As filed with the Securities and Exchange Commission on July 30, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-3
Registration Statement
Under
The Securities Act of 1933
---------------
ROOM PLUS, INC.
(Exact name of registrant as specified in its charter)
New York 11-2622051
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
91 Michigan Avenue
Paterson, New Jersey 07503
(973) 523-4600
---------------
(Address, including zip code and
telephone number including area code,
of registrant's principal executive office)
---------------
C. Kenneth Shank, Esq.
Wilentz, Goldman & Spitzer, PC
90 Woodbridge Center Drive
Woodbridge, New Jersey 07095
(732) 855-6145
---------------
(Name, address, including zip code and telephone
number including area code, of agent for service)
<PAGE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: [ X ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum Amount of
of Securities to be Amount to be Offering Price Per Aggregate Offering Registration
Registered Registered Share (1) Price (1) Fee
---------- ---------- --------- --------- ---
<S> <C> <C> <C> <C>
Common stock,
$.00133 par value 1,366,250 $2.4063 $3,287,607.38 $969.84
</TABLE>
- ------------------------
(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for purposes of calculating amount of registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED JULY 30, 1998
PROSPECTUS
ROOM PLUS, INC.
1,366,250 Shares of Common Stock, $.00133 par value
This Prospectus relates to 1,366,250 shares of common stock, $.00133 par
value of Room Plus, Inc. (the "Company"), a New York corporation. These shares
are being offered for sale by the Selling Shareholders as hereinafter defined
(this "Offering").
In June 1995, the Company granted to Mark Rubin ("Rubin") warrants (the
"Rubin Warrants") to purchase a maximum of 56,250 shares of common stock at a
purchase price of $2.00 per share. In September 1995, the Company granted to
Kirlin Securities, Inc. ("Kirlin") warrants (the "Kirlin Warrants") to purchase
a maximum of 750,000 shares of common stock at a purchase price of $1.20 per
share (both, the "Warrant Stock", and collectively with the "Option Stock" (as
hereinafter defined), the "Common Stock"). The current holders of the Kirlin
Warrants are Swan Alley (Nominees) Limited, Frank Terzo, Mark Rubin, Alan Lyons,
David Lindner and Anthony J. Kirincic (the "Kirlin Shareholders").
On April 27, 1998, the Company issued to Rubin and Finbar O'Neill
("O'Neill", and collectively with the Kirlin Shareholders and Rubin, the
"Selling Shareholders") options to purchase an aggregate of 500,000 shares of
the Company's common stock at an exercise price of $2.125 (the "Initial Option
Stock"). On June 23, 1998, the Company issued to Rubin additional options to
purchase an aggregate of 60,000 shares of the Company's common stock at an
exercise price of $2.125 (the "Additional Option Stock", and collectively with
the Initial Option Stock, the "Option Stock").
The Company will receive the proceeds from the exercise of the warrants
and options but will not receive any of the proceeds from the sale of the Common
Stock.
This Offering is not being underwritten. The shares of Common Stock being
offered hereunder may be sold from time to time by the Selling Shareholders in
one or more transactions on the NASDAQ SmallCap Market ("NASDAQ") or the Boston
Stock Exchange ("BSE"), in block transactions, in negotiated transactions or by
a combination of such methods of offering at prevailing market prices, at prices
related to prevailing market prices or negotiated prices. All of the expenses of
preparing and filing the Registration Statement of which this Prospectus forms a
part are being paid by the Company.
The common stock of the Company is traded on NASDAQ and on the BSE, under
the symbols PLUS and RPF, respectively. On July 23, 1998, the average of the
high and low prices at which the Common Stock was quoted on NASDAQ was
$2.4063.
INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
The date of this Prospectus is July 30, 1998
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and files reports and other
information with the Securities and Exchange Commission (the "Commission") in
accordance therewith. Such reports, proxy statements, and other information
filed by the Company are available for inspection and copying at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices located at 7 World Trade
Center, Suite 1300, New York, New York 10048, and at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth St., N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants, including the Company, that file
electronically with the Commission. The common stock of the Company is traded as
a "NASDAQ SmallCap Market Security" on the NASDAQ SmallCap Market and on the
BSE. Reports and other information concerning the Company may be inspected at
such exchanges.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997.
(2) The Company's Quarterly Report on Form 10-QSB for the
quarterly-period ended March 31, 1998.
(3) Form 8-K filed on February 18, 1998.
(4) Registration Statement on Form 8-A, SEC File No. 001-14478, filed on
October 22, 1996, registering the Company's common stock under
Section 12 of the Exchange Act, which describes the class of
securities being registered hereunder.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14,
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof.
This Prospectus incorporates documents by reference which are not
presented herein or delivered herewith. The Company will provide without charge
to each person to whom this Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any and all of the foregoing
documents incorporated herein by reference (other than exhibits to such
documents which are not specifically incorporated by reference into the
information that this Prospectus incorporates). Written or telephone requests
should be directed to Investor Relations Department, Room Plus, Inc., 91
Michigan Avenue, Paterson, New Jersey 07503, telephone number (973) 523-4600.
Statements contained in the documents incorporated by reference shall be
deemed modified and superseded to the extent that statements contained herein
modify or supersede such statements.
No dealer, salesman, or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus, and,
if given or made, such information and representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any state to any person to whom it is unlawful to make such offer in
such state. Neither the delivery of this Prospectus nor any sales made hereunder
shall, under any circumstances, create any implication that there has been no
change in the affairs of the Company since the date hereof.
