SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)1
SMARTSERV ONLINE, INC.
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(Name of issuer)
COMMON STOCK
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(Title of class of securities)
13-3750708
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(CUSIP number)
THOMAS J. FLEMING, ESQ.
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
March 20, 2000
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
/ /.
Note. six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of __ Pages)
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1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
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CUSIP No. 13-3750708 13D Page 2 of 61 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Wireless Acquisition Partners, LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 380,000 shares (subject to adjustment
OWNED BY and/or dispute)
EACH
REPORTING -----------------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
0 shares
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
380,000 shares (subject to adjustment
and/or dispute)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
380,000 shares (subject to adjustment and/or dispute)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.8%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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CUSIP No. 13-3750708 13D Page 3 of 61 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Gregg A. Smith
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 380,000 shares (subject to adjustment
OWNED BY and/or dispute)
EACH
REPORTING -----------------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
0 shares
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
380,000 shares (subject to adjustment
and/or dispute)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 shares
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
380,000 shares (subject to adjustment and/or dispute)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 13-3750708 13D Page 4 of 61 Pages
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Michael Wainstein
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 380,000 shares (subject to adjustment
OWNED BY and/or dispute)
EACH
REPORTING -----------------------------------------------------------------
PERSON WITH
8 SHARED VOTING POWER
0 shares
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
380,000 shares (subject to adjustment
and/or dispute)
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 shares
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
380,000 shares (subject to adjustment and/or dispute)
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.8%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
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CUSIP No. 13-3750708 13D Page 5 of 61 Pages
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The following constitutes the Schedule 13D filed by the undersigned
(the "Schedule 13D").
Item 1. Security and Issuer.
This Statement relates to Common Stock, par value $.01 per
share ("Common Stock"), of SmartServ Online, Inc. (the "Issuer").
Item 2. Identity and Background.
1. (a) WIRELESS ACQUISITION PARTNERS, LLC, is a limited liability
company organized under the laws of the State of Delaware ("WAP"). Its name was
changed from American Warrant Partners, LLC on or about March 28, 2000.
(b) Address: 505 Park Avenue, 14th Floor
New York, New York 10022
(c) Principal Business: Investments
(d) No.
(e) No.
2. (a) Gregg A. Smith is the Chief Executive Officer of WAP.
(b) Address: c/o 505 Park Avenue, 14th Floor
New York, New York 10022
(c) Principal Business: Investments
(d) No.
(e) No.
(f) Citizenship: United States
3. (a) Michael Wainstein is the President WAP.
(b) Address: 505 Park Avenue, 14th Floor
New York, New York 10022
(c) Principal Business: Investments
(d) No.
(e) No.
(f) Citizenship: United States
Item 3. Source and Amount of Funds or Other Consideration.
On March 20, 2000, the United States Bankruptcy Court for the
Southern District of New York issued an Order approving the sale of certain
assets of Rickel & Associates, Inc. ("Rickel") in connection with Rickel's
Chapter 11 proceedings. Pursuant to the Court's Order, WAP, which was then named
American Warrant Partners, LLC, acquired warrants and related rights that Rickel
held in a variety of companies, one of which was the Issuer. Pursuant to the
Court Order, the aggregate purchase price is $3,525,000, which is not allocated
among the various warrants and other rights that WAP purchased. The warrants and
related rights concerning the Issuer that WAP acquired are described in Item 5
below. The funds to purchase the foregoing warrants and related rights were
derived from WAP's working capital.
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CUSIP No. 13-3750708 13D Page 6 of 61 Pages
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Item 4. Purpose of Transaction.
The Reporting Persons purchased the Warrants and related
rights, for investment purposes. No Reporting Person has any present plans or
proposals which would relate to or result in any of the matters set forth in
subparagraphs (a) - (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As a result of the Bankruptcy Court Order described in
Item 3 above and entered March 20, 2000, WAP expects to close on its purchase
from Rickel of certain warrants and related rights in the Issuer on or about
April 3, 2000. Upon closing, WAP will hold, free and clear of all liens,
encumbrances, claims, security interests, pledges, restrictions, options,
judgments, orders, interests and/or tax claims the rights that Rickel held in
the following: (i) the Underwriters Warrant to purchase common stock and/or
redeemable warrants dated March 21, 1996 between the Issuer and Rickel (the
"Underwriters Warrant"); (ii) the Agreement dated April 24, 1997, between the
Issuer and Rickel, under which the Issuer became obligated to deliver 100,000
warrants to purchase its Common Stock; and (iii) the Agreement dated May 19,
1997, between the Issuer and Rickel, under which the Issuer became obligated to
deliver an additional 100,000 warrants to purchase its Common Stock (items (ii)
and (iii) are referred to herein as the "Supplemental Warrants").
On its face, the Underwriters Warrant authorizes WAP to
acquire 150,000 shares of Common Stock at $8.25 per share and 150,000 warrants
to acquire 150,000 shares at $8.25 per share, exercisable at $.165 per warrant.
The Underwriters Warrant is valid through March 21, 2001. On their face, the
Supplemental Warrants authorize WAP to acquire 200,000 shares of Common Stock
exercisable at $2.00 per share for 25,000 shares; $2.25 per share for 25,000
shares; $2.75 for 25,000 shares; $3.00 per share for 50,000 shares; $3.50 for
25,000 shares; $3.75 for 25,000 shares; $4.00 for 25,000 shares. The
Supplemental Warrants expire one-half on April 24, 2002 and the balance on May
19, 2002. The foregoing descriptions are qualified in their entirety by the
remainder of this item and by the Exhibits, which we incorporate herein by
reference.
WAP has been advised that, subsequent to the issuance of the
Underwriters Warrant and the Supplemental Warrants, the Issuer effected a 1 for
6 reverse stock split. The Underwriters Warrant requires the recalculation of
both the number of shares and exercise price to give effect to this reverse
stock split. However, the Underwriters Warrant contains antidilution provisions
which WAP believes require other adjustments to both the number of shares
subject to the warrant as well as to the purchase price for those shares. In its
informal discussions with the Issuer, the Issuer has indicated to WAP its
position that the Underwriters Warrant now gives rise to a right to acquire
90,000 shares at $13.50 per share and a warrant to acquire an additional 90,000
shares at $14.75 per share. WAP has not yet made a determination regarding the
validity of the Issuer's computation. To the best of WAP's knowledge, no formal
notice has been given by the Issuer of its position concerning the effect of its
recapitalization and share issuances since the Underwriters Warrant was issued.
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CUSIP No. 13-3750708 13D Page 7 of 61 Pages
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The Supplemental Warrants do not contain any language
providing for antidilution or for adjustment on recapitalization. For the
purposes of computing its percentage interest in the Issuer's Common Stock , WAP
has utilized the Issuer's preliminary calculations concerning the Underwriters
Warrant and the face amount of the Supplemental Warrants, which together would
give WAP the warrants to acquire 380,000 shares of Common Stock.
Notwithstanding the foregoing, WAP anticipates that the Issuer
will contend, among other things, that the Supplemental Warrants must be
adjusted to give effect to the 1 for 6 reverse stock split. In such event, WAP
would have warrants to acquire 33,828 shares, with 4,166 exercisable at $12 per
share and the same amount exercisable at the following prices: $13.50, $16.50,
$21, $22.50, and $24.50 per share and 8,332 exercisable at $18 per share. If the
foregoing computations are accepted for the Underwriters Warrant and the
Supplemental Warrants, the reporting persons would have collectively the right
to acquire 213,828 shares of the Issuer's Common Stock, which would be equal to
approximately five and nine-tenths percent (5.9%) of the issued and outstanding
shares, based on 3,493,108 shares of Common Stock outstanding as of February 11,
2000. In addition, WAP has been advised that the Issuer may dispute the validity
of the Supplemental Warrants, which claim, if asserted, WAP intends to contest
vigorously.
As Chief Executive Officer of WAP, Gregg A. Smith has sole
power to vote or dispose of the Underwriters Warrant and the Supplemental
Warrants and any shares of Common Stock that may be acquired pursuant thereto.
As President of WAP, Michael Wainstein also has sole power to vote or dispose of
the Underwriters Warrant and the Supplemental Warrants and any shares of Common
Stock that may be acquired pursuant thereto. Messrs. Smith and Wainstein have no
interest in the Issuer's Common Stock, except as officers of WAP.
(b) The Reporting Persons identified in Item 2 of this
Schedule 13D have not effected any transactions in shares of Common Stock of the
Issuer in the last sixty days, except as set forth above and as follows:
1. Gregg A. Smith has sold the following shares of Common
Stock of the Issuer:
Date Amount Price
28-Jan-00 1,500 $57.250
24-Jan-00 300 $41.250
2. Gregg A. Smith has sold the following warrants to purchase
the Issuer's Common Stock:
Date Amount Price
28-Jan-00 2,000 $23.875
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CUSIP No. 13-3750708 13D Page 8 of 61 Pages
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3. Gregg A. Smith may be deemed a beneficial owner of
securities held by Saratoga Holdings, Inc., for which he serves as Chief
Executive Officer, and which has sold the following warrants to purchase the
Issuer's Common Stock:
Date Price Amount
---- ----- ------
24-Jan-00 1,500 $19.500
10-Feb-00 1,000 $48.000
20-Mar-00 400 $53.000
20-Mar-00 200 $54.500
20-Mar-00 400 $54.00
20-Mar-00 400 $54.00
22-Mar-00 200 $53.000
22-Mar-00 350 $53.000
22-Mar-00 200 $53.000
22-Mar-00 150 $53.000
22-Mar-00 200 $53.000
23-Mar-00 200 $54.000
23-Mar-00 200 $54.000
23-Mar-00 200 $54.000
23-Mar-00 200 $54.000
23-Mar-00 500 $54.000
23-Mar-00 200 $54.000
All the transactions set forth in subparagraphs 1-3 above were
effected in the open market.
(c) No person other than the Reporting Persons is known to
have the right to receive, or the power to direct the receipt of dividends from,
or proceeds from the sale of, such shares of Common Stock.
(d) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
(a) WAP's interest in the securities of the Issuer are set
forth in the following three agreements:
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CUSIP No. 13-3750708 13D Page 9 of 61 Pages
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1. Underwriters warrant to purchase common stock
and/or redeemable warrants, dated March 21, 1996, annexed as Exhibit A.
2. The Rickel/Issuer Agreement, dated April 24, 1997,
annexed as Exhibit B.
3. The Rickel/Issuer Agreement, dated May 19, 1997,
annexed as Exhibit C.
WAP's rights in these agreement were acquired pursuant to the
Bankruptcy Court Order, annexed as Exhibit D. WAP's interests are described in
Item 5 above and in the annexed Exhibits, which are incorporate herein by
reference.
(b) Except for the circumstances discussed or referred to in
paragraph (a) above, there are no contracts, arrangements, understandings, or
relationships with respect to the securities of the Issuer among any of the
persons reporting in this Schedule 13D.
Item 7. Material to be Filed as Exhibits
Exhibit A. Underwriters warrant to purchase common stock
and/or redeemable warrants, dated March 21, 1996.
