As filed with the Securities and Exchange Commission on October 29, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
GENISYS RESERVATION SYSTEMS, INC.
(Name of small business issuer in charter)
New Jersey 7872 22-2719541
(State or other (Standard Industrial (IRS Employer
jurisdiction of Primary Classification I.D. Number)
incorporation Code Number)
or organization)
(Address and telephone number, of registrant's
principal executive offices)
2401 Morris Avenue, 3rd Floor
Union, New Jersey 07083
(908) 810-8767
(Address of principal place of business or
intended principal place of business)
(Name, address and telephone number, of agent for service)
JOHN H. WASKO
c/o Genisys Reservation Systems, Inc.
2401 Morris Avenue, 3rd Floor
Union, New Jersey 07083
(908) 810-8767
Please send a copy of all communications to:
DAVID W. SASS, ESQ. William J. Davis
McLaughlin & Stern, LLP Scheichet & Davis, P.C.
260 Madison Avenue 505 Park Avenue, 20th Floor
New York, New York 10016 New York, New York 10022
(212) 448-1100 (212) 688-3200
Fax(212) 448-0066 Fax(212) 371-7634
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 of the Securities Act of 1933,
check the following box [x]
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CALCULATION OF REGISTRATION FEE
Title of Each Amount Proposed Maximum Proposed Maximum Amount
Class of Security Being Offering Price Aggregate Offering of
Registration Fee
Being Registered Registered Per Unit/Share (1) Price
- --------------------------------------------------------------------------
Shares of Common Stock 920,000 $5.00 $4,600,000 $1,393.94
$.0001 par value(2) Shares
Class A Common Stock 1,495,000 $0.20 $ 298,800 $ 90.53
Warrants(2) Warrants
Shares of Common Stock 1,495,000 $5.75 $8,596,250 $2,604.92
underlying the Class A Shares
Warrants(2)(3)
Class B Common Stock 920,000 $0.10 $ 92,000 $ 27.88
Warrants(2) Warrants
Shares of Common Stock 920,000 $6.75 $6,210,000 $1,881.82
underlying the Class B Shares
Warrants(2)(3)
Shares of Common Stock 287,500 $5.75 $1,653,125 $ 500.95
underlying Class A Shares
Warrants issued in a
private placement
Underwriter's Warrant 80,000 $.0001 $ 8 $ .01
to purchase Common Shares
Stock
Class A Warrants 130,000 $.0001 $ 13 $ .01
Warrants
Class B Warrants 80,000 $.0001 $ 8 $ .01
Warrants
Underwriter's
Shares 80,000 $6.00 $ 480,000 $ 145.45
of Common Stock Shares
Shares of Common
Stock 130,000 $6.90 $ 897,000 $ 271.82
Underlying Shares
Under-
writer's Warrant
to Purchase Class A
Warrants(3)
Shares of Common
Stock 80,000 $8.10 $ 648,000 $ 196.36
Shares
Underlying Under-
writer's Warrant to
Purchase Class B
Warrants(3)
TOTAL $ 7,614.66
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Includes an additional 120,000 shares of Common Stock, 195,000 Class A
Warrants and shares underlying the Class A Warrants and 120,000 Class B
Warrants and shares underlying the Class B Warrants.
(3) Pursuant to Rule 416 there are also being registered such additional
shares as may be issued as a result of the anti-dilution provisions of
the Common Stock Purchase Warrants and the Representative's Warrant.
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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EXPLANATORY NOTE
This registration statement covers the primary offering of Common Stock
and Class A and Class B Redeemable Warrants by Genisys Reservation Systems, Inc.
("Company") and the offering of securities by certain selling stockholders
("Selling Stockholders"). The Company is registering, under the primary
prospectus ("Primary Prospectus") 800,000 Shares of Common Stock, 1,300,000
Class A Redeemable Warrants, and 800,000 Class B Redeemable Warrants. The
Selling Stockholders are registering, under an alternate prospectus ("Alternate
Prospectus"), 287,500 shares of Common Stock underlying outstanding Class A
Warrants. The Alternate Prospectus pages, which follow the Primary Prospectus,
contain certain sections which are to be combined with all of the sections
contained in the Primary Prospectus, with the following exceptions: The front
and back cover pages, and the sections entitled "The Offering" and "Selling
Stockholders." In addition, the sections entitled "Concurrent Sales" and "Plan
of Distribution" will be added to the Alternate Prospectus. Furthermore, all
references contained in the Alternate Prospectus to the "Offering" shall refer
to the Company`s offering under the Primary Prospectus.
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GENISYS RESERVATION SYSTEMS, INC.
Cross Reference Sheet
Item Caption Location
1. Forepart of Registration Statement Outside Front Cover Page and Outside
Front Cover Page of Page
Prospectus
2. Inside Front and Outside Back Cover Inside Front and Outside Pages of
Prospectus Outside Back Cover Pages
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Underwriting; Risk Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Underwriting
9. Legal Proceedings Not Applicable
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of
Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Underwriting-
Indemnification for Securities Act Indemnification
15. Organization Within Last Five Years Not Applicable
16. Description of Business Business; Risk Factors; Financial
Statements; Selected Financial
Data; Prospectus Summary; Use of
Proceeds
17. Management's Discussion and Analysis Management's Discussion and
or Plan of Operation Analysis of Financial Condition
and Results of Operation
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18. Description of Property Business-Properties
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Related Market Information;
Stockholder Matters Prospectus Summary
21. Executive Compensation Management-Executive
Compensation
22. Financial Statements Financial Statements
23. Changes In and Disagreements With Not Applicable
Accountants on Accounting and
Financial Disclosure
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Subject to Completion dated October 29, 1996
PROSPECTUS
GENISYS RESERVATION SYSTEMS, INC.
800,000 Shares of Common Stock
1,300,000 Class A Redeemable Warrants
800,000 Class B Redeemable Warrants
Genisys Reservation Systems, Inc., a New Jersey corporation (the "Company"),
hereby offers through R.D. White & Co., Inc. (the "Underwriter") 800,000 shares
("Shares") of Common Stock, par value $.0001, per share, ("Common Stock") and
2,100,000 redeemable warrants ("Redeemable Warrants"), 1,300,000 of which will
be "Class A Redeemable Warrants" and 800,000 of which will be "Class B
Redeemable Warrants," at an anticipated public offering price of $5.00 per share
of Common Stock, $.20 per Class A Redeemable Warrant, and $.10 per Class B
Redeemable Warrant (the Common Stock and Redeemable Warrants collectively
referred to as the "Securities"). See "Underwriting."
Each Redeemable Warrant shall be exercisable for a period of 48 months,
commencing six (6) months from the date on which the registration statement (the
"Registration Statement") of which this prospectus (the "Prospectus") forms a
part is declared effective (the "Effective Date") by the Securities and Exchange
Commission (the "Commission"). Each Class A Redeemable Warrant shall entitle the
holder to acquire one share of Common Stock at a price equal to $5.75 per share.
Commencing 12 months after the Effective Date, the Company will have the right
at any time to redeem all, but not less than all, of the Class A Redeemable
Warrants at a price equal to twenty cents ($.20) per Redeemable Warrant,
provided that the closing bid price of the Common Stock equals or exceeds $6.25
per share for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. Each Class B Redeemable Warrant shall entitle the
holder to acquire one share of the Common Stock at a price equal to $6.75 per
share. Commencing 12 months after the Effective Date, the Company will have the
right at any time to redeem all, but not less than all, of the Class B
Redeemable Warrants at a price equal to ten cents ($.10) per Redeemable Warrant,
provided that the closing bid price of the Common Stock equals or exceeds $7.25
per share for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. See "Descriptions of Securities."
AN INVESTMENT IN THE SECURITIES DESCRIBED HEREIN INVOLVES A HIGH DEGREE OF RISK
AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION."
SUCH 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
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OFFENSE.
Price to Public Underwriting Discounts Proceeds to
and Commissions (1) Company(2)
Per Share offered by $5.00 $.50 $4.50
Company............
Per Class A Redeemable $.20 $.02 $.18
Warrant offered by
Company..........
Per Class B Redeemable $.10 $.01 $.09
Warrant offered by
Company..........
Total(3)..... $4,340,000 $434,000 $3,906,000
- --------------------------- --------------------------- -----------------
R.D. White & Co., Inc.
-----------------
The Date of this Prospectus is October 29, 1996
- ---------------
(1) Does not include additional underwriting compensation to be
paid by the Company to the Underwriter in the form of a non-
accountable expense allowance of $130,200 ("Non-Accountable
Expense Allowance") equal to 3% of the aggregate initial
public offering price of the Securities (or $149,730 assuming
exercise in full of the Over-Allotment Option, as (defined
below), $50,000 of which has been advanced to the Underwriter.
(2) Exclusive of exercise of the Over-Allotment Option (as defined
below) and before deducting expenses payable by the Company
estimated at $365,200 (including the Underwriter's Non-
Accountable Expense Allowance of $130,200 payable by the
Company). After deducting such expenses and applicable
underwriting discounts, the net proceeds to the Company,
exclusive of the exercise of the Over-Allotment Option (as
defined below), will be approximately $3,540,800.
(3) The Company has granted an option to the Underwriter to
purchase all or part of an additional 15% of the shares of
Common Stock and Redeemable Warrants from the Company to cover
over-allotments for a period of forty five (45) days from the
effective date of the Registration Statement upon the same
terms and conditions (the "Over-Allotment Option"). If the
Over-Allotment Option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, and Proceeds
to the Company will be $4,991,000, $499,100 and $4,491,900,
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respectively (exclusive of other expenses payable by the
Company of $235,000 and the Non-Accountable Expense Allowance
of $149,730). Assuming exercise of the Over-Allotment Option
and after deducting expenses and applicable underwriting
discounts, the net proceeds to the Company will be
approximately $4,107,170. See "Underwriting."
