Exhibit 4.3
GENISYS RESERVATION SYSTEMS, INC.
AND
X.X. XXXXX & CO., INC.
UNDERWRITER'S
WARRANT AGREEMENT
Dated as of , 1997
UNDERWRITER'S WARRANT AGREEMENT dated as of , 1997 between GENISYS
RESERVATION SYSTEMS, INC., a New Jersey corporation (the "Company") and
X.X. XXXXX & CO., INC., its successors, designees and assigns (hereinafter
referred to as the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriter warrants
("Warrants") to purchase up to an aggregate of 90,000 shares of common
stock, $.0001 par value, of the Company's ("Common Stock") and/or up to
240,000 warrants consisting of 150,000 Class A Warrants and 90,000 Class B
Warrants ("Underlying Warrants"), each Underlying Warrant entitling the
holder to purchase one share of Common Stock. (One share of Common Stock
and one Underlying Warrant are each hereinafter referred to as a "Warrant
Security" and more than one collectively referred to as the "Warrant
Securities"); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting agreement
(the "Underwriting Agreement") dated as of the date hereof among the
Underwriter and the Company to act as the Underwriter in connection with
the Company's proposed public offering of up to 900,000 shares of Common
Stock and 2,400,000 redeemable warrants consisting of 1,500,000 Class A
Warrants and 900,000 Class B Warrants (collectively the "Redeemable
Warrants") at a public offering price of $5.00 per share of Common Stock
and $.20 per Class A Redeemable Warrant and $.10 per Class B Redeemable
Warrant (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 Underwriter in consideration for, and as
part of the Underwriter's compensation in connection with, the Underwriter
acting as the Underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter
1
to the Company of an aggregate twenty-one dollars ($21.00), 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 The Underwriter is hereby granted by the Company the right to
purchase, at any time from , 1998 until 5:00 P.M., New York time, on ,
2002, up to an aggregate of 90,000 shares of Common Stock (the "Shares")
and 240,000 Underlying Warrants at an initial exercise price (subject to
adjustment as provided in Section 8 hereof) of $6.00 per Share and $.24 per
Class A Warrant and $.12 per Class B Warrant, subject to the terms and
conditions of this Agreement. Each Underlying Warrant is exercisable to
purchase one additional share of Common Stock at an initial exercise price
of $6.90 per Class A Warrant from , 1998 until 5:00 P.M. New York time on ,
2002 at which time the Class A Underlying Warrants will expire and $ 8.10
per Class B Warrant from , 1998 until 5:00 P.M. New York time on , 2002 at
which time the Class B Underlying Warrants will expire. Except as set forth
herein, the Underlying Warrants issuable upon exercise of the Warrants are
in all respects identical to the Redeemable Warrants being purchased by the
Underwriter for resale to the public pursuant to the terms and provisions
of the Underwriting Agreement and the Redeemable Warrant Agreement dated
1996 between the Company and Continental Stock Transfer & Trust Company
("Redeemable Warrant Agreement"). Except as 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 (i) in the form set forth in Exhibit A, with respect to Class A
Warrants to purchase Underlying Warrants and (ii) in the form set forth in
Exhibit B with respect to Class B Warrants to purchase Underlying Warrants,
each attached hereto and made a part hereof, with such appropriate
insertions, omissions, substitutions, and other variations as required or
permitted by this Agreement.
2
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable at the
initial exercise prices (subject to adjustment as provided in Section 8
hereof) per Share and per Underlying Warrant as set forth in Section 6
hereof payable by certified or official bank check in New York Clearing
House funds, subject to adjustment as 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 Warrant Securities purchased at the Company's
principal offices (presently located at 0000 Xxxxxx Xxxxxx, Xxxxx, XX
07083) 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 and a certificate or certificates
for the Underlying Warrants so purchased. The purchase rights represented
by each Warrant Certificate are exercisable at the option of the Holders
thereof, in whole or part (but not as to fractional shares of the Common
Stock and Underlying Warrants). In the case of the purchase of less than
all Warrant Securities 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 Warrant Securities purchasable thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the method of payment
set forth in Section 3.1 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 applicable Warrant Certificates in the manner specified in
Section 3.1. The number of shares of Common Stock to be issued pursuant to
this Section 3.2 shall be equal to the difference between (a) the number of
shares of Common Stock in respect of which the Warrants are exercised and
(b) a fraction, the numerator of which shall be the number of shares of
Common Stock in respect of which the Warrants are exercised multiplied by
the Exercise Price (as hereinafter defined) and the denominator of which
shall be the Market Price. The number of Underlying Warrants to be issued
pursuant to this Section 3.2 shall be equal to the difference between (a)
the number of Underlying Warrants in respect of which the Warrants are
exercised and (b) a fraction, the numerator of which shall be the number of
Underlying Warrants in respect of which the Warrants are exercised
multiplied by the Exercise Price (as hereinafter defined) and the
denominator of which shall be the
Market Price.