Exhibit B. The Rickel/Issuer Agreement, dated April 24, 1997.
Exhibit C. The Rickel/Issuer Agreement, dated May 19, 1997.
Exhibit D. Order approving sale of debtor's assets in In re
Rickel & Associates, Inc., Case No. 98/B/47203 (SMB)(U.S. Bankruptcy Court,
S.D.N.Y.), dated March 20, 2000.
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CUSIP No. 13-3750708 13D Page 10 of 61 Pages
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 30, 2000
WIRELESS ACQUISITION PARTNERS, LLC
By:/s/ Michael Wainstein
-----------------------------------
President - Michael Wainstein
/s/ Michael Wainstein
--------------------------------------
Michael Wainstein
/s/ Gregg A. Smith
--------------------------------------
Gregg A. Smith
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CUSIP No. 13-3750708 13D Page 11 of 61 Pages
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EXHIBIT INDEX
Exhibit Description Page
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A. Underwriters warrant to purchase common 12
stock and/or redeemable warrants, dated
March 21, 1996.
B. The Rickel/Issuer Agreement, dated April 41
24, 1997.
C. The Rickel/Issuer Agreement, dated May 19, 48
1997.
D. Order approving sale of debtor's assets in 55
55 In re Rickel & Associates, Inc., Case No.
98/B/47203 (SMB)(U.S. Bankruptcy Court,
S.D.N.Y.), dated March 20, 2000.
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CUSIP No. 13-3750708 13D Page 12 of 61 Pages
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Exhibit 1
UNDERWRITER'S WARRANT TO PURCHASE COMMON STOCK DATED MARCH 21, 1996
NO SALE OR TRANSFER OF THIS WARRANT OR THE SECURITIES
UNDERLYING THIS WARRANT MAY BE MADE UNTIL
THE EFFECTIVENESS OF A REGISTRATION STATEMENT
OR OF A POST-EFFECTIVE AMENDMENT THERETO
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"),
COVERING THIS WARRANT OR THE SECURITIES UNDERLYING
THIS WARRANT, OR UNTIL THE COMPANY IS IN RECEIPT OF AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM
THE REGISTRATION REQUIREMENT OF THE ACT. ADDITIONALLY, TRANSFER
OF THIS WARRANT IS RESTRICTED UNDER PARAGRAPH 2 BELOW.
UNDERWRITER'S WARRANT TO PURCHASE
COMMON STOCK AND/OR REDEEMABLE WARRANTS
SMARTSERV ONLINE, INC.
(a Delaware corporation)
Dated: March 21, 1996
THIS CERTIFIES THAT, for value received, Rickel & Associates,
Inc. (the "Underwriter") or its permitted transferees, as set forth in paragraph
2 below (the "Holder") is the owner of options (the "Underwriter's Option") to
purchase from SmartServ Online, a Delaware corporation (the "Company"), during
the period and at the prices hereinafter specified, up to 150,000 shares of the
Company's common stock, par value $.01 per share (the "Common Stock"), and up;
to 150,000 redeemable common stock purchase warrants (the "Warrants"),
(collectively with the Common Stock, the "Securities").
This Underwriter's Option is issued pursuant to an
Underwriting Agreement dated March 21, 1996, between the Company and the
Underwriter in connection with a public offering through the Underwriter (the
"Public Offering"), of 1,380,000 shares of Common Stock and 1,500,000 Warrants,
and pursuant to the Underwriter's overallotment option, an additional
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CUSIP No. 13-3750708 13D Page 13 of 61 Pages
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225,000 shares of Common Stock and 225,000 Warrants. The Warrants (including
those issuable pursuant to the exercise of the Underwriter's Option) will be
issued pursuant to and subject to the terms and conditions set forth in an
agreement between the Company Continental Stock Transfer Company (the
"Agreement" ).
1. Exercise of the Underwriter's Option.
a. The rights represented by this Underwriter's Option
shall be exercisable at the prices and during the period specified below upon
the terms and subject to the conditions as set forth herein:
i. During the period from March 2l, 1996 to March 20,
1997, inclusive, the Holder shall have no right to purchase any Securities
hereunder.
ii. Between March 21, 1997 and March 21, 2001,
inclusive, the Holder shall have the option to purchase shares of Common Stock
and Warrants hereunder at a price of 8.25 per share and $.165 per Warrant,
respectively, the purchase price of the Common Stock and the purchase price of
the Warrants being 165% of the public offering prices for the Securities forth
in the Prospectus forming a part of the registration statement on Form SB2 (File
No. 333-114) of the Company, as amended (the "Registration Statements"). The
Warrants issuable to the Underwriter shall be exercisable at a price of $8.60
per share of Common Stock.
iii. After March 20, 2001, the Holder shall have no
right to purchase any Securities hereunder and this Underwriter's Option shall
expire effective at 5:00 p.m., New York time on such date.
b. The rights represented by this Underwriter's option
may be exercised at any time within the period above specified, in whole or in
part, by (i) the surrender of this Underwriter's Option (with the purchase form
at the end hereof properly executed) at the
<PAGE>
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CUSIP No. 13-3750708 13D Page 14 of 61 Pages
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principal executive office of the Company (or such other office or agency of the
Company as it may designate by notice in writing to the Holder at the address of
the Holder appearing on the books of the Company); (ii) payment to the Company
of the exercise price then in effect for the number of shares of Common Stock
and Warrants specified in the above-mentioned purchase form together with
applicable stock transfer taxes, if any; and (iii) delivery to the Company of a
duly executed agreement signed by the person(s) designated in the purchase form
to the effect that such person Is) agree(s) to be bound by the provisions of
Paragraph 5 and subparagraphs (b), (c) and (d) of Paragraph 6 hereof. This
Underwriter's option shall be deemed to have been exercised, in whole or in part
to the extent specified, immediately prior to the close of business on the date
this Underwriter's Option is surrendered and payment is made in accordance with
the foregoing provisions of this Paragraph 1, and the person or persons in whose
name or names the certificates for the Securities shall be issuable upon such
exercise shall become the holder or holders of record of such Common Stock and
Warrants at that time and date. The Common Stock and Warrants so purchased shall
be delivered to the Holder within a reasonable time, not exceeding ten (10)
business days, after the rights represented by this Underwriter's Option shall
have been so exercised.
2. Restrictions on Transfer.
This Underwriter's Option shall not be transferred, sold,
assigned or hypothecated for a period of one year commencing March 21, 1996,
except that it may be transferred to successors of the Holder, and may be
assigned in whole or in part to any person who is an officer of the Underwriter
an an officer or partner of any other member of the selling group during such
period. Any such assignment shall be effected by the Holder by (i) completing
and executing the transfer form at the end hereof and (ii) surrendering this
Underwriter's option with such duly
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CUSIP No. 13-3750708 13D Page 15 of 61 Pages
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completed and executed transfer form for cancellation, accompanied by funds
sufficient to pay any transfer tax, at the office or agency of the company
referred to in Paragraph 1 hereof, accompanied by a certificate (signed by a
duly authorized representative of the Holder), stating that each transferee is a
permitted transferee under this Paragraph 2; whereupon the Company shall issue,
in the name or names specified by the Holder (including the Holder), a new
Underwriter's option or Underwriter's Options of like tenor and representing in
the aggregate rights to purchase the same number of Securities as are then
purchasable hereunder. The Holder acknowledges that this Underwriter's Option
may not be offered, sold, assigned or otherwise transferred except pursuant to
an effective registration statement under the Act or an opinion of counsel
satisfactory to the Company that an exemption from registration under the Act is
available.
3. Covenants of the Company.
a. The Company covenants and agrees that all Common Stock
issuable upon the exercise of this Underwriter's Option will, upon issuance
thereof and payment therefor in accordance with the terms hereof, and all Common
Stock issuable upon exercise of the warrants underlying this Underwriter's
Option, will upon the issuance thereof and payment therefor in accordance with
the terms of the Warrant Agreement, be duly and validly issued, fully paid and
nonassessable and no personal liability will attach to the holder thereof by
reason of being such a holder, other than as set forth herein.
b. The Company covenants and agrees that during the period
within which this Underwriter's Option may be exercised, the Company will at all
times have authorized and reserved a sufficient number of shares of Common Stock
to provide for the exercise of this Underwriter's Option and the warrants
included therein.
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CUSIP No. 13-3750708 13D Page 16 of 61 Pages
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c. The Company covenants and agrees that for so long as the
Securities shall be outstanding (unless the Securities shall no longer be
registered under Paragraph 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended) the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Underwriter's Option and the
Warrants contained therein, to be quoted by the NASDAQ Stock Market or listed on
a national securities exchange.
4. No Rights of Stockholder.
This Underwriter's Option shall not entitle the Holder to any
voting rights or other rights as a stockholder of the Company, either at law or
in equity, and the rights of the Holder are limited to those expressed in this
Underwriter's Option and are not enforceable against the Company except to the
extent set forth herein.
5. Registration Rights.
a. During the four year period commencing March 21,
1997, the Company shall advise the Holder, whether the Holder holds this
Underwriter's Option or has exercised this Underwriter's Option and holds Common
Stock and Warrants, or common Stock underlying the warrants (the "Warrant
Shares"), by written notice at least 30 days prior to the filing of any
post-effective amendment to the Registration statement or of any new
registration statement or post-effective amendment thereto under the Act,
covering any securities of the Company, for its own account or for the account
of others, and upon the request or the Holder made during such four-year period,
include in any such post-effective amendment or registration statement such
information as may be required to permit a public offering of any of the Common
Stock or Warrant's issuable hereunder, and/or the Warrant Shares; provided, that
this Paragraph 5(a) shall not apply to any registration statement filed pursuant
to Paragraph 5(b) hereof or to
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CUSIP No. 13-3750708 13D Page 17 of 61 Pages
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registrations of shares in connection with an employee benefit plan or a merger,
consolidation or other comparable acquisition or solely for registration of
non-convertible debt or preferred equity securities of the Company; and
provided, further, that, notwithstanding the foregoing, the Holder shall have no
right to include any Registrable Securities in any new registration statement or
post-effective amendment thereto unless as of the effective date thereof the
Registration Statement (as it may hereafter be amended or supplemented) or any
new registration statement under which the Registrable Securities are registered
shall have ceased to be effective or the prospectus contained in such
Registration Statement shall have ceased to be current. The Company shall supply
prospectuses in order to facilitate the public sale or other disposition of the
Registrable Securities, use its best efforts to register and qualify any of the
Registrable Securities for sale in such states in which the Common Stock and
Warrants are offered and sold in the Public Offering as such Holder reasonably
designates and do any and all other acts and things which may be necessary to
enable such Holder to consummate the public sale of the Registrable Securities,
provided that, without limiting the foregoing, 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. The Holder shall furnish information requested by the Company in
accordance with such post-effective amendments or registration statements,
including its intentions with respect thereto, and shall furnish indemnification
as set forth in Paragraph 6. The Company shall continue to advise the Holders of
the Registerable Securities of its intention to file a registration statement or
amendment pursuant to this Paragraph 5(a) until the earliest of (i) March 20,
2001; or (ii) such time as all of the Registerable Securities have been
registered and sold under the Act; or (iii) all of the Registrable Securities
have been otherwise transferred, new certificates for them not bearing a Legend
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CUSIP No. 13-3750708 13D Page 18 of 61 Pages
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restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration or
qualification of them under the Act, or (iv) in the opinion of legal counsel for
the Company, the Registrable Securities may be offered and sold by the holders
thereof without being registered under the Act and such securities, upon receipt
by the purchasers thereof pursuant to such sale, will not constitute "restricted
securities" as such term is defined in Rule 144 under the Act.
