<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 33-00412-NY
FIRST PRIORITY GROUP, INC.
(Exact name of small business issuer as specified in its charter)
New York 11-2750412
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
270 Duffy Avenue
Hicksville, New York 11801
(Address of principal executive offices)
(516) 938-1010
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of November 13, 1995: 4,883,883 shares of common stock
Transitional Small Business Format (check one)
Yes No X
Page 1 of 29 pages.
Exhibit Index starts on page 12
<PAGE>
Index to Condensed Consolidated Financial Statements
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements.
Condensed Consolidated Balance Sheet as at September 30, 1995 3
Condensed Consolidated Statements of Operations for the three months
ended September 30, 1995 and 1994 4
Condensed Consolidated Statements of Operations for the nine months
ended September 30, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1995 and 1994 6
Notes to Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation. 8
PART II - OTHER INFORMATION
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 9
(b) Reports on Form 8-K. 27
2
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1995
-------------
(UNAUDITED)
<S> <C>
ASSETS
Current Assets:
Cash and cash equivalents............. $ 410,133
Account receivable, less allowance for
doubtful accounts of $11,500....... 857,135
Other current assets.................. 20,968
-------------
Total current assets............... 1,288,236
Property and equipment, net............. 115,902
Other assets............................ 10,575
-------------
Total assets....................... $ 1,414,713
-------------
-------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses........................... 986,847
Note payable, current................. 10,410
-------------
Total current liabilities.......... 997,257
Note payable, long term............... 29,455
-------------
Total liabilities.................. 1,026,712
Shareholder's equity:
Common stock, $.015 par value,
authorized 8,000,000 shares; issued
5,150,550 shares................... 77,258
Additional paid-in capital............ 1,509,310
Deficit............................... (1,108,567)
-------------
478,001
Less common stock held in treasury, at
cost, 266,667 shares............... (90,000)
-------------
Total shareholders' equity......... 388,001
-------------
Total.............................. $ 1,414,713
-------------
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenue from operations................. $ 2,423,933 $ 1,844,479
Costs of revenue (principally charges by
repair facilities for services)....... 2,027,974 1,508,583
------------- -------------
Gross profit............................ 395,959 335,896
Operating expenses:
Selling, general and administration... 393,284 326,293
------------- -------------
Income from operations.................. 2,675 9,603
Interest and other income............... 1,699 38
------------- -------------
Net Income.............................. $ 4,374 $ 9,641
------------- -------------
------------- -------------
Income per share........................ NIL NIL
------------- -------------
------------- -------------
Weighted average shares outstanding
during the period..................... 4,883,883 4,883,883
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenue from operations................. $ 7,346,860 $ 5,800,284
Costs of revenue (principally charges by
repair facilities for services)....... 6,031,671 4,738,662
------------- -------------
Gross profit............................ 1,315,189 1,061,622
Operating expenses:
Selling, general and administration... 1,154,595 961,573
------------- -------------
Income from operations.................. 160,594 100,049
Interest and other income............... 3,879 1,269
------------- -------------
Income before income taxes.............. 164,473 101,318
Provision for income taxes.............. 1,000 0
------------- -------------
Net income.............................. $ 163,473 $ 101,318
------------- -------------
------------- -------------
Income per share........................ $ 0.03 $ 0.02
------------- -------------
------------- -------------
Weighted average shares outstanding
during the period..................... 4,883,883 4,883,883
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income............................ $ 163,473 $ 101,318
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization......... 21,434 25,369
Changes in assets and liabilities:
Increase in accounts receivable.... (112,427) (46,623)
Increase in other current assets... (6,813) (10,099)
Increase in accounts payable and
accrued expenses.................. 251,169 96,576
------------- -------------
Net cash provided by operating
activities......................... 316,836 166,541
------------- -------------
Cash flows from investing activities:
Additions to property and equipment... (73,486) (21,340)
------------- -------------
Cash flows from financing activities:
Net cash provided by financing
activities......................... 39,865 0
------------- -------------
Net increase in cash.................... 283,215 145,201
Cash at beginning of period............. 126,918 44,161
------------- -------------
$ 410,133 $ 189,362
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
FIRST PRIORITY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. UNAUDITED FINANCIAL STATEMENTS
The information contained in the condensed consolidated financial statements for
the period ended September 30, 1995 is unaudited, but includes all adjustments,
consisting of normal recurring adjustments, which the Company considers
necessary for a fair presentation of the financial position and the results of
operations for these periods.
The financial statements and notes are presented as permitted by Form 10-QSB,
and do not contain certain information included in the Company's annual
statements and notes. These financial statements should be read in conjunction
with the Company's annual financial statement as reported in its most recent
annual report on Form 10-KSB.
2. BUSINESS OF THE COMPANY
First Priority Group, Inc. (the "Company"), a New York corporation formed in
October 1983, is engaged directly and through its wholly-owned subsidiaries in
automotive fleet management and administration of automotive repairs for
businesses, insurance companies and members of affinity groups. The services
provided by the Company include the computerized compilation and analysis of
vehicle usage and maintenance data and the repair and maintenance of vehicles
through approximately 3,000 independently contracted and over 5,000 nationally
recognized repair facilities nationwide. The Company's office is located at 270
Duffy Avenue, Hicksville, New York 11801 and its telephone number is (516)
938-1010.
3. RESULTS OF OPERATIONS
The unaudited results of operations for the three and nine months ended
September 30, 1995 and 1994 are not necessarily indicative of the results to be
expected for the full year.