3.3 Definition of Market Price. As used herein, the phrase "Market Price"
at any date shall be deemed to be (i) when referring to the Common Stock,
the last reported price, or, in case no such reported sale takes place on
such day, the average of the last reported 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 by the Nasdaq National Market ("NNM"), or, if the Common Stock
is not listed or admitted to trading on any national securities exchange or
quoted by NNM, the average closing price as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through Nasdaq or similar
organization if Nasdaq is no longer reporting such information, or if the
Common Stock is not quoted on Nasdaq, or such similar organization as
determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it or (ii) when
referring to an Underlying Warrant, the last reported price, or, in the
case no such reported sale takes place on such day, the average of the last
reported prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the
Underlying Warrants are listed or admitted to trading or by NNM, or, if the
Underlying Warrants are not listed or admitted to trading on any national
securities exchange or quoted by NNM, the average closing price as
furnished by the NASD through Nasdaq or similar organization if Nasdaq is
no longer reporting such information, or if the Underlying Warrant is not
quoted on Nasdaq or such similar organization, the Market Price of an
Underlying Warrant shall equal the difference between the Market Price of
the Common Stock and the Exercise Price (as hereinafter defined) of the
Underlying Warrant. Notwithstanding the foregoing, for purposes of Section
8, the Market Price of a share of Common Stock or an Underlying Warrant
shall be determined by reference to the relevant information set forth
above during the thirty (30) trading days immediately preceding the date of
the event requiring the determination of the Market Price (except that, in
the event of a public offering of shares of Common Stock, the Market Price
of a share of Common Stock or an Underlying Warrant shall be determined by
reference to the trading day immediately preceding the effective date of
the public offering and not such thirty (30) trading day period).
4
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and Underlying Warrants
and other securities, properties or rights underlying such Warrants and,
upon the exercise of the Underlying Warrants, the issuance of certificates
for shares of Common Stock and other securities, properties or rights
underlying such Underlying Warrants, shall be made forthwith (and in any
event within five (5) 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 the 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 Shares,
Underlying Warrants and the shares of Common Stock underlying such
Underlying Warrants (and other securities, property or rights issuable upon
the exercise of the Warrants or the Underlying Warrants) shall be executed
on behalf of the Company by the manual or facsimile signature of the then
present Chairman or Vice Chairman of the Board of Directors or President or
Vice President of the Company under its corporate seal reproduced thereon,
attested to by the manual or facsimile signature of the then present
Secretary or Assistant Secretary of the Company. Warrant Certificates shall
be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
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; 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
Underwriter.
5
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 to purchase
Common Stock shall be $4.50 per share of Common Stock and the initial
exercise price of each Warrant to purchase Underlying Warrants shall be
$.24 per Class A Underlying Warrant and $.12 per Class B Underlying
Warrant. The adjusted exercise price 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 and in
accordance with a reduction by the Company, in its sole discretion, of the
exercise price of each Warrant to purchase Common Stock.
6.2 Exercise Price. The term "Exercise Price" herein shall mean the
applicable initial exercise price or with respect to Warrants to purchase
Common Stock the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Current Registration Under the Securities Act of 1933. The Warrants,
the Shares, the Underlying Warrants issuable upon exercise of the
applicable Warrants and the shares of Common Stock issuable upon exercise
of such Underlying Warrants have been registered under the Securities Act
of 1933, as amended (the "Act"), pursuant to the Company's Registration
Statement on Form SB-2 (Registration No.333-15011 ) (the "Registration
Statement"). The Company covenants and agrees to use its best efforts to
maintain the effectiveness of the Registration Statement for a period of
five (5) years from its effective date.
7.2 Contingent Registration Rights.
In the event that, for any reason whatsoever, the Company shall fail to
maintain the effectiveness of the Registration Statement for a period of
five (5) years from its effective date and, in any event, from and after
the fifth (5th) anniversary of the effective date of the Registration
Statement, the Underwriter shall have commencing the date of any such
occasion, the contingent registration rights ("Registration Rights") set
forth in Sections 7.3 and 7.4 hereof.