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<PAGE>
This Prospectus constitutes a part of a Registration Statement which the
Company has filed with the Commission under the 1933 Act with respect to the
Common Stock. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and related Exhibits thereto for further information with respect to
the Company and the securities offered hereby. Such additional information can
be obtained from the Commission's office in Washington, D.C. Any statements
contained herein concerning the provisions of any documents are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
CERTAIN STATEMENTS IN THIS PROSPECTUS (INCLUDING DOCUMENTS INCORPORATED
HEREIN BY REFERENCE) CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE, OR ACHIEVEMENTS OF THE COMPANY
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
THE COMPANY
The Company is a fully-integrated manufacturer and retailer of
mica-laminated furniture for residential uses, primarily bedroom furniture for
children ages three to 16 years old. The Company's products are of a modular
design and are intended to be multi-functional, interchangeable and
space-saving.
The Company distributes its products through its own distribution network
of 16 retail showrooms located in the greater New York City and Philadelphia
metropolitan areas. Management believes that stores located in strip malls and
densely populated areas offer the highest visibility of the Company's products
and ease of access for the Company's targeted customers. The Company's retail
showrooms range from approximately 2,000 to 5,000 square feet.
The Company uses standard component pieces to manufacture furniture for
children's and adult's bedrooms and home offices. The approximately 300 standard
components can be finished in various colors and textures and combined in
various configurations to produce a finished product which is personalized to
the customer's taste, space and budget. The use of standard components also
permits the Company's furniture to be reconfigured as the customer's needs or
tastes change.
The Company does not maintain a large inventory of finished products
(other than showroom display models) because the Company's finished products are
manufactured from standard components and personalized to the customer's needs.
Finished products are manufactured to meet a specified desired delivery date,
which is generally fixed at the time of the order and is generally within two to
six weeks thereafter.
The Company's manufacturing operations are conducted in a 78,000 square
foot facility located in Paterson, New Jersey. In the past two years, the
Company has implemented numerous changes to its manufacturing facility and
processes in order to reduce the future direct costs of manufacturing and to
produce more contemporary styles of high quality, mica-laminated furniture.
The Company was organized under the laws of New York in 1982 under the
name RPF Holding Corp. Its executive offices are located at 91 Michigan Avenue,
Paterson, New Jersey 07503, its telephone number is (973) 523- 4600 and its
electronic mail address is [email protected].
RISK FACTORS
History of Losses; No Assurance of Profitability; Going Concern Qualification in
Certified Public Accountant's Report
The Company incurred a net loss for the fiscal year ended December 31,
1997 and realized only modest net earnings for the three months ended March 31,
1998. There can be no assurance that the Company will be profitable in the
future. As
5
<PAGE>
of March 31, 1998, the Company had a working capital deficit of ($238,956) and
an accumulated deficit of ($3,979,302). In connection with the audit of the
Company's financial statements for the fiscal year ended December 31, 1997, the
Company has received a report from its independent public accountants,
Ehrenkrantz Sterling & Co., LLC, that includes an explanatory paragraph
describing the uncertainty as to the ability of the Company to continue as a
going concern.
Need for Additional Financing
The Company has substantially depleted its cash reserves as of March 31,
1998 and consequently has technically defaulted on financial obligations. Those
defaults, however, have been temporarily cured as the obligors have allowed the
Company to modify the terms and conditions of the affected financing
arrangements. Additional financing is required in order for the Company to
continue as a going concern. There can be no assurance that adequate financing
will be available on acceptable terms, if at all.
Uncertainty of Market Acceptance in New Markets
The Company has recently expanded its retail showrooms into the greater
Philadelphia area. As a result, the Company will have to advertise extensively
and develop name recognition among consumers. Moreover, the consumers in the
greater Philadelphia area may have different preferences for furniture or may
otherwise not be as receptive to the Company's products as consumers in the
metropolitan New York area. For these reasons, as well as factors normally
associated with expansion, there can be no assurance that retail showrooms
opened in these new markets will generate sales sufficient to compensate for the
increase in overhead, or generate sales or earnings consistent with those
generated by retail showrooms in the Company's existing markets.
Cyclical Nature of Retail Furniture Industry
The retail furniture industry historically has been cyclical and directly
affected by, among other things, housing starts, existing home sales, consumer
confidence and general economic conditions. Furniture purchases are generally
discretionary and, in light of the fact that they represent a significant
expenditure to the average consumer, they are often deferred during times of
economic uncertainty. Accordingly, any period of economic uncertainty may have a
material adverse effect on the Company's financial condition.
Competition
The home furnishings industry is a highly competitive and fragmented
market with annual U.S. sales of $49.6 billion in 1996 and estimated annual U.S.
sales of $53 billion in 1997.
The Company is the largest retailer of mica-laminated home furniture in
the New York metropolitan area. Several small retailers, such as Atlantic
Furniture and Kids' Room, and large retailers, such as IKEA, also sell
mica-laminated furniture similar to that sold by the Company in the same
geographic region. The Company also competes directly or indirectly with all
manufacturers and retailers of home furniture, including Huffman Koos, Levitz,
Thomasville and Drexel Heritage. In addition, there are no significant barriers
to prevent the entry of additional competitors in the home furniture industry
generally or in the mica-laminated furniture market particularly. Many of the
Company's current and potential competitors have substantially greater
financial, manufacturing, marketing, distribution and sales resources than the
Company, and there can be no assurance that the Company will be able to compete
successfully in the future.
Dependence on Key Personnel
The Company is largely dependent on the continued service of Marc Zucker,
its Chairman and Chief Executive Officer, and Allan Socher, its President and
Director of Marketing. The loss of the services of either Messrs. Zucker or
Socher could have a material adverse effect on the Company's operations and
financial condition. The Company does not maintain key man life insurance on the
lives of Messrs. Zucker or Socher. The Company has entered into employment
agreements with each of Messrs. Zucker and Socher, which agreements may be
terminated by the Company by not less than three years' notice or by the
respective employee on not less than three months' notice.
6
<PAGE>
Possible Delisting of Securities
There can be no assurance that the trading market for the Company's
securities will be sustained. The continued trading of the common stock on
NASDAQ and the BSE is conditioned upon the Company meeting certain criteria. If
the Company fails to meet any of these criteria, the common stock could be
delisted from trading on NASDAQ or the BSE, which delisting could materially
adversely affect the trading market for the common stock. There can be no
assurance that the Securities will not be delisted.
