EXHIBIT 4
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS OPTION SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement") dated as of July 2, 2001, is
entered into by and between Ramy El-Batrawi (the "Optionor") and individual
resident in California and the Chairman and Chief Executive Officer of
GenesisIntermedia, Inc., a Delaware corporation (the "Company") and Riverdale
LLC, a New York limited liability company (together with its successors and
assigns, the "Holder").
WHEREAS to induce Holder to enter into an acquisition financing
facility and investment banking commitment letter (the "Commitment Letter")
dated the date hereof among the Holder, the Company and the other parties named
therein, and in consideration of the payment of $1.00 and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Optionor has agreed to grant Options to the Holder providing
for the purchase of shares of Common Stock of the Company held by Optionor in
the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. FORM OF OPTION CERTIFICATES. There shall be two series of
Options, denominated as Series IA and IB (each a the "Option" and collectively,
the "Options"). The certificates evidencing the Options (the "Option
Certificates") (and the form of election to purchase shares of Common Stock and
the form of assignment printed on the reverse thereof) shall be substantially as
set forth in Exhibit A hereto. Each Option Certificate shall be dated as of the
date of issuance thereof, whether upon initial issuance or upon transfer or
exchange, and each Option shall entitle Holder thereof to purchase one share of
Common Stock held by the Optionor, but the number of such shares and the
Exercise Price (as defined in Section 3(c)) shall be subject to adjustments as
provided herein.
SECTION 2. COMMON STOCK AND OPTION COMMON STOCK. As hereinafter used in
this Agreement, "Common Stock" shall mean the Common Stock, $0.001 par value, of
the Company as authorized at the date hereof and stock of any other class into
which such presently authorized Common Stock may hereafter be changed, and
"Option Common Stock" shall mean the Common Stock issuable upon exercise of
Options. In case, by reason of the operation of Section 4, the Options shall
entitle Holder thereof to purchase any other shares of stock or other securities
or property of the Company or of any other corporation, any reference in
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this Agreement to the exercise of Options shall be deemed to refer to and
include the purchase of such other shares of stock or other securities or
property upon such exercise.
SECTION 3. TERM OF OPTIONS; EXERCISE PRICE OF OPTIONS.
(a) Options, and corresponding Option Certificates, shall
be issued to Holder within five business days after the execution and delivery
of the Credit Agreement by Holder and the Company, entitling the Holder to
purchase the number of shares set forth below on the conditions set forth in
this Agreement and the Option Certificate.
Aggregate
Series of Number of Shares
Options Subject to Options
IA 1,000,000
IB 500,000
(b) Holder may exercise the Options evidenced by an Option
Certificate, in whole or in part and in accordance with the provisions of this
Section 3, at any time and from time to time after the date of this Agreement.
To exercise Options, Holder shall surrender to the Optionor at the principal
executive office of the Company the Option Certificate with the form of election
to purchase duly executed, together with payment of the Exercise Price (as
defined below) for each share of Option Common Stock issuable upon exercise of
an Option, or, alternatively, to receive a lesser number of shares through a
Cashless Exercise (as defined below), at or prior to 5:00 p.m. (Pacific Time) on
July 1, 2005 (the "Expiration Date"), at which time all rights evidenced by the
Option Certificates shall cease and the Options shall become void.
(c)The purchase price for each share of Common Stock
pursuant to the exercise of an Option (the "Exercise Price") shall be as
follows: Series IA - $2.00 per share; and Series IB - $4.00 per share. The
Exercise Price shall be payable in lawful money of the United States of America,
except as provided in clause (d)(2) below.
(d) Options may be exercised by either of the following
methods:
(1) Cash Exercise. If Holder desires to exercise Options
for cash, Holder must elect and sign the "Cash Exercise" election on the reverse
side of the Option Certificate and deliver to the Optionor (x) the Option
Certificate or Certificates representing the Options to be exercised and (y)
cash or a certified or official bank check payable to the Optionor for the
Exercise Price for such Option (a "Cash Exercise").