7.3 Piggyback Registration.
(a) If, at any time commencing after the effective date of the Registration
Rights
6
and expiring on the seventh (7th) anniversary of the effective date of the
Registration Statement, the Company proposes to register any of its
securities under the Act, either for its own account or the account of any
other security holder or holders of the Company possessing registration
rights ("Other Stockholders") (other than pursuant to Form S-4, Form S-8 or
comparable registration statement), it shall give written notice, at least
thirty (30) days prior to the filing of each such registration statement,
to the Underwriter and to all other Holders of Warrants, Shares, Underlying
Warrants and shares of Common Stock issuable upon exercise of the
Underlying Warrants (collectively, "Registrable Securities") of its
intention to do so. If the Underwriter or other Holders of Registrable
Securities notify the Company within twenty-one (21) days after the receipt
of any such notice of its or their desire to include any such securities in
such proposed registration statement, the Company shall afford the
Underwriter and such other Holders of such securities the opportunity to
have any such securities registered under such registration statement.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Underwriter and such other Holders as part of the written notice
given pursuant to Section 7.3(a) hereof. The right of the Underwriter or
any such other Holder to registration pursuant to this Section 7.3 shall be
conditioned upon their participation in such underwriting and the inclusion
of their Registrable Securities in the underwriting to the extent
hereinafter provided. The Underwriter and all other Holders proposing to
distribute their securities through such underwriting shall (together with
the Company and any officer, directors or Other Stockholders distributing
their securities through such underwriting) enter into an underwriting
agreement in customary form with the underwriter or underwriters selected
by the Company. Notwithstanding any other provision of this Section 7.3, if
the underwriter or underwriters advises the Company in writing that
marketing factors require a limitation or elimination of the number of
shares of Common Stock or other securities to be underwritten, the
Underwriter may limit the number of shares of Common Stock or other
securities to be included in the registration and underwriting. The Company
shall so advise the Underwriter and all other Holders of Registrable
Securities requesting registration, and the number of shares of Common
Stock or other securities that are entitled to be included in the
registration and underwriting shall be allocated among the Underwriter and
other Holders requesting registration, in each case, in
7
proportion, as nearly as practicable, to the respective amounts of
securities which they had requested to be included in such registration at
the time of filing the registration statement. (c) Notwithstanding the
provisions of this Section 7.3, the Company shall have the right at any
time after it shall have given written notice pursuant to Section 7.3(a)
hereof (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.
7.4 Demand Registration.
(a) At any time commencing after the effective date of the Registration
Rights and ending on the fifth (5th) anniversary of the effective date of
the Registration Statement, the Underwriter and Holders of Registrable
Securities representing a "Majority" (as hereinafter defined) of such
securities (assuming the exercise of all of the Warrants and Underlying
Warrants) (the "Initiating Holders") shall have the right (which right is
in addition to the registration rights under Section 7.3 hereof),
exercisable by written notice to the Company, to have the Company prepare
and file with the Commission, on one occasion, 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 Holders, in
order to comply with the provisions of the Act, so as to permit a public
offering and sale of their respective Registrable Securities for up to two
hundred and seventy (270) days by such Holders and any other Holders of
Registrable Securities, as well as any other security holders possessing
similar registration rights, who notify the Company within twenty-one (21)
days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.4 by any Holder or Holders to all
other registered Holders of Registrable Securities, as well as any other
security holders possessing similar registration rights, within ten (10)
days after the date of the receipt of any such registration request.
(c) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to Section
7.4(a) hereof. The right of any Holder to registration pursuant to this
Section 7.4 shall be conditioned upon such Holder's participation in such
underwriting and the
8
inclusion of such Holder's Registrable Securities in the underwriting to
the extent and subject to the limitations provided herein. A Holder may
elect to include in such underwriting all or a part of the Registrable
Securities it holds.
(d) The Company shall (together with all Holders, officers, directors and
Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with
the Underwriter of the underwriter of underwriters selected for such
underwriting by the Initiating Holders, which underwriter(s) shall be
reasonably acceptable to the Underwriter. Notwithstanding any other
provision of this Section 7.4, if the Underwriter advises the Initiating
Holders in writing that marketing factors require a limitation or
elimination of the number of shares of Common Stock or other securities to
be underwritten, the Underwriter may limit the number of shares of Common
Stock or other securities to be included in the registration and
underwriting. The Company shall so advise the Underwriter and all Holders
of Registrable Securities requesting registration, and the number of shares
of Common Stock or other securities that are entitled to be included in the
registration and underwriting shall be allocated among the Underwriter and
other Holders requesting registration, in each case, in proportion, as
nearly as practicable, to the respective amounts of securities which they
had requested to be included in such registration at the time of filing the
registration statement. If the Company or any Holder of Registrable
Securities who has requested inclusion in such registration as provided
above disapproves of the terms of any such underwriting, such person may
elect to withdraw its securities therefrom by written notice to the
Company, the underwriter and the Initiating Holders. Any securities so
excluded shall be withdrawn from such registration. No securities excluded
from such registration by reason of such underwriters' marketing
limitations shall be included in such registration. To facilitate the
allocation of shares in accordance with this Section 7.4(d), the Company or
underwriter or underwriters selected as provided above may round the number
of securities of any holder which may be included in such registration to
the nearest 100 shares.