7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
For the three months ended September 30, 1995 the Company's revenues from
operations increased by $579,454 (31.4%) to $2,423,933 from $1,844,479 for the
three months ended September 30, 1994. The gross profit as a percentage
decreased 1.9% for the three months ended September 30, 1995 to 16.3% from 18.2%
for the same period of 1994. The decreased gross profit percentage is mainly
due to fee based programs offered to large companies at a reduced rate as an
incentive to sign on long term contracts. This business practice has
dramatically reduced the Company's attrition rate.
For the nine months ended September 30, 1995 the Company's revenues from
operations increased by $1,546,576 (26.7%) to $7,346,860 from $5,800,284 for the
nine months ended September 30, 1994. The gross profit as a percentage
decreased .4% for the nine months ended September 30, 1995 to 17.9% from 18.3%
for the same period of 1994.
Selling, general and administrative expenses increased $66,991 (20.5%) to
$393,284 for the third quarter of 1995 from $326,293 during the same period of
1994. Selling, general and administrative expenses increased 193,022 (20.1%) to
$1,154,595 for the first nine months of 1995 from $961,573 during the same
period of 1994. The increased selling, general, and administrative costs is due
to increased advertising, personnel, and benefit costs.
The Company has recently expanded its program of providing automobile collision
repair services to the insurance industry. Under its Direct Repair and
Appraisal Program, the Company provides appraisal services on a per accident fee
basis to insurance companies. Additionally, the Company offers, to the insured,
to repair the damaged vehicle through the Company's extensive shop repair
network. The Company believes that the provision of such services to insurance
companies may become an important source of revenues for the Company because of
the high volume of collision appraisal and repair referrals that insurance
companies provide as compared with the Company's corporate fleet management
clients. The Company has taken steps to obtain several insurance companies as
clients.
The Company believes that it has adequate liquidity to support its cost of
operations for the foreseeable future.
8
<PAGE>
Part II OTHER INFORMATION
Item 5. Other Information
The Company entered into an Investment Banking Agreement with Kirlin
Securities, Inc. ("Kirlin") on August 1, 1995. For a term of eighteen months,
Kirlin will provide financial consulting and investment banking services to the
Company. It is anticipated that Kirlin will assist the Company in exploring the
possibility of raising additional capital through the issuance of additional
shares of its Common Stock. In consideration for these services, Kirlin has
been granted a Warrant to purchase 750,000 shares of the Company's Common Stock
which becomes exercisable in increments on various dates and at various prices.
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits
9
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(b) Reports on Form 8-K
None
THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
FIRST PRIORITY GROUP, INC.
Date: November 14, 1995 By: /s/ Michael Karpoff
-------------------
Michael Karpoff
Co-Chairman of the Board
of Directors, President and
Director (Principal Executive
Officer)
Date: November 13, 1995 By: /s/ Barry Siegel
----------------
Barry Siegel
Co-Chairman of the Board
of Directors, Treasurer,
Secretary and Director
(Principal Financial
and Accounting Officer)
11
<PAGE>
Index of Exhibits
Exhibit No. Description Page
- ----------- ----------- ----
10.1 Investment Banking Agreement dated August 1, 10
1995 between the Company and Kirlin Securities, Inc.
10.2 Warrant dated August 1, 1995 issued to Kirlin 15
Securities, Inc.
12
<PAGE>
Exhibit 10.1
13
<PAGE>
INVESTMENT BANKING AGREEMENT
This Agreement is made and entered into as of the 1st day of August, 1995
between Kirlin Securities, Inc. ("Kirlin" or the "Consultant") and First
Priority Group, Inc. (the "Company").
In consideration of the mutual promises made herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Company hereby engages Consultant for the term specified in
Paragraph 2 hereof to render financial consulting and investment banking advice
to the Company upon the terms and conditions set forth herein.
2. This Agreement shall commence on August 1, 1995 and continue for a
term of eighteen months; provided, however, that the Company may terminate this
Agreement at the end of the any calendar month by 30 days prior written notice
to Kirlin if in its sole judgment, Consultant has not adequately performed its
duties hereunder.
3. During the term of this Agreement, Consultant shall provide the
Company with such regular and customary financial consulting advice as is
reasonably requested by the Company, provided that Consultant shall not be
required to undertake duties not reasonably within the scope of this Agreement.
It is understood and acknowledged by the parties that the value of Consultant's
advice is not readily quantifiable, and that although Consultant shall be
obligated to render the advice contemplated by this Agreement upon the
reasonable request of the Company, in good faith, Consultant shall not be
obligated to spend any specific amount of time in so doing. Consultant's duties
may include, but will not necessarily be limited to, providing recommendations
concerning the following financial and related matters as requested by the
Company:
(a) Rendering advice and assistance in connection with the
preparation of press releases;
(b) Assisting in the Company's financial public relations;
(c) Rendering advice with regard to internal operations,
including:
(i) the formation of corporate goals and their
implementation;
(ii) the Company's financial structure; and
(iii) corporate organization;
(d) Rendering advice with regard to any of the following
corporate finance matters:
(i) changes in the capitalization of the Company;
(ii) changes in the Company's corporate structure;
(iii) redistribution of share holdings of the Company's
stock;
(iv) offerings of securities in public and private
transactions;
(v) alternative uses of corporate assets;
(vi) structure and use of debt;
(vii) sales of stock by insiders pursuant to Rule 144 or
otherwise; and
(e) Rendering advice with regard to the goal of obtaining
listing of the Company's Common Stock on the Nasdaq SmallCap Market.