(2) Cashless Exercise. If Holder desires to exercise
Options without delivering cash, Holder must elect and sign the "Cashless
Exercise" election on the reverse side of the Option Certificate and deliver to
the Optionor the Option Certificate or Certificates representing the Options to
be exercised (a "Cashless Exercise"). Upon a Cashless Exercise, Holder shall be
entitled to a number of shares of Option Common Stock determined by using the
following formula:
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X = Y(A-B)
______
A
Where: X = the number of shares of Option Common Stock
to be issued to the Holder under
the provisions of this Section 3(d)(2)
Y = the number of shares of Option
Common Stock that would otherwise be issued
upon an exercise of the Options to be
exercised if they were exercised for cash
A = the Current Market Price per share of Common
Stock calculated as of the date
of exercise
B = the Exercise Price then in effect
SECTION 4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES
OF COMMON STOCK. The Exercise Price and the number of shares purchasable upon
exercise of an Option (other than in connection with any securities issued or
issuable pursuant to that certain acquisition transaction that has been
identified to Holder) shall be subject to adjustment as follows:
(a) Change in Common Stock. If the Company shall, at any
time or from time to time after the date hereof, (i) issue any shares of Common
Stock as a stock dividend to holders of Common Stock, (ii) subdivide or combine
the outstanding shares of Common Stock into a greater or lesser number of shares
or (iii) issue any shares of its capital stock in a reclassification or
reorganization of the Common Stock (any such issuance, subdivision, combination,
reclassification or reorganization being herein called a "Change of Shares"),
then (A) in the case of the events referred to in clauses (i) and (ii) above,
the number of shares of Common Stock that may be purchased upon the exercise of
an Option shall be adjusted to the number of shares of Common Stock that the
Holder of an Option would have owned or have been entitled to receive after the
happening of such event for each series of Options, had an Option been exercised
immediately prior to the record date (or, if there is no record date, the
effective date) for such event, and the Exercise Price shall be adjusted to the
price (calculated to the nearest 100th of one cent) determined by multiplying
the Exercise Price immediately prior to such event by a fraction, the numerator
of which shall be the number of shares of Common Stock purchasable with an
Option immediately prior to such event and the denominator of which shall be the
number of shares of Common Stock purchasable with an Option after the adjustment
referred to above and (B) in the case of the events referred to in clause (iii)
above, paragraph (b) below shall apply. An adjustment made pursuant to clause
(A) of this paragraph (a) shall become effective retroactively immediately after
the record date in the case of such dividend and shall become effective
immediately after the effective date in other cases, but any shares of Common
Stock issuable solely as a result of such adjustment shall not be issued prior
to the effective date of such event.
(b) Common Stock Distribution. If the Company shall, at any
time or from time to time after the date hereof, issue, sell or otherwise
distribute (including by way of deemed distributions pursuant to paragraphs (c)
and (d) below) any shares of Common Stock (other than pursuant to (A) a Change
of Shares or (B) the exercise or conversion, as the case may be, of any Warrant,
Convertible Security (each as defined in paragraph (c) below) or Option) (any
such event, including any deemed distributions described in paragraphs (c) and
(d), being herein
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called a "Common Stock Distribution"), for a consideration per share less than
the greater of the Exercise Price or the Market Dilution Price in effect on the
date of such Common Stock Distribution, then, effective upon such Common Stock
Distribution, the Exercise Price for each affected series of Options shall be
reduced to the price (calculated to the nearest 100th of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Common Stock
Distribution by a fraction that is the lesser of the following two fractions:
(i) a fraction, the numerator of which shall be the sum of (A) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Common Stock Distribution multiplied by the Current
Market Price in effect immediately prior to such Common Stock Distribution, plus
(B) the consideration, if any, received by the Company upon such Common Stock
Distribution, and the denominator of which shall be the product of (C) the total
number of shares of Common Stock issued and outstanding immediately after such
Common Stock Distribution multiplied by (D) the Current Market Price in effect
immediately prior to such Common Stock Distribution and (ii) a fraction, the
numerator of which shall be the sum of (A) the number of shares of Common Stock
outstanding (exclusive of any treasury shares) immediately prior to such Common
Stock Distribution multiplied by the Exercise Price in effect immediately prior
to such Common Stock Distribution, plus (B) the consideration, if any, received
by the Company upon such Common Stock Distribution, and the denominator of which
shall be the product of (C) the total number of shares of Common Stock issued
and outstanding immediately after such Common Stock Distribution multiplied by
(D) the Exercise Price in effect immediately prior to such Common Stock
Distribution.