(e) In the event that the Initiating Holders are unable to sell all of the
Registrable Securities for which they have requested registration due to
the provisions of Section 7.4(d) hereof and if, at that time, the
Initiating Holders are not permitted to sell Registrable Securities under
Rule 144(k), the Initiating Holders shall be entitled to require the
Company to afford the Initiating Holders
9
an opportunity to effect one additional demand registration under this
Section 7.4.
(f) In addition to the registration rights under Section 7.3 and subsection
(a) of Section 7.4 hereof, at any time commencing on the date hereof and
expiring five (5) years thereafter any Holder of Registrable Securities
shall have the right, exercisable by written request to the Company, to
have the Company prepare and file, on one occasion, with the Commission a
registration statement so as to permit a public offering and sale for 270
days by any such Holder of its Registrable Securities provided, however,
that the provisions of Section 7.5(b) hereof, shall not apply to any such
registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holder's making such request.
(g) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Registrable
Securities of the Initiating Holders or the Holder(s) referred to in
Section 7.5(f) above (the "Paying Holders"), within the time period
specified in Section 7.5(a) below, the Company shall upon the written
notice of election of the Initiating Holders or the Paying Holders, as the
case may be, repurchase (i) any and all Shares and Underlying Warrants at
the higher of the Market Price per share of Common Stock or per Underlying
Warrant, as the case may be, on (x) the date of the notice sent to the
Company under Section 7.4(a) or (f), as the case may be, or (y) the
expiration of the period specified in Section 7.5(a) and (ii) any and all
Warrants at such Market Price less the Exercise Price of such Warrant. Such
repurchase shall be in immediately available funds and shall close within
five (5) business days after the expiration of the period specified in
Section 7.5(a).
7.5 Covenants of the Company With Respect to Registration. In connection
with any registration under Sections 7.3 and 7.4 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration statement
within thirty (30) 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
Registrable Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all
10
registration statements filed pursuant to Sections 7.3 and 7.4 hereof
including, without limitation, the Company's legal and accounting fees,
printing expenses, blue sky fees and expenses. If the Company shall fail to
comply with the provisions of Section 7.5(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s),
extend the exercise period of the Warrants by such number of days as shall
equal the delay caused by the Company's failure.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities 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 the Holder(s) of the Registrable Securities
to be sold pursuant to any registration statement and each person, if any,
who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (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 but only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify each of
the Underwriters contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Registrable Securities 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, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Act, the exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or
their successors or assigns, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 7 of the Underwriting Agreement
11
pursuant to which the Underwriters have agreed to indemnify the Company.
(f) For a period of one hundred eighty (180) days after the effectiveness
of any registration statement filed pursuant to Section 7.4 hereof, the
Company shall not permit any other registration statement (other than (1) a
registration statement relating to the securities for which the Company has
granted demand registration rights, as described in the Prospectus included
in the Registration Statement, (2) a registration statement relating to the
shares of Common Stock issuable upon exercise of the Redeemable Warrants
issued to the public pursuant to the Registration Statement, (3) a
registration statement relating to the securities for which the Company has
granted piggyback registration rights, as described in the Prospectus
included in the Registration Statement and (4) a registration statement
filed on Forms S-4 or S-8) to be or remain effective during the
effectiveness of a registration statement filed pursuant to Section 7.4
hereof, without the prior written consent of the Holders of the Registrable
Securities representing a Majority of such securities.
(g) 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
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.
(h) The Company shall as soon as practicable after the effective date of
any registration statement filed pursuant to Sections 7.3 and 7.4 hereof,
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
12
the act and covering a period of at least 12 consecutive months beginning
after the effective date of the registration statement.
(i) 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 written 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
rules 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.
(j) With respect to any registration under Section 7.4 hereof, the Company
shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting by the Initiating Holders or the Paying
Holders, as the case may be, which may be the Underwriter. Such agreement
shall be satisfactory in form and substance to the Company, each Holder and
such managing underwriters, 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. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Registrable Securities 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 underwriters
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 underwriters, except as they may relate
to such Holders and their intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference to the
Holders of Registrable Securities, shall mean in excess of fifty percent
(50%) of the then outstanding Warrants, Shares, Underlying Warrants and
shares of Common Stock issued upon exercise of the Underlying Warrants that
(i) are not held by the Company, an affiliate, officer, creditor, employee
13
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.
(l) Nothing contained in this Agreement shall be construed as requiring the
Holder(s) to exercise their Warrants or Underlying Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(m) In addition to the Registrable Securities, 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 shares of Common Stock.