14
<PAGE>
In addition to the foregoing, Consultant agrees to furnish advice to the
Company in connection with the acquisition of and/or merger with other
companies, the sale of the Company itself, or any of its assets, subsidiaries or
affiliates, or similar type of transaction (hereinafter referred to as a
"Transaction").
4. (a) The Company acknowledges that its ability to obtain listing of
its Common Stock on the Nasdaq SmallCap Market will be dependent upon its Common
Stock having a minimum bid price of $3.00 per share and that, in all likelihood,
the Company will need to effect an appropriate reverse stock split in order for
the bid price of its Common Stock to achieve this level. At the appropriate
time that the Company meets the other objective listing requirements, the
Company agrees to effect this reverse stock split.
(b) If requested by Consultant, the Company also agrees that
prior to January 15, 1996, it will offer to sell, exclusively through Consultant
and pursuant to Regulation D or Section 4(2) or other applicable exemption from
registration, 1,000,000 shares of its Common Stock at a minimum gross sale price
of $.50 per share in order to facilitate the Company's ability to meeting the
listing requirements for the Nasdaq SmallCap Market. The Consultant shall act
as the Placement Agent for such offering pursuant to a Placement Agency
Agreement to be agreed upon and the Consultant shall use its best efforts to
sell the shares to its customers and other interested parties.
(c) The Company and Consultant also agree that any additional
financing needed during the term of this Agreement to meet the listing criteria
for the Nasdaq SmallCap Market will be raised exclusively through Consultant at
a price and on such terms as may be agreed upon. If the Company does not record
net income during such trailing 12 months' term, such financing will be raised
at a price of $.50 per share.
5. The Company shall pay Consultant the following compensation:
(a) Upon execution of this Agreement, the Company is issuing to
Kirlin (or its designees) 750,000 warrants ("Warrants") to purchase its Common
Stock upon the terms set forth in the warrant agreement(s) in the form of
Exhibit A hereto. The Warrants are fully earned by Kirlin as of the execution
of this Agreement and may not be terminated by the Company for any reason;
although it is acknowledged that the exercisability of the Warrants is dependent
upon the conditions set forth in the Warrant Agreement.
(b) In the event that the Company consummates any Transaction
that is or was originated directly or indirectly by Consultant during the term
of this Agreement, the Company shall pay fees to Consultant as follows:
Consideration Fee
------------- ---
$ -0- to $100,000 Minimum fee of $5,000
$ 100,001 to $2,000,000 5% of Consideration
$ 2,000,001 or more $100,000 plus 3% of the
Consideration in excess of
$2,000,000
For the purposes of this Agreement, "Consideration" shall mean the total
market value on the date of closing of the Transaction of the cash, promissory
notes, securities, assets and all other property (real or personal) exchanged,
received or paid, directly or indirectly, to or by the Company or any of its
officers, directors, employees or security holders in connection with any
Transaction, including without limitation any amounts paid to holders of
warrants, stock purchase rights, options, stock appreciation rights, or
convertible securities of the Company or any affiliate thereof, or pursuant to
any employment, royalty or consulting agreement, covenant not to compete,
earnout or contingent payment right or similar arrangement, agreement or
understanding, whether oral or written. Any co-broker retained by Consultant
shall be paid by Consultant.
15
<PAGE>
(c) If Consultant acts as an underwriter or placement agent in
the sale or distribution of securities by the Company to the public or in a
private transaction (an "Offering"), Consultant shall receive, as compensation
for services rendered, commissions equal to ten percent (10%) of the gross
proceeds received by the Company, a nonaccountable expense allowance equal to
three percent (3%) of the gross proceeds received by the Company and warrants to
purchase an amount of securities of the Company equal to ten percent (10%) of
the total amount sold by the Company in such Offering, together with such other
compensation as may be agreed upon by the Company and the Consultant. The
exercise price of the warrants shall be no less than the price paid by the
investors in such offering.
(d) Fees and expenses payable to Consultant with regard to
fairness opinions and valuations requested by the Company will be determined by
mutual agreement at such time as the nature and terms of such financing are
affirmed.
All fees to be paid pursuant to this paragraph 5, except as otherwise
agreed in writing, are due and payable to Consultant in cash at the closing or
closings of any transaction. In the event that this Agreement shall not be
renewed, or if this Agreement is terminated for any reason, then notwithstanding
any such non-renewal or termination, Consultant shall be entitled to receive the
full fee provided for hereunder for any transaction for which the discussions or
introductions were initiated during the term of this Agreement. In the event
that this Agreement shall not be renewed, or if this Agreement is terminated for
any reason, then notwithstanding any such non-renewal or termination, Consultant
shall be entitled to receive the full fee provided for hereunder for any
transaction for which the discussions or introductions were initiated during the
term of this Agreement, provided that such transaction was consummated within
the later of: (a) one year from the expiration date of this Agreement; or (b)
18 months from the initial date of introductions or discussions between the
Company and the other parties to the transaction.
6. In addition to the fees payable hereunder, and regardless of whether
any transaction set forth in paragraph 5 is proposed or consummated, if the
Company has so agreed in writing and in advance of the incurrence of expenses by
the Consultant, the Company shall reimburse Consultant for all reasonable travel
and out-of-pocket expenses incurred in connection with the services performed by
Consultant pursuant to this Agreement, promptly after submission to the Company
of appropriate evidence of such expenditures.