(1) If any Common Stock Distribution shall require an
adjustment to the Exercise Price pursuant to the provisions of this paragraph
(b), including by operation of paragraph (c) or (d) below, then, effective at
the time such adjustment is made, the number of shares of Common Stock
purchasable upon the exercise of each affected series of Options shall be
increased to a number determined by multiplying the number of shares for each
affected series of Options so purchasable immediately prior to such Common Stock
Distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to such adjustment and the denominator of which
shall be the Exercise Price in effect immediately after such adjustment. In
computing adjustments under this paragraph, fractional interests in Common Stock
shall be taken into account to the nearest 100th of a share.
(2) The provisions of this paragraph (b), including by
operation of paragraph (c) or (d) below, shall not operate to increase the
Exercise Price or reduce the number of shares of Common Stock purchasable upon
the exercise of the Options, except by operation of paragraph (j) or (k) below.
(c) Issuance of Warrants. If the Company shall, at any time
or from time to time after the date hereof, issue, sell, distribute or otherwise
grant in any manner (including by assumption) any rights to subscribe for or to
purchase, or any warrants or options for the purchase of, Common Stock or any
stock or securities convertible into or exchangeable for Common Stock other than
the warrants (as adjusted from time to time in accordance with the terms
thereof, the "Excluded Warrants") to purchase 4,000,000 shares of Common Stock
being issued by the Company concurrently herewith (any such rights, warrants or
options being herein called "Warrants" and any such convertible or exchangeable
stock or securities being herein
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called "Convertible Securities"), whether or not such Warrants or the rights to
convert or exchange such Convertible Securities are immediately exercisable, and
the price per share at which Common Stock is issuable upon the exercise of such
Warrants or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or receivable
by the Company as consideration for the issuance, sale, distribution or granting
of such Warrants, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Warrants, plus, in
the case of Warrants to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of all such Warrants) shall be
less than the greater of the Exercise Price or the Market Dilution Price in
effect immediately prior to the issuance, sale, distribution or granting of such
Warrants, then, for the purposes of paragraph (b) above, the total maximum
number of shares of Common Stock issuable upon the exercise of all such Warrants
or upon the conversion or exchange of the total maximum amount of the
Convertible Securities issuable upon the exercise of all such Warrants shall be
deemed to have been issued as of the date of the issuance, sale, distribution or
granting of such Warrants and thereafter shall be deemed to be outstanding and
the Company shall be deemed to have received as consideration such price per
share, determined as provided above, therefor. Except as otherwise provided in
paragraphs (j) and (k) below, no additional adjustment of the Exercise Price
shall be made upon the actual exercise of such Warrants or upon conversion or
exchange of the Convertible Securities issuable upon the exercise of such
Warrants. If the minimum and maximum numbers or amounts referred to in this
paragraph (c) or in paragraph (d) below cannot be calculated with certainty as
of the date of the required adjustment, such numbers and amounts shall be
determined in good faith by the Board of Directors of the Company or, to the
extent applicable, pursuant to arbitration as provided in the Warrant Agreement
at the same time such determination is made in connection with the Warrants.
(d) Issuance of Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Warrants), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon the
conversion or exchange of such Convertible Securities (determined by dividing
(i) the aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale or distribution of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the greater of the Exercise Price or the Market
Dilution Price in effect immediately prior to such issuance, sale or
distribution, then, for the purposes of paragraph (b) above, the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
issuance, sale or distribution of such Convertible Securities and thereafter
shall be deemed to be outstanding and the Company shall be deemed to have
received
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as consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to
holders of Common Stock any dividend or other distribution of cash, evidences of
its indebtedness, other securities or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Warrants or Convertible
Securities and (ii) any cash dividend declared and paid pursuant to a regular
dividend policy of the Company), or any options, warrants or other rights to
subscribe for or purchase any of the foregoing, then (A) the Exercise Price
shall be decreased to a price determined by multiplying the Exercise Price then
in effect by a fraction, the numerator of which shall be the Exercise Price in
effect on the record date for such distribution less the sum of (X) the cash
portion, if any, of such distribution per share of Common Stock outstanding
(exclusive of any treasury shares) plus (Y) the then fair market value (as
determined in good faith by the Board of Directors of the Company) per share of
Common Stock issued and outstanding on the record date for such distribution of
that portion, if any, of such distribution consisting of evidences of
indebtedness, other securities, properties, assets, options, warrants or
subscription or purchase rights, and the denominator of which shall be the
Exercise Price then in effect and (B) the number of shares of Common Stock
purchasable upon the exercise of an Option shall be increased to a number
determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
the adjustment required by clause (A) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
The adjustments required by this paragraph (e) shall be made whenever any such
distribution is made and shall be retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(f) Certain Distributions. If the Company shall pay a
dividend or make any other distribution payable in Warrants or Convertible
Securities, then, for purposes of paragraph (b) above (including dividends or
distributions by operation of paragraph (c) or (d) above, as the case may be),
such Warrants or Convertible Securities shall be deemed to have been issued or
sold without consideration except for such amounts of consideration as shall
have been deemed to have been received by the Company pursuant to paragraphs (c)
or (d) above, as, appropriate.