7.6 Restrictive Legends. In the event that the Company fails to maintain
the effectiveness of the Registration Statement, such that the exercise, in
part or in whole, of the Warrants and the Underlying Warrants are not, at
the time of such exercise, registered under the Act, any certificates
representing the Shares underlying the Warrants, the Underlying Warrants
underlying the Warrants and the shares of Common Stock underlying the
Underlying Warrants, and any of the other securities issuable upon exercise
of the Warrants shall bear the following restrictive 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.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Computation of Adjusted Exercise Price. Except as hereinafter provided,
in the event the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuances or sales referred
to in Section 8.7 hereof), including shares held in the
14
Company's treasury and shares of Common Stock issued upon the exercise of
any options, rights or warrants to subscribe for shares of Common Stock and
shares of Common Stock issued upon the direct or indirect conversion or
exchange of securities for shares of Common Stock, for a consideration per
share less than the Exercise Price in effect immediately prior to the
issuance or sale of such shares, or without consideration, then forthwith
upon such issuance or sale, the Exercise Price shall (until another such
issuance or sale) be reduced to the price (calculated to the nearest full
cent) equal to the quotient derived by dividing (i) an amount equal to the
sum of (a) the total number of shares of Common Stock outstanding
immediately prior to the issuance or sale of such shares, multiplied by the
Exercise Price in effect immediately prior to such issuance or sale, and
(b) the aggregate of the amount of all consideration, if any, received by
the Company upon such issuance or sale, by (ii) the total number of shares
of Common Stock outstanding immediately after such issuance or sale;
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price
in effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section
8.3 hereof.
For the purposes of this Section 8 the term Exercise Price shall mean the
Exercise Price per share of Common Stock set forth in Section 6 hereof, as
adjusted from time to time pursuant to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by
the Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price) before
deducting therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or other
performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (other than as a dividend or other
distribution
15
on any stock of the Company) of shares of Common Stock for a consideration
part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of
such consideration as determined in good faith by the Board of Directors of
the Company and shall include any amounts payable to security holders or
any affiliates thereof, including without limitation, pursuant to any
employment agreement, royalty, consulting agreement, covenant not to
compete, earnout or contingent payment right or similar arrangement,
agreement or understanding, whether oral or written; all such amounts being
valued for the purposes hereof at the aggregate amount payable thereunder,
whether such payments are absolute or contingent, and irrespective of the
period or uncertainty of payment, the rate of interest, if any, or the
contingent nature thereof; provided, however, that if any Holder(s) does
not agree with such evaluation, a mutually acceptable independent appraiser
shall make such evaluation, the cost of which shall be borne by the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(iv) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in subsection (ii)
of this Section 8.1.
(v) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
8.2 Options, Rights, Warrants and Convertible and Exchangeable Securities.
In case the Company shall at any time after the date hereof issue options,
rights or
16
warrants to subscribe for shares of Common Stock, or issue any securities
convertible into or exchangeable for shares of Common Stock, for a
consideration per share less than the Market Price in effect immediately
prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, or without consideration, the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the
case may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the case may
be, issuable under such options, rights or warrants shall be deemed to be
issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per
share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares in accordance with
the terms of the Warrants), if any, received by the Company for such
options, rights or warrants.
(b) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall
be deemed to be issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration (determined
in the same manner as consideration received on the issue or sale of shares
of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
(c) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in subsection (a) of this
Section 8.2, or in the price per share at which the securities referred to
in subsection (b) of this Section 8.2 are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case
may be, shall be deemed to have expired or terminated on the date when such
price change became effective in respect of shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and the Company
shall be deemed to have issued upon such date new options, rights or
warrants or convertible or exchangeable securities at the new price in
respect of the number of shares issuable
17
upon the exercise of such options, rights or warrants or the conversion or
exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities 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 in effect immediately
prior to such adjustment by the number of Warrant Securities issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
8.5 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 amended as of the
date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications 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. The Company covenants that so long as any of the
Warrants are outstanding, the Company shall not without the prior written
consent of the Underwriter issue any securities whatsoever other than
Common Stock. In the event that the Company shall, upon the consent of the
Underwriter, after the date hereof issue securities with greater or
superior voting rights than the shares of Common Stock outstanding as of
the date hereof, the Holder, at 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.
8.6 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 merger shall execute and
deliver to the Holder a supplemental warrant agreement providing that the
holder of each Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Warrant)
18
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 in Section 8. The above provision of this subsection
shall similarly apply to successive consolidations or mergers.
8.7 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, Underlying Warrants,
Redeemable Warrants or the shares of Common Stock issuable upon the
exercise of (i) the Warrants, (ii) the Underlying Warrants, or (iii) the
Redeemable Warrants;
(b) If the amount of said adjustment shall be less than two (2) cents per
Warrant Security, provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be 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 two (2) cents per Warrant Security; or
(c) Upon the conversion of a $25, 000 promissory note, which bears interest
at the rate of 9% per annum and is convertible into up to 30% of the
outstanding shares of Common Stock of the Company, held by Loeb Holding
Corporation, as escrow agent.