7. (a) The Company acknowledges that all opinions and advice (written
or oral) given by Consultant to the Company in connection with Consultant's
engagement are intended solely for the benefit and use of the Company in
considering the transaction to which they relate, and the Company agrees that no
person or entity other than the Company shall be entitled to make use of or rely
upon the advice of Consultant to be given hereunder, and no such opinion or
advice shall be used for any manner or for any purpose, nor may the Company make
any public references to Consultant, or use the Consultant's name in any annual
reports or any other reports or releases of the Company, without Consultant's
prior written consent.
(b) The Company acknowledges that Consultant makes no commitment to
make a market in the Company's securities, to recommend or advise its clients to
purchase the Company's securities, or to prepare research or corporate finance
reports.
8. Consultant will hold in confidence any confidential information
which the Company provides to Consultant pursuant to this Agreement which is
designated by an appropriate stamp or legend as being confidential.
Notwithstanding the foregoing, Consultant shall not be required to maintain
confidentiality with respect to information (i) which is or becomes part of the
public domain not due to the breach of this Agreement by Consultant; (ii) of
which it had independent knowledge prior to disclosure; (iii) which comes into
the possession of Consultant in the normal and routine course of its own
business from and through independent non-confidential sources; or (iv) which is
required to be disclosed by Consultant by laws, rules or regulators. If
Consultant is requested or required to disclose any confidential information
16
<PAGE>
supplied to it by the Company, Consultant shall, unless prohibited by law,
promptly notify the Company of such request(s) so that the Company may seek an
appropriate protective order.
9. The Company acknowledges that Consultant or its affiliates are in
the business of providing financial services and consulting advice to others.
Nothing herein contained shall be construed to limit or restrict Consultant in
conducting such business with others, or in rendering such advice to others.
10. The Company recognizes and confirms that, in advising the Company
hereunder, Consultant will use and rely on data, material and other information
furnished to Consultant by the Company, without independently verifying the
accuracy, completeness or veracity of same.
11. The Company agrees to indemnify and hold harmless Kirlin, it
employees, agents, representatives and controlling persons from and against any
and all losses, claims, damages, liabilities, suits, actions, proceedings, costs
and expenses (collectively, "Damages"), including, without limitation,
reasonable attorney fees and expenses, as and when incurred, if such Damages
were directly or indirectly caused by, relating to, based upon or arising out of
the rendering by Kirlin of services pursuant to this Agreement, so long as
Kirlin shall not have engaged in intentional or willful misconduct, or shall
have acted grossly negligently, in connection with the services provided which
form the basis of the claim for indemnification. This paragraph shall survive
the termination of this Agreement.
12. Consultant shall perform its services hereunder as an independent
contractor and not as an employee or agent of the Company or any affiliate
thereof. Consultant shall have no authority to act for, represent or bind the
Company or any affiliate thereof in any manner, except as may be expressly
agreed to by the Company in writing from time to time.
13. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof. No provision of this Agreement may
be amended, modified or waived, except in a writing signed by both parties.
This Agreement shall be binding upon and inure to the benefit of each of the
parties and their respective successors, legal representatives and assigns.
This Agreement may be executed in counterparts. In the event of any dispute
under this Agreement, then and in such event, each party agrees that the same
shall be submitted to the American Arbitration Association ("AAA") in the City
of New York, for its decision and determination in accordance with its rules and
regulations then in effect. Each of the parties agrees that the decision and/or
award made by the AAA may be entered as judgment of the Courts or the State of
New York, and shall be enforceable as such. This Agreement shall be construed
and enforced in accordance with the laws of the State of New York, without
giving effect to conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
KIRLIN SECURITIES, INC. FIRST PRIORITY GROUP, INC.
By: /s/ Anthony J. Kirincic By: /s/ Barry Siegel
------------------------------ --------------------------
Anthony J. Kirincic, President Barry Siegel, Co-Chairman
17
<PAGE>
Exhibit 10.2
18
<PAGE>
THE REGISTERED HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT AS HEREIN PROVIDED.
VOID AFTER 5:00 P.M. EASTERN TIME, JULY 31, 2000.
WARRANT
For the Purchase of
750,000 Shares of Common Stock
of
FIRST PRIORITY GROUP, INC.
1. Warrant.
THIS CERTIFIES THAT, in consideration of $10.00 and other good and
valuable consideration, duly paid by or on behalf of Kirlin Securities, Inc.
("Holder"), as registered owner of this Warrant, to First Priority Group, Inc.
("Company"), Holder is entitled, at any time or from time to time at or after
the dates set forth below in this Section 1 (each a "Commencement Date"), and at
or before 5:00 p.m., Eastern Time, July 31, 2000 ("Expiration Date"), but not
thereafter, to subscribe for, purchase and receive, in whole or in part, up to
Seven Hundred Fifty Thousand (750,000) shares of Common Stock of the Company
("Common Stock"). If the Expiration Date is a day on which banking institutions
are authorized by law to close, then this Warrant may be exercised on the next
succeeding day which is not such a day in accordance with the terms herein.