(g) Consideration Received. If any shares of Common Stock
shall be issued and sold by the Company in an underwritten public offering or
agented private placement, the consideration received by the Company for such
shares of Common Stock shall be deemed to include the underwriting discounts and
commissions realized by the underwriters or selling agents of such offering. If
any shares of Common Stock, Warrants or Convertible Securities shall be issued,
sold or distributed for a consideration other than cash, the amount of the
consideration other than cash received by the Company in respect thereof shall
be deemed to be the then fair market value of such consideration as determined
in good faith by the Board of Directors of the Company. If any Warrants shall be
issued in connection with the issuance and sale of other securities of the
Company, together comprising one integral transaction in which no
6
specific consideration is allocated to such Warrants by the parties thereto,
such Warrants shall be deemed to have been issued, sold or distributed for such
amount of consideration as shall be allocated to such Warrants in good faith by
the Board of Directors of the Company.
(h) Deferral of Certain Adjustments. No adjustments to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of the Options) shall be required
hereunder unless such adjustment together with other adjustments carried forward
as provided below, would result in an increase or decrease of at least one
percent of the Exercise Price; provided, however, that any adjustment which is
not required to be made by reason of this paragraph (i) shall be carried forward
and taken into account in any subsequent adjustment.
(i) Changes in Warrants and Convertible Securities. If the
exercise price provided for in any Warrants referred to in paragraph (c) above
(but excluding the Excluded Warrants), the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in paragraph (c) or (d) above, or the rate at which any Convertible
Securities referred to in paragraph (c) or (d) above are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution upon an event which
results in a related adjustment pursuant to this Section 4), then the Exercise
Price then in effect and the number of shares of Common Stock purchasable upon
the exercise of the Options shall forthwith be readjusted (effective only with
respect to any exercise of the Options after such readjustment) to the Exercise
Price and number of shares of Common Stock so purchasable that would then be in
effect had the adjustment made upon the issuance, sale, distribution or granting
of such Warrants or Convertible Securities been made based upon such changed
purchase price, additional consideration or conversion rate, as the case may be,
but only with respect to such Warrants and Convertible Securities as then remain
outstanding.
(j) Expiration of Warrants and Convertible Securities. If,
at any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of the Options shall have been made pursuant to
paragraph (c), (d) or (i) above or this paragraph (j), any Warrants or
Convertible Securities shall have expired unexercised or, solely with respect to
Warrants that are rights ("Rights"), are redeemed, the number of such shares so
purchasable shall, upon such expiration or such redemption, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may be)
as if (i) the only shares of Common Stock deemed to have been issued, in
connection with such Warrants or Convertible Securities were the shares of
Common Stock, if any, actually issued or sold upon the exercise of such Warrants
or Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise plus the aggregate Consideration, if any, actually received by the
Company for the issuance, sale, distribution or granting of all such Warrants or
Convertible Securities, whether or not exercised; provided, however, that (x) no
such readjustment shall have the effect of decreasing the number of shares so
purchasable by an amount (calculated by adjusting such decrease to account for
all other adjustments made pursuant to this Section 4 following the date of the
original adjustment referred to above) in excess of the amount of the adjustment
initially made in respect of the
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issuance, sale, distribution or granting of such Warrants or Convertible
Securities and (y) in the case of the redemption of any Rights, there shall be
deemed (for the purposes of paragraph (c) above) to have been issued as of the
date of such redemption for no consideration a number of shares of Common Stock
equal to the aggregate consideration paid to effect such redemption divided by
the Current Market Price of the Common Stock on the date of such redemption.