b. If any fifty-one (51%) percent holder (as defined
below) shall give notice to the Company at any time during the four (4) year
period beginning one (1) year from , 1996 to the effect that much holder desires
to register under the Act any Registerable Securities, under such circumstances
that a public distribution (within the meaning Registerable Securities will be
involved (and the Registration Statement or any new registration statement under
which such Registerable Securities are registered shall have ceased to be
effective or the Prospectus contained therein shall have ceased to the currents,
then the Company bill as promptly a practicable after notice, but later than
thirty (30) days (or forty-five (45) days if the Company is unable to use Form
S-3), after receipt of such notice, at the Company's option, file a
post-effective amendment to the current Registration Statement or a new
registration statement pursuant to the Act to the end that the Registerable
Securities may be publicly sold under the Act as promptly as practicable
thereafter and the Company will use its best efforts to cause such registration
to become and remain effective as provided herein (including the taking of such
steps as are reasonably necessary to obtain the removal of any stop order);
provided, that such fifty-one (51%) percent holder shall furnish the Company
with appropriate information in connection therewith as the Company may
reasonably request; and provided, further, that the Company shall not be
required to file such a post-effective amendment or registration statement
pursuant to this
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CUSIP No. 13-3750708 13D Page 19 of 61 Pages
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Paragraph 5(b) on more than one occasion; and provided, further, that, the
registration rights of the 51% holder under this Paragraph 5(b) shall be subject
to the "piggyback" registration rights of other holders or securities of the
company to include such securities in any registration statement or
post-effective amendment filed pursuant to this Paragraph 5(b). The Company will
maintain such registration statement or post-effective amendment current under
the Act for a period of at least nine months from the effective date thereof.
The Company shall supply prospectuses in order to facilitate the public sale of
the Registrable Securities, use its best extorts to register and qualify any of
the Registerable Securities for sale in such states in which the Common Stock
and Warrants are offered and sold in the Public Offering as such holder
reasonably designates and furnish indemnification in the manner provided in
Paragraph 6 hereof, provided that, without limiting the foregoing, 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.
c. The Holder may, in accordance with Paragraphs 5(al
or (b), at his or its option, and subject to the limitations set forth in
Paragraph 1(a) hereof, request the registration of any of the Registerable
Securities in a filing made by the Company prior to the acquisition of the
securities upon exercise of this Underwriter's Option. The Holder may thereafter
exercise this Underwriter's Option at any time or from time to time subsequent
to the effectiveness under the Act of the registration statement in which the
Common Stock underlying the Underwriter's Options and Warrants were included.
d. The term "51% holder," as used in this Paragraph
5, shall include any owner or combination of owners of Underwriter's Options or
Registerable Securities if the aggregate number of shares of Common Stock and
Warrant Shares included in and underlying
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CUSIP No. 13-3750708 13D Page 20 of 61 Pages
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the Underwriter's Option and Registerable Securities held of record by it or
them, would constitute a majority of the aggregate of such shares of Common
Stock And Warrant Shares underlying the Underwriter's Option and Registerable
Securities as of the date of the initial issuance of the Underwriter's option.
e. The following provisions of this Paragraph 5 shall
also be applicable:
i. Within ten (10) days after receiving any notice
pursuant to Paragraph 5(b), the Company shall give notice to the other Holders
of Underwriters Options or Registerable Securities, advising that the Company is
Proceeding with such post-effective amendment or registration and Offering to
include therein the Registerable Securities of such other Holder, provided that
they shall furnish the Company with all information in connection therewith as
shall be necessary or appropriate and as the Company shall reasonably request in
writing. Following the effective date of such post-effective amendment or
registration, the Company shall, upon the request of any Holder of Registerable
Securities, forthwith supply such number of prospectuses meeting the
requirements of the Act, as shall be reasonably requested by such Holder. The
Company shall use its best efforts to qualify the Registerable Securities for
sale in such states in which the Common Stock and Warrants are offered and sold
in the Public Offering as the 51% holder shall reasonably designate at such
times as the registration statement is effective under the Act, provided that
without limiting the foregoing 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.
ii. The Company shall bear the entire cost and
expense of any registration of securities initiated by it under Paragraph 5(a}
hereon notwithstanding that the
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CUSIP No. 13-3750708 13D Page 21 of 61 Pages
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Registerable Securities subject to this Underwriter's Option may be included in
any such registration. The company shall also comply with the one request for
registration made by the 51% holder pursuant to Paragraph 5(b) hereof at the
Company's own expense and without charge to any holder of the Registerable
Securities. Notwithstanding the foregoing, any Holder whose Registerable
Securities are included in any such registration statement pursuant to this
Paragraph 5 shall, however, bear the fees of any counsel retained by such Holder
and any transfer taxes or underwriting discounts or commissions applicable to
the Registerable Securities sold by such Holder thereto and, in the case of a
registration pursuant to Paragraph 5 hereof, any additional registration or
"blue sky" or state securities fees attributable to the registration or
qualification of such Holders Registerable Securities.
iii. If the underwriter or managing underwriter in
any underwritten offfering made pursuant to Paragraph 5(a) hereof shall advise
the Company that it declines to include a portion or all of the Registerable
Securities requested by the Holders to be included in the registration
statement, then distribution of all or a specified portion of the Registerable
Securities shell be excluded from such registration statement (in case of an
exclusion as to a portion of such Registerable Securities, such portion to be
allocated among such Holders in proportion to the respective numbers of
Registerable Securities requested to be registered by each such Holder). In such
event the Company shall give the Holder prompt notice of the number of
Registerable Securities excluded. Further, in such event the company shall,
commencing six (6) months after the completion of such underwritten offering,
file and use best efforts to have declared effective, at its sole expense
(subject to the last sentence of Paragraph 5(e)(ii)), a registration statement
relating to such excluded securities.
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CUSIP No. 13-3750708 13D Page 22 of 61 Pages
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iv. Notwithstanding anything to the contrary
contained herein, the Company shall have the right at any time after it shall
have given written notice pursuant ton Paragraph 5(a) or 5(b) (irrespective of
whether a written request for inclusion of any Registerable Securities shall
have been made to elect not to file or to delay any such proposed registration
statement or post-effective amendment thereto, or to withdraw the same after the
filing but prior to the effective date thereof. In addition, the Company may
delay the filing of any registration statement or post-effective amendment
requested pursuant to Paragraph 5(b) hereof by not more than 120 days if the
Company, prior to the time it would otherwise have been required to file such
registration statement or post-effective amendment thereto, determines in good
faith that the filing of the registration statement would require the disclosure
of non-public material information that, in its judgment, would be detrimental
to the Company if so disclosed or would otherwise adversely affect a financing,
acquisition, disposition, merger or other material transaction.
v. If a registration pursuant to Paragraph 5(a)
hereof involves an underwritten offering, the Company shall have the right to
select the investment banker or investment bankers and manager that will serve
as underwriter with respect to the underwritten offering. No Holder of
Registerable Securities may participate in any underwritten offering under this
Agreement unless such holder completes and emerges all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwritten offering, in each case, in the form and
upon terms reasonably acceptable to the Company and the underwriters. The
requested registration pursuant to Paragraph 5(b) hereof shall not involve an
underwritten offering unless the Company shall first give its written
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CUSIP No. 13-3750708 13D Page 23 of 61 Pages
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approval of each underwriter that participates in the offering, such approval
not to be unreasonably withheld.
6. Indemnification.
a. Whenever pursuant to Paragraph 5, a registration
statement relating to any Registerable Securities is filed under the Act,
amended or supplemented, the Company will indemnify and hold harmless each
Holder of the Registerable Securities covered by such registration statement,
amendment or supplement (such holder hereinafter referred to as the
"Distributing Holder"), each person, if any, who controls (within the meaning of
the Act) the Distributing Holder, and each officer, employee, partner or agent
of the Distributing Holder, if the Distributing Holder is a broker or dealer,
and each underwriter (within the meaning of the Act) of such securities and each
person, if any, who controls (within the meaning of the Act) any such
underwriter and each officer, employee, agent or partner of such underwriter
against any losses, claims, damages or liabilities, joint or several, to which
the Distributing Holders any such underwriter or any other person may become
subject under the Act or otherwise, insofar, as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or any preliminary prospectus or final
prospectus constituting a part thereof or act amendment or supplement thereto,
or arise out of or are based upon the omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading; and will reimburse the Distributing Holder and each such underwriter
or such other person for any legal or other expenses reasonably incurred by the
Distributing Holder, or underwriter or such ether person, in connection with
investigating or defending any such loss,
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CUSIP No. 13-3750708 13D Page 24 of 61 Pages
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claim, damage, liability or action; provided, however, that the Company will not
be liable in any such case (i) to the extent that any such loss claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
by Distributing Holder, any other Distributing Holder or any underwriter for use
in the preparation thereof, or (ii) losses, claims, damages or liabilities arise
out of or are based upon any actual or alleged untrue statement or omission made
in or from any preliminary prospectus, but corrected in the final prospectus, as
amended or supplemented.
b. Whenever pursuant to Paragraph 5 a registration
statement relating to the Registerable Securities is filed under the Act, or is
amended or supplemented, the Distributing Holder will indemnify and hold
harmless the Company each of its directors, each of its officers who have signed
said registration statement and such amendments and supplements thereto, and
each person, if any, who controls the Company (within the meaning of the Act)
against any losses, claims, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in any such registration such based
statement or any preliminary prospectus or final prospectus constituting a part
thereof, or any amendment or supplement thereto, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in
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CUSIP No. 13-3750708 13D Page 25 of 61 Pages
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said registration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with written
information furnished by such Distributing Holder for use in the preparation
hereof; and will reimburse the Company or any such director, officer or
controlling person for any Legal or other expenses reasonably incurred by them
in connection with investigation or defending any such loss, claim, damage,
liability or action.
c. Promptly after receipt by an indemnified party
under this Paragraph 6 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission to so notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Paragraph 6.
d. In case any such action is brought against any
indemnified party, and it notifies an indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to so assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Paragraph 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
7. Adjustments of Warrant Price and Number of Shares of Common
Stock.