Prior to the Company's public offering as described herein, there has
been no active public market for the Common Stock or the Redeemable Warrants,
and no assurance may be given that a public market will develop following the
completion of the offering or that, if any such market does develop, it will be
sustained. The Company has applied to have the Securities listed for quotation
on The NASDAQ SmallCap MarketSM ("NASDAQ") under the symbols: "GENS," "GENSW,"
and GENSZ," respectively. There can be no assurance given that the Company will
be able to satisfy on a continuing basis the requirements for quotation of such
securities on NASDAQ. See "Risk Factors - No Assurances of Public Market or
Continued NASDAQ Listing," "Risk Factors-Penny Stock Regulations" and "Market
for the Company's Securities and Other Related Stockholder Matters."
The Securities being offered for sale by the Company are being offered
on a firm commitment basis, subject to prior sale, when, as and if delivered to
and accepted by the Underwriter pursuant to the terms of the underwriting
agreement relating to the offering. See "Underwriting." It is expected that
delivery of certificates representing the securities being offered by the
Company will be made against payment therefor at the offices of the Underwriter
on or about ______, 1997. See "Available Information."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMPANY'S SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
ALTHOUGH IT HAS NO LEGAL OBLIGATION TO DO SO, THE UNDERWRITER MAY FROM
TIME TO TIME ACT AS A MARKET-MAKER AND OTHERWISE EFFECT TRANSACTIONS IN THE
COMPANY'S SECURITIES. THE UNDERWRITER WILL NOT ACT AS A MARKET-MAKER UNTIL SUCH
TIME AS ITS PARTICIPATION IN THIS OFFERING IS COMPLETE. THE UNDERWRITER, IF IT
PARTICIPATES IN THE MARKET, MAY BE A DOMINATING INFLUENCE IN ANY MARKET THAT
MIGHT DEVELOP FOR ANY OF THE COMPANY'S SECURITIES. SUCH ACTIVITIES, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME OR FROM TIME TO TIME. THEREFORE,
THERE IS NO ASSURANCE THAT THE UNDERWRITER WILL OR WILL NOT BE A DOMINATING
INFLUENCE. THE PRICES AND LIQUIDITY OF THE SECURITIES OFFERED HEREUNDER MAY BE
AFFECTED BY THE DEGREE, IF ANY, OF THE UNDERWRITER'S PARTICIPATION IN THE
MARKET. SEE "RISK FACTORS" AND "UNDERWRITING."
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, a amended (the "Exchange Act") and in
accordance therewith presently files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copies at the Commission's public reference
room located in Room 1024 at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's Regional Offices located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such materials may also
be obtained at prescribed rates from the Public Reference Section of the
Commission located in Room 1024 at 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company has filed a Registration Statement relating to the
securities offered hereby with the Commission pursuant to the provisions of the
Securities Act of 1933, as amended (the "Securities Act"). Although this
Prospectus forms a part of the Registration Statement, it does not contain all
of the information set forth in the Registration Statement, the exhibits or the
schedules thereto. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement, the
exhibits and the schedules thereto. Summaries of and references to various
documents in this Prospectus do not purport to be complete and in each case
reference is made to the copy of such document which has been filed as an
exhibit to the Registration Statement.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to and
should be read in conjunction with the more detailed information and financial
data (including any financial statements and the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share and per
share amounts set forth hereinafter have been adjusted to reflect the reverse
split on a one for two basis effectuated in July, 1996. Each prospective
investor is urged to read this Prospectus in its entirety.
The Company
The principal business activity of Genisys Reservation Systems, Inc.
(the "Company") is developing a computerized limousine reservation and payment
system for the business traveler. The management of the Company anticipates that
the proprietary software that is being developed will enable limousine
reservations to be completely computerized -i.e., be entirely automatic and
operate without human intervention.
At the present time, there are four major airline reservations systems
in operation in the United States -- "Sabre", "Worldspan", "Apollo" and "System
One" (the "Reservation System"). Each of these systems allows a travel agency or
corporate travel department to make an airline reservation and receive
instantaneously a confirmation and a printed airline ticket on any airline. It
is also possible to make a hotel reservation with one of the major hotel chains
through any of the reservation systems and receive an instantaneous confirmation
of room availability. Additionally, a travel agent or corporate travel manager
may make an automobile reservation with any one of the major car rental
companies (Hertz, Avis and the like) through these airline reservations systems,
and receive an immediate confirmation of the car rental reservation.
When it comes to limousine reservations, however, there is at present
no method for making a reservation through one of the four major airline
reservation systems and receiving an immediate guaranteed confirmation. The
usual method of making a limousine reservation in a destination city is to call
a limousine company, if the travel agent knows of one. This use of the
telephone, with its attendant inconveniences such as "telephone tag" and missed
communications, can require up to a few hours to secure a confirmed limousine
reservation. It is also an expensive process for the
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travel agent or corporate travel manager, due primarily to the personnel
required to secure a binding limousine reservation. There are also frequent
billing errors and clerical mistakes in scheduling.
The Company seeks to solve the problems involved in making limousine
reservations for the business traveler by:
1. developing a limousine reservation system that utilizes
the airline computer reservation systems already in use;
2. developing a way to identify and qualify the best
limousine service providers in the cities that are the business
travelers most frequent destinations;
3. developing a way to disseminate reservation information to
corporate clients and to limousine service providers with no
errors, with immediate confirmation and without the need to utilize
the telephone;
4. developing an automated electronic payment system to
process all fees charged by the Company to its clients;
5. performing the above-described tasks with a high degree of
quality control; and
6. providing corporate clients with precise management and
financial information, to enable them to ascertain where their
money is being spent.
The Company was organized on April 25, 1986 under the name of
JEC02 Lasers, Inc. and changed its name to Robotic Lasers, Inc. on
December 22, 1987. It changed its name to Genisys Reservation
Systems, Inc. on July 16, 1996. The Company's executive offices
are at 2401 Morris Avenue, Union, New Jersey 07083, and its
telephone number is 908-810-8767.
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The Offering
Securities Offered
800,000 shares of Common Stock, par value $.0001, per share ("Common Stock") and
2,100,000 redeemable warrants ("Redeemable Warrants"), 1,300,000 of which will
be "Class A Redeemable Warrants" and 800,000 of which will be "Class B
Redeemable Warrants."
Offering Price
$5.00 per Share of Common Stock $0.20 per Class A Redeemable Warrant $0.10 per
Class B Redeemable Warrant
The Redeemable Warrants
Each Redeemable Warrant shall be exercisable for a period of 48 months,
commencing six (6) months from the date on which the registration statement (the
"Registration Statement") of which this prospectus (the "Prospectus") forms a
part is declared effective (the "Effective Date") by the Securities and Exchange
Commission (the "Commission"). Each Class A Redeemable Warrant shall entitle the
holder to acquire one share of Common Stock at a price equal to $5.75 per share.
Commencing 12 months after the Effective Date, the Company will have the right
at any time to redeem all, but not less than all, of the Class A Redeemable
Warrants at a price equal to ten cents ($.10) per Redeemable Warrant, provided
that the closing bid price of the Common Stock equals or exceeds $6.25 per share
for any twenty (20) trading days within a period of thirty (30) consecutive
trading days ending on the fifth trading day prior to the date of the notice of
redemption. Each Class B Redeemable Warrant shall entitle the holder to acquire
one share of the Common Stock at a price equal to $6.75 per share. Commencing 12
months after the Effective Date, the
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Company will have the right
at any time to redeem all,
but not less than all, of
the Class B Redeemable
Warrants at a price equal
to ten cents ($.10) per
Redeemable Warrant,
provided that the closing
bid price of the Common
Stock equals or exceeds
$7.25 per share for any
twenty (20) trading days
within a period of thirty
(30) consecutive trading
days ending on the fifth
trading day prior to the
date of the notice of
redemption.
Securities Outstanding Prior to the
Company's Offering
Common Stock 2,834,866 Shares
Class A Warrants 287,500
Securities Outstanding After the
Company's Offering:
Common Stock (1)(3) 3,634,866 Shares
Class A Warrants(2) 1,587,500 Warrants
Class B Warrants(2) 800,000 Warrants
Proposed NASDAQ SmallCap MarketSM
Symbols(4)
Common Stock GENS
Class A Warrants GENSW
Class B Warrants GENSZ
- ---------------
(1) Does not include: (a) 2,100,000 shares of Common Stock
issuable upon exercise of the Class A and Class B Warrants;
(b) 120,000 shares of Common Stock issuable upon exercise of
the Over-Allotment Option and 315,000 shares of Common Stock
issuable upon the exercise of the Redeemable Warrants
contained therein; (c) 287,500 shares issuable upon exercise
of outstanding warrants issued in a private placement in May,
1996, or (d) 420,728 shares to be received by Loeb Holding
Corp.,as agent, upon conversion of the interim loan agreements
into two promissory notes. See "Description of Securities,"
"Certain Transactions," "Principal Stockholders," and
"Underwriting."
(2) Does not include the issuance of 315,000 Redeemable Warrants
issuable upon exercise of the Over-Allotment Option, but does
include 287,500 Class A warrants issued in a private placement
in May 1996, which Warrants are identical to the Class A
Redeemable Warrants offered hereby. See "Underwriting" and
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"Description of Securities."
(3) Does not include shares of Common Stock issuable upon the conversion of
two promissory notes at the completion of this Offering in the
principal amounts of $20,000 and $10,000, respectively (the
"Convertible Notes").