(k) Reorganization of Company. Except for a Cash Merger (as
defined in the next paragraph), if the Company consolidates or merges with or
into, or transfers or leases all or substantially all its assets to, any person,
upon consummation of such transaction the Options shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
Holder would have owned immediately after the consolidation, merger, transfer or
lease if Holder had exercised the Options immediately before the effective date
of the transaction.
In the event that the Company consolidates or merges with
or into, or transfers or leases all or substantially all of its assets to, any
person in a transaction in which more than 90% of the aggregate value of the
consideration to be received by the Company's common stockholders consists of
cash or cash equivalents (a "Cash Merger"), Holder shall be entitled to (i)
exercise the Options, effective immediately prior to the effective date of such
Cash Merger as set forth in the preceding paragraph or (ii) receive a cash
payment equal to the amount that Holder would receive if Holder had exercised
the Options immediately prior to the Cash Merger less the aggregate Exercise
Price.
(l) Other Adjustments. If at any time Holder shall become
entitled to receive any securities of the Company other than shares of Common
Stock as constituted on the date of issuance of the Options, then the number of
such other securities so receivable upon exercise of the Options and the
Exercise Price applicable to such exercise shall be adjusted at such time, and
shall be subject to further adjustment from time to time thereafter, in a manner
and on terms as nearly equivalent as practicable to the provisions with respect
to the shares of Common Stock contained in this Section 4. No adjustment under
this Section 4 shall reduce the Exercise Price below $0.01.
(m) Voluntary Adjustment. The Optionor from time to time
may reduce the Exercise Price for the Options by any amount for any period of
time if the period is at least 20 days and if the reduction is irrevocable
during the period. Whenever the Exercise Price for the Options is reduced, the
Optionor shall cause to be mailed to Holder a notice of the reduction. Such
notice shall be mailed at least 15 days before the date the reduced Exercise
Price takes effect. The notice shall state the reduced Exercise Price and the
period it will be in effect.
(n) Notice of Certain Actions and Adjustments. In case the
Company shall propose (i) to pay any dividend payable in stock of any class to
the holders of its Common Stock or to make any other distribution to the holders
of its Common Stock (other than a regular cash dividend), or (ii) to offer to
the holders of its Common Stock rights to subscribe for or to purchase any
additional shares of Common Stock or shares of stock of any class or any other
securities, rights or options, or (iii) to effect any reclassification of its
Common Stock (other than a reclassification involving only the subdivision, or
combination, of outstanding shares of Common Stock), or (iv) to effect any
capital reorganization, or (v) to effect any consolidation, merger or sale,
organic change, transfer or other disposition of all or substantially all of its
property, assets or business, or (vi) to effect the liquidation, dissolution or
winding up of the
8
Company and the Company shall provide notice thereof to Optionor, then in each
such case, the Optionor shall deliver to Holder a notice of such proposed
action, which shall specify the date on which a record is to be taken for the
purposes of such stock dividend, distribution or rights, or the date on which
such reclassification, reorganization, consolidation, merger, sale, organic
change, transfer, disposition, liquidation, dissolution, or winding up is to
take place and the date of participation therein by the holders of Common Stock,
if any such date is to be fixed, and shall also set forth such facts with
respect thereto as shall be reasonably necessary to indicate the effect of such
action on the Common Stock and the number and kind of any other shares of stock
which will be issuable upon exercise of an Option, and the Exercise Price
thereof, after giving effect to any adjustment which will be required as a
result of such action. Such notice shall be so delivered as soon as practicable
after Optionor receives notice thereof from the Company.
Upon any adjustment of the Exercise Price pursuant to
Section 4, the Optionor shall promptly thereafter cause to be given to Holder at
its address provided by Holder to Optionor for such purpose written notice of
such adjustments by first-class mail, postage prepaid, a certificate setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of shares of Option Common Stock (or portion
thereof) issuable after such adjustment in the Exercise Price, upon exercise of
an Option and payment of the adjusted Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein.
To the extent the Options become convertible into cash, no
adjustment need be made thereafter as to the cash.
