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EXHIBIT 4
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of _________, 1997 by and between Hotel
Discovery, Inc., a Minnesota corporation (the "Company"), and Norwest Bank
Minnesota, National Association, as Warrant Agent (the "Warrant Agent").
A. The Company proposes to issue up to 2,200,000 Redeemable Class A
Warrants (the "Warrants") evidencing the right to purchase an aggregate of up
to 2,200,000 authorized but previously unissued shares of Common Stock, $.01
par value per share, of the Company (the "Common Stock"). The Warrants would
be issued in connection with the issuance by the Company of up to 2,200,000
Units, each Unit consisting of one share of Common Stock and one Warrant, in
connection with the Company's Registration Statement on Form SB-2.
B. The Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent desires so to act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants.
NOW THEREFORE, it is agreed as follows:
ARTICLE I.
APPOINTMENT OF WARRANT AGENT; ISSUANCE,
FORM AND EXECUTION OF WARRANT CERTIFICATES
Section 1.1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company, and the Warrant Agent hereby
accepts the agency established herein and agrees to perform its agency duties
in accordance with the terms and conditions of this Warrant Agreement.
Section 1.2. Warrant Certificates. The Company shall execute and deliver
to the Warrant Agent certificates which the Company has authorized to represent
the Warrants ("Warrant Certificates"). The Warrant Certificates shall be
substantially as set forth in Exhibit A hereto and may have such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Warrant Agreement, or as may be required to comply with any law or with
any rule or regulation relating to listing of the Warrants on the Nasdaq stock
market, including the SmallCap Market System, or on any stock exchange or to
conform to usage. The Warrant Certificates shall be dated with the date of
their issuance.
Section 1.3. Execution of Warrant Certificates. The Warrant Certificates
shall be executed on behalf of the Company by a duly authorized officer of the
Company, either manually or by facsimile signature printed thereon. The
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. Any Warrant
Certificate may be signed on behalf of the Company by the person who at the
actual date of the signing of such Warrant Certificate shall have been the
proper officer
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of the Company, although at the date of issuance of such Warrant
Certificate any such person has ceased to be such officer of the Company.
ARTICLE II.
EXERCISE OF WARRANTS
Section 2.1. Exercise. Any or all of the Warrants represented by each
Warrant Certificate may be exercised by the holder thereof on or before 5:00
p.m., Minneapolis time, on _________, 2001, unless extended by the Company, by
surrender of the Warrant Certificate with the Purchase Form, which is printed
on the reverse thereof (or a reasonable facsimile thereof) duly executed by
such holder, to the Warrant Agent at its principal office in Minneapolis,
Minnesota, accompanied by payment, in cash or by certified or official bank
check payable to the order of the Company, in an amount equal to the product of
the number of shares of Common Stock issuable upon exercise of the Warrant
represented by such Warrant Certificate, as adjusted pursuant to the provisions
of Article III hereof, multiplied by the exercise price of $6.50, as adjusted
pursuant to the provisions of Article III hereof (such price as so adjusted
from time to time being herein called the "Exercise Price"), and such holder
shall be entitled to receive such number of fully paid and nonassessable shares
of Common Stock, as so adjusted, at the time of such exercise.
Section 2.2. Time of Exercise. Each exercise of Warrants shall be deemed
to have been effective immediately prior to the close of business on the
business day on which the Warrant Certificate relating to such Warrants shall
have been surrendered to the Warrant Agent as provided in Section 2.1, and at
such time the person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon such exercise as
provided in Section 2.3, shall be deemed to have become the holder or holders
of record thereof.
Section 2.3. Issuance of Shares of Common Stock; No Fractional Shares.