Penny Stock Regulation
In the event the common stock is delisted from trading on NASDAQ SmallCap
and the trading price of the common stock is less than $5.00 per share, trading
in the common stock would also be subject to the requirements of Rule 15g-9
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Under such rule, broker/dealers who recommend such low priced securities
to persons other than established customers and accredited investors must
satisfy special sales practice requirements, including a requirement that they
make an individualized written suitability determination for the purchaser and
receive the purchaser's written consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990 also require additional
disclosure in connection with any trades involving a stock defined as a "penny
stock" (generally, according to recent regulations adopted by the Securities and
Exchange Commission (the "Commission"), any non-NASDAQ equity security that has
a market price of less than $5.00 per share, subject to certain exceptions),
including the delivery, prior to any penny stock transaction, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
Such requirements could severely limit the market liquidity of the common stock
and the ability of purchasers in this Offering to sell their securities in the
secondary market. There can be no assurance that the common stock will not be
treated as a penny stock.
No Dividends Anticipated
The holders of common stock are entitled to receive dividends when, as and
if declared by the Board, out of funds legally available therefor. The Company
does not anticipate paying any dividends on its common stock in the foreseeable
future.
USE OF PROCEEDS
The Company will not receive any proceeds from the shares being sold in
this Offering.
SELLING SHAREHOLDERS
The Selling Shareholders listed in the table below have indicated their
intention to register the shares underlying their warrants and options and to
resell to the public the number of shares so issued. The shares covered by this
Prospectus are being registered to permit public secondary trading of the Common
Stock issuable to the Selling Shareholders upon the exercise of their respective
warrants and options and the Selling Shareholders may offer the securities for
resale from time to time. See "Plan of Distribution." The table sets forth
information with respect to ownership of the Company's common stock by the
Selling Shareholders. The Selling Shareholders are offering shares of the
Company as set forth below. All information with respect to stock ownership has
been furnished to the Company by the respective Selling Shareholders.
7
<PAGE>
<TABLE>
<CAPTION>
Shares Owned
Prior to Shares Issued Percent of
to Exercise of Upon Exercise Total Number Shares Owned Ownership
Selling Warrant/Option of Warrant/ of Shares After After
Shareholder or Conversion Option Being Offered Offering(1) Offering(1)
----------- ------------- ------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Anthony J. Kirincic -0-(2) 5,000 5,000 -0- -0-
David Lindner -0-(2) 5,000 5,000 -0- -0-
Allan Lyons 10,000 20,000 20,000 10,000 *
Finbar O'Neill -0- 250,000 250,000 -0- -0-
Mark Rubin 86,100 396,250 396,250 86,100 1.5%
Swan Alley (Nominees)
Limited 200,000 500,000 500,000 200,000 3.5%
Frank Terzo 168,000 190,000 190,000 168,000 2.9%
------- --------- --------- ------- ---
Total 464,100 1,366,250 1,366,250 464,100 7.9%
======= ========= ========= ======= ===
</TABLE>
- ------------------------
(1) Assumes that the Selling Shareholders will sell all of the Warrant
Stock and Option Stock and only retain ownership of previously issued shares of
the Company's common stock.
(2) Excludes 160,546 shares of common stock of the Company owned by Kirlin
Holding Corp. and its wholly-owned subsidiary, Kirlin Securities, Inc., of which
David Lindner and Anthony J. Kirincic are affiliates.
* Represents less than 1% of the outstanding shares of common stock of the
Company.
Frank Terzo, one of the Selling Shareholders, is a director of the Company
since December 1996 and was a consultant to the Company for a one year period
commencing July 1996. Since July 1997, Mr. Terzo has been a Partner of The
Thornwater Company, L.P., the co-underwriter for the Company's November 1996
IPO. The Thornwater Company, L.P. currently acts as a financial consultant to
the Company pursuant to a consulting agreement which terminates in November
1998.
In June 1995, Mark Rubin became a consultant to the Company. In connection
with the provision of financial consulting services, Mr. Rubin received
approximately $3,000 per month, the Rubin Warrants, and 50,000 shares of common
stock, which shares were valued at $.80 per share. The consulting agreement by
and between the Company and Mr. Rubin terminated in December 1996.
Anthony J. Kirincic and David Lindner are executives of Kirlin Holding
Corp. and its wholly owned subsidiary Kirlin Securities, Inc. In 1995, Kirlin
Securities, Inc. acted as placement agent in a private placement of 750,000
shares of common stock of the Company.
PLAN OF DISTRIBUTION
The securities offered hereby may be sold from time to time to purchasers
directly by any of the Selling Shareholders. The shares may be sold, or resold,
as the case may be, from time to time by the Selling Shareholders in one or more
transactions on NASDAQ or the BSE, in block transactions, in negotiated
transactions or a combination of such methods of sale at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. These transactions may be effected by the
Selling Shareholders through one or more broker-dealers who may act as principal
or who may receive compensation in the form of concessions or commissions from
the Selling Shareholders or the purchasers of the shares for whom they may act
as agent, in such amounts as are customary in connection with similar
transactions. The Company has agreed to bear all expenses in connection with the
registration of the shares.
The Company has not engaged any underwriter, broker, dealer or agent in
connection with this Offering.
In order to comply with the securities laws of certain states, if
applicable, the shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they
8
<PAGE>
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
LEGAL MATTERS
The validity of the common shares offered hereby will be passed upon for
the Company by Wilentz, Goldman & Spitzer, PC, 90 Woodbridge Center Drive,
Woodbridge, New Jersey 07095.