SECTION 5. CURRENT MARKET PRICE; MARKET DILUTION PRICE. The
"Current Market Price" per share of Common Stock at any date shall be the
average of the daily closing prices for the 10 consecutive trading days ending
on the last full trading day on the exchange or market specified in the second
succeeding sentence, prior to the time and date as of which the Current Market
Price is to be computed. The closing price for any day shall be the last
reported sale price regular way or, if no such reported sale takes place on such
day, the average of the closing bid and asked prices regular way for such day,
in each case (1) on the principal national securities exchange on which the
shares of Common Stock are listed or to which such shares are admitted to
trading or (2) if the Common Stock is not listed or admitted to trading on a
national securities exchange, in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") or any comparable system or (3) if the Common Stock is not listed on
Nasdaq or a comparable system, as furnished by two members of the National
Association of Securities Dealers, Inc. ("NASD") selected from time to time in
good faith by the Board of Directors of the Company for that purpose. In the
absence of all of the foregoing, or if for any other reason the Current Market
Price per share cannot be determined pursuant to the foregoing provisions of
this Section 5, the Current Market Price per share shall be the fair market
value thereof as determined in good faith by the Board of Directors of the
Company. The "Market Dilution Price" per share of Common Stock at any date shall
be the Current Market Price on such date; provided that on any date that the
Current Market Price shall be equal to or in excess of $9.00, the Market
Dilution Price shall be the then applicable Exercise Price.
9
SECTION 6. EXERCISE OF OPTIONS AND STOCK CERTIFICATES
(a) Subject to the provisions of this Agreement, the Holder
shall have the right, which may be exercised as provided in such Option
Certificate, to purchase from the Optionor (and the Optionor shall transfer and
sell to Holder) all or part of the number of fully paid and nonassessable shares
of Option Common Stock specified in such Option Certificate (subject to the
adjustments as herein provided), upon a Cash Exercise or Cashless Exercise. Upon
surrender of such Option Certificate, it shall be canceled by the Optionor. The
date of exercise of any Option shall be deemed to be the date of its receipt by
the Company duly and properly filled in and signed and accompanied by proper
funds as hereinafter provided. In the event of a Cash Exercise, payment of the
Exercise Price may be made in cash or by certified or official bank check. No
adjustment shall be made for any regular cash dividends declared or paid on
shares of Common Stock prior to the exercise of an Option. Upon such Cash
Exercise or Cashless Exercise, the Optionor shall transfer and cause to be
delivered against receipt of payment therefor, and in such name or names as the
Holder may designate, a certificate or certificates for the number of full
shares of Option Common Stock so purchased upon the exercise of such Options. No
cash shall be paid in respect of any fraction of a share of such stock issuable
upon such surrender, as provided in Section 7 of this Agreement.
(b) Each certificate evidencing shares of Common Stock
transferred upon the exercise of Options shall have such letters, numbers or
other marks of identification or designation or such legends (including
restrictive legends), summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Common Stock may from
time to time be listed, or to conform to usage.
SECTION 7. ELIMINATION OF FRACTIONS. The Optionor shall not be required
to transfer fractional shares of Common Stock upon any exercise of Options. As
to any final fraction of a share that the Holder would otherwise be entitled to
purchase upon such exercise, no cash or other adjustment in respect of such
final fraction shall be made and it shall be disregarded for all purposes.
SECTION 8. TRANSFER TAXES. The Holder will pay all documentary stamp
taxes attributable to the transfer of shares of Option Common Stock upon the
exercise of any Option; provided, however, that neither the Optionor nor the
Company shall be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of any certificates
for shares of Option Common Stock in a name other than that of the Holder.
SECTION 9. RESERVATION OF SHARES. The Optionor shall, from the date
hereof through the date on which all Options shall have been exercised or shall
have expired, segregate and place in an escrow pursuant to an escrow agreement
of even date between Riverdale LLC, the Optionor and the Escrow Agent, a form of
which is appended hereto as Exhibit B, for the purpose of effecting the transfer
of stock upon exercise of Options, one million shares of Common Stock (and any
property or securities issued on account thereof and which are to be held by the
Optionor pursuant to the terms of this Agreement). The Holder shall have a right
to
10
direct Optionor and Optionor hereby agrees if so directed to vote the shares
underlying the Options on any matters requiring the vote of the Company's
stockholders and relating to the issuance of securities of the Company,
amendments to the Company's charter documentation which affect the rights of
holders of Common Stock, the sale of assets of the Company, a merger or
consolidation of the Company, or any other recapitalization or reorganization of
the Company.