As soon as practicable after the exercise of any Warrant, and in any event
within ten (10) days after receipt by the Warrant Agent of the notice of
exercise under Section 2.1, the Company at its expense (including the payment
by it of any applicable issue taxes) will cause to be issued in the name of and
delivered to the holder thereof or as such holder (upon payment by such holder
of any applicable transfer taxes) may direct,
(a) a certificate or certificates for the number of fully paid and
nonassessable shares of Common Stock to which such holder shall be
entitled upon such exercise plus, in lieu of any fractional share to which
such holder would otherwise be entitled, an amount in cash equal to such
fraction multiplied by the then current value of a share of Common Stock,
such current value to be determined as follows:
(i) if the Common Stock shall be listed or admitted to
unlisted trading privileges on any single national securities
exchange, then such current value shall be computed on the
basis of the last reported sale price of the Common Stock on
such exchange on the last business day prior to the date
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of the exercise of such Warrant upon which a sale shall have
been effected; or
(ii) if the Common Stock shall not be so listed or
admitted to unlisted trading privileges and bid and asked
prices therefor in the over-the-counter market shall be
reported by Nasdaq, including the SmallCap Market System, then
such current value shall be the last reported sale on the last
business day prior to the date of the exercise of such
Warrant, or, in the event the last reported sale is
unavailable, the average of the closing bid and asked prices
on the last business day prior to the date of the exercise of
such Warrant as so reported; or
(iii) if the Common Stock shall be listed or admitted to
unlisted trading privileges on more than one national
securities exchange or one or more national securities
exchanges and in the over-the-counter market, then such
current value shall, if different as a result of calculation
under the applicable method(s) described above in this
Section, be deemed to be the higher number calculated in
connection therewith; or
(iv) if the Common Stock shall not be so listed or
admitted to unlisted trading privileges and such bid and asked
prices shall not be so reported, then such current value shall
be computed on the basis of the book value of Common Stock as
of the close of business on the last day of the month
immediately preceding the date upon which such Warrant was
exercised, as determined by the Company,
and
(b) in case such exercise includes only part of the Warrants
represented by any Warrant Certificate, a new Warrant Certificate or
Warrant Certificates of like tenor, calling in the aggregate on the face
or faces thereof for the number of shares of Common Stock equal (without
giving effect to any adjustment therein) to the number of such shares
called for on the face of such Warrant Certificate minus the number of
such shares designated by the holder for such exercise as provided in
Section 2.1. Warrants, represented by a properly assigned Warrant
Certificate, may be exercised by a new holder without first having a new
Warrant Certificate issued.
Section 2.4. Extension of Exercise Period; Change of Exercise Price. The
Company may, upon notice given to the Warrant Agent, and without the consent of
the holders of the Warrant Certificates, (i) reduce the Exercise Price during
all or any portion of the originally stated exercise period, or (ii) extend the
period over which the Warrants are exercisable beyond ________, 2001 and
increase the Exercise Price for any period the Warrant exercise period is
extended. In the case of the extension of the exercise period or a change in
the Exercise Price, the Company must provide the Warrant Agent and the
Warrantholders of record notice of such extension of the exercise period,
specifying, as the case may be, the time to which such exercise period is
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extended, or specifying the new Exercise Price and the periods for which such
new Exercise Price is in effect, a reasonable time prior to the date such
extension or new Exercise Price is to take effect, such reasonable time to be
commercially reasonable and consistent with applicable securities laws and
regulations.
ARTICLE III.
ANTIDILUTION PROVISIONS
Section 3.1. Adjustment of Exercise Price.
(a) The Exercise Price shall be subject to the following adjustments.
In the event that:
(i) any dividends on any class of stock of the Company
payable in Common Stock or securities convertible into Common
Stock shall be paid by the Company;
(ii) the Company shall subdivide its then outstanding
shares of Common Stock into a greater number of shares; or
(iii) the Company shall combine outstanding shares of
Common Stock, by reclassification or otherwise;
then, in any such event, the Exercise Price in effect immediately prior to
such event shall (until adjusted again pursuant hereto) be adjusted
immediately after such event to a price (calculated to the nearest full
cent) determined by dividing (A) the number of shares of Common Stock
outstanding immediately prior to such event, multiplied by the then
existing Exercise Price, by (B) the total number of shares of Common Stock
outstanding immediately after such event (including the maximum number of
shares of Common Stock issuable in respect of any securities convertible
into Common Stock), and the resulting quotient shall be the adjusted
Exercise Price per share.
(b) No adjustment of the Exercise Price shall be made if the amount
of such adjustments shall be less than one cent per share, but in such
case any adjustment that would otherwise be required to be made shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment or adjustments
so carried forward, shall amount to not less than one cent per share.