EXPERTS
The financial statements of the Company incorporated by reference in this
Prospectus from the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997, have been audited by Ehrenkrantz Sterling & Co., LLC,
independent public accountants, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon such report
given upon the authority of said firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
The Certificate of Incorporation of the Company provides that no director
of the Company shall be personally liable to the Company or its shareholders for
damages for a breach of duty in such capacity, except as otherwise provided in
the Business Corporation Law of the State of New York, as amended from time to
time.
Section 722 of the New York Business Corporation Law empowers a New York
corporation to indemnify any person, made, or threatened to be made, a party to
an action or proceeding other than one by or in the right of the corporation to
procure a judgment in its favor, whether civil or criminal, including an action
by or in the right of any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the corporation served in any
capacity at the request of the corporation, by reason of the fact that he, his
testator or intestate, was a director or officer of the corporation, or served
such corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorney's fees actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a purpose which
he reasonably believed to be in, or in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation and, in
criminal actions or proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful.
In addition, Section 722 of the New York Business Corporation Law states
that a New York corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer of any other corporation of
any type or kind, domestic or foreign, of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim, issue or matter to which such person
shall have been adjudged to be liable to the corporation, unless and only to the
extent that the court on which the action was brought, or, if no action was
brought, any court of competent jurisdiction, determines upon application that,
in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
9
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Other Expenses of Issuance and Distribution
The expenses relating to the registration of shares will be borne by the
Company. The Selling Shareholders shall not pay any of such expenses. The
expenses are estimated to be as follows:
Registration fee - Securities and Exchange Commission $969.84
Legal fees and expenses *
Printing/Listing expenses *
Blue Sky fees Accounting fees and expenses *
Nasdaq Listing Fees *
Miscellaneous -------
Total $ *
=======
- ----------
* To be filed by amendment
Indemnification of Directors and Officers
Please refer to section heading "DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES" located in the Prospectus part
of this Registration Statement.
Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
4.3 Form of Warrant issued by the Company to Kirlin Securities Corp.(1)
4.4 Form of Warrant issued by the Company to Mark Rubin(1)
4.5 Letter dated April 24, 1998 confirming terms and conditions to lend the Company
$200,000(2)
4.6 Promissory Note in the amount of $100,000 due June 11, 1998, between the Company
and Finbar O'Neill(2)
4.7 Stock Purchase Option dated April 24, 1998 for 250,000 shares of common stock issued
to Finbar O'Neill(2)
4.8 Promissory Note in the amount of $100,000 due June 11, 1998, between the Company
and Mark Rubin(2)
4.9 Stock Purchase Option dated April 24, 1998 for 250,000 shares of common stock issued
to Mark Rubin(2)
4.10 Stock Purchase Option dated June 23, 1998 for 60,000 shares of common stock issued to Mark Rubin(3)
4.11 Letter Agreement dated July 7, 1998 between the Company
and Mark Rubin extending the due date of the Promissory
Note due June 11, 1998, to August 1, 1998(3)
4.12 Letter Agreement dated July 7, 1998 between the Company and Finbar O'Neill extending the due date of the
Promissory Note due June 11, 1998, to August 1, 1998(3)
5 Opinion of Counsel(4)
11
<PAGE>
23.1 Consent of Ehrenkrantz Sterling & Co., LLC(3)
23.2 Consent of Wilentz, Goldman & Spitzer(4) (contained in Exhibit 5)
24 Power of Attorney(3) (contained on signature page)
</TABLE>
- ------------------------
(1) Incorporated by reference to the exhibit of the same number filed as part
of the Registration Statement on Form SB-2 (File No. 333-10483)
(2) Incorporated by reference to the exhibit of the same number filed as part
of the Quarterly Report on Form 10-QSB for the period ended March 31, 1998
(File No. 1-14478)
(3) Filed herewith
(4) To be filed by amendment
Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
1933 Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement; PROVIDED, HOWEVER, that paragraphs
(1)(i) and (1)(ii) do not apply if the information required to
be included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the 1933 Act,
each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the Offering.
(4) For purposes of determining any liability under the 1933 Act, each filing
of the registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated
12
<PAGE>
by reference in the Registration Statement shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Paterson, State of New Jersey on July 30, 1998.
ROOM PLUS, INC.