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CUSIP No. 13-3750708 13D Page 26 of 61 Pages
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a. Computation of Adjusted Price. Except as
hereinafter provided, in case the Company shall, at any time after the date of
closing of the sale of securities pursuant to the Public Offering (the "Closing
Date"), issue or sell any shares of Common Stock (other than the issuances or
sales referred to in Paragraph 7(f) hereof), including shares held in the
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 (other than
the issuances or sales of Common Stock pursuant to rights to subscribe for such
Common Stock distributed pursuant to Paragraph 7(j) hereof) 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 both the
"Market Price" (as defined in Paragraph 7(a) (vi) hereof) per share of Common
Stock on the trading day immediately preceding such issuance or sale ant the
Warrant Price (as hereinafter defined), in effect immediately prior to such
issuance or sale, or without consideration, then forthwith upon such issuance or
sale, the Warrant Price in respect of the Common Stock issuable upon exercise of
the Underwriter's Option (but not the exercise price of the Warrants underlying
the Underwriter's Option, which shall be adjusted only in accordance with the
Warrant Agreement) shall (until another such issuance or sale) be reduced to the
price (calculated to the nearest full cent) determined by multiplying the
Warrant Price in effect immediately prior to such issuance or sale by a
fraction, the numerator of which shall be the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issuance or sale multiplied
by the Warrant Price immediately prior to such issuance or sale plus (2) the
consideration received by the company upon scour issuance or sale, and the
denominator of which shall be the product of (x) the total number of shares of
Common Stork outstanding immediately after such issuance or sale, multiplied by
(y) the Warrant Price immediately prior to such issuance or sale; provided,
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CUSIP No. 13-3750708 13D Page 27 of 61 Pages
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however, that in no event shall the Warrant Price be adjusted pursuant to this
computation to an amount in excess of the Warrant Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Paragraph 7(c) hereof. For the purposes
of this Paragraph 7, the term "Warrant Price" shall mean the exercise price per
share of Common Stock issuable upon exercise of the Underwriter's Option
(initially $8.25 per share), as adjusted from time to time pursuant to the
provisions of this Paragraph 7.
For the purposes of any computation to be made in accordance
with this Paragraph 7(a), 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 such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the public offering price) before deducting therefrom
any compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
ii. In case of the issuance or sale (otherwise
than as a dividend or other distribution on any stock 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.
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CUSIP No. 13-3750708 13D Page 28 of 61 Pages
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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 shareholders 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 subparagraph (ii) of thin
Paragraph 7(a).
v. The number of shares of Common Stock at any one
time outstanding shall include the aggregate number of shares issued or issuable
upon the exercise at options, rights, warrants and upon the conversion or
exchange of convertible or exchangeable securities.
vi. As used herein, the phrase "Market Price" at
any date shall be deemed to be the average of the last reported sale price, or,
in case no such reported sale takes place on such day the average of the last
reported sale prices for the last three trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading on any national securities exchange or
quoted on the NASDAQ Stock Market, or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted on the NASDAQ
Stock Market, the closing bid quotation as furnished by the National Association
of Securities Dealers, Inc. through NASDAQ or a
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CUSIP No. 13-3750708 13D Page 29 of 61 Pages
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similar organization if NASDAQ is no longer reporting such information, or if
the Common Stock is not quoted on NASDAQ, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it for the three trading days immediately preceding
such issuance or sale. If the Common Stock is listed or admitted to trading on a
national securities exchange and also quoted on the NASDAQ Stock Market, the
Market Price shall be determined as hereinabove provided by reference to the
prices reported in the NASDAQ Stock Market; provided that if the Common Stock in
listed or admitted to trading on the New York Stock Exchange, the Market Price
shall be determined as hereinabove provided by reference to the prices reported
by such exchange.
b. Options. Rights. Warrants and Convertible and
Exchangeable Securities. Except in the case of the Company issuing rights to
subscribe for shares of Common Stock distributed pursuant to Paragraph 7(j)
hereof, if the Company shall at any time after the Closing Date issue options,
rights or warrants to subscribe for shares of Common Stock, or issue any
securities convertible into exchangeable for shares of Common Stock, in each
case other than the issuances or sales referred to in Paragraph 7(f) hereof, (i)
for a consideration per share less than the lesser of (a) the Warrant Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or (b) the Market Price on the
trading day immediately preceding such issuance, or (ii) without consideration,
the Warrant Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the cash
may be, shall be reduced to a price determined by making a computation in
accordance with the provisions of Paragraph 7(a) hereof, provided that:
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CUSIP No. 13-3750708 13D Page 30 of 61 Pages
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i. The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under all the outstanding options, rights or
warrants shall bet deemed to be issued and outstanding at the time all the
outstanding options, rights or warrants were issued, and for a consideration
equal to the minimum purchase price per share provided for in the 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 Paragraph 7(a) hereof), if any, received by the
Company for the options, rights or warrants, and if no minimum price is provided
in the options, rights or warrants, then the consideration shall be equal to
zero; provided, however, that upon the expiration or other termination of the
options, rights or warrants, if any thereof shall not have been exercised, the
number of shares of Common Stock deemed to be issued and outstanding pursuant to
this subparagraph (b) (and for the purposes of subparagraph (v) Paragraph 7(a)
hereof) shall be reduced by such number of shares as to which options, warrants
and/or rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding, and the Warrant
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of shares actually issued or issuable upon the exercise of those options,
rights or warrants as to which the exercise rights shall not have expired or
terminated unexercised.
ii. 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 received on the issue or sale of shares of
Common Stock in accordance with the terms of Paragraph 7(a) hereof)
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CUSIP No. 13-3750708 13D Page 31 of 61 Pages
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received by the Company for such securities, plus the minimum consideration, if
any, receivable by the Company upon the conversion or exchange thereof;
provided, however, that upon the expiration or other termination of the right to
convert or exchange such convertible or exchangeable securities (whether by
reason of redemption or otherwise), the number of shares deemed to be issued and
outstanding pursuant to this subparagraph (ii) (and for the purpose of
subparagraph (v) of Paragraph 7(a) hereof) shall be reduced by such number of
shares as to which the conversion or exchange rights shall have expired or
terminated unexercised, and such number of shares shell no longer be deemed to
be issued and outstanding, and the warrant Price then in effect shall forthwith
be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of the shares actually
issued or issuable upon the conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised. No adjustment will be made pursuant to
this subparagraph (ii) upon the issuance by the Company of any convertible or
exchangeable securities pursuant to the exercise of and option, right or warrant
exercisable therefor, to the extent that adjustments in respect of such options,
rights or warrants were previously made pursuant to the provisions of
subparagraph (i) of this subparagraph 7(b).
iii. If any change shall occur in the price per share
provided for in any of the options, rights or warrants refereed to in
subparagraph (i) of this Paragraph 7 (b), or in the price per share at which the
securities referred to in subparagraph (ii) of this Paragraph 7 (b) are
convertible or exchangeable, or if any such options, rights or warrants are
exercised at a price greater than the minimum purchase price provided for in
such options, rights or warrants, or any such securities are converted or
exercised for more then the minimum consideration receivable by the Company upon
such conversion or exchange, the options, rights or warrants or
<PAGE>
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CUSIP No. 13-3750708 13D Page 32 of 61 Pages
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conversions 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 upon the exercise
of such options, rights or warrants or the conversion or exchange of such
convertible or exchangeable securities; provided, however, that no adjustment
made pursuant to this subparagraph (iii) with respect to any change in the price
per share provided for in any of the options, rights or warrants referred to in
subparagraph (i) of this Paragraph 7, or in the price per share at which the
securities referred to in subparagraph (ii) of this Paragraph 7(b) are
convertible or exchangeable, which change results from the application of the
anti-dilution provisions thereof in connection with an event for which, subject
to subparagraph (iv) of Paragraph 7(f), an adjustment to the Warrant Price and
the number of securities issuable upon exercise of the Warrants will be required
to be made pursuant to this Paragraph 7.
c. Subdivision and Combination. In case the Company
shall at any time after the Closing Date subdivide or combine the outstanding
shares of Common Stock, the warrant Price shall forthwith be proportionately
decreased in the case of subdivision or increased in the case of combination.
d. Adjustment in Number of Shares. Upon each
adjustment of the Warrant Price pursuant to the provisions of this Paragraph 7,
the number of shares of common Stock (but not the number of warrants, which are
subject to adjustment as set forth in the Warrant Agreement) issuable upon the
exercise of the Underwriter's Option shall be adjusted to the nearest full whole
number by multiplying a number equal to the Warrant Price in effect
<PAGE>
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CUSIP No. 13-3750708 13D Page 33 of 61 Pages
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immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of the Underwriter's Option immediately prior to such
adjustment and dividing the product so obtained by the adjusted Warrant Price.
e. Reclassification Consolidation, Merger, etc. In
case of any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value to no par value, or from no value to par
value, or as a result of a subdivision or combination), or in the case of any
consolidation 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 shares of Common Stock, except a
change as a result of a subdivision or combination of such shares or a change in
par value, as aforesaid), or in the case of a sale or conveyance to another
corporation of the property of the Company as an entirety, the Holder shall
thereafter have the right to purchase the kind and number of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance an it the Holder were the owner of the
shares of Common Stock underlying the Underwriter's Option immediately prior to
any such events (but not the shares of Common Stock issuable upon exercise of
any Warrants underlying the Underwriter's Option) at a price equal to the
product of (x) the number of shares issuable upon exercise of the Underwriter's
Option (but not the shares of Common Stock issuable upon exercise of any
Warrants underlying the Underwriter's Option) and (y) the Warrant Price in
effect immediately prior to the record date for such reclassification, change,
consolidation, merger, sale or conveyance as if such Holder had exercised the
Underwriter's Option.
<PAGE>
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CUSIP No. 13-3750708 13D Page 34 of 61 Pages
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f. No Adjustment of Warrant Price in Certain Cases.
Notwithstanding anything herein to the contrary, no adjustment of the Warrant
Price shall be made:
i. Upon the issuance or sale of the Underwriter's
Option, the shares of Common Stock or Warrants issuable upon the
exercise of the Underwriter's Option or the shares of Common Stock
issuable upon exercise of the Warrants underlying the Underwriter's
Option; or
ii. Upon the issuance or sale of (A) the shares of
Common Stock or Warrants issued by the Company in the Public Offering
(including pursuant to the Underwriter's overallotment option) or other
shares of Common Stock or warrants issued by the Company upon
consummation of the Public Offering, (B) the shares of Common Stack for
other securities) issuable upon exercise of Warrants; or
iii. If the amount of said adjustment shall be
less tine two cents (2cents} per share of Common Stock.
g. Adjustment of Warrants Underlying Underwriter's
Option. With respect to the Warrants underlying the Underwriter's Option, the
exercise price of such warrants and the number of shares of Common Stock
purchasable pursuant to such Warrants shall be automatically adjusted in
accordance with the applicable provisions of the Warrant Agreement, upon the
occurrence, at any time after the date hereof, of any of the events described in
the Warrant Agreement requiring such adjustment, with the same force and effect
and if such Warrants had been issued of this date, whether or not such warrants
shall have been exercised (or exercisable) at the time of the occurrence of such
event and whether or not such Warrants
<PAGE>
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CUSIP No. 13-3750708 13D Page 35 of 61 Pages
- -------------------------------- -------------------------------
shall be issued and outstanding at the time of the occurrence of such event.
Thereafter, such warrants shall be exercisable at such adjusted Warrant's
exercise price for such adjusted number of shares of Common Stock or other
securities, properties or rights.
h. Redemption of Underwriter's Option.