During the period ending on the Expiration Date, the Company agrees not to take
any action that would terminate the Warrant, except as expressly provided below
in this Section 1. This Warrant is initially exercisable at a price per share
of Common Stock purchased set forth below in this Section 1; provided, however,
that upon the occurrence of any of the events specified in Section 6 hereof, the
rights granted by this Warrant, including the exercise price and the number of
shares of Common Stock to be received upon such exercise, shall be adjusted as
therein specified. The term "Exercise Price" shall mean the initial exercise
price or the adjusted exercise price, depending on the context, of a share of
Common Stock. The term "Securities" shall mean the shares of Common Stock
issuable upon exercise of this Warrant.
This Warrant shall become exercisable as follows:
(A) The right to purchase 125,000 shares of Common Stock shall
become exercisable, at an initial exercise price per share of
$.25 upon the execution date of the Investment Banking Agreement
dated August 1, 1995 (the "Consulting Agreement") between the
Company and Kirlin Securities, Inc. ("Kirlin");
(B) The right to purchase 125,000 shares of Common Stock shall
become exercisable, at an initial exercise price per share of
$.125, on December 31, 1995, provided that prior to that date
the Company shall have not terminated the Consulting Agreement
with Kirlin;
(C) The right to purchase 350,000 shares of Common Stock shall
become exercisable, at an initial exercise price per share of
$.25, on
19
<PAGE>
January 31, 1997, provided that prior to that date the Company
shall have not terminated the Consulting Agreement;
(D) The right to purchase 150,000 shares of Common Stock shall
become exercisable, at an initial exercise price of $.375, on
July 31, 1996, provided that prior to that date the Company
shall have not terminated the Consulting Agreement; and
(E) Notwithstanding (b), (c) and (d) above, should Kirlin
successfully complete the sale of 1,000,000 shares of the
Company's Common Stock under the terms set forth in paragraph
4(b) of the Consulting Agreement, then at that time, the Holder
shall have the right to purchase all of the remaining shares
available under this Warrant that were not yet exercisable.
Once a portion of this Warrant has first become exercisable, it
shall remain exercisable until the Expiration Date.
2. Exercise.
2.1 Exercise Form. In order to exercise this Warrant, the exercise
form attached hereto must be duly executed and completed and delivered to the
Company, together with this Warrant and payment of the Exercise Price for the
Securities being purchased. If the subscription rights represented hereby shall
not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date,
this Warrant shall become and be void without further force or effect, and all
rights represented hereby shall cease and expire.
2.2 Legend. Each certificate for Securities purchased under this
Warrant shall bear a legend as follows, unless such Securities have been
registered under the Securities Act of 1933, as amended ("Act"):
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act") or
applicable state law. The securities may not be offered for sale,
sold or otherwise transferred except pursuant to an effective
registration statement under the Act, or pursuant to an exemption from
registration under the Act and applicable state law."
2.3 Conversion Right.
2.3.1 Determination of Amount. In lieu of the payment of
the Exercise Price in cash, the Holder shall have the right (but not the
obligation) to convert this Warrant, in whole or in part, into Common Stock
("Conversion Right"), as follows: upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of any of the
Exercise Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the "Value" (as defined below) of the portion of the
Warrant being converted at the time the Conversion Right is exercised by (y) the
Market Price. The "Value" of the portion of the Warrant being converted shall
equal the remainder derived from subtracting (a) the Exercise Price multiplied
by the number of shares of Common Stock being converted from (b) the Market
Price of the Common Stock multiplied by the number of shares of Common Stock
being converted. As used herein, the term "Market Price" at any date shall be
deemed to be the last reported sale price of the Common Stock on such date, or,
in case no such reported sale takes place on such day, the average of the last
reported sale prices for the immediately preceding 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, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or if any such
exchange on which the
20
<PAGE>
Common Stock is listed is not its principal trading market, the last reported
sale price as furnished by the National Association of Securities Dealers, Inc.
("NASD") through the Nasdaq National Market or SmallCap Market, or, if
applicable, the OTC Bulletin Board, or if the Common Stock is not listed or
admitted to trading on any of the foregoing markets, or similar organization, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
2.3.2 Exercise of Conversion Right. The Conversion Right may be
exercised by the Holder on any business day on or after the Commencement Date
and not later than the Expiration Date by delivering the Warrant with a duly
executed exercise form attached hereto with the conversion section completed to
the Company, exercising the Conversion Right and specifying the total number of
shares of Common Stock the Holder will purchase pursuant to such conversion.
3. Transfer.
3.1 General Restrictions. The registered Holder of this Warrant,
by its acceptance hereof, agrees that it will not sell, transfer or assign or
hypothecate this Warrant to anyone except upon compliance with, or pursuant to
exemptions from, applicable securities laws. In order to make any permitted
assignment, the Holder must deliver to the Company the assignment form attached
hereto duly executed and completed, together with this Warrant and payment of
all transfer taxes, if any, payable in connection therewith. The Company shall
immediately transfer this Warrant on the books of the Company and shall execute
and deliver a new Warrant or Warrants of like tenor to the appropriate
assignee(s) expressly evidencing the right to purchase the aggregate number of
shares of Common Stock purchasable hereunder or such portion of such number as
shall be contemplated by any such assignment.
3.2 Restrictions Imposed by the Securities Act. This Warrant and the
Securities underlying this Warrant shall not be transferred unless and until (i)
the Company has received the opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the Act,
and applicable state law, the availability of which is established to the
reasonable satisfaction of the Company, or (ii) a registration statement
relating to such Securities has been filed by the Company and declared effective
by the Securities and Exchange Commission and compliance with applicable state
law.