Section 3.2. Adjustment of Number of Shares Purchasable on Exercise of
Warrants. Upon each adjustment of the Exercise Price pursuant to Section 3.1,
the registered holder of each Warrant shall thereafter (until another such
adjustment) be entitled to purchase at the adjusted Exercise Price the number
of shares, calculated to the nearest full share, obtained by multiplying the
number of shares specified in such Warrant (as adjusted as a result of all
adjustments in the Exercise Price in effect prior to such adjustment) by the
Exercise Price in effect prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
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Section 3.3. Notice as to Adjustment. Upon any adjustment of the
Exercise Price and an increase or decrease in the number of shares of Common
Stock purchasable upon the exercise of the Warrants, then, and in each such
case, the Company shall within ten (10) days after the effective date of such
adjustment give written notice thereof, by first class mail, postage prepaid,
addressed to each registered Warrantholder at the address of such Warrantholder
as shown on the books of the Company, which notice shall state the adjusted
Exercise Price and the increased or decreased number of shares purchasable upon
the exercise of the Warrants, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
Section 3.4. Effect of Reorganization, Reclassification, Merger, Etc. If
at any time while any Warrant is outstanding there should be any capital
reorganization or reclassification of the capital stock of the Company (other
than the issue of any shares of Common Stock in subdivision of outstanding
shares of Common Stock by reclassification or otherwise and other than a
combination of shares provided for in Section 3.1 hereof) or any consolidation
or merger of the Company with another corporation or any sale, conveyance,
lease or other transfer by the Company of all or substantially all of its
assets to any other corporation, the holder of any Warrant shall, during the
remainder of the period such Warrant is exercisable, be entitled to receive,
upon payment of the Exercise Price, the number of shares of stock or other
securities or property of the Company, or of the successor corporation
resulting from such consolidation or merger, or of the corporation to which the
assets of the Company has been sold, conveyed, leased or otherwise transferred,
as the case may be, to which the Common Stock (and any other securities and
property) of the Company, deliverable upon the exercise of such Warrant, would
have been entitled upon such capital reorganization, reclassification of
capital stock, consolidation, merger, sale, conveyance, lease or other transfer
if such Warrant had been exercised immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger, sale,
conveyance, lease or other transfer; and, in any such case, appropriate
adjustment (as determined by the Board of Directors of the Company) shall be
made in the application of the provisions set forth in this Warrant Agreement
with respect to the rights and interests thereafter of the Warrantholders to
the end that the provisions set forth in this Warrant Agreement (including the
adjustment of the Exercise Price and the number of shares issuable upon the
exercise of the Warrants) shall thereafter be applicable, as near as may be
reasonably practicable, in relation to any shares or other property thereafter
deliverable upon the exercise of the Warrants as if the Warrants had been
exercised immediately prior to such capital reorganization, reclassification of
capital stock, such consolidation, merger, sale, conveyance, lease or other
transfer and the Warrantholders had carried out the terms of the exchange as
provided for by such capital reorganization, reclassification, consolidation or
merger. The Company shall not effect any such capital reorganization,
consolidation, merger or transfer unless, upon or prior to the consummation
thereof, the successor corporation or the corporation to which the property of
the Company has been sold, conveyed, leased or otherwise transferred shall
assume by written instrument the obligation to deliver to the holder of each
Warrant such shares of stock, securities, cash or property as in accordance
with the foregoing provisions such holder shall be entitled to purchase.
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Section 3.5. Prior Notice as to Certain Events. In case at any time:
(a) The Company shall pay any dividend upon its Common Stock payable
in stock or make any distribution (other than cash dividends) to the
holders of its Common Stock; or
(b) The Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or any
other rights; or
(c) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the
Company with, or sale, conveyance, lease or other transfer of all or
substantially all of its assets to, another corporation; or
(d) There shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then in any one or more of such cases, the Company shall give prior written
notice, by first class mail, postage prepaid, addressed to each registered
Warrantholder at the address of such Warrantholder as shown on the books of the
Company, of the date on which (i) the books of the Company shall close or a
record shall be taken for such stock dividend, distribution or subscription
rights or (ii) such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders of the
Common Stock of record shall participate in such dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding up, as the case may be. Such written notice shall be given at least
twenty (20) days prior to the action in question and not less than twenty (20)
days prior to the record date or the date on which the Company's transfer books
are closed in respect thereto.
Section 3.6. Certain Obligations of the Company. The Company will not,
by amendment of its articles of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant Agreement or the Warrant
Certificate, but will at all times in good faith assist in the carrying out of
all such terms. Without limiting the generality of the foregoing, the Company
(a) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable shares
of such stock upon the exercise of all Warrants from time to time outstanding,
and (b) will not (i) transfer all or substantially all of its properties and
assets to any other person or entity, or (ii) consolidate with or merge into
any other entity where the Company is not the continuing or surviving entity,
or (iii) permit any other entity to consolidate with or merge into the Company
where the Company is the continuing or surviving entity but, in connection with
such consolidation or merger, the Common Stock then issuable upon the exercise
of the Warrants shall be changed into or exchanged for shares or other
securities or property of any other entity unless, in any such case, the other
entity acquiring such properties and assets,
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continuing or surviving after such consolidation or merger or issuing or
distributing such shares or other securities or property, as the case may be,
shall expressly assume in writing and be bound by all the terms of this Warrant
Agreement and the Warrant Certificates.
Section 3.7. Reservation and Listing of Common Stock. The Company will
at all times reserve and keep available, solely for issuance and delivery upon
the exercise of the Warrants, all shares of Common Stock from time to time
issuable upon such exercise. All such shares shall be authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
nonassessable with no liability on the part of the holder thereof. The
Company, at its expense, will list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance, and will maintain such listing of, the shares of Common Stock from
time to time issuable upon the exercise of the Warrants.