Notwithstanding anything to the contrary contained in this Agreement or
elsewhere, the Underwriter's Option cannot be redeemed by then Company under any
circumstances.
i. Dividends and Other Distributions with Respect to
Outstanding Securities. In the event that the Company shall at any time after
the Closing Date and prior to the exercise and expiration of the Underwriter's
Option declare a dividend (other than a dividend consisting solely of shares of
Common Stock or a cash dividend or distribution payable out of current or
retained earnings) or otherwise distribute to the holders of Common Stock any
monies, assets, property, rights, evidences of indebtedness, securities (other
than such a cash dividend or distribution or dividend consisting solely of
shares of Common Stock), whether issued by the Company or by another person or
entity, or any other thing of value, the Holders of the unexercised
Underwriter's Option shall thereafter be entitled) in addition to the shares of
Common Stock or other securities receivable upon the exercise thereof, to
receive, upon the exercise of such Underwriter's Option, the same monies,
property, assets, rights, evidences or 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 Holders were the owners of the shares Common
Stock underlying the Underwriter's Option (but not the shares of Common Stock
issuable upon exercise of any Warrants underlying the Underwriter's option). 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
Paragraph 7(i).
<PAGE>
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CUSIP No. 13-3750708 13D Page 36 of 61 Pages
- -------------------------------- -------------------------------
j. Subscription Rights for Shares of Common Stock or
Other Securities. In case the Company or an affiliate of the Company shall at
any time after the date hereof and prior to the exercise of the Underwriter's
Option in full issue any rights to subscribe for shares of Common Stock or any
other securities of the Company or of such affiliate to all the holders of
Common Stock of the Company, the Holders of the unexercised Underwriter's Option
shall be entitled, in addition to the shares of Common Stock or other securities
receivable upon the exercise of the Underwriter's Option, to receive such rights
at the time such rights are distributed to the other stockholders of the Company
but only to extent of the number of shares of Common Stock, if any, for which
the Underwriter's Option remains exercisable.
k. Notice in Event of Dissolution. In case of the
dissolution, liquidation or winding-up of the Company, all rights under the
Underwriter's Option shall terminate on a date fixed by the Company, such date
to be no earlier than ten (10) days prior to the effectiveness of such
dissolution, liquidation or winding-up and not later than five (5) days prior to
such effectiveness. Notice of such termination of purchase rights shall be given
to the last registered Holder of the Underwriter's Option, as the same shall
appear on the books and records of the Company, by registered mail at least
thirty (30) days prior to such termination date.
l. Computations. The Company may retain a firm of
independent public accountants (who may be any such firm regularly employed by
the Company) to make any computation required under this Paragraph, and any
certificate setting forth such computation signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Paragraph 7.
<PAGE>
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CUSIP No. 13-3750708 13D Page 37 of 61 Pages
- -------------------------------- -------------------------------
8. Fractional Shares.
a. The Company shall not be required to issue
fractions of shares of Common Stuck or fractional Warrants on the exercise of
this Underwriter's Option, provided, however, that if the Holder exercises the
Underwriter's Option in full, any fractional shares of Common Stock shall be
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock.
b. The Holder of this Underwriter's Option, by
acceptance hereof, expressly waives his right to receive any fractional share of
Common Stock or fractional Warrant upon exercise of this Underwriter's Option.
9. Redemption of Warrants Underlying the Underwriter's Option.
The Warrants underlying the Underwriter's Option are
redeemable by tine Company at a redemption price of $.10 Warrant, in whole or in
part, 12 months after the date hereof and prior to their expiration upon not
Less than thirty (30) days' prior written notice to the holders of the Warrants;
provided that the average closing bid quotation of the Common Stock as reported
on The Nasdaq Stock Market, if traded thereon, or if not traded thereon, the
average closing sale price if listed on a national securities exchange (or other
reporting system that provides last sales prices), has been at least 187.5% of
the then current exercise price for a period of 20 consecutive trading days
ending on the third day prior to the date on which the Company gives notice of
redemption. Any redemption in part shall be made pro rata to all Warrant
holders. The redemption notice shall be made pro rata to all holders of the
Warrants at their respective addresses appearing in the Warrant register.
Holders of the Warrants will have exercise rights until the close of business on
the day immediately preceding the date fixed for redemption (at which time this
Underwriter's Option shall no longer be exercisable for Warrants).
<PAGE>
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CUSIP No. 13-3750708 13D Page 38 of 61 Pages
- -------------------------------- -------------------------------
10. Miscellaneous.
a. This Underwriter's Option shall be governed by and
in accordance with the laws of the State of New York without regard to the
conflicts of law principles thereof.
b. All notices, requests, consents and other
communications hereunder shall be made in writing and shall be deemed to have
been duly made when delivered, or mailed by registered or certified mail, return
receipt requested: (i) if to a Holder, to the address of such Holder as shown on
the books of the Company, or (ii) if to the Company, Metro Center, One Station
Place Stamford, Connecticut 06902.
c. The Company and the Underwriter may from time to
time supplement or amend this Underwriter's Option without the approval of any
other Holders 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 not to
materially adversely affect the interest of the Holders.
d. All the covenants and provisions of this
Underwriter's Option by or for the benefit of the Company and the Holders shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
e. Nothing in this Underwriter's Option shall be
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder or Holders, any legal or equitable
right, and this Underwriter's Option shall be for the sole and exclusive benefit
of the Company and the Underwriter and any other Holder or Holders.
<PAGE>
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CUSIP No. 13-3750708 13D Page 39 of 61 Pages
- -------------------------------- -------------------------------
f. This Underwriter's Option 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 Company has caused this Underwriter's
Warrant to be signed by its duly authorized officer and this Underwriter's
Option to be dated March 21, 1996.
SMARTSERV ONLINE, INC.
By:/s/ Sebastian E. Cassetta
-------------------------------
Sebastian E. Cassetta, Chairman
<PAGE>
- -------------------------------- -------------------------------
CUSIP No. 13-3750708 13D Page 40 of 61 Pages
- -------------------------------- -------------------------------
PURCHASE FORM
(To be signed only upon exercise of the Underwriter's Option)
The undersigned, the Holder of the foregoing Underwriter's
Option, hereby irrevocably elects to exercise the purchase rights represented by
such Underwriter's Option for, and to purchase thereunder, _______________
shares of Common Stock and/or ___ Warrants of SmartServ Online, Inc. and
herewith makes payment of $___________ therefor, and requests that the
certificates for Common Stock and/or Warrants be issued in the name(s) of, and
delivered to _______________________________________________ whose address(es)
is (are) __________________________________________________________________ and
whose social security or taxpayer identification number is
___________________________.
Dated:_______________________________
____________________________________**
____________________________________
Address
- --------
**Signature must conform in all respects to name of registered
Holder.
<PAGE>
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CUSIP No. 13-3750708 13D Page 41 of 61 Pages
- -------------------------------- -------------------------------
Exhibit 2
875 Third Avenue
New York, New York 10022
(212) 339-9800
April 24, 1997
Mr. Sebastian Cassetta
SmartServ Online, Inc.
One Station Place
Stamford, CT 06902
Attention: Mr. Sebastian Cassetta
Chairman and CEO
Gentlemen:
We are pleased to set forth the terms of the retention of Rickel &
Associates, Inc. ("Rickel") by SmartServ Online, Inc. (collectively with its
affiliates, the "Company").
1. Rickel will assist the Company as its non-exclusive financial
advisor. In connection with Rickels activities on the Company's behalf Rickel
will familiarize itself with the business, operations, properties, financial
condition and prospects of the Company. In connection with our role as your
financial advisor, we would expect our services to include specific advice
regarding the capitalization and other investment banking services as may be
mutually agreed in writing by Rickel and the Company.
2. In connection with Rickels' activities on the Company's behalf,
the Company agrees to cooperate with Rickel and will furnish to, or cause to be
furnished to, Rickel all information and data concerning the Company (the
"Information") which Rickel deems appropriate and will provide Rickel with
access to the Company's officers, directors, employees, appraisers, independent
accountants, legal counsel and other consultants and advisors, as well as any
possible leads the Company might have. The Company represents and warrants that
all information (a) made available to Rickel by the Company or (b) contained in
any filing by the Company with any court or governmental or regulatory agency,
commission or instrumentality (each, an "Agency") will, at all times during the
period of the engagement of Rickel hereunder, be complete and correct in all
material respects and will not certain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances under which such
statements are made. The Company further represents and warrants that any
projections or other Information provided by it to Rickel or any Agency will
have been prepared in good faith and will be based upon assumptions which, in
light of the circumstances under which they are made, are reasonable.
<PAGE>
- -------------------------------- -------------------------------
CUSIP No. 13-3750708 13D Page 42 of 61 Pages
- -------------------------------- -------------------------------
The Company acknowledges and agrees that, in rendering its services hereunder,
Rickel will be using and relying on the Information (and information available
from public sources and other sources deemed reliable by Rickel) without
independent verification thereof by Rickel or independent appraisal by Rickel of
any of the Company's assets. Rickel does not assume responsibility for the
accuracy or completeness of the Information or any other information regarding
the Company. Any advice rendered by Rickel pursuant to this Agreement may not be
disclosed publicly without, any reference to Rickel in any public communications
by the Company shall be subject to, Rickels' prior written consent except as may
be required by law or regulatory authority or in judicial or other proceedings.
3. In consideration of our services pursuant to this Agreement, Rickel
shall be entitled to receive, and the Company agrees to pay Rickel, the
following compensation:
Upon execution of this Agreement, the Company shall issue
Rickel, warrants (the "Warrants") to purchase 100,000 shares
of the Company's Common Stock which will be exercisable at the
following prices: 1) 25,000 at $2.00, 2) 25,000 at $2.25, 3)
25,000 at $2.75, and 4) 25,000 at $3.00. The Warrants shall
expire five years from the execution date of this letter and
will be exercisable immediately. The Company will use its best
efforts to keep a registration statement effective for the
life of the Warrants, and the Warrants shall carry customary
demand and "piggy-back" registration rights. The Company shall
prepare the Warrant agreement and effect a registration
statement at its own expense. The Warrants will be subject to
a "cashless" exchange provision.
4. In addition to the fees described in paragraph 3 above, the Company
agrees to promptly reimburse Rickel, upon request from time to time, for all
out-of pocket expenses incurred by Rickel (including fees and disbursements of
counsel, and of other consultants and advisors retained by Rickel that are not
employees of Rickel) in connection with the matters contemplated by this
Agreement. Such fees shall not exceed $500, unless prior permission has been
granted by the Company.
5. The Company agrees to indemnify Rickel in accordance with the
indemnification provisions (the "Indemnification Provisions") attached to this
Agreement, which Indemnification Provisions are incorporated herein and made a
part hereof and which shall survive the termination, expiration or suppression
of this Agreement.
6. Either party hereto may terminate this Agreement at any time upon
30 days written notice, without liability or continuing obligation, except as
set forth in the following sentence. Neither termination of this Agreement nor
completion of the assignment contemplated hereby shall affect: (i) any
compensation earned by Rickel up to the date of termination or completion, as
the case may be, (ii) the provisions of paragraph 3-13, inclusive, of this
Agreement and (iv) the attached Indemnification Provisions which are
incorporated herein, all of which shall remain operative and in full force and
effect.