8.8 Dividends and Other Distributions. In the event that the Company shall
at any time prior to the exercise of all Warrants declare a dividend (other
than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether
issued by the Company or by another, or any other thing of value, the
Holders of the unexercised Warrants shall thereafter be entitled, in
addition to the shares of Common Stock or other securities and property
receivable upon the exercise thereof, to receive, upon the exercise of such
Warrants, the same property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled
to receive at the time of such dividend or distribution as if the Warrants
had been exercised immediately prior to such dividend or distribution. At
the time of any
19
such dividend or distribution, the Company shall make appropriate reserves
to ensure the timely performance of the provisions of this subsection 8.8.
9. 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 Securities in
such denominations as shall be designed 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 Warrants, if mutilated,
the Company will make and deliver a new Warrant Certificate of like tenor,
in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required
to issue fractional shares of Common Stock or Underlying Warrants upon the
exercise of Warrants. Warrants may only be exercised in such multiples as
are required to permit the issuance by the Company of one or more whole
shares of Common Stock and Underlying Warrants. If one or more Warrants
shall be presented for exercise in full at the same time by the same
Holder, the number of whole shares of Common Stock or Underlying Warrants
which shall be issuable upon such exercise thereof shall be computed on the
basis of the aggregate number of shares of Common Stock and Underlying
Warrants purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock or Underlying Warrants would, except
for the provisions provided herein, be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to such fraction multiplied by the then current market value of
a share of Common Stock or Underlying Warrants, determined as follows:
(1) If the Common Stock or Underlying Warrant, as the case may be, is
listed, or admitted to unlisted trading privileges on the New York Stock
Exchange ("NYSE") or the
20
American Stock Exchange ("AMEX"), or is traded on the NNM, the current
market value of a share of Common Stock or Underlying Warrant, as the case
may be, shall be the closing sale price of the Common Stock or the
Underlying Warrant, as the case may be, at the end of the regular trading
session on the last business day prior to the date of exercise of the
Warrants on whichever of such exchanges or NNM had the highest average
daily trading volume for the Common Stock or the Underlying Warrant, as the
case may be, on such day; or
(2) If the Common Stock or the Underlying Warrant, as the case may be, is
not listed or admitted to unlisted trading privileges, on either the NYSE
or the AMEX and is not traded on NNM, but is quoted or reported on Nasdaq,
the current market value of a share of Common Stock or the Underlying
Warrant, as the case may be, shall be the closing price (or the last sale
price, if then reported by Nasdaq) of the Common Stock or the Underlying
Warrant, as the case may be, at the end of the regular trading session on
the last business day prior to the date of exercise of the Warrants as
quoted or reported on Nasdaq, as the case may be; or
(3) If the Common Stock or the Underlying Warrant, as the case may be, is
not listed, or admitted to unlisted trading privileges, on either of the
NYSE or the AMEX, and is not traded on NNM or quoted or reported on Nasdaq,
but is listed or admitted to unlisted trading privileges on the BSE or
another national securities exchange (other than the NYSE or the AMEX), the
current market value of a share of Common Stock or Underlying Warrant, as
the case may be, shall be the closing price of the Common Stock or the
Underlying Warrant, as the case may be, at the end of the regular trading
session on the last business day prior to the date of exercise of the
Warrants on whichever of such exchanges has the highest average daily
trading volume for the Common Stock or the Underlying Warrant, as the case
may be, on such day; or
(4) If the Common Stock or the Underlying Warrant, as the case may be, is
not listed or admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, but is traded in the over-the-counter market, the current market
value of a share of Common Stock or the Underlying Warrant, as the case may
be, shall be the average of the last reported bid and asked prices of the
Common Stock or the Underlying Warrant, as the case may be, reported by the
National Quotation Bureau, Inc. on the last business day prior to the date
of exercise of the Warrants; or
21
(5) If the Common Stock or the Underlying Warrant, as the case may be, is
not listed, admitted to unlisted trading privileges on any national
securities exchange, or listed for trading on NNM or quoted or reported on
Nasdaq, and bid and asked prices of the Common Stock or the Underlying
Warrant, as the case may be, are not reported by the National Quotation
Bureau, Inc., the current market value of a share of Common Stock or the
Underlying Warrant, as the case may be, shall be an amount, not less than
the book value thereof as of the end of the most recently completed fiscal
quarter of the Company ending prior to the date of exercise, determined in
accordance with generally acceptable accounting principles, consistently
applied.