(4) The Shares of Common Stock and the Class A Redeemable Warrants
and Class B Redeemable Warrants are expected to be listed for
quotation on NASDAQ under the symbols: "GENS", "GENSW" and
"GENSZ", respectively. There can be no assurance given that
the Company will be able to satisfy on a continuing basis the
requirements for quotation of such securities on NASDAQ. See
"Risk Factors" and "Market for the Company's Securities and
Other Related Stockholder Matters."
Risk Factors
An investment in any of the securities being offered hereby is highly
speculative and involves substantial risks including, but not limited to, a
qualified independent auditors report - financial losses, limited operations,
early development stage of the Company, technological changes, market
acceptance, dependence on existing computer reservation systems, working capital
- - use of proceeds: broad discretion in application of proceeds, dependence upon
a key individual, possible need for additional financing, dependence on certain
suppliers, economic downturn, technological change and new product development,
product protection and infringement, and competition. See "Risk Factors,"
"Business," "Dilution," "Market for the Company's Securities and Other Related
Stockholder Matters" and "Underwriting."
Use of Proceeds
The Company will receive the net proceeds of its offer and sale of the
Common Stock and Warrants and intends to use the net proceeds for the following:
(i) approximately $850,000 for systems and procedures development and additional
equipment; (ii) approximately $1,351,823 or repayment of outstanding
indebtedness; and (iii) approximately $1,338,977 for general working capital
purposes. See "Risk Factors" and "Use of Proceeds".
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Summary Financial Information
The following summary of selected financial information concerning the
Company, other than the "As Adjusted" information reflecting the Company's
receipt and use of the net proceeds of its public offering (see "Use of
Proceeds"), have been derived from the financial statements (including the
related notes thereto) of the Company included elsewhere in this Prospectus (the
"Financial Statements").
The unaudited financial information of the Company as of June 30, 1996
and for the six months then ended have been prepared on the same basis as the
audited financial statements of the Company and, in the opinion of management,
include all adjustments necessary to present fairly the financial position and
the results of operations of the Company.
SUMMARY STATEMENT OF OPERATIONS DATA:
Period From
March 7, 1994
Four Months Ended Year Ended (Date of Inception)
December 31, 1995 August 31, 1995 to August 31, 1994
----------------- --------------- -------------------
Costs and Expenses $ 292,230 $ 269,080 $ 31,510
Net Loss $(292,230) $(269,080) $(31,510)
Net Loss Per Share $ (.10) $ (.11) $ (.01)
Six Months Ended June 30
1996 1995
(Unaudited) (Unaudited)
Costs and Expenses $ 512,590 $ 134,802
Net Loss $(512,590) $(134,802)
Net Loss per Share $ (.18) $ (.05)
SUMMARY BALANCE SHEET DATA:
June 30, 1996 June 30, 1996
December 31, As
1995 Actual Adjusted(1)
Working Capital $(826,930) $ (805,151) $2,735,649
(Deficit)
Total Assets $ 352,685 $ 845,961 $4,386,761
Long-term Debt $ 89,746 $ 671,756 $ 671,756
Total Liabilities $ 939,992 $ 1,874,358 $1,874,358
Stockholders' Equity $(587,307) $(1,028,397) $2,512,403
(Deficiency)
(1) Includes the net proceeds (after underwriting commission,
nonaccountable expense allowance and estimated expenses) of the
offering contemplated herein and does not reflect the application of
the use of proceeds for repayment of outstanding indebtedness of
$1,351,823. See "Use of Proceeds".
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RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. SUCH SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS,
AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS
AND THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS, THE NOTES THERETO AND
THE DOCUMENTS REFERENCED HEREIN.
Qualified Independent Auditor`s Report - Financial Losses
The financial statements have been prepared assuming that the Company
will continue as a going concern and the auditor's report indicates that the
going concern basis may not be appropriate, due to its current financial
condition and recent results of operations. There can be no assurance that the
Company's business strategy will prove successful, or that the Company will
operate profitably. Since the Company has incurred operating losses from
inception and has capital and working capital deficiencies, there is substantial
doubt as to the Company's ability to continue as a going concern. See
"Business", "Financial Statements" and "Management's Discussion and Analysis".
Limited Operations
To date, the operations of the Company have been limited to market
research and development of a software and hardware system for computerizing the
limousine reservation process. The Company has not yet generated any revenues
and will require further technical development within a period of the next
twelve months, as well as an additional investment of the proceeds from this
Offering before a determination of the system's commercial feasibility can be
made. No assurance can be given that the Company's reservation system will
achieve commercial feasibility. See "Business".
Development Stage of the Company
Although the founders and principal stockholders of the
Company have substantial experience in the limousine and travel
industry, the Company itself is not sufficiently established to
fully evaluate or forecast its prospects. The Company is thus
subject to all the risks associated with the creation of a new
business, and there is no assurance that it will be able to
continue to function as a viable entity. See "Business"
18
<PAGE>
Rapid Technological Changes
The computer hardware and software industry is relatively new and has
undergone, and is expected to continue to undergo, significant and rapid
technological changes. Not only will market penetration and customer acceptance
of the Company's system depend upon the Company's ability to develop and
maintain a technically competent marketing force, but upon the Company's ability
to adapt to rapid technological changes in its industry. The Company also
expects that new competitors may introduce systems or services that are directly
or indirectly competitive with those of the Company. Such competitors may
succeed in developing systems and services that have greater functionality or
are less costly than the Company's systems and services and may be more
successful in marketing such systems and services. While the Company continues
to enhance and develop its existing and new reservation software products, there
can be no assurance that such enhancements or developments will be accepted by
existing or new markets. See "Business."
No Assurance of Market Acceptance
While the Company believes that its computerized limousine reservation
system will gain acceptance among corporate travel departments, there can be no
assurance that a sufficient number of corporate travel departments will be
willing to utilize the Company's system to enable the Company to achieve
profitable operations. See "Business".
Dependence on Existing Computer Reservation Systems
The Company is dependant on access to existing computer reservation
systems. If such systems were to experience technical difficulties or be unable
to operate for a period of time, the Company's business would be adversely
affected. In addition, the Company has agreements with three of the four major
airline reservation systems. There can be no assurance that such agreements will
be renewed or renewed on favorable terms after their expiration. Moreover, if
such agreements were to terminate and the Company were to lose access to such
systems, its' business would be materially and adversly affected. See
"Business".
Broad Discretion by Management in Application of Proceeds
A portion (approximately $1,338,977 or 37.8%) of the net proceeds
derived from the sale of the Securities offered hereby will be added to the
Company's general working capital. Management will have complete discretion as
to the application of such funds. No assurance can be given as to the amounts
that will be raised by this offering and if such amounts will be sufficient to
meet the Company's needs. See "Use of Proceeds."
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<PAGE>
The management of the Company has broad discretion to adjust the
application and allocation of the net proceeds of this offering of approximately
$1,338,977 or 37.8% of the net proceeds, plus up to $14,806,250 of gross
proceeds that may be received upon exercise of the Redeemable Warrants, in order
to address changed circumstances and opportunities. As a result of the
foregoing, the success of the Company will be substantially dependent upon the
discretion and judgment of the management of the Company with respect to the
application and allocation of the net proceeds hereof. Pending use of such
proceeds, the net proceeds of this offering will be invested by the Company in
temporary, short-term interest-bearing obligations. See "Use of Proceeds,"
"Business" and "Management."
Dependence Upon Key Individual
The Company's success is dependent upon the activities of Joseph
Cutrona, its President. The loss of Mr. Cutrona's services through death,
disability or resignation will have a material and adverse effect on the
business of the Company. The Company has an employment agreement with Mr.
Cutrona, however, such employment agreement does not specify a definite length
of employment with the Company. The Company intends to obtain key man insurance
on the life of Mr. Cutrona in the amount of $1,000,000. See "Management".
Possible Need for Additional Financing
The Company intends to fund its operations and other capital needs for
the next twelve (12) months substantially from operations and the proceeds of
this offering, but there can be no assurance that such funds will be sufficient
for these purposes. There can be no assurance that such financing will be
available, or that it will be available on acceptable terms. See "Use of
Proceeds."
Dependence on Certain Suppliers
The Company is dependant on certain of its suppliers who are involved
with the development of the Company's system. Should the Company lose any of
such suppliers, it would cause a delay in the Company bringing it's system to
market. The arrangement with these suppliers is not subject to any formal
written agreements and are served on a month to month basis. No assurance can be
given that the Company will be able to adequately replace such suppliers in the
event of a termination of services by the suppliers to the Company.
Adverse Effect of Economic Downturn
The Company's system, when operable, will be dependant on the travel
habits of its customers. In the event there is an economic downturn or change in
travel patterns, the Company's business could be adversely affected. See
"Business".
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Product Protection and Infringement
The Company does not have any patents on any of its technology and
relies largely on copyright, its license agreements with customers and its own
security systems, confidentiality procedures and employee nondisclosure
agreements to maintain the trade secrecy of its proprietary information. There
can be no assurance that the legal protections and precautions taken by the
Company, or available remedies, will be adequate to prevent misappropriation of
the Company's proprietary information. In addition, these protections do not
prevent independent third-party development of functionally equivalent or
superior systems, products or methodologies. The Company does not believe that
its products infringe upon the proprietary rights of third parties and the
Company is not aware of any claims to that effect. However, there can be no
assurance that third parties will not assert infringement claims against the
Company in the future. See "Business".
Likely Competition
Although, to the best of the knowledge of the management of the
Company, there are as yet no competitors, it must be assumed that if the
Company's efforts are successful, other companies will begin to offer competing
systems. These future competitors may well be companies which have substantially
greater research, development, marketing and financial resources than the
Company. Moreover, customers seeking limousine service will be able to reserve
such service through existing telephone based systems or alternative methods
which may indirectly compete with the Company.
See "Business".