<PAGE>
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CUSIP No. 13-3750708 13D Page 43 of 61 Pages
- -------------------------------- -------------------------------
17. The validity and interpretation of this Agreement shall be governed
by and enforced, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be fully performed therein (excluding
the conflicts of laws rules). The Company irrevocably submits to the
jurisdiction of any court of the State of New York or the United States District
Court for the Southern District of the State of New York for the purpose of any
suit, action or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated hereby, which is brought by or against
the Company and (i) hereby irrevocably agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in any such court,
(ii) to the extent that the Company has acquired, or hereafter may acquire, any
immunity from jurisdiction of any such court or from any legal process therein,
the Company hereby waives, to the fullest extent permitted by law, such immunity
and (iii) agrees not to commence any action, suit or proceeding relating to this
Agreement other than in such courts. The Company hereby waives, and agrees not
to assert in any such suit, action or proceeding, in each case, to the fullest
extent permitted by applicable law, any claim that (a) the Company is not
personally subject to the jurisdiction of any such court, (b) the Company is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to the Company or its property or (c) any such suit, action or
proceeding is brought in any inconvenient forum.
18. The benefits of this Agreement shall inure to the parties hereto,
their respective successors and assigns and to the indemnified parties hereunder
and their respective successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
19. Each of the Company and Rickel hereby knowingly, voluntarily and
irrevocably waives any right it may have to a trial by jury in respect of any
claim based upon, arising out of or in connection with this Agreement and the
transactions contemplated thereby. Each of the Company and Rickel hereby
certifies that no representative or agent of the other party has represented
expressly or otherwise that such party would not seek to enforce the provision
of this waiver. Further, each of the Company and Rickel acknowledges that each
party has been induced to enter this Agreement by, inter, alia, the provisions
of this paragraph.
20. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or provision hereof
is invalid or unenforceable, (i) the remaining terms and provisions hereof shall
be unimpaired and shall remain in full force and effect and (ii) the invalid or
unenforceable provision or term shall be replaced by a term or provision that is
valid and enforceable and that comes closes to expressing the intention of such
invalid or unenforceable term or provision.
21. This Agreement embodies the entire agreement and understanding of
the parties hereto and supersedes any and all prior agreements, arrangements and
understanding relating to the matters provided for herein. No alteration,
waiver, amendment, change or supplement hereto shall be binding or effective
unless the same is set forth in writing signed by a duly authorized
representative of each party.
<PAGE>
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CUSIP No. 13-3750708 13D Page 44 of 61 Pages
- -------------------------------- -------------------------------
22. The Company and Rickel has all requisite corporate power and
authority to enter into this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.
23. This Agreement does not create, and shall not be construed as
creating, rights enforceable by any person or entity not a party hereto, except
those entitled thereto by virtue of clause (iv) of paragraph 6 and the
Indemnification Provisions hereof. The Company acknowledges and agrees that
Rickel is not and shall not be construed as a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or creditors of the Company
or any other person by virtue of this Agreement or the retention of Rickel
hereunder, all of which are hereby expressly waived. The Company also agrees
that Rickel shall not have any liability (including without limitation,
liability for losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses or disbursements resulting from any
negligent act or omission of Rickel) (whether direct or indirect, in contract,
tort or otherwise) to the Company or to any person (including, without
limitation, equity holders and creditors of the Company) claiming through the
Company for or in connection with the engagement of Rickel, this Agreement or
the transaction contemplated hereby. The Company acknowledges that Rickel was
induced to enter into this Agreement by inter, alia, the provisions of this
paragraph.
24. For the convenience of the parties hereto, any number of
counterparts of this Agreement may be executed by the parties hereto. Each such
counterpart shall be, and shall deemed to be, an original instrument, but all
such counterparts taken together shall constitute one and the same Agreement.
If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us.
Very truly yours,
RICKEL & ASSOCIATES, INC.
By: /s/
--------------------------
Managing Director
Confirmed and Agreed to:
this 25 day of April, 1997
SMARTSERV ONLINE
<PAGE>
- -------------------------------- -------------------------------
CUSIP No. 13-3750708 13D Page 45 of 61 Pages
- -------------------------------- -------------------------------
By: /s/ Sebastian Cassetta
--------------------------
Mr. Sebastian Cassetta
Chairman and CEO
<PAGE>
- -------------------------------- -------------------------------
CUSIP No. 13-3750708 13D Page 46 of 61 Pages
- -------------------------------- -------------------------------
INDEMNIFICATION PROVISIONS
The Company (as such term is defined in the Agreement (as such term is
defined below)) agrees to indemnify and hold harmless Rickel, to the fullest
extent permitted by law, from and against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements (and any and all actions, suits, proceedings and investigations in
respect thereof and any and all legal and other costs, expenses and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, suit, proceeding or investigation (whether or not in connection
with litigation in which Rickel is a party), directly or indirectly, caused by,
relating to, based upon, arising out of, or in connection with (a) Rickels'
acting for the Company, including, without limitation, any act or omission by
Rickel in connection with its acceptance of or the performance or
non-performance of its obligations under the agreements dated April 24, 1997
between Rickel & Associates, Inc. and SmartServ Online, as it may be amended
from time to time (the "Agreement") or (b) any untrue statement or alleged
untrue statement of a material fact contained in, or omissions or alleged
omissions from, any information furnished by the Company to Rickel or any
Agency; provided, however, such indemnity agreement shall not apply to any
portion of any such loss, claim, damage, obligation, penalty, judgment, award,
liability, cost, expense or disbursement to the extent it is found obligation
penalty, judgment, award, liability, cost, expense or disbursement to the extent
it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resuited primarily and directly from the
gross negligence or willful misconduct of Rickel.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to Rickel or the persons indemnified below
in this sentence and shall extend to the following: Rickel & Associates, Inc.,
their respective affiliated entities, directors, officers, shareholders,
partners, employees, legal counsel, agents and controlling persons (within the
meaning of the federal securities laws). All references to Rickel in these
Indemnification Provisions shall be understood to include any and all of the
foregoing.
If any action, suit, proceeding or investigation is commenced, as to
which Rickel proposes to demand indemnification, it shall notify the Company
with reasonable promptness; provided, however, that any failure by Rickel to
notify the Company shall not relieve the Company from its obligations hereunder.
The Company shall have the right to assume the defense of any such action, suit,
proceeding or investigation, including the employment of counsel and the payment
of all expenses. Rickel shall have the right to employ separate counsel in any
action, suit, proceeding or investigation and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
Rickel unless (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed to assume such defense and to
employ counsel or (iii) in such action, suit, proceeding or investigation there
is, in the opinion of such separate counsel, a conflict on any material issue
between the position of the Company and Rickel. The Company shall be liable for
any settlement of any claim against Rickel made with its written consent, which
consent shall not be unreasonably withheld or delay. The Company shall not,
without the prior written consent of
<PAGE>
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CUSIP No. 13-3750708 13D Page 47 of 61 Pages
- -------------------------------- -------------------------------
Rickel, settle or compromise any claim, or permit a default or consent to the
entry of any judgment in respect thereof, unless such settlement, compromise or
consent includes, as an unconditional term thereof, the giving by the claimant
to Rickel of an unconditional and irrevocable release from all liability in
respect of such claim. Rickel shall not settle or compromise any such action,
suit, proceeding or investigation without the Company's written consent, which
shall not be unreasonably withheld or delayed.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification Provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and Rickel, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Rickel, on the other hand, and also the relative
fault of the Company on the one hand, and Rickel, on the other hand, in
connection with the statements, acts or omissions which resulted in such losses,
claims, obligations, penalties, judgments, awards, liabilities, costs, expenses
or disbursements and the relevant equitable considerations shall also be
considered. No person found liable for a fraudulent misrepresentation shall be
entitled to contribution from any person, who is not also found liable for such
fraudulent misrepresentation. Notwithstanding the foregoing, Rickel shall not be
obligated to contribute any amount hereunder that exceeds the amount of fees
previously received by Rickel pursuant to the Agreement.
Neither termination nor completion of the engagement of Rickel referred
to above shall affect these Indemnification Provisions which shall then remain
operative and in full force and effect.
<PAGE>
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CUSIP No. 13-3750708 13D Page 48 of 61 Pages
- -------------------------------- -------------------------------
Exhibit 3
875 Third Avenue
New York, New York 10022
(212) 339-9800
May 19, 1997
Mr. Sebastian Cassetta
SmartServ Online, Inc.
One Station Place
Stamford, CT 06902
Attention: Mr. Sebastian Cassetta
Chairman and CEO
Gentlemen:
We are pleased to set forth the terms of the retention of Rickel &
Associates, Inc. ("Rickel") by SmartServ Online, Inc. (collectively with its
affiliates, the "Company").
25. Rickel will assist the Company as its non-exclusive financial
advisor. In connection with Rickels activities on the Company's behalf, Rickel
will familiarize itself with the business, operations, properties, financial
condition and prospects of the Company. In connection with our role as your
financial advisor, we would expect our services to include specific advice
regarding the capitalization and other investment banking services as may be
mutually agreed in writing by Rickel and the Company. The Company further agrees
that it will not for a period of one (1) year, release its' stockholder lists to
anyone without prior written consent of Rickel.
26. In connection with Rickels' activities on the Company's behalf ,
the Company agrees to cooperate with Rickel and will furnish to, or cause to be
furnished to, Rickel all information and data concerning the Company (the
"Information") which Rickel deems appropriate and will provide Rickel with
access to the Company's officers, directors, employees, appraisers, independent
accountants, legal counsel and other consultants and advisors, as well as any
possible leads the Company might have. The Company represents and warrants that
all information (a) made available to Rickel by the Company or (b) contained in
any filing by the Company with any court or governmental or regulatory agency,
commission or instrumentality (each, an "Agency") will, at all times during the
period of the engagement of Rickel hereunder, be complete and correct in all
material respects and will not certain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances under which such
statements are made. The Company further represents and warrants that any
projections or other Information provided by it
<PAGE>
- -------------------------------- -------------------------------
CUSIP No. 13-3750708 13D Page 49 of 61 Pages
- -------------------------------- -------------------------------
to Rickel or any Agency will have been prepared in good faith and will be based
upon assumptions which, in light of the circumstances under which they are made,
are reasonable. The Company acknowledges and agrees that, in rendering its
services hereunder, Rickel will be using and relying on the Information (and
information available from public sources and other sources deemed reliable by
Rickel) without independent verification thereof by Rickel or independent
appraisal by Rickel of any of the Company's assets. Rickel does not assume
responsibility for the accuracy or completeness of the Information or any other
information regarding the Company. Any advice rendered by Rickel pursuant to
this Agreement may not be disclosed publicly without, any reference to Rickel in
any public communications by the Company shall be subject to, Rickels' prior
written consent except as may be required by law or regulatory authority or in
judicial or other proceedings.