11. 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 and
the Underlying 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. The Company further covenants and
agrees that upon exercise of the Underlying Warrants underlying the
Warrants and payment of the respective Underlying Warrant exercise price
therefor, all shares of Common Stock and other securities issuable upon
such exercises shall be duly and validly issued, fully paid, non-
assessable and not subject to the preemptive rights of any stockholder. As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of
the Warrants and Underlying Warrants and all Underlying Warrants underlying
the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock or the Underlying Warrants
issued to the public in connection herewith may then be listed and quoted
on NNM.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holders 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
22
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 shares of Common
Stock for the purpose of entitling them to receive a dividend or
distribution payable other than in cash, or a cash dividend or distribution
payable other than out of current or retained earnings, 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 event at least fifteen (15) days prior to the date fixed as a record
date or the date of 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 book, 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 any 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.
13. Underlying Warrants. The form of the certificates representing Class A
and Class B Underlying Warrants (and the form of election to purchase
shares of Common Stock upon the exercise of Underlying Warrants and the
form of assignment printed on the reverse thereof) shall be substantially
as set forth in Exhibits "A" and "B" to the Redeemable Warrant Agreement
provided, however, that the Underlying Warrants will be subject to
redemption only after the Warrants have been exercised and the Underlying
Warrants are outstanding. Each Class A Underlying Warrant shall entitle the
Holder to
23
purchase one fully paid and non-assessable share of Common Stock at an
initial purchase price of $6.90 from , 1998 until 5:00 P.M. New York time
on , 2002 at which time the Class A Underlying Warrants shall expire. Each
Class B Underlying Warrant shall entitle the Holder to purchase one fully
paid and non-assessable share of Common Stock at an initial purchase price
of $8.10 from , 1998 until 5:00 P.M. New York time on , 2002 at which time
the Class B Underlying Warrants shall expire. The exercise price of the
Underlying Warrants and the number of shares of Common Stock issuable upon
the exercise of the Underlying Warrants are subject to adjustment, whether
or not the Warrants have been exercised and the Underlying Warrants have
been issued, in the manner and upon the occurrence of the events set forth
in Section 8 of the Redeemable Warrant Agreement, which is hereby
incorporated herein by reference and made a part hereof as if set forth in
its entirety herein. Subject to the provisions of this Agreement and upon
issuance of the Underlying Warrants, each registered holder of such
Underlying Warrant shall have the right to purchase from the Company (and
the Company shall issue to such registered holders) up to the number of
fully paid and non-assessable shares of Common Stock (subject to adjustment
as provided herein and in the Redeemable Warrant Agreement), free and clear
of all preemptive rights of stockholders, provided that such registered
holder complies with the terms governing exercise of the Underlying Warrant
set forth in the Redeemable Warrant Agreement, and pays the applicable
exercise price, determined in accordance with the terms of the Redeemable
Warrant Agreement. Upon exercise of the Underlying Warrants, the Company
shall forthwith issue to the registered holder of any such Underlying
Warrant in his name or in such name as may be directed by him, certificates
for the number of shares of Common Stock so purchased. Except as otherwise
provided herein and in Section 6.1 hereof, the Underlying Warrants shall be
governed in all respects by the terms of the Redeemable Warrant Agreement
except that any notice of redemption that the Company may issue with
respect to the Redeemable Warrants shall not be applicable to the
Underlying Warrants. The Underlying Warrants shall be transferable in the
manner provided in the Redeemable Warrant Agreement, and upon any such
transfer, a new Underlying Warrant Certificate shall be issued promptly to
the transferee. The Company covenants to, and agrees with, the Holder(s)
that without the prior written consent of the Holder(s), which will not be
unreasonably withheld, the Redeemable Warrant Agreement will not be
modified, amended, canceled, altered or superseded,
24
and that the company will send to each Holder, irrespective of whether or
not the Warrants have been exercised, any and all notices required by the
Redeemable Warrant Agreement to be sent to holders of Underlying Warrants.
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:
(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 to 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.
15. Supplements and Amendments. The Company and the Underwriter may from
time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certificates 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
Underwriter may deem necessary or desirable and which the Company and the
Underwriter 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 Holders and their
respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
, 2004. Notwithstanding the foregoing, the indemnification provisions of
Section 7 shall survive such termination until the close of business on ,
2006.
25
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 the rules of said State governing the conflicts of laws. The Company,
the Underwriter and any other registered 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 Underwriter and any other
registered 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 Underwriter and the Holders (at the
option of the party bringing such action, proceeding or claim) may be
served by transmitting a copy thereof, by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 14 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 Underwriter and any other
registered 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 incurred in connection with the preparation therefor.
19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement and the Redeemable Warrant 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.
26
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 Underwriter and any other registered Holder(s) of the Warrant
Certificates or Warrants Securities 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 Underwriter and any other registered Holders
of Warrant Certificates or Warrant Securities.