Patents
The Company may file for patents on certain items relating to the
design of its proprietary systems. However, the Company does not consider the
granting of patents on these systems to be critical to its business. The Company
expects that the proprietary software that it is developing will be protected
under United State's copyright law. See "Business".
Need for Highly Qualified Personnel
The success of the Company's business will depend upon its ability to
attract and retain personnel with a wide range of technical capabilities.
Competition for such personnel is intense, and is expected to increase in the
future. No assurance can be given that the Company will be able to attract and
retain such personnel. See "Business".
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Arbitrary Determination of Offering Price of Securities
The public offering price of the Securities and the exercise price of
the Redeemable Warrants were determined by negotiation between the Company and
the Underwriter and do not necessarily bear any relationship to the Company's
assets, book value, net worth or any other established criteria of value. Among
the factors considered in determining such prices were the Company's historical
performance and growth, management's assessment of the Company's business
potential and earning prospects, the prospects for growth in the industry in
which the Company operates, market prices and prevailing market conditions
generally. Neither the offering price of the Securities nor the exercise price
of the Redeemable Warrants should be regarded as indicative of the actual value
of any of the securities being offered by the Company. The trading price of the
securities and/or exercise price of the Redeemable Warrants could also be
subject to significant fluctuations in response to variations in quarterly
results of operations, announcements of new contracts or services by the Company
or its competitors, government regulatory action, general trends in the industry
and other actions, including extreme price and volume fluctuations which have
been experienced by the securities markets from time to time in recent years.
See "Underwriting".
Immediate and Substantial Dilution
This Offering involves an immediate and substantial dilution of $4.31
(86.2%) per share between the net tangible book value per share of Common Stock
upon consummation of this Offering and the initial public offering price. To the
extent that any future financing involves the sale of the Company's equity
securities, the interests of the Company's then existing stockholders, including
investors in this Offering, could be substantially diluted. See "Dilution" and
"Future Sales of Stock by Stockholders."
Absence of Dividends on Common Stock
The Company has not paid any dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, working capital
and earnings, if any, will be retained for use in the Company's business
operations and in the expansion of its business. The Company has no present
intention to pay cash dividends on its Common Stock. See "Dividend Policy" and
"Description of Securities".
Possible Adverse Effect of Future Sales of Stock by Stockholders
Of the Company's 2,834,866 outstanding shares of Common Stock prior to
the Offering contemplated hereby, 2,296,932 shares are "restricted securities"
as that term is defined under the Securities Act and in the future may only be
sold in compliance with Rule 144 promulgated under the Securities Act or
pursuant to
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<PAGE>
an effective registration statement. Rule 144 provides, in essence, that a
person (including a group of persons whose shares are aggregated) who has
satisfied a two-year holding period for such restricted securities may sell
within any three-month period, under certain circumstances, an amount of
restricted securities which does not exceed the greater of 1% of that class of
the Company's outstanding securities or the average weekly trading volume of
that class of securities during the four calendar weeks prior to such sale. In
addition, pursuant to Rule 144, persons who are not affiliated with the Company
and who have held their restricted securities for at least three years are not
subject to the quantity limitations or the manner of sale restriction of the
rules. As of the date hereof, no shares of Common Stock are available for resale
pursuant to Rule 144. Pursuant to an agreement with the Underwriter, the
officers, directors and holders of 5% or more of the Company's equity securities
are restricted from selling their respective securities for a period of 18
months from the Effective Date, absent waiver of such restriction by the
Underwriter. See "Certain Transactions" and "Underwriting."
In the event that shares of Common Stock which are not currently
salable become salable by means of registration, eligibility for sale under Rule
144 or otherwise and the holders of such shares of Common Stock elect to sell
such shares of Common Stock in the public market, there is likely to be a
negative effect on the market price of the Company's securities and on the
ability of the Company to obtain additional equity financing. In addition, to
the extent that such shares of Common Stock enter the market, the value of the
Common Stock in the over-the-counter market may be reduced. No predictions can
be made as to the effect, if any, that sales or availability for sale of the
Securities will have on the market price of any such securities, which may
prevail from time to time. Nevertheless, the foregoing could adversely affect
such prevailing market prices. See "Principal Stockholders," "Certain
Transactions" and "Description of Securities."
Financial Risk to Investors in Public Offering
Upon completion of the Company's public offering, the Company's current
stockholders will have paid $77,013 for 2,834,866 shares of Common Stock, or 78%
of the Company's then outstanding shares of Common Stock, and purchasers of the
Securities in the Company's public offering will have paid $4,000,000 for
800,000 shares of Common Stock, or 22% (exclusive of related warrants) of the
Company's then outstanding shares of Common Stock, assuming no exercise of the
Over-Allotment Option and no exercise of the Redeemable Warrants being offered
by the Company pursuant thereto. Therefore, investors purchasing Securities in
the Company's public offering will bear a substantially greater financial risk
than the Company's current stockholders. See "Dilution."
No Assurance of Public Market or Continued NASDAQ Listing
Prior to the Company's public offering, there has been no
public market for any of the Company's securities, and there can be
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<PAGE>
no assurance given that a regular trading market for the Securities will develop
after the completion of the Company's public offering. If a trading market does
in fact develop for any of the foregoing securities, there can be no assurance
given that it will be sustained. In connection with the Company's public
offering, the Company applied for and was granted inclusion of the Common Stock
and the Redeemable Warrants for quotation on NASDAQ under the symbols: GENS,
GENSW, and GENSZ, respectively. While such securities are currently listed for
quotation on NASDAQ, there can be no assurance given that the Company will be
able to satisfy the requirements for continued quotation on NASDAQ or that such
quotation will otherwise continue. If, for any reason, any of such securities
become ineligible for continued listing and quotation or a public trading market
does not develop, purchasers of such securities may have difficulty selling
their securities should they desire to do so.
Under the current rules of the National Association of Securities
Dealers, Inc. ("NASD"), in order to qualify for initial listing on NASDAQ, a
company must have, among other things, at least $4,000,000 in total assets,
$2,000,000 in total capital and surplus, $1,000,000 in market value of public
float and a minimum bid price of $3.00 per share. For continued listing, a
company must have, among other things, $2,000,000 in total assets, $1,000,000 in
total capital and surplus, $1,000,000 in market value of public float and a
minimum bid price of $1.00 per share. Although the Company is able initially to
satisfy the requirements for quotation on NASDAQ, it may be unable to satisfy
the requirements for continued quotation thereon, and trading, if any, in the
securities being offered hereby would be conducted in the over-the-counter
market in what are commonly referred to as the "pink sheets" of the National
Quotation Bureau, Inc. or on the NASD OTC Electronic Bulletin Board. As a
result, an investor may find it more difficult to dispose of or to obtain
accurate quotations as to the price of such securities. See "Underwriting".
Risk of "Penny Stock" Regulations
The Commission has adopted regulations which define a "penny stock" to
be any equity security that has a market price (as defined) of less than $5.00
per share, subject to certain exceptions. The Company believes that, as of the
date of this Prospectus, the Common Stock and/or the Redeemable Warrants may be
deemed to be "penny stocks" as defined by the Exchange Act and the rules and
regulations promulgated thereunder. For any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities, information on the limited market in penny stocks and, if the
broker-dealer is the sole market-maker,
24
<PAGE>
the broker-dealer must disclose this fact and the broker-dealer's presumed
control over the market. In addition, the broker-dealer must obtain a written
acknowledgment from the customer that such disclosure information was provided
and must retain such acknowledgment from the customer for at least three years.
Further, monthly statements must be sent to the customer disclosing
current price information for the penny stock held in the account. While many
NASDAQ-listed securities would otherwise be covered by the definition of penny
stock, transactions in a NASDAQ-listed security would be exempt from all but the
sole market-maker provision for: (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operation for three
years); (ii) transactions in which the customer is an institutional accredited
investor; and (iii) transactions that are not recommended by the broker-dealer.
In addition, transactions in a NASDAQ-listed security directly with a NASDAQ
market-maker for such securities would be subject only to the sole market-maker
disclosure, and the disclosure with respect to commissions to be paid to the
broker-dealer and the registered representative.
The above-described rules may materially adversely affect the liquidity
for the market of the Company's securities. Such rules may also affect the
ability of broker-dealers to sell the Company's securities and may impede the
ability of holders (including, specifically, purchasers in this offering) of the
Common Stock, the Class A Warrants, the Common Stock underlying the Class A
Warrants, the Class B Warrants and the Common Stock underlying the Class B
Warrants to sell such securities in the secondary market.
Underwriter's Influence on the Market
Although it has no legal obligation to do so, the Underwriter may from
time to time act as a market-maker and otherwise effect transactions in the
Company's securities. To the extent the Underwriter acts as a market-maker in
the Common Stock or Redeemable Warrants it may be a dominating influence in that
market. The price and liquidity of such securities may be affected by the
degree, if any, of the Underwriter's participation in the market inasmuch as a
significant amount of such securities may be sold to customers of the
Underwriter. Such customers subsequently may engage in transactions for the sale
or purchase of such securities through or with the Underwriter. In the event
that market-making activities are commenced, the Underwriter may discontinue
such activities at any time or from time to time. See "Underwriting."
Risk of Blue Sky Restrictions on Exercise of the Redeemable
Warrants
The Company has qualified the sale of the securities being
offered hereby in a limited number of states. Although certain
25
<PAGE>
exemptions in the Blue Sky laws of certain states, other than those states in
which such securities are initially qualified, may permit such securities,
including the Redeemable Warrants, to be transferred to purchasers in such
states, the Company will be prevented from issuing Common Stock upon exercise of
the Redeemable Warrants in such states unless an exemption from registration or
qualification is available or unless the issuance of Common Stock upon the
exercise of the Redeemable Warrants is qualified and a current registration
statement is in effect. The Company may decide not to seek or may not be able to
obtain qualification of the issuance of such Common Stock in all of the states
in which the ultimate purchasers of the Redeemable Warrants reside. In such
case, the Redeemable Warrants of such purchasers will expire and have no value
if such warrants cannot be exercised. Accordingly, the market for the Redeemable
Warrants may be limited. See "Underwriting".