27. In consideration of our services pursuant to this Agreement, Rickel
shall be entitled to receive, and the Company agrees to pay Rickel, the
following compensation:
Upon execution of this Agreement, the Company shall issue
Rickel, warrants (the "Warrants") to purchase 100,000 shares
of the Company's Common Stock which will be exercisable at the
following prices: 1) 25,000 at $3.00, 2) 25,000 at $3.50, 3)
25,000 at $3.75, and 4) 25,000 at $4.00. The Warrants shall
expire five years from the execution date of this letter and
will be exercisable immediately. The Company will use its best
efforts to keep a registration statement effective for the
life of the Warrants, and the Warrants shall carry customary
demand and "piggy-back" registration rights. The Company shall
prepare the Warrant agreement and effect a registration
statement at its own expense. The Warrants will be subject to
a "cashless" exchange provision.
28. In addition to the fees described in paragraph 3 above, the Company
agrees to promptly reimburse Rickel, upon request from time to time, for all
out-of pocket expenses incurred by Rickel (including fees and disbursements of
counsel, and of other consultants and advisors retained by Rickel that are not
employees of Rickel) in connection with the matters contemplated by this
Agreement. Such fees shall not exceed $500, unless prior permission has been
granted by the Company.
29. The Company agrees to indemnify Rickel in accordance with the
indemnification provisions (the "Indemnification Provisions") attached to this
Agreement, which Indemnification Provisions are incorporated herein and made a
part hereof and which shall survive the termination, expiration or suppression
of this Agreement.
30. Either party hereto may terminate this Agreement at any time upon
30 days written notice, without liability or continuing obligation, except as
set forth in the following sentence. Neither termination of this Agreement nor
completion of the assignment contemplated hereby shall affect: (i) any
compensation earned by Rickel up to the date of termination or completion, as
the case may be, (ii) the provisions of paragraph 3-13, inclusive, of this
<PAGE>
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CUSIP No. 13-3750708 13D Page 50 of 61 Pages
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Agreement and (iv) the attached Indemnification Provisions which are
incorporated herein, all of which shall remain operative and in full force and
effect.
31. The validity and interpretation of this Agreement shall be governed
by and enforced, and construed in accordance with, the laws of the State of New
York applicable to agreements made and to be fully performed therein (excluding
the conflicts of laws rules). The Company irrevocably submits to the
jurisdiction of any court of the State of New York or the United States District
Court for the Southern District of the State of New York for the purpose of any
suit, action or other proceeding arising out of this Agreement, or any of the
agreements or transactions contemplated hereby, which is brought by or against
the Company and (i) hereby irrevocably agrees that all claims in respect of any
such suit, action or proceeding may be heard and determined in any such court,
(ii) to the extent that the Company has acquired, or hereafter may acquire, any
immunity from jurisdiction of any such court or from any legal process therein,
the Company hereby waives, to the fullest extent permitted by law, such immunity
and (iii) agrees not to commence any action, suit or proceeding relating to this
Agreement other than in such courts. The Company hereby waives, and agrees not
to assert in any such suit, action or proceeding, in each case, to the fullest
extent permitted by applicable law, any claim that (a) the Company is not
personally subject to the jurisdiction of any such court, (b) the Company is
immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to the Company or its property or (c) any such suit, action or
proceeding is brought in any inconvenient forum.
32. The benefits of this Agreement shall inure to the parties hereto,
their respective successors and assigns and to the indemnified parties hereunder
and their respective successors and assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the parties hereto
shall be binding upon their respective successors and assigns.
33. Each of the Company and Rickel hereby knowingly, voluntarily and
irrevocably waives any right it may have to a trial by jury in respect of any
claim based upon, arising out of or in connection with this Agreement and the
transactions contemplated thereby. Each of the Company and Rickel hereby
certifies that no representative or agent of the other party has represented
expressly or otherwise that such party would not seek to enforce the provision
of this waiver. Further, each of the Company and Rickel acknowledges that each
party has been induced to enter this Agreement by, inter, alia, the provisions
of this paragraph.
34. If it is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) that any term or provision hereof
is invalid or unenforceable, (i) the remaining terms and provisions hereof shall
be unimpaired and shall remain in full force and effect and (ii) the invalid or
unenforceable provision or term shall be replaced by a term or provision that is
valid and enforceable and that comes closes to expressing the intention of such
invalid or unenforceable term or provision.
35. This Agreement embodies the entire agreement and understanding of
the parties hereto and supersedes any and all prior agreements, arrangements and
understanding relating to the matters provided for herein. No alteration,
waiver, amendment, change or supplement hereto
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CUSIP No. 13-3750708 13D Page 51 of 61 Pages
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shall be binding or effective unless the same is set forth in writing signed by
a duly authorized representative of each party.
36. The Company and Rickel has all requisite corporate power and
authority to enter into this Agreement and the transactions contemplated hereby.
This Agreement has been duly and validly authorized by all necessary corporate
action on the part of the Company and has been duly executed and delivered by
the Company and constitutes a legal, valid and binding agreement of the Company,
enforceable in accordance with its terms.
37. This Agreement does not create, and shall not be construed as
creating, rights enforceable by any person or entity not a party hereto, except
those entitled thereto by virtue of clause (iv) of paragraph 6 and the
Indemnification Provisions hereof. The Company acknowledges and agrees that
Rickel is not and shall not be construed as a fiduciary of the Company and shall
have no duties or liabilities to the equity holders or creditors of the Company
or any other person by virtue of this Agreement or the retention of Rickel
hereunder, all of which are hereby expressly waived. The Company also agrees
that Rickel shall not have any liability (including without limitation,
liability for losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses or disbursements resulting from any
negligent act or omission of Rickel) (whether direct or indirect, in contract,
tort or otherwise) to the Company or to any person (including, without
limitation, equity holders and creditors of the Company) claiming through the
Company for or in connection with the engagement of Rickel, this Agreement or
the transaction contemplated hereby. The Company acknowledges that Rickel was
induced to enter into this Agreement by inter, alia, the provisions of this
paragraph.
38. For the convenience of the parties hereto, any number of
counterparts of this Agreement may be executed by the parties hereto. Each such
counterpart shall be, and shall deemed to be, an original instrument, but all
such counterparts taken together shall constitute one and the same Agreement.
If the foregoing correctly sets forth our Agreement, please sign the
enclosed copy of this letter in the space provided and return it to us.
Very truly yours,
RICKEL & ASSOCIATES, INC.
By: /s/
----------------------------------
Managing Director
Confirmed and Agreed to:
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CUSIP No. 13-3750708 13D Page 52 of 61 Pages
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this 19 day of May, 1997
SMARTSERV ONLINE
By: /s/ Sebastian Cassetta
--------------------------
Mr. Sebastian Cassetta
Chairman and CEO
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CUSIP No. 13-3750708 13D Page 53 of 61 Pages
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INDEMNIFICATION PROVISIONS
The Company (as such term is defined in the Agreement (as such term is
defined below)) agrees to indemnify and hold harmless Rickel, to the fullest
extent permitted by law, from and against any and all losses, claims, damages,
obligations, penalties, judgments, awards, liabilities, costs, expenses and
disbursements (and any and all actions, suits, proceedings and investigations in
respect thereof and any and all legal and other costs, expenses and
disbursements in giving testimony or furnishing documents in response to a
subpoena or otherwise), including, without limitation, the costs, expenses and
disbursements, as and when incurred, of investigating, preparing or defending
any such action, suit, proceeding or investigation (whether or not in connection
with litigation in which Rickel is a party), directly or indirectly, caused by,
relating to, based upon, arising out of, or in connection with (a) Rickels'
acting for the Company, including, without limitation, any act or omission by
Rickel in connection with its acceptance of or the performance or
non-performance of its obligations under the agreements dated April 24, 1997
between Rickel & Associates, Inc. and SmartServ Online, as it may be amended
from time to time (the "Agreement") or (b) any untrue statement or alleged
untrue statement of a material fact contained in, or omissions or alleged
omissions from, any information furnished by the Company to Rickel or any
Agency; provided, however, such indemnity agreement shall not apply to any
portion of any such loss, claim, damage, obligation, penalty, judgment, award,
liability, cost, expense or disbursement to the extent it is found obligation
penalty, judgment, award, liability, cost, expense or disbursement to the extent
it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resuited primarily and directly from the
gross negligence or willful misconduct of Rickel.
These Indemnification Provisions shall be in addition to any liability
which the Company may otherwise have to Rickel or the persons indemnified below
in this sentence and shall extend to the following: Rickel & Associates, Inc.,
their respective affiliated entities, directors, officers, shareholders,
partners, employees, legal counsel, agents and controlling persons (within the
meaning of the federal securities laws). All references to Rickel in these
Indemnification Provisions shall be understood to include any and all of the
foregoing.
If any action, suit, proceeding or investigation is commenced, as to
which Rickel proposes to demand indemnification, it shall notify the Company
with reasonable promptness; provided, however, that any failure by Rickel to
notify the Company shall not relieve the Company from its obligations hereunder.
The Company shall have the right to assume the defense of any such action, suit,
proceeding or investigation, including the employment of counsel and the payment
of all expenses. Rickel shall have the right to employ separate counsel in any
action, suit, proceeding or investigation and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
Rickel unless (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed to assume such defense and to
employ counsel or (iii) in such action, suit, proceeding or investigation there
is, in the opinion of such separate counsel, a conflict on any material issue
between the position of the Company and Rickel. The Company shall be liable for
any settlement of any claim against Rickel made with its written consent, which
consent shall not be unreasonably withheld or delay. The Company shall not,
without the prior written consent of
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CUSIP No. 13-3750708 13D Page 54 of 61 Pages
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Rickel, settle or compromise any claim, or permit a default or consent to the
entry of any judgment in respect thereof, unless such settlement, compromise or
consent includes, as an unconditional term thereof, the giving by the claimant
to Rickel of an unconditional and irrevocable release from all liability in
respect of such claim. Rickel shall not settle or compromise any such action,
suit, proceeding or investigation without the Company's written consent, which
shall not be unreasonably withheld or delayed.
In order to provide for just and equitable contribution, if a claim for
indemnification pursuant to these indemnification Provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company, on the one hand, and Rickel, on the other hand, shall
contribute to the losses, claims, damages, obligations, penalties, judgments,
awards, liabilities, costs, expenses and disbursements to which the indemnified
persons may be subject in accordance with the relative benefits received by the
Company, on the one hand, and Rickel, on the other hand, and also the relative
fault of the Company on the one hand, and Rickel, on the other hand, in
connection with the statements, acts or omissions which resulted in such losses,
claims, obligations, penalties, judgments, awards, liabilities, costs, expenses
or disbursements and the relevant equitable considerations shall also be
considered. No person found liable for a fraudulent misrepresentation shall be
entitled to contribution from any person, who is not also found liable for such
fraudulent misrepresentation. Notwithstanding the foregoing, Rickel shall not be
obligated to contribute any amount hereunder that exceeds the amount of fees
previously received by Rickel pursuant to the Agreement.
Neither termination nor completion of the engagement of Rickel referred
to above shall affect these Indemnification Provisions which shall then remain
operative and in full force and effect.