By: /s/ Marc Zucker
-------------------
Marc Zucker, Chief Executive Officer
Date: July 30, 1998
14
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Marc Zucker or Jay H. Goldberg, his
attorney-in-fact, for him in any and all capacities, to sign any amendments to
this Registration Statement, and to file the same, with exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said attorney-in-fact, or
his substitute, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature and Title Date
------------------- ----
<S> <C> <C>
By: /s/ Marc Zucker July 30, 1998
---------------
Name: Marc Zucker
Title: Chairman of the Board, Chief
Executive Officer and a Director
(Principal Executive Officer)
By: /s/ Allan Socher July 30, 1998
----------------
Name: Allan Socher
Title: President and a Director
By: /s/ Theodore Shapiro July 30, 1998
-------------------
Name: Theodore Shapiro
Title: Executive Vice President and a Director
By: /s/ Jay H. Goldberg July 30, 1998
-------------------
Name: Jay H. Goldberg
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
By: /s/ Frank Terzo July 30, 1998
---------------
Name: Frank Terzo
Title: Director
By: /s/ Alan Hirschfeld July 30, 1998
-------------------
Name: Alan Hirschfeld
Title: Director
By: /s/ Alan Granetz July 30, 1998
----------------
Name: Alan Granetz
Title: Director
</TABLE>
15
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
----------- ----------- --------
<S> <C> <C>
4.3 Form of Warrant issued by the Company to Kirlin Securities
Corp.(1)
4.4 Form of Warrant issed by the Company to Mark Rubin(1)
4.5 Letter dated April 24, 1998 confirming terms and conditions
to lend the Company $200,000(2)
4.6 Promissory Note in the amount of $100,000 due June 11, 1998,
between the Company and Finbar O'Neill(2)
4.7 Stock Purchase Option dated April 24, 1998 for 250,000 shares
of common stock issued to Finbar O'Neill(2)
4.8 Promissory Note in the amount of $100,000 due June 11, 1998,
between the Company and Mark Rubin(2)
4.9 Stock Purchase Option dated April 24, 1998 for 250,000 shares
of common stock issued to Mark Rubin(2)
4.10 Stock Purchase Option dated June 23, 1998 for 60,000 shares of
common stock issued to Mark Rubin(3)
4.11 Letter Agreement dated July 7, 1998 between the Company and
Mark Rubin extending the due date of the Promissory Note due
June 11, 1998, to August 1, 1998(3)
4.12 Letter Agreement dated July 7, 1998 between the Company
and Finbar O'Neill extending the due date of the
Promissory Note due June 11, 1998, to August 1, 1998(3)
5 Opinion of Counsel(4)
23.1 Consent of Ehrenkrantz Sterling & Co., LLC(3)
23.2 Consent of Wilentz, Goldman & Spitzer(4)
(contained in Exhibit 5)
24 Power of Attorney(3) (contained on signature page)
</TABLE>
- ------------------------
(1) Incorporated by reference to the exhibit of the same number file as part of
the Registration Statement on Form SB-2 (File No. 333-10483)
(2) Incorporated by reference to the exhibit of the same number filed as part of
the Quarterly Report on Form 10-QSB for the period ended March 31, 1998 (File
No. 1-14478)
(3) Filed herewith
(4) To be filed by amendment
16
Exhibit 4.10 Stock Purchase Option dated April 24, 1998
Dated: June 23, 1998 Option to purchase 60,000 shares of
Common Stock
STOCK PURCHASE OPTION
THIS CERTIFIES THAT Mark Rubin (the "Holder") is entitled to purchase from
ROOM PLUS, INC., a New York corporation (the "Company"), up to 60,000 shares
(the "Option Shares" or "Shares") of the Company's common stock, $.00133 par
value ("Common Stock"), at $2.125 per share (the "Exercise Price"), subject to
adjustment as provided herein, at any time during the period commencing on the
date hereof (the "Effective Date") and ending on June 22, 2003 (the "Exercise
Term").
1. The rights represented by this Option may be exercised at the
Exercise Price, subject to adjustment in accordance with paragraph 8 hereof, at
any time, or from time to time, during the Exercise Term.
2. (a) The rights represented by this Option may be exercised at any
time within the Exercise Term, in whole or in part, by (i) the surrender of the
Option (with the purchase form at the end hereof properly executed) at the
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 specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any and statement as to the number of Shares and Exercise Price as to which such
exercise is made; 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(s) agree(s) to be bound by the provisions of paragraph 6 and
subparagraphs (b), (c) and (d) of paragraph 7 hereof. The 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 the Option is surrendered
and payment is made in accordance with the foregoing provisions of this
paragraph 2, and the person or persons in whose name or names the certificates
for Shares shall be issuable upon such exercise shall become the holder or
holders of record of such Shares at that time.
(b) Notwithstanding anything to the contrary contained in subparagraph
2(a), the Holder may elect to exercise this Option, in whole or in part, by
exchanging Option Shares otherwise issuable upon the exercise of this Option
computed using the following formula:
<PAGE>
X = Y(A-B)
----------
A
Where: X = the number of shares of Common Stock to be
issued to the Holder;
Y = the number of shares of Common Stock
issuable upon exercise of this Option;
A = the current fair market value of one share
of Common Stock (calculated as described
below); and
B = the Exercise Price.
The Holder may also pay the Exercise Price by delivery to the Company of
shares of the Company's Common Stock owned by the Holder having a fair market
value equal to the aggregate Exercise Price for the number of Shares as to which
this Option is being exercised.
As used herein, the current fair market value of Common Stock shall mean
the greater of (x) the average of the closing prices of the Company's Common
Stock sold on all securities exchanges on which the Common Stock may at the time
be listed and the NASDAQ National Market, or, if there have been no sales on any
such exchange or the NASDAQ National Market on such day, the average of the
highest bid and lowest asked price on such day on The Nasdaq SmallCap Market or
otherwise in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar successor organization (the
"Market Price"), on the trading day immediately preceding the date notice of
exercise of this Option is given or (y) the average of the Market Price per
share of Common Stock for the five trading days immediately preceding the date
notice of exercise of this Option is given. If on any date for which the Market
Price per share of Common Stock is to be determined the Common Stock is not
listed on any securities exchange or quoted on the NASDAQ National Market or on
The Nasdaq SmallCap Market or otherwise in the over-the-counter market, the
Market Price per share of Common Stock shall be the highest price per share
which the Company could then obtain from a willing buyer (not a current employee
or director) for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by the Board of Directors of the
Company, unless prior to such date the Company has become subject to a merger,
acquisition or other consolidation pursuant to which the Company is not the
surviving party, in which case the Market Price per share of Common Stock shall
be deemed to be the value received by the holders of the Company's Common Stock
for each share thereof pursuant to the Company's acquisition.
3. The Option shall not be transferred, sold, assigned, or hypothecated
(other than by will or pursuant to the laws of descent and distribution), except
if such transfer is exempt from registration under the Securities Act of 1933 as
amended ("Act") or except if such transfer is otherwise in compliance with the
Act. Any assignment shall be effected by the Holder by (i) executing the form of
assignment at the end hereof and (ii) surrendering the Option for cancellation
at the office or agency of the Company referred to in paragraph 2 hereof,
accompanied by a certificate (signed by an officer of the Holder if the Holder
is a corporation),
<PAGE>
stating that each transferee is a permitted transferee under this paragraph 3;
whereupon the Company shall issue, in the name or names specified by the Holder
(including the Holder) a new Option or Option of like tenor and representing in
the aggregate rights to purchase the same number of Shares as are purchasable
hereunder.