Continuing Voting Control by Current Officers and Directors
As of the date hereof, the management of the Company owns 2,296,932
shares of Common Stock. Consequently, immediately upon completion of the
Company's public offering of the Securities, the officers and directors of the
Company will own or control the voting of 61.68% of the Company's issued and
outstanding Common Stock, assuming no exercise of the Over-Allotment Option and
no exercise of the Redeemable Warrants. There are no cumulative voting rights
and directors must be elected by a plurality of the outstanding voting
securities entitled to vote. Therefore management of the Company will be in a
position to control the actions of the Company. See "Principal Stockholders" and
"Certain Transactions."
Current Prospectus Requirement to Exercise Warrants
During the exercise period of the Redeemable Warrants, the Company must
maintain and make available a current prospectus. This Prospectus will no longer
be current after _________, 1997 (or earlier upon the occurrence of a material
event or change which would render the information herein inaccurate or
otherwise misleading). There can be no assurance given that the Company will not
be prevented by financial or other considerations from maintaining a current
prospectus. In the event that a current prospectus is not available, the
Redeemable Warrants may not be exercisable and the Company will be precluded
from redeeming the Redeemable Warrants. See "Underwriting".
Adverse Effects of Possible Redemption of the Redeemable Warrants
Each Class A Redeemable Warrant shall entitle the holder to acquire one
share of the Common Stock at a price equal to $5.75 per share. Commencing 12
months after the Effective Date, the Company will have the right at any time to
redeem all, but not less than
26
<PAGE>
all, of the Class A Redeemable Warrants at a price equal to ten cents ($.10) per
Redeemable Warrant, provided that the closing bid price of the Common Stock
equals or exceeds $6.25 per share for any twenty (20) trading days within a
period of thirty (30) consecutive trading days ending on the fifth trading day
prior to the date of the notice of redemption. Each Class B Redeemable Warrant
shall entitle the holder to acquire one share of the Common Stock at a price
equal to $6.75 per share. Commencing 12 months after the Effective Date, the
Company will have the right at any time to redeem all, but not less than all, of
the Class B Redeemable Warrants at a price equal to ten cents ($.10) per
Redeemable Warrant, provided that the closing bid price of the Common Stock
equals or exceeds $7.25 per share for any twenty (20) trading days within a
period of thirty (30) consecutive trading days ending on the fifth trading day
prior to the date of the notice of redemption. See "Descriptions of Securities."
Although holders of the Redeemable Warrants will have the right to exercise
their Redeemable Warrants through the date of redemption, they may be unable to
do so because they lack sufficient funds at the time of redemption, or they may
simply not wish to invest any more money in shares of the Common Stock at that
time. Should a holder of the Redeemable Warrants fail to exercise such
Redeemable Warrants or to sell such Redeemable Warrants on or prior to the
redemption date, such Redeemable Warrants will have no value beyond their
redemption value. The Company may not redeem the Redeemable Warrants unless the
Company has available a current prospectus with respect to the Redeemable
Warrants. See "Risk Factors-Current Prospectus Requirement" above and
"Description of Securities-Redeemable Warrants."
Possible Restrictions on Market-making Activities During Warrant
Solicitation
To the extent that the Underwriter solicits the exercise of the
Redeemable Warrants from the holders thereof, it may be prohibited pursuant to
the requirements of Rule 10b-6 under the Exchange Act from engaging in
marketmaking activities during such solicitation and for a period of up to nine
days preceding such solicitation. As a result, the Underwriter may be unable to
continue to provide a market for the Company's securities during certain periods
while the Redeemable Warrants are exercisable. The Underwriter is not obligated
to act as a market-maker. See "Underwriting."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Securities being
offered by the Company, after deducting expenses and other costs of the
offering, are estimated to be approximately $3,540,800 (or $4,107,170 if the
Over-Allotment Option is exercised
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in full). The Company intends to use the net proceeds of its
offering substantially as follows:
Proposed Use of Proceeds Approximate Amount Percentage
System Procedures Development
and additional equipment(1) $850,000 24.0%
Repayment of Debt (2) 1,351,823 38.2%
Working Capital (3) 1,338,977 37.8%
--------- -----
Total $3,540,800 100%
---------
- ----------------------------
(1) To be utilized for (a) completion of software development and acquisitions
of computer hardware needed to complete development of the Genisys payment
system ($560,000) and (b) completion of software development and acquisition of
computer hardware necessary to complete integration of the Genisys reservation
system with the Apollo Computer Reservation System ("CRS") ($290,000).
(2) Of the total debt of $1,351,823 being repaid (a) $475,000 bears interest at
9% and is payable to Loeb Holding Corp., as agent (Loeb), in 12 equal quarterly
payments commencing on September 5, 1997; (b) amounts of $50,000, $50,000,
$50,000, $25,000, $25,000, $25,000 and $25,000 bear interest at 9% and are
payable to Loeb and mature on February 3, 1996, February 11, 1996, February 23,
1996, March 29, 1996, April 7, 1996, May 10, 1996 and June 3, 1996,
respectively, of which $237,500 will be repaid;(c) a total of $563,500 bearing
interest at 10% and payable to 16 unaffiliated parties matures upon the earlier
to occur of May 29, 1997 or thirty days after the closing date of the first
underwritten public offering of the Company's securities (d) $40,500 is payable
to John Wasko for accrued consulting fees; (e)$9,000 is payable to Mark Kenny
for accrued salary; (f) $2,964 payable to County Club; and (g) $23,359 payable
to Loeb Partners for consulting and other miscellaneous fees. See "Certain
Transactions".
(3) General working capital contemplates, among other things, the use for
general corporate purposes, including funding day to day operations of the
Company such as executive salaries and the Company's future development.
The amounts set forth above are estimates developed by management of
the Company based upon the Company's current plans and prevailing economic and
industry conditions. Although the Company does not currently contemplate
material changes in the proposed use of proceeds set forth above, to the extent
that management of the Company finds that adjustment thereto is required, the
amounts shown may be adjusted among the uses indicated above. The Company's
proposed use of proceeds is subject to changes in general, economic and
competitive conditions, timing and management discretion, each of which may
change the amount of proceeds expended for the purposes intended. The proposed
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application of proceeds is also subject to changes in market conditions and the
Company's financial condition in general. Changes in general, economic,
competitive and market conditions and the Company's financial condition would
include, without limitation, the occurrence of an economic slowdown or recession
and changes in the competitive environment in which the Company operates. While
management of the Company is not currently aware of the existence or pending
threat of any of the foregoing events, there can be no assurance given that one
or more of such events will not occur. See "Risk Factors" generally, including
specifically, "Risk Factors-Working Capital-Use of Proceeds" and "Risk
Factors-Competition." Any additional proceeds received upon exercise of the
Over-Allotment Option or Redeemable Warrants will be added to working capital
and used as management, in its sole discretion, deems appropriate.
While there can be no assurance given, the Company believes that the
net proceeds from its public offering and internally generated funds will be
adequate to satisfy the Company's working capital needs for the next 12 months.
The Company does not currently anticipate that it will need the proceeds from
the potential exercise of Redeemable Warrants to fund its working capital needs
or to maintain its operations over the next 12 months. However, the Company may
require additional financing in the future in order to expand its business. The
Company is not able at this time to predict the amount or potential source of
such additional funds and has no current commitments to obtain such funds, other
than as set forth herein. There can be no assurance that additional financing on
acceptable terms will be available to the Company when needed, if at all. See
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Pending use of the net proceeds from the Company's
public offering, the Company may make temporary investments in short-term, high
grade, interest-bearing instruments.
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- ----------------------------------------------------------------
CAPITALIZATION'
- -----------------------------------------------------------------
The following table sets forth as of June 30, 1996 the Company's capitalization
on a pro forma basis and as adjusted to give effect to this Offering and its net
proceeds, assuming the over-allotment is not exercised. The information below
should be read in conjunction with the Financial Statements contained in this
Prospectus, which should be read in their entirety.
Actual As Adjusted(1)(2)(4)
Short-term debt:
Current portion of obligation
under captial lease $65,367 65,367
Notes payable-Loeb Holding Corp.,
as agent.(3) 750,000 -
------- ----
Total Short-term debt 815,367 65,367
------- --------
Long-term debt:
10% notes payable-bridge financing 563,500 -
Convertible notes payable(3)(4) 30,000 67,500
Long-term portion of obligation
under capital lease 78,256 78,256
------- --------
Total long-term debt 671,756 145,756
------- --------
Stockholders' equity (deficency):
Preferred stock, $.0001 par value;
25,000,000 shares authorized;
None outstanding - -
Common stock, $.0001 par value;
75,000,000 shares authorized;
2,834,866 shares issued and
outstanding 283 -
3,634,866 shares outstanding
as adjusted - 363
Paid in capital 76,730 3,617,450
Deficit accumulated during the
development stage (1,105,410) (1,105,410)
----------- -----------
Total stockholder's equity
(Deficiency) (1,028,397) 2,512,403
----------- -----------
Total Capitalization (Long-term
debt and stockholders' equity
(deficiency) $ (356,641) $2,658,159
------------- ----------
- -------------
(1) Gives effect to the anticipated net proceeds of $3,540,800 from the
public offering and the repayment of debt of $1,351,823 (which includes
$825,823 of related party debt) with the proceeds.