4. New Warrants to be Issued.
4.1 Partial Exercise or Transfer. Subject to the restrictions in
Section 3 hereof, this Warrant may be exercised or assigned in whole or in
part. In the event of the exercise or assignment hereof in part only, upon
surrender of this Warrant for cancellation, together with the duly executed
exercise or assignment form and funds (or conversion equivalent) sufficient to
pay any Exercise Price and/or transfer tax, the Company shall cause to be
delivered to the Holder without charge a new Warrant of like tenor to this
Warrant in the name of the Holder evidencing the right of the Holder to purchase
the aggregate number of shares of Common Stock and Warrants purchasable
hereunder as to which this Warrant has not been exercised or assigned.
4.2 Lost Certificate. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
and of reasonably satisfactory indemnification, the Company shall execute and
deliver a new Warrant of like tenor and date. Any such new Warrant executed and
delivered as a result of such loss, theft, mutilation or destruction shall
constitute a substitute contractual obligation on the part of the Company.
21
<PAGE>
5. Registration Rights.
5.1 "Piggy-Back" Registration.
5.1.1 Grant of Right. The Holders of this Warrant shall
have the right for a period of seven years from the Commencement Date to include
all or any part of this Warrant and the shares of Common Stock underlying this
Warrant (collectively, the "Registrable Securities") as part of any registration
of securities filed by the Company (other than in connection with a transaction
contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or
any equivalent form); provided, however, that if, in the written opinion of the
Company's managing underwriter or underwriters, if any, for such offering (the
"Underwriter"), the inclusion of the Registrable Securities, when added to the
securities being registered by the Company or the selling stockholder(s), will
exceed the maximum amount of the Company's securities which can be marketed (i)
at a price reasonably related to their then current market value, or (ii)
without materially and adversely affecting the entire offering, the Company
shall nevertheless register all or any portion of the Registrable Securities
required to be so registered but such Registrable Securities shall not be sold
by the Holders until 90 days after the registration statement for such offering
has become effective or for such longer period as the managing underwriter may
require; and provided further that, if any securities are registered for sale on
behalf of other stockholders in such offering and such stockholders have not
agreed to defer such sale until the expiration of such period, the number of
securities to be sold by all stockholders in such public offering during such
period shall be apportioned pro rata among all such selling stockholders,
including all holders of the Registrable Securities, according to the total
amount of securities of the Company owned by said selling stockholders,
including all holders of the Registrable Securities.
5.1.2 Terms. The Company shall bear all fees and expenses
attendant to registering the Registrable Securities, but the Holders shall pay
any and all underwriting commissions and the expenses of any legal counsel
selected by the Holders to represent them in connection with the sale of the
Registrable Securities. In the event of such a proposed regis- tration, the
Company shall furnish the then Holders of outstanding Registrable Securities
with not less than thirty days written notice prior to the proposed date of
filing of such registration state- ment. Such notice to the Holders shall
continue to be given for each registration statement filed by the Company until
such time as all of the Registrable Securities have been sold by the Holder.
The holders of the Registrable Securities shall exercise the "piggy-back" rights
provided for herein by giving written notice, within twenty days of the receipt
of the Company's notice of its intention to file a registration statement. The
Company shall cause any registration statement filed pursuant to the above
"piggyback" rights to remain effective for at least nine months from the date
that the Holders of the Registrable Securities are first given the opportunity
to sell all of such securities.
5.2 General Terms.
5.2.1 Indemnification.
(a) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement hereunder and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all
22
<PAGE>
reasonable attorneys' fees and other expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such registration statement. The Holder(s) of the Registrable Securities
to be sold pursuant to such registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, against all
loss, claim, damage, expense or liability (including all reasonable attorneys'
fees and other expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from information furnished by or
on behalf of such Holders, or their successors or assigns, in writing, for
specific inclusion in such registration statement.
(b) If any action is brought against a party hereto,
("Indemnified Party") in respect of which indemnity may be sought against the
other party ("Indemnifying Party"), such Indemnified Party shall promptly notify
Indemnifying Party in writing of the institution of such action and Indemnifying
Party shall assume the defense of such action, including the employment and fees
of counsel reasonably satisfactory to the Indemnified Party, and the payment of
actual expenses. Such Indemnified Party shall have the right to employ its or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the employment of
such counsel shall have been authorized in writing by Indemnifying Party in
connection with the defense of such action, or (ii) Indemnifying Party shall not
have employed counsel to defend such action, or (iii) such Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to it which may result in a conflict between the Indemnified Party and
Indemnifying Party (in which case Indemnifying Party shall not have the right to
direct the defense of such action on behalf of the Indemnified Party), in any of
which events, the reasonable fees and expenses of not more than one additional
firm of attorneys designated in writing by the Indemnified Party shall be borne
by Indemnifying Party. Notwithstanding anything to the contrary contained
herein, if Indemnified Party shall assume the defense of such action as provided
above, Indemnifying Party shall not be liable for any settlement of any such
action effected without its written consent.