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CUSIP No. 13-3750708 13D Page 55 of 61 Pages
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Exhibit 4
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
- ----------------------------------------------X
: Chapter 11
In re
: Case No. 98-B-47203 (SMB)
RICKEL & ASSOCIATES, INC.,
:
Debtor.
- ----------------------------------------------X
ORDER APPROVING SALE OF DEBTOR'S ASSETS
Upon the Emergency Order Fixing (i) an Expedited Hearing to Consider
the Debtor's Application for Authority to Sell Assets Under Terms of an Asset
Purchase Agreement (the "Purchase Agreement") with American Warrant Partners,
LLC ("AWP") Subject to Higher and Better Offers and (ii) Provisions for Higher
and Better Offers and (iii) the Form and Manner of Notice of the Expedited
Hearing and Related Provisions of the Sale entered by this Court (the "Emergency
Order"); and upon the application (the "Application"), dated February 17, 2000
of Rickel & Associates, Inc., debtor and debtor-in-possession (the "Debtor"),
seeking entry of (A) the Emergency Order and (B) an order, pursuant to Sections
105, 363(b) and (f) of Title 11, United States Code (the "Bankruptcy Code") and
Federal Rules of Bankruptcy Procedure 2002 and 600, authorizing the Debtor to
sell certain assets, (the "Assets") set forth in Exhibit A to the Application;
and there being no objections (the "Objections') filed; and upon the adjournment
of the Hearing to March 21, 2000 (the "Hearing") and notice of the adjournment
having been given to all parties served with the Emergency Order and the
Application; and upon the corrected schedule of the Assets which is annexed
hereto as Exhibit "A" to this Order which was also served upon all parties
served with the Emergency Order and the Application; and after hearing
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CUSIP No. 13-3750708 13D Page 56 of 61 Pages
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the arguments of the Debtor, by its counsel, Wolman, Babitt & King, L.L.P., and
the Official Committee of Unsecured Creditors (the "Committee"), by its counsel,
Rattet & Pasternak, LLP, in support of the sale of the Assets subject to higher
and better offers; and upon the auction sale being conducted by the Court during
the Hearing; and after due deliberation and sufficient cause appearing therefor,
it is hereby FOUND as follows:
39. This Court has jurisdiction over this proceeding under 28 U.S.C.
ss.ss. 1334 and 157(a). The Application and this sale comprise a core proceeding
under 28 U.S.C. ss. 157(b).
40. The Court confirmed the Debtor's Plan of Reorganization by Order
dated March 7, 2000.
41. Based on the representations contained in the Application as
augmented by counsel at the Hearing, certain of the Assets and the Debtor's
rights thereto are contested or not confirmed or registered and require
additional resources be expended to resolve certain disputes or effect
perfection of the Debtor's rights in the Assets which raises certain risks
associated with the realization of the entire value of the Assets which the
Debtor transfers to the successful bidder through this sale.
42. After undertaking an analysis of the nature of the Debtor's
remaining assets, the Debtor determined based on many factors, including but not
limited to the existence of certain risks and the need for the expenditure of
additional resources, that it would be in the best interests of the Debtor's
estate if it could sell certain illiquid warrants and related assets identified
on Exhibit A hereto, previously defined as the Assets, pursuant to a bulk bid,
rather than attempting to sell each asset separately.
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CUSIP No. 13-3750708 13D Page 57 of 61 Pages
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43. AWP offered to purchase the Assets on the terms set forth in the
Asset Purchase Agreement and that such offer resulted from arms-length
negotiations initially between counsel to the Committee and thereafter between
AWP's counsel and counsel to the Debtor.
44. Debtor's's counsel reviewed and revised the original Exhibit of the
Assets which was provided by the representatives of AWP to be sold to conform
with what remained in the Debtor Is name after reviewing the Debtor's books and
records.
45. Gregg Smith, who is a principal of AWP, is also a member of the
Committee in this case.
46. The Court is satisfied that the Debtor~s determination to sell the
Assets pursuant to a bulk bid is a product of the Debtor's's exercise of its
sound business judgment, and will result in a greater benefit to the Debtors
estate than an attempt to sell each of the Debtor's assets separately. Further,
no party at the hearing offered to purchase any of the Securities separately.
47. AWP's offer to purchase of the Assets and the sale and/or transfer
thereof by the Debtor, pursuant to the Asset Purchase Agreement, for cash and
other consideration set forth in the Asset Purchase Agreement, as the same may
be modified at the Hearing, on the terms and conditions set forth in this Order
and the Asset Purchase Agreement, was negotiated at arm's length and is found to
be in good faith. The Debtor and AWP, in the negotiation of the Asset Purchase
Agreement have complied in all respects with the applicable provisions of the
Bankruptcy Code and rules relating thereto and there is no evidence of
collusion, fraud or unfair advantage on the part of AWP.
48. The terms of sale of the Assets were subject to higher and better
offers and the Court entertained bids at an auction conducted by the Court at
the Hearing which resulted in
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CUSIP No. 13-3750708 13D Page 58 of 61 Pages
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AWP (the "Purchaser") being the successful bidder in the amount of $3,525,000
(the "Purchase Price").
49. In light of the open bidding and resulting auction, the Purchase
Price represents the highest and best offer for the Assets and is fair,
reasonable and adequate consideration under the circumstances, in all respects,
and the sale is in the best interests of the Debtor's estate.
50. The Purchaser is a purchaser in good faith of the Assets and is
entitled to the protections afforded by Section 363(m) of the Bankruptcy Code.
Based upon the foregoing findings, is hereby ORDERED, ADJUDGED and
DECREED that
a. All of the foregoing findings of the Court are incorporated herein
as if fully set forth herein and the Application, as modified, is granted.
b. The Debtor be and hereby is authorized to sell the Assets to the
Purchaser pursuant to the terms of the Asset Purchase Agreement for the sum of
$3,525,000, Purchase Price, and the transactions contemplated under the Asset
Purchase Agreement are hereby authorized and approved.
c. The Asset Purchase Agreement and the list of Assets annexed hereto
as Exhibit A are hereby approved.
d. The Debtor is authorized and directed to (a) execute, acknowledge
and deliver to the Purchaser such instruments or documents of assignment,
consent, conveyance, transfer, release and other assurances relative to the
Assets necessary to consummate the Asset Purchase Agreement; (b) take such other
action that may be reasonably necessary, desirable or customary to implement the
terms and provisions of the Asset Purchase Agreement, and any other action that
may reasonably be requested by the Purchaser for purposes of assigning,
transferring,
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CUSIP No. 13-3750708 13D Page 59 of 61 Pages
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granting, conveying, and confirming to the Purchaser, or reducing to possession,
any or all of the Assets, as may be provided in the Asset Purchase Agreement or
otherwise; and (c) execute such nonmaterial amendments to the Asset Purchase
Agreement as may be required to effectuate the letter and intent of such
agreement and the consummation of the transactions authorized by this Order, all
without further Order of the Court.
e. The Debtor is authorized and directed to transfer and convey the
Assets to the Purchaser at the closing to be scheduled under the terms of the
Asset Purchase Agreement ("Closing"), pursuant to Sections 363(b) and (f) of the
Bankruptcy Code, free and cigar of all liens, encumbrances, claims (as "claim"
is defined in 11 U.S.C. ss.101(5)), security interests, pledges, restrictions,
options, judgments, orders, interests, and/or tax claims (inclusive of
transferee tax liability claims), in each case of any kind or nature, whether
secured or unsecured, choate or inchoate, filed or unfiled, scheduled or
unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or
non-contingent, material or non-material, known or unknown, whether arising
prior to or subsequent to the date of the filing of the Chapter 11 petition of
the Debtor (collectively "Claims" and each a "Claim").
f. From and after entry of this Order, the Debtor, its creditors, other
parties in interests, and each of them, shall not take or cause to be taken any
action with would interfere with the transfer, assignment and conveyance of the
Assets to the Purchaser or other consents, undertakings or assurances given by
the Debtor in accordance with the terms of the Asset Purchase Agreement and this
Order. All persons or entities who presently, or on the date of the closing are,
in possession of any of the Assets are hereby directed to surrender possession
of such Assets to the Purchaser at the Closing.
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CUSIP No. 13-3750708 13D Page 60 of 61 Pages
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g. After the Closing, this Court shall be divested of jurisdiction of
the Assets purchased by the Purchaser, except, however, the Court shall retain
jurisdiction to resolve any disputes which may arise in connection with the
consummation of the transactions contemplated by the Asset Purchase Agreement or
this Order, and to make such further orders as may be necessary in furtherance
of the terms of the Asset Purchase Agreement and this Order.
h. From and After the Closing, the Purchaser shall have the right and
authority, subject to the terms of the Asset Purchase Agreement, to collect for
the account of the Buyer any sums which shall be due and payable on account of
any of the Assets transferred or intended to be transferred to the Purchaser at
the closing and to endorse with the name of the Debtor any checks or drafts
relating to the Assets which may be payable to the order of the Debtor.
i. From and after the Closing, all agreements of any kind whatsoever
and all orders of this Court entered in this case prior to the date hereof shall
be deemed amended and/or vacated to the extent required to permit the
consummation of the transactions under the Asset Purchase Agreement. To the
extent such other agreements or orders are inconsistent with this Order or the
Asset Purchase Agreement, this Order and the Asset Purchase Agreement shall in
all such cases govern.
j. This Order is binding upon and shall inure to the benefit of any
successors or assigns of the Debtor and the Purchaser. No provision of this
Order shall be modified, amended, revoked or terminated, whether under any plan
of reorganization or otherwise, if such modification, amendment, revocation or
termination is sought by any party receiving notice of the Application and the
Emergency Order.
k. The value of the Assets fluctuates. Accordingly, the stay provided
for in Fed. R. Bankrupt. 6004(g), is waived for good cause shown to allow (i)
the Debtor and the
<PAGE>
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CUSIP No. 13-3750708 13D Page 61 of 61 Pages
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Purchaser to consummate the transactions contemplated by the Asset Purchase
Agreement and conduct the Closing immediately upon the entry of this Order, or
as soon thereafter as the parties are prepared to close, and (ii) the Purchaser
shall have the full protection afforded to it as a good faith purchaser of the
Assets pursuant to Section 363(m) of the Bankruptcy Code and all parties and
entities are hereby barred from asserting any Claims or other interests against
the Purchaser, its successors and assigns, pursuant to Section 363(f) of the
Bankruptcy Code and the Purchaser and the Debtor are authorized to take any and
all steps reasonably necessary, including the execution of documents, to
effectuate this bar.
l. Consistent with the provisions of the Asset Purchase Agreement and
Section 363(f) of the Bankruptcy Code, the Purchaser shall not assume, nor shall
the Purchaser be deemed to have assumed, any liability or obligation of the
Debtor of any kind, character or description, whether known or unknown, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, secured or
unsecured, joint or several, or otherwise.
m. This Order shall take effect and shall be fully enforceable
immediately upon execution hereof.
Dated: New York, New York
March 20, 2000
/s/ Stuart M. Bernstein
-------------------------------
USBJ