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(2) Does not include: (a) 287,500 shares of Common Stock issuable
upon exercise of the Class A Warrants issued in a private
placement; (b) 120,000 shares of Common Stock issuable upon
exercise of the Over-Allotment Option; (c) 315,000 shares of
Common Stock issuable upon exercise of the Redeemable Warrants
made part of the Over-Allotment Option; or (d) 80,000 shares
of Common Stock issuable upon exercise of the Underwriter's
Purchase Option. In the event all outstanding options
(excluding 315,000 options covering the over-allotment option
but including 80,000 shares covered by the Underwriters
Purchase Option) were exercised there would be 4,122,366
shares of Common Stock outstanding. See "Description of
Securities," "Certain Transactions," "Management" and
"Underwriting."
(3) Gives effect to the repayment of $712,500 of the $750,000 Note
payable due to Loeb Holding Corp. with the proceeds from the
offering. The remaining $37,500 Convertible Note is
reclassified to long-term debt as it is payable commencing
April 1, 1998.
(4) Does not include the assumed conversion of $30,000 into 15,000
shares of common stock. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources".
DILUTION
As of June 30, 1996, the Company had an aggregate of 2,834,866 shares of Common
Stock outstanding and a net tangible book value of $(1,028,397) or $(.36) per
share of Common Stock. "Net Tangible Book Value Per Share" represents the total
amount of the Company's tangible assets, less the total amount of its
liabilities, divided by the total number of shares of Common Stock outstanding.
After giving effect to the sale of 800,000 shares of Common Stock by
the Company at the offering price of $5.00 per share of Common Stock, and the
proceeds from the sale of the Class A and Class B Warrants and the deduction of
offering expenses in the amount of $235,000 and underwriting discounts and
commissions estimated at $564,200 (which amounts include payment of the
Underwriter's Non-Accountable Expense Allowance but without taking into account
exercise of the Over-Allotment Option), the pro forma net tangible book value of
the Company would be $.69 per share of Common Stock. This amount represents an
immediate dilution (the difference between the attributed price per share of
Common Stock to purchasers in the Company's offering and the pro forma net
tangible book value per share of Common Stock as of June 30, 1996 of
approximately $4.31 per share of Common Stock to new investors and an immediate
increase (the difference between the pro forma net
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tangible book value per share of Common Stock as of June 30, 1996 and the pro
forma net tangible book value per share of Common Stock as of June 30, 1996
after giving effect to the issuance of 800,000 shares of Common Stock and
related warrants) of $1.05 per share of Common Stock to the Company's
stockholders. Such increase to the Company's current stockholders is solely
attributable to the cash price paid by purchasers of the Securities offered for
sale by the Company.
The following table illustrates the per share dilution as of June 30, 1996:
Public offering price per share(1)................. $5.00
Net tangible book value per share before giving $(.36)
effect to the Company's offering...............
Increase per share attributable to the net proceeds
of the sale of 800,000 shares of Common Stock
and related warrants offered by the Company..... 1.05
Pro forma net tangible book value per share as of
June 30, 1996 reflecting the Company's
Offering(2)........................................ .69
Dilution per share to purchasers in the Company's
offering........................................... $4.31
- ------------------------
(1) Attributes $5.00 of the public offering price to the shares of
Common Stock and none to the Redeemable Warrants. Represents
the public offering price before deduction of estimated
expenses of the Company's offering, underwriting discounts and
commissions. If the Underwriter's over-allotment option is
exercised in full, the pro forma as adjusted net tangible book
value per share of Common Stock after this Offering would be
approximately $.82 representing an immediate increase of $1.18
per share to current stockholders and an immediate dilution of
$4.18 per share to new investors.
(2) Assumes no exercise of: (a) the Underwriter's Purchase Option
(or exercise of the Redeemable Warrants included therein); (b)
the Over-Allotment Option (or exercise of the Redeemable
Warrants included therein). See "Capitalization,"
"Underwriting," "Certain Transactions" and "Description of
Securities."
The following table sets forth, as of June 30, 1996, a comparison of
the number of shares of Common Stock acquired by current stockholders from the
Company, the total consideration paid for such shares of Common Stock and the
average price per share paid by current stockholders of Common Stock and to be
paid by the prospective purchasers of the shares of Common Stock offered for
sale by the Company (based upon the anticipated public offering price of $5.00
per share of Common Stock, before deducting
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underwriting discounts and commissions and estimated offering
expenses).
Common Stock Acquired Total Consideration Average Price
Number Percent Amount Percent Per Share
Current
Stockholders..... 2,834,866 78% $ 77,013 1.9% $.03
New
Investors(1)(2) 800,000 22% $4,000,000 98.1% $5.00(3)
----------- ----- ----------- ----
Total(2)(3)(4) 3,634,866 100% $4,077,013 100%
(1) Does not include 80,000 shares of Common Stock which may be
issued on exercise of option granted to the Underwriters to
cover over-allotments. See "Underwriting".
(2) Assumes no exercise of: (a) the Underwriter's Purchase Option
(or exercise of the Redeemable Warrants included therein); (b)
the Over-Allotment Option (or exercise of the Redeemable
Warrants included therein); nor (c) the issuance of 420,728
shares upon conversion of certain promissory notes. See
"Capitalization," "Management Discussion and Analysis of
Financial Conditions and Results of Operations",
"Underwriting," "Certain Transactions" and "Description of
Securities."
(3) Aggregate offering price before deduction of offering
expenses, underwriting discounts and commissions.
(4) Does not include the shares of Common Stock issuable upon the
conversion of the Convertible Notes.
DIVIDEND POLICY
The Company issued has not, to date, paid and does not
anticipate paying any dividends on its Common Stock in the
foreseeable future. The Company currently intends to retain all
working capital and earnings, if any, for use in the Company's
business operations and in the expansion of its business. See
"Description of Securities-Common Stock."
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The principal business activity of the Company is developing a
computerized limousine reservation system for the business traveler. The Company
anticipates that the proprietary software that is being developed will enable
limousine reservations to be completely computerized -- i.e., be entirely
automated and operate without human intervention except for initial input of
travel information.
The Company, a New Jersey corporation, was organized on April 25, 1986,
under the name of JECO2 Lasers, Inc. and changed its name to Robotic Lasers,
Inc. on December 22, 1987. On August 11, 1995, Robotic Lasers acquired Corporate
Travel Link, Inc. (a development-stage enterprise) which was incorporated in New
Jersey on March 7, 1994. For accounting purposes, the share exchange transaction
and combination of Corporate Travel Link with the Company has been treated as a
reverse acquisition. The previous historical financial statements of Corporate
Travel Link (since its information in March 1994) are now reported as the
historical consolidated financial statements of the Company and its subsidiary.
As of August 11, 1995, the Company`s business and operations consist solely of
the business and operations of Corporate Travel Link, which continues to operate
as a wholly-owned subsidiary of the Company. The Company changed its name from
Robotic Lasers, Inc. to Genisys Reservation Systems, Inc. on July 16, 1996.
The Company changed its fiscal year end from the last day of August to
December 31, effective December 31, 1995.
Components of Revenue and Expenses
Revenue. The Company is a development-stage company and has generated
no revenues and has no commercial operations to date. The Company does not
expect to generate any revenues from operations during the fiscal year ending
December 31, 1996. The Company does expect to bring its computerized limousine
reservation system on-line through two of the four main airline Computer
Reservation Systems in existence (Sabre and Worldspan) in early 1997, at which
time the Company expects to generate revenue. The Company anticipates completing
development of and bringing a third airline Computer Reservation System, Apollo,
on-line in late 1997, which it expects to increase revenues.
The Company anticipates that its computerized limousine
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reservation system will generate revenue from the following sources: (i) a
transaction fee charged for use of the Genisys reservation system and billed
through the Genisys payment system and the Company`s centrally billed corporate
card, (ii) a merchant fee generated by charges processed through the Genisys
payment system, (iii) an annual software licensing fee charged to limousine
service providers who utilize the Genisys reservation and payment systems and
(iv) a net booking fee charged to limousine service providers for work delivered
through the Genisys reservation system.
Expenses. Cost of service will include all costs directly attributable
to the Company's provision of services to its corporate clients and the
limousine service providers. The most significant component of cost of service
is the booking fee charged by the airline Computer Reservation System ("CRS")
for reservations made by the Genisys systems utilizing the CRS. Booking fees are
a set amount charged by each CRS for transactions posted through the system.
Cost of service also includes the access and file fees charged by a commercial
bank acting as the Company`s Automated Clearing House in distributing payments
made to limousine service providers through the Genisys payment system.
General and administration expenses include salaries, commissions and
benefits, travel costs, professional fees, rent, telephone and other operating
costs of the Company. The Company has not capitalized any internal expenditures
with respect to the costs of developing and implementing the Genisys reservation
and payment systems.
Results of Operations
The Company is in the development stage and has not yet generated any
revenues and has no commercial operations to date. The Company has been
unprofitable since inception and expects to incur additional operating losses
over the next several fiscal quarters. The Company does not expect to generate
any revenues from operations until 1997. As reflected in the accompanying
financial statements, the Company has incurred losses totaling $1,105,410 since
inception and at June 30, 1996, had a working capital deficit of $805,151.
Selling, general and administrative expenses were $422,428 for the six
months ended June 30, 1996 as compared to $128,311 during the six months ended
June 30, 1995. The primary reason for the difference between the two periods is
the commencement of operations during the earlier period when the Company had no
employees, while during the latter period the Company was operational with 5
full-time employees. Payroll and payroll-related costs increased approximately
$115,000 during 1996. Other cost increases during the 1996 period consist of
consulting fees
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($40,000), professional fees ($99,000), travel costs ($11,000), marketing costs
($7,000) and other administrative costs ($22,000).
Comparison of the results of operations during the 4 months ended
December 31, 1995, to the same period in 1994 is not deemed meaningful, as the
Company only incurred nominal operating costs during the 1994 period.
