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
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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 1997 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.
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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
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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 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).
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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.
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6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided
in Section 8 hereof, the initial exercise price of each Warrant to purchase
Common Stock shall be $6.00 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
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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
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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
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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
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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, (iii) the Redeemable
Warrants, (iv) an option held by Xxxx Xxxxx to acquire 5,000 shares of Common
Stock upon conversion of a $10,000 promissory note, (v) an option held by Xxxx
Xxxxxxx to acquire 10,000 shares of Common Stock upon conversion of a $20,000
promissory note, (vi) options held by Xxxx Xxxxx to purchase 25,000 shares of
the Company's Common Stock at an exercise price of $.60 per share and 35,000
shares of the Company's Common Stock at a price of $2.00 per share, (vii) an
option held by Loeb Holding Corp., as agent, to acquire 400,000 shares of Common
Stock of the Company upon conversion of two promissory notes aggregating
$37,500, (viii) a warrant held by an unaffiliated equipment lessor to acquire
13,000 shares of Common Stock at an exercise price of $2.00 per share and the
287,500 Class A Redeemable Warrants to purchase shares of Common Stock being
registered together with the Public Offering for public sale; or
(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.
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
19
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
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
20
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 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
21
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
(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
22
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 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.
23
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 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
24
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, 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
25
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.
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
26
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be
held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this
Agreement.
21. Captions. The caption headings of the Sections of
this Agreement are for
convenience of reference only and are not intended, nor should they be
construed as, a part of this
Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
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:
27
X.X. XXXXX & CO., INC.
By:
Name:
Title:
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
28
"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.
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.
29
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:
30
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.
31
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:
32
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.
33
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:
34
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.
35
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:
36
[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)
37
[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)
38