4. The Company covenants and agrees that all Option Shares which may be
purchased hereunder will, upon issuance against payment of the purchase price
therefor, be duly and validly issued, fully paid and nonassessable, and no
personal liability will attach to the holder thereof. The Company further
covenants and agrees that, during the periods within which the Option may be
exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
the Option.
5. The Option shall not entitle the Holder to any voting rights or other
rights as stockholders of the Company.
6. (a) The Company shall advise the Holder or its transferees, whether the
Holder holds the Option or has exercised the Option and holds shares of Common
Stock, by written notice at least four weeks prior to the filing of any
registration statement or post-effective amendment thereto under the Act
covering any shares of the Company, for its own account or for the account of
others, except for any registration statement filed on Form S-4 or S-8
(including a Form S-3 related to a Form S-8) and will, for a period of five
years beginning one year after the Effective Date, upon the request of the
Holder, and subject to subparagraph 6(a)(ii), include in any such post-effective
amendment to the Registration Statement or in any new registration statement
such information as may be required to permit a public offering of the Option
Shares issuable upon the exercise of this Option (collectively, the "Registrable
Shares"). The Company shall supply prospectuses and such other document as the
Holder may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares, use its best efforts to register and
qualify any of the Registrable Shares for sale in such states as the Holder
designates and do any and all other reasonable acts and things which may be
necessary or desirable to enable the Holder to consummate the public sale or
other disposition of the Registrable Shares, all at no expense to the Holder
(other than the fees and disbursements of counsel for the Holder and the
underwriting discounts and commission, if any, payable in respect of the
Registrable Shares) of the Holder or any such holders, and furnish
indemnification in the manner provided in paragraph 7 hereof; provided, however,
the Company shall not be required to (A) qualify to do business in any state by
reason of this Section 6 in which it is not otherwise required to qualify to do
business, (B) or register or qualify in any state which will impose material
burdens on the Company, including without limitation, the obligation to pay any
corporate taxes. The Holder shall furnish information and indemnification as set
forth in paragraph 7 hereof. (ii) If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holder as a part of the written notice given
pursuant to subparagraph 6(a)(i). If the managing underwriter determines that a
limitation of the number of shares to be underwritten is required, the
underwriter may exclude some or all Registrable Shares from such registration
(the "Excluded Registrable Shares"); provided, however, that if any securities
of the Company are included in such registration statement for the account of
any person other than the Company and the Holder or any such holder, the Option
Shares included in such registration statement for such other person shall have
been reduced pro rata to the reduction of the Holder's Option Shares which were
requested to be included in such registration.
<PAGE>
(b) The provisions of paragraph 6(a) shall not be applicable if the
Company has registered the Option Shares for resale by the Holder pursuant to a
registration statement on Form S-3, or other applicable form, and such
registration statement remains effective when the registration statement
referred to in paragraph 6(a) is filed.
7. (a) Whenever pursuant to paragraph 6 a registration statement relating
to the Option Shares is filed under the Act, amended or supplemented, the
Company will indemnify and hold harmless each Holder of the Shares covered by
such registration statement, amendment or supplement (such Holder being
hereinafter called the "Distributing Holder"), and each person, if any, who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such Shares and each person, if
any, who controls (within the meaning of the Act) any such underwriter, against
any losses, claims, damages or liabilities, joint or several, to which the
Distributing Holder, any such controlling person or any such underwriter 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 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 and will reimburse the Distributing
Holder or such controlling person or underwriter for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case 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 such Distributing Holder or any other Distributing
Holder for use in the preparation thereof.
(b) 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, joint, or several, 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 said registration statement, said
preliminary prospectus, said final prospectus, or said amendment or supplement,
or arises 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 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 such Distributing Holder for
use in the preparation thereof; 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 investigating or defending any
such loss, claim, damage, liability or action.
<PAGE>
(c) Promptly after receipt by an indemnified party under this paragraph 7
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 7.
(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 7 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation.
In order to provide for just equitable contribution under the Act in any
case in which (i) any person entitled to indemnification under this Section 7
makes claim for indemnification pursuant hereto but it is judicially determined
(by entry of a final judgment or decree by a court of competent jurisdiction an
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 8 provides for indemnification in such case, or (ii)
contribution under the Act may be required on the part of any such person in
circumstances for which indemnification is provided under this Section 7, then,
and in each such case, the Company and each Holder shall contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after any contribution from others) in such proportion taking into
consideration the relative benefits received by each party from the offering
covered by the Prospectus (taking into account the portion of the proceeds of
the offering realized by each), the parties' relative knowledge and access to
information concerning the matter with respect to which the claim was assessed,
the opportunity to correct and prevent any statement or omission and other
equitable considerations appropriate under the circumstances; and provided,
that, in any such case, no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11 (f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within fifteen (15) days after receipt by any party to this Agreement (or
its representative) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is
to be made against another party (the "contribution party"), notify the
contributing party of the commencement thereof, but the omission so to notify
the contributing party will not relieve it from any liability which it may have
to any other party other than for contribution hereunder. In case any such
action, suit or proceeding is brought against any party, and such party notifies
a contributing party or his or its representative of the commencement thereof
within the aforesaid fifteen (15) days, the contributing party will be entitled
to participate therein with the notifying party and any other contributing party
similarly notified. Any such contributing party shall not be liable to any party
seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The provisions contained in
<PAGE>
this Section 7 are in addition to any other rights or remedies which either
party hereto may have with respect to the other or hereunder.