Liquidity and Capital Resources.
The Company's funds have principally been provided from Loeb Holding
Corp., as agent, LTI Ventures Leasing Corporation and a private offering, as
described below.
In September 1995, Loeb Holding Corp., as agent, (Loeb) agreed to loan
the Company up to a maximum of $500,000 as evidenced by two Promissory Notes
dated September 5, 1995, one in the amount of $475,000 and the other in the
principal amount of $25,000. In addition, Loeb loaned the Company an additional
$150,000 in December 1995, $75,000 during the three months ended March 31, 1996,
and $25,000 in April 1996. Total loan proceeds to date are $750,000.
On September 30, 1995, the Company entered into a sale and lease-back
arrangement with LTI Ventures Leasing Corp. (LTI) whereby the Company sold the
bulk of its computer hardware and commercially purchased software to LTI. In
consideration for the sale, the Company received a total of $169,599 and agreed
to lease back the hardware and software for varying terms at
a monthly rental presently totaling $7,039.
During the quarter ended March 31, 1996, the Company sold 5,000 shares
of the Company's restricted Common Stock to a former officer and director of the
Company for $10,000. During the same period, the Company also sold 25,000 shares
of the Company's restricted Common Stock to an unrelated party for $50,000.
Pursuant to a private offering, the Company issued 11.5 units to
various unrelated third parties in May and June 1996. Each $50,000 unit consists
of a $49,000 promissory note and a Class A redeemable Common Stock purchase
Warrant valued at $1,000 per unit. Each warrant entitles the holder to purchase
25,000 shares of the Company's common stock at $5.75 per share. Total proceeds
received from this offering was $575,000 and warrants to purchase 287,500 shares
of the Company's common stock were issued.
In April and June 1996, the Company borrowed a total of $30,000 from
two unrelated third parties. The maturity date is the earlier of January 1,
1998, or the consummation of a public offering of the Company`s common stock.
These notes bear interest at a rate of 7% per annum, payable
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<PAGE>
on the last day of each calendar quarter of each year, commencing March 31,
1997, to the maturity date.
If the maturity date of these notes shall occur prior to January 1,
1998, in lieu of the $30,000 payment of the principal amount due, the principal
amount due shall be converted into 15,000 fully paid and non-assessable shares
of common stock of the Company.
At June 30, 1996, the Company had cash of $396,928 and a working
capital deficit of $805,151. Management of the Company estimates that it will
require additional funding of approximately $750,000 to provide for its planned
operations for the next six months. The Company is exploring a number of
operations for the next six months. The Company intends to fund its operations
and other capital needs for the next twelve (12) months substantially from
operations and the proceeds of this offering, but there can be no assurance that
such funds will be sufficient for these purposes. There can be no assurance that
such financing will be available, or that it will be available on acceptable
terms. See "Use of Proceeds."
- -----------------------------------------------------------
BUSINESS
- -------------------------------------------------------------
History
The Company was incorporated in New Jersey in April 1986 as a
wholly-owned subsidiary of JEC Lasers, Inc. ("JEC") to continue the research and
development of an ultra-compact, multi-kilowatt CO2 laser begun under an
agreement with Loughborough Consultants Ltd ("LCL"), which is affiliated with
Loughborough University of Technology, Loughborough, Leicestershire, England.
Due to the uncertain financial condition of JEC and, in order to
preserve the CO2 laser technology which management felt may have had some value,
on May 30, 1986, the Board of Directors of JEC voted to spin-off Robotic Lasers
into an independent, publicly-owned corporation by issuing a stock dividend of
one share of the Company's Common Stock for every four shares of JEC common
stock outstanding to all shareholders of record as of July 8, 1986. On September
23, 1988, the shares were registered under the Securities Act of 1933, as
amended. On June 25, 1986, the Company and JEC signed a Purchase Agreement
whereby the Company acquired all of the assets, rights and properties relating
to JEC's CO2 laser research and development agreement with LCL, subject to
certain liabilities.
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On March 3, 1995, the Company sold all of the assets, rights and
properties relating to the C02 laser research and development agreement with
LCL, subject to certain liabilities, to JEC for $345,593 which generated a
profit of approximately $246,000.
On August 9, 1995, the shareholders of the Company approved an
amendment to the Company's Certificate of Incorporation to effect a
fifty-five-for-one reverse stock split pursuant to which each fifty-five shares
of the Company's Common Stock outstanding as of its close of business on July
12, 1995 was replaced by one share of Common Stock. The reverse stock split
reduced the number of outstanding shares of Common Stock of the Company as of
July 12, 1995 from 30,853,352 to 560,970 (before July 16, 1996 one for two
reverse split) shares of Common Stock.
On August 11, 1995, Robotic Lasers acquired Corporate Travel Link, Inc.
(a development-stage enterprise) which was incorporated on March 7, 1994, by
issuing 5,048,730 (before July 16, 1996 one for two reverse split) shares of
restricted New Common Stock of the Company in exchange for 300 shares of the
Common Stock of Corporate Travel Link ("Travel Link"), which represented all of
the authorized, issued and outstanding shares of common stock of Travel Link.
As of August 11, 1995, the Company's business and operations consist
solely of the business and operations of Travel Link which continues to operate
as a wholly-owned subsidiary of the Company.
General
The principal business activity of the Company is developing a
computerized limousine reservation and payment system for the business traveler.
The management of the Company anticipates that the proprietary software that is
being developed will enable limousine reservations to be completely computerized
- -i.e., be entirely automatic and operate without human intervention.
At the present time, there are four major airline reservations systems
in operation in the United States -- "Sabre", "Worldspan", "Apollo" and "System
One"(the "Reservation System"). Each of these systems allows a travel agency or
corporate travel department to make an airline reservation and receive
instantaneously a confirmation and a printed airline ticket on any airline. It
is also possible to make a hotel reservation with one of the major hotel chains
through any of the reservation systems and receive an instantaneous confirmation
of room availability. Additionally, a travel agent or corporate travel manager
may make an automobile reservation with any one of the major car rental
companies (Hertz, Avis and the like) through these airline reservations systems,
and receive an immediate confirmation of the car rental reservation.
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<PAGE>
When it comes to limousine reservations, however, there is at present
no method for making a reservation through one of the four major airline
reservation systems and receiving an immediate guaranteed confirmation. The
usual method of making a limousine reservation in a destination city is to call
a limousine company, if the travel agent knows of one. This use of the
telephone, with its attendant inconveniences such as "telephone tag" and missed
communications, can require up to a few hours to secure a confirmed limousine
reservation. It is also an expensive process for the travel agent or corporate
travel manager, due primarily to the personnel required to secure a binding
limousine reservation. There are also frequent billing errors and clerical
mistakes in scheduling.
In today's cost-conscious business world, corporations must explore
every possible way to cut costs and save time. Under systems presently in place,
there is no quick, direct, and efficent way to reserve limousine service. Today
reservations are still being booked, changed, canceled and reconfirmed by
telephone, which is time-consuming, error-prone and expensive.
The Company seeks to solve the problems involved in making limousine
reservations for the business traveler by:
1. developing a limousine reservation system that
utilizes the airline computer reservation systems already in use;
2. developing a way to identify and qualify the best
limousine service providers in the cities that are the business
travelers most frequent destinations;
3. developing a way to disseminate reservation information
to corporate clients and to limousine service providers with no
errors, with immediate confirmation and without the need to utilize
the telephone;
4. developing an automated electronic payment system to
process all fees charged by the Company to its clients;
5. performing the above-described tasks with a high degree
of quality control; and
6. providing corporate clients with management and financial
information, to enable them to ascertain where costs are being
incurred.
Computerized Limousine Reservation System
The Company proposes to work with travel agents and corporate travel
departments by providing a computerized system for securing limousine
reservations.
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A typical reservation with the Company's proposed system may be
demonstrated as follows:
Assume that a corporate executive wishes to travel from Newark, New
Jersey to Phoenix, Arizona. The executive will contact his travel manager/agent
with his travel plans. The travel manager/agent will then determine which
airline flies between Newark and Phoenix on the date and at the time when the
executive wishes to travel.
The travel manager/agent will then go to his airline reservation
computer to enter the information necessary to book the reservation. The
information originated by the travel manager/agent will be transmitted to one or
more of the Reservation System's mainframe computers and, in turn, will be
relayed to the mainframe computer of the selected airline. The airline's
computer will ascertain seat availability and it will transmit a reservation
back to the Reservation System's mainframe computer. The Reservation System will
then retransmit the information to the travel manager/agent and a ticket will be
issued.
Further, if the corporate executive decides that he wishes to stay at a
particular hotel while in Phoenix, this reservation, too, may be made through
the Reservation System. The travel manager/agent inputs the data already in the
computer pertaining to the airline reservation, and he adds the data necessary
to secure a hotel reservation. The information is transmitted to the Reservation
System's mainframe computer, and it is then relayed to the hotel's mainframe.
The latter computer searches to ascertain room availability and relays a
confirmed reservation to the Reservation System. The Reservation System
transmits the information to the travel manager/agent and a confirmed
reservation slip is printed.
Finally, the corporate executive advises his travel manager/agent to
obtain four limousine reservations: (a) from his home to Newark Airport; (b)
from Phoenix Airport to his hotel; (c) from the hotel to the Phoenix Airport at
the end of his trip; and (d) from Newark Airport to his home. The travel
manager/agent, however, cannot presently effect these reservations through the
Reservation System or any of the other reservation systems and receive an
immediate, error-free confirmed limousine reservation.
Instead, the travel manager/agent must use the telephone. While a
corporate travel manager/agent based in Newark will undoubtedly know of a
limousine company in the Newark area to call, he may not know of any in the
Phoenix area. Reliable reservations cannot be made quickly or efficiently.