Section 3.8. Registration or Exemption for Common Stock. The Company
will use its best efforts (a) at all times the Warrants are exercisable to
maintain an effective registration statement under the Securities Act of 1933,
as amended (the "Act"), covering Common Stock issuable upon exercise of the
Warrants, (b) from time to time to amend or supplement the prospectus contained
in such registration statement to the extent necessary in order to comply with
applicable law, (c) to qualify for exemption from the registration requirements
of the Act the Common Stock issuable upon exercise of the Warrants, and (d) to
maintain exemptions or qualifications, in those jurisdictions in which the
original registration statement relating to the Warrants was initially
qualified, to permit the exercise of the Warrants and the issuance of the
Common Stock pursuant to such exercise. The Warrant Agent shall have no
responsibility for the maintenance of such exemptions or qualifications or for
liabilities arising from the exercise or attempted exercise of Warrants in
jurisdictions where exemptions or qualifications have not been maintained or
are otherwise unavailable.
ARTICLE IV.
REDEMPTION OF WARRANTS
Section 4.1. Redemption Price. The Warrants may be redeemed at the
option of the Company, at any time after the date hereof following a period of
14 consecutive trading days where the per share average closing bid price of
the Common Stock exceeds $7.00, on notice as set forth in Section 4.2, and at a
redemption price equal to $.01 per Warrant. For purposes of this Section, the
closing bid price of the Common Stock shall be determined by the closing bid
price as reported by Nasdaq so long as the Common Stock is quoted on Nasdaq
and, if the Common Stock is listed on a national securities exchange, shall be
determined by the last reported sale price on the primary exchange on which the
Common Stock is traded.
Section 4.2. Notice of Redemption. In the case of any redemption of
Warrants, the Company or, at its request, the Warrant Agent in the name of and
at the expense of the Company shall give notice of such redemption to the
holders of the Warrants to be redeemed as hereinafter provided in this Section
4.2. Notice of redemption to the holders of Warrants shall be given by mailing
by first-class mail a notice of such redemption not less than 30 days prior to
the date fixed
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for redemption. Any notice which is given in the manner herein provided shall
be conclusively presumed to have been duly given, whether or not the holder
receives the notice. In any case, failure duly to give such notice, or any
defect in such notice, to the holder of any Warrant Certificate shall not
affect the validity of the proceedings for the redemption of Warrants
represented by any other Warrant Certificate. Each such notice shall specify
the date fixed for redemption, the place of redemption and the redemption price
of $.01 at which each Warrant is to be redeemed, and shall state that payment
of the redemption price of the Warrants will be made on surrender of the
Warrants at such place of redemption, and that if not exercised by the close of
business on the date fixed for redemption, the exercise rights of the Warrants
identified for redemption shall expire unless extended by the Company. Such
notice shall also state the current Exercise Price and the date on which the
right to exercise the Warrants will expire unless extended by the Company.
Section 4.3. Payment of Warrants on Redemption; Deposit of Redemption
Price. If notice of redemption shall have been given as provided in Section
4.2, the redemption price of $.01 per Warrant shall, unless the Warrant is
theretofore exercised pursuant to the terms hereof, become due and payable on
the date and at the place stated in such notice. On and after such date of
redemption, provided that cash sufficient for the redemption thereof shall then
be deposited by the Company with the Warrant Agent for that purpose, the
exercise rights of the Warrants identified for redemption shall expire. On
presentation and surrender of Warrant Certificates at such place of payment in
such notice specified, the Warrants identified for redemption shall be paid and
redeemed at the redemption price of $.01 per Warrant. Prior to the date fixed
for redemption, the Company shall deposit with the Warrant Agent an amount of
money sufficient to pay the redemption price of all the Warrants identified for
redemption. Any monies which shall have been deposited with the Warrant Agent
for redemption of Warrants and which are not required for that purpose by
reason of exercise of Warrants shall be repaid to the Company upon delivery to
the Warrant Agent of evidence satisfactory to it of such exercise.
ARTICLE V.
CERTAIN OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES
Section 5.1. No Rights of Shareholders. The Warrant Certificates shall
be issued in registered form only. No Warrant Certificate shall entitle the
holder thereof to any of the rights of a holder of shares of Common Stock of
the Company, including, without limitation, the right to vote, to receive
dividends and other distributions, or to receive any notice of, or to attend,
meetings of holders of Common Stock or any other proceedings of the Company.