(c) If the indemnification or reimbursement provided for
hereunder is finally judicially determined by a court of competent jurisdiction
to be unavailable to an Indemnified Party (other than as a consequence of a
final judicial determination of willful misconduct, bad faith or gross
negligence of such Indemnified Party), then Indemnifying Party agrees, in lieu
of indemnifying such Indemnified Party, to contribute to the amount paid or
payable by such Indemnified Party (i) in such proportion as is appropriate to
reflect the relative benefits received, or sought to be received, by
Indemnifying Party on the one hand and by such Indemnified Party on the other or
(ii) if (but only if) the allocation provided in clause (i) of this sentence is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in such clause (i) but also the
relative fault of Indemnifying Party and of such Indemnified Party; provided,
however, that in no event shall the aggregate amount contributed by a Holder
exceed the profit, if any, earned by such Holder as a result of the exercise by
him of the Warrants and the sale by him of the underlying shares of Common
Stock.
(d) The rights accorded to Indemnified Parties hereunder shall
be in addition to any rights that any Indemnified Party may have at common law,
by separate agreement or otherwise.
5.2.2 Exercise of Warrants. Nothing contained in this
Warrant shall be construed as requiring the Holder(s) to exercise their Warrants
prior to or after the initial filing of any registration statement or the
effectiveness thereof.
5.2.3 Documents Delivered to Holders. The Company shall
furnish to each Holder participating in any of the foregoing offerings and to
each Underwriter of any such offering, if any, a signed counterpart, addressed
to such Holder or Underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under any underwriting agreement related thereto), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by
23
<PAGE>
the independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities. The Company shall also deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and inde-
pendent auditors, all to such reasonable extent and at such reasonable times and
as often as any such Holder shall reasonably request. The cost for the opinion
of counsel and the "cold comfort" letter referenced in this section shall be
borne equally by the Company and the Holder.
6. Adjustments.
6.1 Adjustments to Exercise Price and Number of Securities. The
Exercise Price and the number of shares of Common Stock underlying this Warrant
shall be subject to adjustment from time to time as hereinafter set forth:
6.1.1 Stock Dividends - Recapitalization, Reclassification,
Split-Ups. If, after the date hereof, and subject to the provisions of Section
6.2 below, the number of outstanding shares of Common Stock is increased by a
stock dividend on the Common Stock payable in shares of Common Stock or by a
split-up, recapitalization or reclassification of shares of Common Stock or
other similar event, then, on the effective date thereof, the number of shares
of Common Stock issuable on exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares.
6.1.2 Aggregation of Shares. If after the date hereof, and
subject to the provisions of Section 6.3, the number of outstanding shares of
Common Stock is decreased by a reverse stock split, consolidation, combination
or reclassification of shares of Common Stock or other similar event, then, upon
the effective date thereof, the number of shares of Common Stock issuable on
exercise of this Warrant shall be decreased in proportion to such decrease in
outstanding shares.
6.1.3 Adjustments in Exercise Price. Whenever the number
of shares of Common Stock purchasable upon the exercise of this Warrant is
adjusted, as provided in this Section 6.1, the Exercise Price shall be adjusted
(to the nearest cent) by multiplying such Exercise Price immediately prior to
such adjustment by a fraction (x) the numerator of which shall be the number of
shares of Common Stock purchasable upon the exercise of this Warrant immediately
prior to such adjustment, and (y) the denominator of which shall be the number
of shares of Common Stock so purchasable immediately thereafter.
6.1.4 Replacement of Securities upon Reorganization, etc.
In case of any reclassification or reorganization of the outstanding shares of
Common Stock other than a change covered by Section 6.1.1 hereof or which solely
affects the par value of such shares of Common Stock, or in the case of any
merger or consolidation of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), or in the case of any sale or
conveyance to another corporation or
24
<PAGE>
entity of the property of the Company as an entirety or substantially as an
entirety in connection with which the Company is dissolved, the Holder of this
Warrant shall have the right thereafter (until the expiration of the right of
exercise of this Warrant) to receive upon the exercise hereof, for the same
aggregate Exercise Price payable hereunder immediately prior to such event, the
kind and amount of shares of stock or other securities or property (including
cash) receivable upon such reclassification, reorganization, merger or
consolidation, or upon a dissolution following any such sale or other transfer,
by a Holder of the number of shares of Common Stock of the Company obtainable
upon exercise of this Warrant immediately prior to such event; and if any
reclassification also results in a change in shares of Common Stock covered by
Sections 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections
6.1.1, 6.1.2, 6.1.3 and this Section 6.1.4. The provisions of this Section
6.1.4 shall similarly apply to successive reclassifications, reorganizations,
mergers or consolidations, sales or other transfers.
6.1.5 Changes in Form of Warrant. This form of Warrant
need not be changed because of any change pursuant to this Section, and Warrants
issued after such change may state the same Exercise Price and the same number
of shares of Common Stock and Warrants as are stated in the Warrants initially
issued pursuant to this Agreement. The acceptance by any Holder of the issuance
of new Warrants reflecting a required or permissive change shall not be deemed
to waive any rights to a prior adjustment or the computation thereof.
6.2 Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of any fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up or
down to the nearest whole number of shares of Common Stock or other securities,
properties or rights.
7. Reservation and Listing. The Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon exercise of this Warrant, such number of shares of Common Stock
or other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock and other
securities issuable upon such exercise shall be duly and validly issued, fully
paid and non-assessable and not subject to preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon exercise
of the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges (or, if applicable on Nasdaq) on which the Common Stock is
then listed and/or quoted.
8. Certain Notice Requirements.
8.1 Holder's Right to Receive Notice. Nothing herein shall be construed
as conferring upon the Holders the right to vote or consent or to receive notice
as a stockholder for the election of directors or any other matter, or as having
any rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the events
described in Section 8.2 shall occur, then, in one or more of said events, the
Company shall give written notice of such event at least fifteen days prior to
the date fixed as a record date or the date of closing the transfer books for
the determination of the stockholders entitled to such dividend, distribution,
conversion or exchange of securities or subscription rights, or entitled to vote
on such proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of the closing of the transfer books,
as the case may be.