Optionor covenants that all shares of Option Common Stock which may be
transferred upon exercise of the Options will be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the transfer thereof. Opitonor agrees to place the one
million shares (the "Series IA Escrow Shares") subject to the Series IA Options,
and any other shares that may become subject to such Options, as a result of the
provisions of Section 4 hereof, in escrow pursuant to an Escrow Agreement
between Optionor and the Holder dated the date hereof. In addition, Opitonor
agrees to place the 500,000 shares (the "Series IB Escrow Shares") subject to
the Series IB Options, and any other shares which may become subject to such
Options, as a result of the provisions of Section 4 hereof, in escrow pursuant
to the Escrow Agreement. If the Series IA Escrow Shares are not placed in escrow
pursuant to the Escrow Agreement on or before July 30, 2001, Optionor shall pay
to the Holder the sum of $35,000 for each business day that the Series IA Escrow
Shares are not so placed in escrow. If the Series IB Escrow Shares are not
placed in escrow pursuant to the Escrow Agreement within seven days of a demand
therefor from the Holder, Optionor shall pay to the Holder the sum of $35,000
for each business day that the Series IB Escrow Shares are not so placed in
escrow. These payments shall be in addition to and not in lieu of any other
damages suffered by the Holder as a result of Optionor's failure to deliver the
Option Common Stock as required by the terms of the Options upon exercise of the
Options.
SECTION 10. SUPPLEMENTS AND AMENDMENTS. The Optionor and Holder may
from time to time make supplements or amendments to this Agreement upon their
mutual written consent.
SECTION 11. MUTILATED OR MISSING OPTION CERTIFICATES. If any Option
Certificate shall be mutilated, lost, stolen or destroyed, the Optionor shall
deliver a new Option Certificate of like tenor and denomination in exchange and
substitution therefor upon surrender and cancellation of the mutilated Option
Certificate or, in the case of a lost, stolen or destroyed Option Certificate,
upon receipt of evidence satisfactory to the Optionor of the loss, theft or
destruction of such Option Certificate and, in either case, upon receipt of such
indemnity as the Optionor may require. Holder shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Optionor may
prescribe. Upon transfer of any property upon exercise of any new Option
Certificate, the replaced Option Certificate shall be void to the same extent
and it shall be the obligation of Holder to satisfy any demand for transfer of
property upon its later exercise to such extent.
SECTION 12. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier (i) the date of
transmission, if such notice or such communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m.,
11
Pacific Time, on a business day, (ii) the business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., Pacific
Time, on any date and earlier than 11:59 p.m., Pacific Time, on such date, (iii)
the business day following the date of mailing, if sent by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice or communication is required to be given. The addresses and facsimile
numbers for all such notices, communication and/or deliveries shall be as
follows:
if to the Optionor,
GenesisIntermedia, Inc.
0000 Xxxxxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Ramy El-Batrawi
Fax: (000) 000-0000
with a copy to:
Nida & Xxxxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
if to the Holder,
Riverdale LLC
c/o Icahn Associates
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
or to such other addresses or facsimile numbers as any party may most recently
have designated in writing to the other parties hereto by such notice.
SECTION 13. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Optionor shall bind and inure to the
benefit of their respective successors and assigns hereunder.
SECTION 14. GOVERNING LAW. This Agreement and each Option issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be construed in accordance with the laws of
the State of Delaware without regard to the conflicts of laws principles
thereof.
SECTION 15. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Optionor and
Holder any legal or equitable right, remedy or claim under this Agreement.
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SECTION 16. 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 all such counterparts shall together constitute but one
and the same instrument.
[Signature page follows]
13
IN WITNESS WHEREOF, the parties hereto have caused this Option
Agreement to be executed and delivered as of the day and year first above
written.
OPTIONOR:
RAMY EL-BATRAWI
____________________________
HOLDER:
RIVERDALE LLC
a New York limited liability company
By: ___________________________________
Xxxxxx X. Xxxxxxxx
Manager
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EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS OPTION SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
FORM OF SERIES I[A/B] OPTION CERTIFICATE
EXERCISABLE ONLY ON OR AFTER JULY 2, 2001 AND BEFORE 5:00
P.M. JULY 1, 2005
(as provided in the Option Agreement
referred to below)
OPTION NUMBER
I[A/B] _______
GENESISINTERMEDIA, INC.