8. Adjustment of the Exercise Price
(a) Except as hereinafter provided, in the event the Company shall, at any
time or from time to time after the date hereof, sell any shares of Common Stock
for a consideration per share less than the Market Price or issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such sale, issuance, subdivision or combination being herein
called a "Change of Shares"), then, and thereafter immediately before the date
of such sale or the record date for each Change of Shares, the Exercise Price
for the Common Stock included in this Option (whether or not the same shall be
issued and outstanding) in effect immediately prior to such Change of Shares
shall be changed to a price (including any applicable fraction of a cent to the
nearest cent) determined by dividing (1) the product of (a) the Exercise Price
in effect immediately before such Change of Shares and (b) the sum of (i) the
total number of shares of Common Stock outstanding immediately prior to such
Change of Shares, and (ii) the number of shares determined by dividing (A) the
aggregate consideration, if any, received by the Company upon such sale,
issuance, subdivision or combination, by (B) the lesser of (x) the Market Price,
and (y) the Exercise Price, in effect immediately prior to such Change of
Shares; by (2) the total number of shares of Common Stock outstanding
immediately after such Change of Shares. Notwithstanding anything to the
contrary contained herein, no adjustment shall be made as a result of the
exercise of any Option or options previously issued by the Company and which are
outstanding on the date hereof.
(b) For the purposes of any adjustment to be made in accordance with this
Section 8(a) the following provisions shall be applicable:
(A) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve 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 portion of the consideration therefor deemed
to have been received by the Company shall be (i) the subscription price
(before deducting any commissions or any expenses incurred in connection
therewith), if shares of Common Stock are offered by the Company for
subscription, or (ii) 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), if such securities are sold to underwriters or dealers for
public offering without a subscription offering, or (iii) the gross amount
of cash actually received by the Company for such securities, in any other
case.
(B) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company, and otherwise than on the
exercise of options, rights or Option or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale 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
deemed to have been received by the Company shall be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
<PAGE>
(C) 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.
(D) The reclassification of securities of the Company other than
shares of Common Stock into shares including shares of Common Stock shall
be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business
on the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in subsection (B)
of this Section 8(a).
(E) The number of shares of Common Stock at any one time outstanding
shall be deemed to include the aggregate maximum number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or Option and upon the conversion or exchange
of convertible or exchangeable securities.
(ii) Upon each adjustment of the Exercise Price pursuant to this Section
8, the number of shares of Common Stock purchasable upon the exercise of this
Option shall be the number derived by multiplying the number of shares of Common
Stock purchasable immediately prior to such adjustment by the Exercise Price in
effect prior to such adjustment and dividing the product so obtained by the
applicable adjusted Exercise Price.
(c) In case the Company shall at any time after the date hereof issue
options, rights or Option to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, for a
consideration per share (determined as provided in Section 8(a) and as provided
below) less than the Market Price immediately prior to the issuance of such
options, rights or Option, or such convertible or exchangeable securities, or
without consideration (including the issuance of any such securities by way of
dividend or other distribution), the Exercise Price for the Common Stock
included in this Option (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options, rights
or Option, or such convertible or exchangeable securities shall be reduced to a
price determined by making the computation in accordance with the provisions of
Section 8(a) hereof, provided that:
(A) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable or that may become issuable under such options,
rights or Option (assuming exercise in full even if not then currently
exercisable or currently exercisable in full) shall be deemed to be issued
and outstanding at the time such options, rights or Option were issued,
for a consideration equal to the minimum Exercise Price per share provided
for in such options, rights or Option at the time of issuance, plus the
consideration, if any, received by the Company for such options, rights or
Option; provided, however, that upon the expiration or other termination
of such options, rights or Option, if any thereof shall not have been
exercised, the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this subsection (A) (and
<PAGE>
for the purposes of subsection (E) of Section 8(a) hereof) shall be
reduced by the number of shares as to which options, Option and/or rights
shall have expired, and such number of shares shall no longer be deemed to
be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price that it would have
been had adjustment been made on the basis of the issuance only of the
shares actually issued plus the shares remaining issuable upon the
exercise of those options, rights or Option as to which the exercise
rights shall not have expired or terminated unexercised.
(B) The aggregate maximum number of shares of Common Stock issuable
or that may become issuable upon conversion or exchange of any convertible
or exchangeable securities (assuming conversion or exchange in full even
if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities,
for a consideration equal to the consideration 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 of Common Stock deemed to
be issued and outstanding pursuant to this subsection (B) (and for the
purposes of subsection (E) of Section 8(a) hereof) shall be reduced by the
number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding, and the Exercise Price then
in effect shall forthwith be readjusted and thereafter be the price that
it would have been had adjustment been made on the basis of the issuance
only of the shares actually issued plus the shares remaining issuable upon
conversion or exchange of those convertible or exchangeable securities as
to which the conversion or exchange rights shall not have expired or
terminated unexercised.
(C) If any change shall occur in the exercise price per share
provided for in any of the options, rights or Option referred to in
subsection (A) of this section 8(b), or in the price per share or ratio at
which the securities referred to in subsection (3) of this Section 8(b)
are convertible or exchangeable, such options, rights or Option or
conversion or exchange rights, as the case may be, to the extent not
theretofore exercised, 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 Option or convertible or exchangeable securities.
(d) In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Option (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger with
a subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification or change of the then outstanding shares
of Common Stock or other capital stock issuable upon exercise of the Option) or
in case of any sale or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, then, as a condition of
such reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be, shall
make lawful and adequate provision whereby the Holder of each Option then
outstanding
<PAGE>
shall have the right thereafter to receive on exercise of such Option the kind
and amount of Shares and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock issuable upon exercise of such Option immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and shall
forthwith mail to the Holder, at the Holder's address on the records of the
Company, a statement signed by its President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary
evidencing such provision. Such provisions shall include provision for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8(a) and (b). The above provisions of this
Section 8(c) shall similarly apply to successive reclassifications and changes
of shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
(e) Irrespective of any adjustments or changes in the Exercise Price or
the number of shares of Common Stock purchasable upon exercise of the Option,
the Option Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Option Certificates pursuant
hereto, continue to express the Exercise Price per share and the number of
shares purchasable thereunder as the Exercise Price per share and the number of
shares purchasable thereunder were expressed in the Option Certificates when the
same were originally issued.