Section 5.2. Loss, Theft, Destruction or Mutilation of Warrant
Certificates. Upon receipt by the Warrant Agent of evidence reasonably
satisfactory to the Warrant Agent of the loss, theft, destruction or mutilation
of any Warrant Certificate, and (a) in the case of any such loss, theft, or
destruction, upon delivery to the Warrant Agent of an indemnity bond in form
and amount, and issued by a bonding company, reasonably satisfactory to the
Company, or (b) in the case of any such mutilation, upon surrender to and
cancellation by the Warrant Agent of such Warrant
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Certificate, the Company at its expense will execute and cause the Warrant
Agent to countersign and deliver, in lieu thereof, a new Warrant Certificate of
like tenor.
Section 5.3. Transfer Agent; Cancellation of Warrant Certificates;
Unexercised Warrants. Norwest Bank Minnesota, National Association (and any
successor), as transfer agent (the "Transfer Agent"), is hereby irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares of Common Stock as shall be sufficient to permit the exercise
in full of all Warrants from time to time outstanding. The Company will keep a
copy of this Agreement on file with the Transfer Agent. The Warrant Agent, and
any successor thereto, is hereby irrevocably authorized to requisition from
time to time from the Transfer Agent certificates for shares of Common Stock
required for exercise of Warrants. The Company will supply the Transfer Agent
with duly executed certificates for shares of Common Stock for such purpose and
will make available any cash required in settlement of fractional share
interests. All Warrant Certificates surrendered upon the exercise or
redemption of Warrants shall be cancelled by the Warrant Agent and shall
thereafter be delivered to the Company; such cancelled Warrant Certificates,
with the Purchase Form on the reverse thereof duly filled in and signed, shall
constitute conclusive evidence as between the parties hereto of the numbers of
shares of Common Stock which shall have been issued upon exercises of Warrants.
Promptly after the last day on which the Warrants are exercisable (set forth
in Section 2.1 above), the Warrant Agent shall certify to the Company the
aggregate number of Warrants then outstanding and unexercised. No shares of
Common Stock shall be subject to reservation with respect to Warrants not
exercised prior to the time and date identified in Section 2.1 above as the
last time and date at which Warrants may be exercised.
ARTICLE VI.
TRANSFER AND EXCHANGE OF WARRANT CERTIFICATES
Section 6.1. Warrant Register; Transfer or Exchange of Warrant
Certificates. The Warrant Agent shall cause to be kept at the principal office
of the Warrant Agent a register (the "Warrant Register") in which, subject to
such reasonable regulations as the Company may prescribe, provisions shall be
made for the registration of transfers and exchanges of Warrant Certificates.
Upon surrender for transfer or exchange of any Warrant Certificates, properly
endorsed, to the Warrant Agent, the Warrant Agent at the Company's expense will
issue and deliver to or upon the order of the holder thereof a new Warrant
Certificate or Warrant Certificates of like tenor, in the name of such holder
or as such holder (upon payment by such holder of any applicable transfer
taxes) may direct, calling in the aggregate on the face or faces thereof for
the number of shares of Common Stock called for on the face of the Warrant
Certificate so surrendered. Any Warrant Certificate surrendered for transfer
or exchange shall be cancelled by the Warrant Agent and shall thereafter be
delivered to the Company.
Section 6.2. Identity of Warrantholders. Until a Warrant Certificate is
transferred in the Warrant Register, the Company and the Warrant Agent may
treat the person in whose name the Warrant Certificate is registered as the
absolute owner thereof and of the Warrants represented thereby for all
purposes, notwithstanding any notice to the contrary, except that, if and when
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Warrant Certificate is properly assigned in blank, the Company and the
Warrant Agent may (but shall not be obligated to) treat the bearer thereof as
the absolute owner of the Warrant Certificate and of the Warrants represented
thereby for all purposes, notwithstanding any notice to the contrary.
ARTICLE VII.
CONCERNING THE WARRANT AGENT
Section 7.1. Taxes. The Company will, from time to time, promptly pay to
the Warrant Agent, or make provision satisfactory to the Warrant Agent for the
payment of, all taxes and charges that may be imposed by the United States or
any State upon the Company or the Warrant Agent upon the transfer or delivery
of shares of Common Stock upon the exercise of Warrants, but the Company shall
not be obligated to pay any tax imposed in connection with any transfer
involved in the delivery of a certificate for shares of Common Stock in any
name other than that of the registered holder of the Warrant Certificate
surrendered in connection with the purchase thereof.
Section 7.2. Replacement of Warrant Agent in Certain Circumstances.