8.2 Events Requiring Notice. The Company shall be required to give the
notice described in this Section 8 upon one or more of the following events: (i)
if the Company shall take
25
<PAGE>
a record of the holders of its shares of Common Stock for the purpose of
entitling them to receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution pay- able otherwise than out of
retained earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Company, or (ii) the Company shall offer to all
the holders of its Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares of capital
stock of the Company, or any option, right or warrant to subscribe therefor, or
(iii) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business shall be proposed.
8.3 Notice of Change in Exercise Price. The Company shall, promptly
after an event requiring a change in the Exercise Price pursuant to Section 6
hereof, send notice to the Holders of such event and change ("Price Notice").
The Price Notice shall describe the event causing the change and the method of
calculating same and shall be certified as being true and accurate by the
Company's Chief Financial Officer.
8.4 Transmittal of Notices. All notices, requests, consents and other
communications under this Warrant shall be in writing and shall be deemed to
have been duly made on the date of delivery if delivered personally or sent by
overnight courier, with acknowledgment of receipt to the party to which notice
is given, or on the fifth day after mailing if mailed to the party to whom
notice is to be given, by registered or certified mail, return receipt
requested, postage prepaid and properly addressed as follows: (i) if to the
registered Holder of this Warrant, to the address of such Holder as shown on the
books of the Company, or (ii) if to the Company, to its principal executive
office.
9. Miscellaneous.
9.1 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Warrant.
9.2 Entire Agreement. This Warrant (together with the other agreements
and documents being delivered pursuant to or in connection with this Warrant)
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter hereof.
9.3 Binding Effect. This Warrant shall inure solely to the benefit of
and shall be binding upon, the Holder and the Company and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Warrant or any provisions herein contained.
9.4 Governing Law; Submission to Jurisdiction. This Warrant shall be
governed by and construed and enforced in accordance with the law of the State
of New York, without giving effect to conflict of laws. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Warrant shall be brought and enforced in the courts
of the State of New York or of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any objection to
such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
8 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the Company in any action, proceeding or claim. The Company agrees
that the prevailing party(ies) in any such
26
<PAGE>
action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys' fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
9.5 Waiver, Etc. The failure of the Company or the Holder to at any
time enforce any of the provisions of this Warrant shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Warrant or any provision hereof or the right of the Company or
any Holder to thereafter enforce each and every provision of this Warrant. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this Warrant shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
9.6 Execution in Counterparts. This Warrant may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer as of the 1st day of August, 1995.
FIRST PRIORITY GROUP, INC.
By: /s/ Barry Siegel
------------------
Name: Barry Siegel
Title: Co-Chairman
27
<PAGE>
Form to be used to exercise Warrant:
First Priority Group, Inc.
270 Duffy Avenue
Hicksville, New York 11801
Date: _________________
The undersigned hereby elects irrevocably to exercise the within Warrant
and to purchase ____ shares of Common Stock of First Priority Group, Inc. and
hereby makes payment of $____________ (at the rate of $_________ per share of
Common Stock) in payment of the Exercise Price pursuant thereto. Please issue
the Common Stock as to which this Warrant is exercised in accordance with the
instructions given below.
or
The undersigned hereby elects irrevocably to convert its right to purchase
___________ shares of Common Stock purchasable under the within Warrant into
_________ shares of Common Stock of ________________________________________
(based on a "Market Price" of $______ per share of Common Stock). Please issue
the Common Stock in accordance with the instructions given below.
______________________________
Signature
______________________________
Signature Guaranteed
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever, and must be guaranteed by a
bank, other than a savings bank, or by a trust company or by a firm having
membership on a registered national securities exchange.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name ________________________________________________________
(Print in Block Letters)
Address ________________________________________________________
28
<PAGE>
Form to be used to assign Warrant:
ASSIGNMENT
(To be executed by the registered Holder to effect a transfer of the within
Warrant):
FOR VALUE RECEIVED,____________________________________ does hereby sell,
assign and transfer unto_______________________ the right to purchase
_______________________ shares of Common Stock of __________________________
("Company") evidenced by the within Warrant and does hereby authorize the
Company to transfer such right on the books of the Company.
Dated:___________________, 199_
______________________________
Signature
NOTICE: The signature to this form must correspond with the name as
written upon the face of the within Warrant in every particular without
alteration or enlargement or any change whatsoever.
29
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-START> JAN-1-1995
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 410,133
<SECURITIES> 0
<RECEIVABLES> 857,135
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,288,236
<PP&E> 242,306
<DEPRECIATION> 126,404
<TOTAL-ASSETS> 1,414,713
<CURRENT-LIABILITIES> 997,257
<BONDS> 0
<COMMON> 77,258
0
0
<OTHER-SE> 310,743
<TOTAL-LIABILITY-AND-EQUITY> 1,414,713
<SALES> 7,346,860
<TOTAL-REVENUES> 7,350,739
<CGS> 0
<TOTAL-COSTS> 6,031,671
<OTHER-EXPENSES> 1,154,595
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 164,473
<INCOME-TAX> 1,000
<INCOME-CONTINUING> 163,473
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163,473
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