(f) After each adjustment of the Exercise Price pursuant to this Section
8, the Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the Exercise Price as so
adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of
each Option, after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly cause a brief summary
thereof to be sent by ordinary first class mail to each Holder at his last
address as it shall appear on the registry books of the Company. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof except as to the holder to whom the Company failed to mail
such notice, or except as to the holder whose notice was defective. The
affidavit of the Secretary or an Assistant Secretary of the Company that such
notice has been mailed shall, in the absence of fraud, be prima facie evidence
of the facts stated therein.
(g) No adjustment of the Exercise Price or the number of shares issuable
upon exercise of this Option shall be made as a result of or in connection with
(A) the issuance or sale of the Option or the Shares underlying the Option, (B)
the issuance or sale of shares of Common Stock pursuant to options, Option,
stock purchase agreements and convertible or exchangeable securities outstanding
or in effect on the date hereof, including options that may be granted under the
Company's existing stock option plan or Common Stock issuable on the exercise of
such options; or (C) the issuance or sale of shares of Common Stock if the
amount of said adjustment shall be less than $.10 for one share of Common Stock,
provided, however, that in such case, any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment that shall amount, together
with any adjustment so carried forward, to at least $.10 for one share of Common
Stock. In addition, any Holder shall not be entitled to cash dividends paid by
the Company prior to the exercise of any Option held by them.
<PAGE>
(h) All notices herein required to be given to the Holder shall be given
to the Holders at their addresses on the records of the Company.
9. This Agreement shall be governed by and in accordance with the laws of
the State of New York applicable to agreements made and to be performed solely
within such state.
IN WITNESS WHEREOF, ROOM PLUS, INC., has caused this Option to be signed
by its duly authorized officers, and this Option to be dated as of the date
first above written.
ROOM PLUS, INC.
By: /s/ Marc Zucker
----------------
Name: Marc Zucker
Title: Chief Executive Officer
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of Option)
The undersigned, the holder of the foregoing Option, hereby irrevocably
elects to exercise the purchase rights represented by such Option for, and to
purchase thereunder, ______ Shares of ROOM PLUS, INC., par value $.00133 (or
shares of Common Stock) per share, at an exercise price of $____ per Share, and
herewith makes payment of $____ therefor (or hereby surrenders and delivers that
portion of the Option having equivalent value (as determined in accordance with
the provisions of subparagraph (d) of paragraph 2 of the Option)), and requests
that the certificates for shares of Common Stock and/or Option be issued in the
name(s) of, and delivered to whose addresses) is (are):_______________________
If the exercise price is paid in accordance with Paragraph 2(b) check here:
Dated: ____________, 19___
Signature : _____________________________
(Print name under signature)
(Signature must conform in all respects to the name of
holder as specified on the face of the Option).
- --------------------------
(Insert Social Security or Other Identifying Number of Holder)
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Option)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto _______________________________________ this Option, together with all
right, title and interest therein, and does hereby irrevocably constitute and
appoint Attorney, to transfer the within Option on the books ROOM PLUS, INC.
with full power of substitution.
Dated:______________________, ____
Signature: ________________________________
(Print name under signature)
(Signature must conform in all respects to the name of holder as
specified on the face of the Option.
- ---------------------------------
(Insert Social Security or Other Identifying Number of Holder)
Exhibit 4.11 Letter Agreement dated July 7, 1998
July 7, 1998
Mr. Mark Rubin
17 Cardinal Drive
East Hills, NY 11576
Re: $100,000 Promissory Note due June 11, 1998
Dear Mr. Rubin:
This letter will confirm our agreement to extend the Due Date of the
above-referenced Promissory Note ("Note") from June 11, 1998 to August 1, 1998.
All references in the Note to the "Due Date," including those in Section 4(a)
thereof relating to conversion of the Note, shall refer to the new Due Date of
August 1, 1998; provided, however, that the Note shall bear interest from the
original June 11, 1998 due date at a rate of eighteen percent (18%) per annum
until paid in full.
Please confirm your agreement to the foregoing by signing and returning a
copy of this letter to the undersigned by telefax at (973) 523-9288.
Very truly yours,
/s/ Marc Zucker
---------------
Marc Zucker
Chairman of the Board
The foregoing is hereby agreed
to and accepted:
/s/ Mark Rubin
- --------------
Mark Rubin
Exhibit 4.12 Letter Agreement dated July 7, 1998
July 7, 1998
Mr. Finbar O'Neill
Terra Firma Construction Management & General
695 East 132nd Street
Bronx, NY 10454
Dear Mr. O'Neill:
This letter will confirm our agreement to extend the Due Date of the
above-referenced Promissory Note ("Note") from June 11, 1998 to August 1, 1998.
All references in the Note to the "Due Date," including those in Section 4(a)
thereof relating to conversion of the Note, shall refer to the new Due Date of
August 1, 1998; provided, however, that the Note shall bear interest from the
original June 11, 1998 due date at a rate of eighteen percent (18%) per annum
until paid in full.
Please confirm your agreement to the foregoing by signing and returning a
copy of this letter to the undersigned by telefax at (973) 523-9288.
Very truly yours,
/s/ Marc Zucker
---------------
Marc Zucker
Chairman of the Board
The foregoing is hereby
agreed to and accepted:
/s/ Finbar O'Neill
- ------------------
Finbar O'Neill
Exhibit 23.1 CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of Room Plus, Inc. of our report dated March 30, 1998,
appearing in and incorporated by reference in the Annual Report on Form 10-KSB
of Room Plus, Inc. for the year ended December 31, 1997, and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ EHRENKRANTZ STERLING & CO., LLC
- -----------------------------------
EHRENKRANTZ STERLING & CO., LLC
Certified Public Accountants
Livingston, New Jersey
July __, 1998