(a) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder after giving thirty (30)
days' notice in writing to the Company, except that such shorter notice
may be given as the Company shall, in writing, accept as sufficient. The
Company may discharge the Warrant Agent at any time with or without
reason, effective upon thirty (30) days written notice to the Warrant
Agent or such shorter period as the Warrant Agent shall, in writing,
accept as sufficient. If the office of Warrant Agent becomes vacant by
resignation, discharge, incapacity to act or otherwise, the Company shall
appoint in writing a new Warrant Agent, the principal office of which
shall be in Minnesota. If the Company shall fail to make such appointment
within a period of thirty (30) days after it has been notified in writing
of such resignation or incapacity by the resigning or incapacitated
Warrant Agent or by the holder of a Warrant Certificate, then the holder
of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United
States or of the State of Minnesota, of good standing, and having its
principal office in Minnesota, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or
examination by Federal or State authority. Any new Warrant Agent
appointed hereunder shall execute, acknowledge and deliver to the Company
an instrument accepting such appointment hereunder and thereupon such new
Warrant Agent without any further act or deed shall become vested with all
the rights, powers, duties and responsibilities of the Warrant Agent
hereunder with like effect as if it had been named as the Warrant Agent;
but if for any reason it becomes necessary or expedient to have the former
Warrant Agent execute and deliver any further assurance, conveyance, act
or deed, the same shall be done and shall be legally and validly executed
and delivered by the former Warrant Agent. Not later than the effective
date of any such
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appointment the Company shall file notice thereof with the former Warrant
Agent. The Company shall promptly give notice of any such appointment to
the holders of the Warrant Certificates by mail to their addresses as
shown in the Warrant Register. Failure to file or give such notice, or
any defect therein, shall not affect the legality or validity of the
appointment of the successor Warrant Agent.
(b) Any company into which the Warrant Agent or any new Warrant Agent
may be merged or converted or with which it may be consolidated or any
company resulting from any merger, conversion or consolidation to which
the Warrant Agent shall be a party shall be the successor Warrant Agent
under this Warrant Agreement without any further act; provided that if
such company would not be eligible for appointment as a successor Warrant
Agent under the provisions of paragraph (a) of this Section 7.2 the
Company shall forthwith appoint a new Warrant Agent in accordance with
such provisions. Any such successor Warrant Agent may adopt the prior
countersignature of any predecessor Warrant Agent and deliver Warrant
Certificates countersigned and not delivered by such predecessor Warrant
Agent or may countersign Warrant Certificates either in the name of any
predecessor Warrant Agent or the name of the successor Warrant Agent.
Section 7.3. Remuneration of Warrant Agent. The Company will pay the
Warrant Agent reasonable remuneration for its services as Warrant Agent
hereunder and will reimburse the Warrant Agent upon demand for all expenditures
that the Warrant Agent may reasonably incur in the execution of its duties
hereunder.
Section 7.4. Further Assurances. The Company will perform, exercise,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
by the Warrant Agent of the provisions of this Warrant Agreement.
Section 7.5. Limitations on Liabilities of the Warrant Agent.
(a) The Warrant Agent may consult with legal counsel (who may
be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection of the
Warrant Agent as to any action taken or omitted by it in good faith
and in accordance with such opinion.
(b) Whenever, in the performance of its duties under this
Warrant Agreement, the Warrant Agent shall deem it necessary or
desirable that any matter be proved or established, or that any
instructions with respect to the performance of its duties hereunder
be given, by the Company prior to taking or suffering any action
hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively
proved and established, or such instructions may be given, by a
certificate or instrument signed by an officer of the Company and
delivered to the Warrant Agent; and such certificate or instrument
shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this
Warrant Agreement in
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reliance upon such certificate or instrument; but in its discretion
the Warrant Agent may in lieu thereof accept other evidence of such
matter or may require such further or additional evidence as it may
deem reasonable.
(c) The Warrant Agent shall be liable hereunder only for its
own negligence or willful misconduct. The Warrant Agent shall act
hereunder solely as agent, and its duties shall be determined solely
by the provisions hereof. The Company agrees to indemnify the
Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of this Warrant
Agreement except as a result of the Warrant Agent's negligence or
willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Warrant
Agreement or in the Warrant Certificates (except its
countersignature thereof) or be required to verify the same, but all
such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in
respect to the validity or execution of any Warrant Certificate
(except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or condition contained
in this Warrant Agreement or in any Warrant Certificate; nor shall
it be responsible for the making of any adjustment in the Exercise
Price, or number of shares issuable upon exercise of the Warrant
Certificates or responsible for the manner, method or amount of any
such adjustment or the facts that would require any such adjustment;
nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of
any shares of Common Stock to be issued pursuant to this Warrant
Agreement or any Warrant Certificate or as to whether any shares of
Common Stock or other securities are or will be validly authorized
and issued and fully paid and nonassessable.