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 together constitute but one
and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
GENISYS RESERVATION SYSTEMS, INC.
By:
Name:
Title:
X.X. XXXXX & CO., INC.
By:
Name:
Title:
27
EXHIBIT A
[FORM OF CLASS A 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
5:00 P.M., NEW YORK TIME, , 2002
No. UW- Class A Warrants to Purchase
Shares of Common Stock
CLASS A WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from ,
1998 until 5:00 p.m. New York time on , 2002 ("Expiration Date"), up to
fully-paid and non-assessable shares of common stock, $.0001 par value
("Common Stock") of Genisys Reservation Systems, Inc., a New Jersey
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $6.90 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 the
conditions set forth herein and in the Underwriter's Warrant Agreement
dated as of , 1997 between the Company and X.X. XXXXX & CO., INC. (the
"Underwriter's 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 or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
28
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Underwriter's Warrant
Agreement, which Underwriter's 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 Underwriter's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and 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 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
Underwriter's 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 of 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 Underwriter's 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.
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.
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in
the Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1997
Attest: GENISYS RESERVATION SYSTEMS, INC.
By:
Name: Name:
Title: Title:
29
EXHIBIT B
[FORM OF CLASS B 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
5:00 P.M., NEW YORK TIME, , 2002
No. UW- Class B Warrants to Purchase
Shares of Common Stock
CLASS B WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from ,
1998 until 5:00 p.m. New York time on , 2002 ("Expiration Date"), up to
fully-paid and non-assessable shares of common stock, $.0001 par value
("Common Stock") of Genisys Reservation Systems, Inc., a New Jersey
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $8.10 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 the
conditions set forth herein and in the Underwriter's Warrant Agreement
dated as of , 1997 between the Company and X.X. XXXXX & CO., INC. (the
"Underwriter's 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 or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
30
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Underwriter's Warrant
Agreement, which Underwriter's 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 Underwriter's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and 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 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
Underwriter's 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 of 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 Underwriter's 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.
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.
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in
the Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1997
Attest: GENISYS RESERVATION SYSTEMS, INC.
By:
Name: Name:
Title: Title:
31
EXHIBIT C
[FORM OF CLASS A 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
5:00 P.M., NEW YORK TIME, , 2002
No. W- Class A Warrants to Purchase
Underlying Warrants
CLASS A WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from ,
1998 until 5:00 p.m. New York time on , 2002 ("Expiration Date"), up to
warrants (each such Underlying Warrant entitling the owner to purchase one
fully-paid and non-assessable share of common stock, $.0001 par value
("Common Stock") of Genisys Reservation Systems, Inc., a New Jersey
corporation (the "Company")), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $.24 per Underlying
Warrant upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Underwriter's Warrant Agreement
dated as of , 1997 between the Company and X.X. XXXXX & CO., INC. (the
"Underwriter's 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 or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
32
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Underwriter's Warrant
Agreement, which Underwriter's 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 Underwriter's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and 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 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
Underwriter's 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 of 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 Underwriter's 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.
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.
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in
the Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1997
Attest: GENISYS RESERVATION SYSTEMS, INC.
By:
Name: Name:
Title: Title:
33
EXHIBIT D
[FORM OF CLASS A 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
5:00 P.M., NEW YORK TIME, , 2002
No. W- Class B Warrants to Purchase
Underlying Warrants
CLASS B WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from ,
1998 until 5:00 p.m. New York time on , 2002 ("Expiration Date"), up to
warrants (each such Underlying Warrant entitling the owner to purchase one
fully-paid and non-assessable share of common stock, $.0001 par value
("Common Stock") of Genisys Reservation Systems, Inc., a New Jersey
corporation (the "Company")), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $.12 per Underlying
Warrant upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Underwriter's Warrant Agreement
dated as of , 1997 between the Company and X.X. XXXXX & CO., INC. (the
"Underwriter's 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 or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
34
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Underwriter's Warrant
Agreement, which Underwriter's 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 Underwriter's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and 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 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
Underwriter's 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 of 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 Underwriter's 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.
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.
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in
the Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of , 1997
Attest: GENISYS RESERVATION SYSTEMS, INC.
By:
Name: Name:
Title: Title:
35
[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
Class A Underlying Warrants
Class B Underlying Warrants
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 Genisys
Reservation Systems, Inc., in the amount of $ , all in accordance with the
terms of Section 3.1 of the Underwriter's Warrant Agreement dated as of ,
1997 between Genisys Reservation Systems, Inc., and X.X. Xxxxx & Co., Inc.
The undersigned request 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 .
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)
36
[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 unto
(Please print name and address of transferee)
Warrant Certificate, together with all right, title and interest therein,
and does hereby reasonably constitute and appoint , as Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Date: 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 Assignee)
37