This Series I[A/B] Option Certificate Certifies that
RIVERDALE LLC
is the registered holder of ______________________
Series I[A/B] Options (the "Options") expiring on the Expiration Date (as
defined in Section 3(b) of the Option Agreement and described on the reverse
hereof) to purchase shares of the common stock (the "Common Stock"), par value
$.001 per share, of GenesisIntermedia, Inc., a Delaware corporation (the
"Company") held by Ramy El-Batrawi (the "Optionor"). Capitalized terms not
otherwise defined herein shall have the terms prescribed in the Option
Agreement.
The Option may be exercised by either of the following methods:
(i) Cash Exercise. If Holder desires to exercise this Option for
cash, Holder must elect and sign the "Cash Exercise" election on the reverse
side of the Option Certificate and deliver to the Company (a) this certificate
and (b) cash or a certified or official bank check payable to the Optionor in
the amount of the Exercise Price.
(ii) Cashless Exercise. If Holder desires to exercise the Option
without delivering cash, Holder must elect and sign the "Cashless Exercise"
election on the reverse side of the Option Certificate and deliver to the
Company the Option Certificate or Certificates representing
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the Options to be exercised (a "Cashless Exercise"). Upon a Cashless Exercise,
Holder is entitled to a number of shares of Option Common Stock as set forth in
the Option Agreement. No fractional shares shall be issued on exercise of the
Option, as provided in the Option Agreement, and that the number of kind of
shares (or in certain events other property) purchasable upon exercise of the
Options and the Exercise Price referred to on the reverse hereof may as of the
date of this Option Certificate have been, or may after such date be, adjusted
as a result of the occurrence of certain events, as more fully provided in the
Option Agreement.
No Option may be exercised after 5:00 p.m. Pacific Time on the Expiration Date.
Reference is hereby made to the further provisions of this Option Certificate
set forth on the reverse hereof and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, the undersigned has caused duly signed this
Option Certificate.
Dated:
RAMY EL-BATRAWI
______________________
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[Reverse]
GENESISINTERMEDIA, INC.
The Options evidenced by this Option Certificate are part of a series
of Options issued pursuant to an Option Agreement dated as of July 2, 2001 (the
"Option Agreement"), duly executed and delivered by the Optionor to Holder,
which Option Agreement is hereby incorporated by reference in and made a part of
this instrument and the Optionor and the Holder (as defined in such Option
Agreement) and a copy of which Option Agreement will be available at the office
of the Secretary of the Company for inspection by Holders during normal business
hours.
The Options evidenced by this Option Certificate may be exercised at
any time on or before the Expiration Date through a Cash Exercise or Cashless
Exercise as described on the other side of this Certificate. In the event that
upon any exercise of Options evidenced hereby the number of Options exercised
shall be less than the total number of Options evidenced hereby, there shall be
issued to Holder a new Option Certificate evidencing the number of Options not
exercised.
The Option Agreement provides that upon the occurrence of certain
events the Exercise Price may, subject to certain conditions, be adjusted and
under certain circumstances the Option may become exercisable for securities or
other assets other than the shares referred to on the face hereof. If the
Exercise Price is adjusted, the Option Agreement provides that the number of
Common Shares purchasable upon the exercise of each Option shall be adjusted in
certain circumstances.
This Option Certificate is not transferable, in whole or in part.
ELECTION TO EXERCISE
To be executed upon exercise of Option
The undersigned hereby irrevocably elects to exercise the right,
represented by this Option Certificate:
____ (a) Cash Exercise: to receive ______ Shares of common stock,
par value $.001 per share, and herewith tenders payment for such Shares in
the amount of $___________ in accordance with the terms of this Option
Certificate.
____ (a) Cashless Exercise: to receive ______ Shares of common
stock, par value $.001 per share, in accordance with the terms of this Option
Certificate.
The undersigned requests that a certificate for such shares be
registered in the name of ___________________, whose address is
__________________________________________ and that such shares be delivered to
_____________ __________________________ _____________ whose address is
______________________________________________________________________________.
If said number of shares is less than all of the shares of common stock
purchasable hereunder, the undersigned requests that a new Option Certificate
representing the remaining balance of such whole Shares be registered in the
name of the undersigned. and that such Option Certificate be delivered to the
undersigned.
Signature: ______________________________
Date:
Signature Guaranty:
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EXHIBIT B
ESCROW AGREEMENT
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