Section 7.6. Amendment and Modification. The Warrant Agent may, without
the consent or concurrence of the holders of the Warrant Certificates, by
supplemental agreement or otherwise, join with the Company in making any
changes or corrections in this Warrant Agreement that they shall have been
advised by counsel (a) are required to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or manifest
error herein contained, (b) add to the obligations of the Company in this
Warrant Agreement further obligations thereafter to be observed by it, or
surrender any right or power reserved to or conferred upon the Company in this
Warrant Agreement, or (c) do not or will not adversely affect, alter or change
the rights, privileges or immunities of the holders of Warrant Certificates not
provided for under this Warrant Agreement; provided, however, that any term of
this Warrant Agreement or any Warrant Certificate may be changed, waived,
discharged or terminated by an instrument in writing signed by each party
against which enforcement of such change, waiver, discharge or termination is
sought, or by which the same is to be performed or observed.
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ARTICLE VIII.
OTHER MATTERS
Section 8.1. Successors and Assigns. All the covenants and provisions of
this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors and
assigns.
Section 8.2. Notices. Any notice or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant Certificate to or on the Company shall be sufficiently given or made if
sent by first class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent) as
follows:
Hotel Discovery, Inc.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Any notice or demand authorized by this Warrant Agreement to be given or made
by the holder of any Warrant Certificate or by the Company to or on the Warrant
Agent shall be sufficiently given or made if sent by first class or registered
mail, postage prepaid, addressed (until another address is filed in writing by
the Warrant Agent with the Company) as follows:
Norwest Bank Minnesota, National Association
Shareholder Services
000 Xxxxx Xxxxxxx Xxxxxxxx
X.X. Xxx 000
Xxxxx Xx. Xxxx, XX 00000-0000
Section 8.3. Governing Law. This Warrant Agreement and the Warrant
Certificates are being delivered in the State of Minnesota and shall be
construed and enforced in accordance with and governed by the laws of such
State.
Section 8.4. No Benefits Conferred. Nothing in this Warrant Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the Company, the Warrant Agent, and the holders of the
Warrant Certificates, any right, remedy or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise or agreement
herein; and all covenants, conditions, stipulations, promises and agreements in
this Warrant Agreement contained shall be for the sole and exclusive benefit of
the Company, the Warrant Agent, their respective successors and the holders of
the Warrant Certificates.
Section 8.5. Headings. The descriptive headings used in this Warrant
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, this Warrant Agreement has been duly executed by the
parties hereto as of the day and year first above written.
HOTEL DISCOVERY, INC.
By ___________________________________
Its Chairman of the Board
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By ___________________________________
Its _______________________________
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EXHIBIT A
No. _____________ Certificate for ______ Warrants
THIS WARRANT CERTIFICATE MAY BE
TRANSFERRED SEPARATELY FROM THE COMMON STOCK CERTIFICATE
WITH WHICH IT IS INITIALLY ISSUED
EXERCISABLE ON OR BEFORE, AND VOID AFTER,
5:00 P.M. MINNEAPOLIS TIME, ____________, 2001
HOTEL DISCOVERY, INC.
WARRANTS TO PURCHASE COMMON STOCK OF
HOTEL DISCOVERY, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
THIS CERTIFIES that CUSIP _________
or assigns, is the owner of the number of Warrants set forth above, each of
which represents the right to purchase from Hotel Discovery, Inc., a Minnesota
corporation (the "Company"), at any time on or before 5:00 Minneapolis time,
___________, 2001, upon compliance with and subject to the conditions set forth
herein and in the Warrant Agreement hereinafter referred to, one share (subject
to adjustments referred to below) of the Common Stock of the Company (such
shares or other securities or property purchasable upon exercise of the
Warrants being herein called the "Shares"), by surrendering this Warrant
Certificate, with the Purchase Form on the reverse side duly executed, at the
principal office of Norwest Bank Minnesota, National Association, or its
successor, as warrant agent (the "Warrant Agent"), and by paying in full, in
cash or by certified or official bank check payable to the order of the
Company, the exercise price of $6.50 per share.
Upon any exercise of less than all the Warrants evidenced by this Warrant
Certificate, there shall be issued to the holder a new Warrant Certificate in
respect of the Warrants as to which this Warrant Certificate was not exercised.
Upon the surrender for transfer or exchange hereof, properly endorsed, to
the Warrant Agent, the Warrant Agent at the Company's expense will issue and
deliver to the order of the holder hereof, a new Warrant Certificate or Warrant
Certificates of like tenor, in the name of such holder or as such holder (upon
payment by such holder of any applicable transfer taxes) may direct, calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face hereof.
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The Warrant Certificates are issued only as registered Warrant
Certificates. Until this Warrant Certificate is transferred in the Warrant
Register, the Company and the Warrant Agent may treat the person in whose name
this Warrant Certificate is registered as the absolute owner hereof and of the
Warrants represented hereby for all purposes, notwithstanding any notice to the
contrary.
This Warrant Certificate is issued under the Warrant Agreement dated as of
_________, 1997 between the Company and the Warrant Agent. The Warrant
Agreement is hereby incorporated by reference into this Warrant Certificate and
this Warrant Certificate is subject to the terms and provisions contained in
said Warrant Agreement, to all of which terms and provisions the registered
holder of this Warrant Certificate consents by acceptance hereof. Copies of
said Warrant Agreement are on file at the principal office of the Warrant Agent
in Minneapolis, Minnesota, and may be obtained by writing to the Warrant Agent.
The number of Shares receivable upon the exercise of the Warrants
represented by this Warrant Certificate and the exercise price per share are
subject to adjustment upon the happening of certain events specified in the
Warrant Agreement.
No fractional Shares of the Company's Common Stock will be issued upon the
exercise of Warrants. As to any final fraction of a share which a holder of
Warrants exercised in the same transaction would otherwise be entitled to
purchase on such exercise, the Company shall pay a cash adjustment in lieu of
any fractional Share determined as provided in the Warrant Agreement.
The Warrants may be redeemed at the option of the Company, at any time
following a period of 14 consecutive trading days where the per share average
closing bid price of the Common Stock exceeds $7.00, on notice as set forth in
the Warrant Agreement, and at a redemption price equal to $.01 per Warrant. If
notice of redemption shall have been given as provided in the Warrant Agreement
and cash sufficient for the redemption be deposited by the Company for that
purpose, the exercise rights of the Warrants identified for redemption shall
expire at the close of business on such date of redemption unless extended by
the Company.
This Warrant Certificate shall not entitle the holder hereof to any of the
rights of a holder of Common Stock of the Company, including, without
limitation, the right to vote, to receive dividends and other distributions, to
exercise any preemptive right, or to receive any notice of, or to attend
meetings of holders of Common Stock or any other proceedings of the Company.
This Warrant Certificate shall be void and the Warrants and any rights
represented hereby shall cease unless exercised on or before 5:00 p.m.
Minneapolis time on ___________, 2001, unless extended by the Company.
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This Warrant Certificate shall not be valid for any purpose until it shall
have been countersigned by the Warrant Agent.
WITNESS the facsimile signatures of the Company's duly authorized
officers.
HOTEL DISCOVERY, INC.
By ______________________________
Chairman of the Board
By ______________________________
Secretary
COUNTERSIGNED AND REGISTERED:
as Warrant Agent
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By ______________________________
Authorized Officer
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[REVERSE OF WARRANT CERTIFICATE]
THE CORPORATION WILL FURNISH ANY SHAREHOLDER UPON REQUEST AND WITHOUT CHARGE, A
COPY OF THE ARTICLES OF INCORPORATION AND A FULL STATEMENT OF THE DESIGNATIONS,
PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF THE SHARES OF EACH CLASS OR
SERIES AUTHORIZED TO BE ISSUED, SO FAR AS THEY HAVE BEEN DETERMINED, AND THE
AUTHORITY OF THE BOARD TO DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF
SUBSEQUENT CLASSES OR SERIES.
TO: Hotel Discovery, Inc.
c/o Norwest Bank Minnesota, National Association
Warrant Agent
PURCHASE FORM
(To be Executed by the Registered Holder
in Order to Exercise of Warrant Certificates)
The undersigned hereby irrevocably elects to exercise ________________* of
the Warrants represented by the Warrant Certificate and to purchase for cash
the Shares issuable upon the exercise of said Warrants and requests that
certificates for such Shares shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
REGISTERED HOLDER OF CERTIFICATE
______________________________________________________________________________
(Print Name)
______________________________________________________________________________
(Address)
______________________________________________________________________________
Dated: __________________________ Signature: ___________________________
* Insert here the number of Warrants evidenced on the face of this Warrant
Certificate (or, in the case of a partial exercise, the portion thereof being
exercised), in either case without making any adjustment for additional Common
Stock or any other securities or property or cash which, pursuant to the
adjustment provisions referred to in this Warrant Certificate, may be
deliverable upon exercise.
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ASSIGNMENT FORM
(To be Executed by the Registered Holder
in Order to Transfer Warrant Certificates)
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
____________________________________ of the Warrants to purchase shares of
Common Stock represented by this Warrant Certificate unto
______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
______________________________________________________________________________
______________________________________________________________________________
and does hereby irrevocably constitute and appoint
____________________________________
Attorney to transfer this Warrant Certificate on the records of the Company
with full power of substitution in the premises.
Dated:________________________ Signature(s) _________________________
SIGNATURE(S) GUARANTEED:
______________________________
NOTICE
The signature(s) to the Purchase Form or the Assignment Form must
correspond to the name as written upon the face of this Warrant Certificate in
every particular without alteration or enlargement or any change whatsoever.