The Company's system proposes to remedy this dilemma. The
Company proposes to create its own computer system which will be
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<PAGE>
linked with one or more of the airline reservation systems. Any limousine
reservations made through the Reservation System will be relayed instantaneously
to the Company's computer and then to a service provider of the clients' choice
- -- all without human intervention -- and an immediate limousine reservation will
be confirmed. In the event that the client has no relationship with a service
provider or has no preference, they will be able to access a national network
service provider through the Company's system. The Company is in the process of
arranging access to such national network services.
The Company`s Computer System Defined
The Company's computer system is made up of two main systems, the
Genisys Reservation System, and the Genisys Payment System. The Genisys
Reservation System is a fully automated computer system that allows travel
agents to make limousine bookings directly through their airline computer
reservation system ("CRS"), much like hotel or car bookings. The Genisys Payment
System is an automated electronic payment and reporting system which will
process and reconcile all purchases made through Genisys Reservation System. The
Genysis Payment System is not yet operational.
An Overview of the Genisys Reservation System
There are three main "components" that play a role in the delivery of a
limousine reservation; the CRS, the Genisys database, and the Genisys computer
terminals which must be purchased by the limousine service provider. The
Company's computer software will integrate these three components into a fully
functional, automated reservation delivery system.
CRS's Interface Development
There are four main airline CRS in existence today in the U.S., SABRE,
WORLDSPAN, APOLLO, and SYSTEM ONE. These CRS's are the primary technology tool
utilized by travel managers/agents to make airline, hotel and car rental
reservations. The Company has contracts with SABRE, WORLDSPAN and APOLLO to
develop an interface that will allow travel managers/agents to make limousine
reservations through the Genisys System.
The Company has completed and tested the Genisys reservation system's WORLDSPAN
interface, and will soon complete the SABRE interface. The Company anticipates
bringing WORLDSPAN and SABRE on-line in early 1997. APOLLO will be the third CRS
brought on-line, and the Company anticipates completing development and bringing
APOLLO on-line in late 1997.
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Genisys Database and Computer Terminal Development
Development of the Genisys database and computer terminals have been completed.
The limousine service provider will be responsible for the cost of purchasing a
computer terminal. The Company estimates the cost of obtaining the computer
terminal to be approximately $1,500. The Company's database and software will be
provided in accordance with licencing agreements entered into with the limousine
providers.
The Company has beta tested its WORLDSPAN interface, database and computer
terminals with a major entertainment company, its travel agency, and a limousine
service provider.
An Overview of Genisys Payment System
Currently under development, the Genisys Payment System will play an
important role in the Company's offering by performing two key functions:
1. The Genisys Payment System will process all transaction
fees charged by the Company for use of the Genisys Reservation
System. For this purpose, the Company is developing a
centrally-billed purchasing card to serve as the system to
process its transaction fee charges. This will allow the
Company to collect transaction fees for the Genisys
Reservation System from its corporate customers in an
automated fashion, eliminating billing and reducing accounts
receivable for the Company.
2. The Genisys Payment System will process payments for all
ground transportation purchases made through the Genisys
Reservation System. This functionality will allow the Company
to become the "master merchant" for all limousine purchases
made through its Reservation System. By becoming the "master
merchant", the Company will create additional interest revenue
and merchant fee revenue on the total dollar volume processed
through the Genisys Reservation and Payment Systems.
Revenue Sources
The Company anticipates generating revenue from the following sources:
1. Transaction Fee
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The Company will charge a transaction fee for the use of the Genisys
reservation system for bookings, changes, and cancellations.
Transaction fees will be processed daily through the Genisys payment
system and the Company's centrally billed corporate card.
2. Merchant Fee
The Company will pay a discounted merchant fee to its credit card processor
for each charge processed (% of total). The Company will charge limousine
service providers a merchant fee higher than what it is charged by the
processor (but lower than what they are currently paying). The difference
is what the Company refers to as merchant fee revenue, which will be
generated by charges processed through the Genisys payment system.
3. Software License Fee
The Company generally will charge an annual software licensing fee to
limousine service providers who utilize the Genisys reservation and payment
systems.
4. Booking Fee -National Networks
The Company will not initially charge limousine service providers
transaction fees as described above. However, the Company intends to secure
net booking fees from national network limousine service providers for work
delivered through the Genisys reservation system.
Competition
Although, to the best of the knowledge of the management of the
Company, there are as yet no competitors, it must be assumed that if the
Company's efforts are successful, other companies will begin to offer competing
systems. These future competitors may be companies which have substantially
greater research, development, marketing and financial resources than the
Company. Moreover customers seeking limousine service will be able to reserve
such service through existing methods such as direct contact with service
providers which may compete with the Company.
Employees
The Company presently employs 5 full-time employees;
2 executive officers, 2 marketing officers, and 1 office
administrator. None of these employees is covered by a
collective bargaining agreement. The Company utilizes
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several software and marketing consultants on a part-time
basis. The Company believes its personnel relations to
be satisfactory.
Properties
The Company presently leases office space at 2401 Morris Avenue, Union,
New Jersey. The five-year lease provides for a monthly rental of $2,125.00
through November 2000 and contains approximately 1,500 square feet of office
space. This property has been leased from unaffiliated third parties and
adaquately satisifies the present needs of the Company. The Company anticipates
that it will need approximately 3,500 square feet in additional space in early
1997.
Government Regulation and licensing
There are no special regulations which impact upon the Company other
than the usual statutes and regulations which govern businesses in general.
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- ---------------------------------------------------------
MANAGEMENT
- ---------------------------------------------------------
Directors and Officers
The following table sets forth certain information with respect to each of the
Company's directors and executive officers.
NAME AGE POSITION
Joseph Cutrona 58 President and Director
John Wasko 58 Secretary/Treasurer
and Director
Mark A. Kenny' 43 Director
Warren D. Bagatelle 58 Director
The Company's Executive Committee is empowered to
exercise full authority of the Board of Directors in
circumstances when convening the full Board is not
practicable. Mr. Warren D. Bagatelle, Mr. John H. Wasko,
and Mr. Joseph Cutrona currently serve as members.
Joseph Cutrona has served the Company as President and Chairman
of the Board since August 1995, and has served as President of Travel Link since
inception, March 11, 1994. He has been employed full time by Travel Link since
March 1995. From 1992 to 1995, Mr. Cutrona was engaged as a marketing consultant
of Country Club Transportation Services, Newark, New Jersey, a company providing
limousine services. From 1990 to 1992, he served as Marketing Director of Gem
Limousine, Edison, New Jersey, a provider of limousine services. From 1978 to
1990, Mr. Cutrona provided limousine consulting services to large corporations
in the tri-state area. Mr. Cutrona graduated from Fairleigh Dickinson University
and The University of Maryland and Sophia University, Osaka Japan.
John H. Wasko has served the Company as
Secretary since September 1995, as Secretary and Treasurer
since April 1996, and as a Director since its inception in
April 1986. Mr. Wasko has also served the Company as
President and Chairman of the Board since its inception to
August 1995, and as Treasurer from April 1986 to September
1987 and from May 1988 to August 1995. Mr. Wasko has also
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served as Chairman of the Board, President and Director of JEC Lasers, Inc.
("JEC") since it was organized in September 1977. He was awarded a bachelor of
science degree in physics in 1963 and a master of science degree in physics
(summa cum laude) in 1965 from Fairleigh Dickinson University.
Mark A. Kenny, currently a consultant to the Company, served as
the Company`s Executive Vice President from August 1995 to October 1996 and
Director since August 1995 and has served as Executive Vice President of Travel
Link since inception, March 11, 1994 to October 1996. From 1974 to the present,
Mr. Kenny has been a partner of Country Club Transportation Services, a provider
of limousine services, which he co-founded in 1974. Mr. Kenny is one of the
original members of the New Jersey Business Travel Association and attended
Seton Hall Preparatory School and Seton Hall University. He is also a member of
the Association of Corporate Travel Executives and a charter member of the New
Jersey Limousine Association.
Warren D. Bagatelle has been, since 1988, a Managing Director at
Loeb Partners Corporation, a New York City investment banking firm and member of
the New York and American Stock Exchanges. Mr. Bagatelle is also a director of
Energy Research Corporation, a company engaged in the development and
commercialization of electrical storage and power generation equipment,
principally fuel cells and rechargeable storage batteries, Rotary Power
International, Inc., a developer and manufacturer of rotary engines, and Sports
Media, Inc., a sports publishing and marketing company. From 1981 to 1987, he
was head of Corporate Finance and Chairman of Josephthal, Lyon & Ross
Incorporated (formerly Rosenkrantz, Lyon & Ross, Inc.) an investment banking
firm. Mr. Bagatelle has a B.A. in economics from Union College and an M.B.A from
Rutgers University.
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Executive Compensation
The following tabulation shows the total compensation paid by the Company
for services in all capacities during the year ended August 31, 1995, 1994 and
1993 to the Officers of the Company and total compensation for all Officers as a
group for such period:
Long-Term Compensation
Awards
Name and Other Annual Restricted
Principal Annual Compensation Compensation Stock
Position Year Salary($) Bonus ($) Awards($)
Joseph Cutona 1995 $28,000.00 $0 $3,840 0
President 1994 $0 $0 $4,000 0
1993 $0 $0 $0 0
Mark A. Kenny 1995 $28,000.00 $0 $3,840 0
1994 $0 $0 $4,000 0
1993 $0 $0 $0 0
John H. Wasko 1995 $0 $0 $2,500 0
Secretary
Treasurer 1994 $0 $0 $0 0
1993 $0 $0 $0 0
Name and
Principal
Position Payouts
Options LTIP All other
SARS Payouts(#) Compensation(4)
Joseph Cutona 1995 $0 $0
President 1994 $0 $0
1993 $0 $0
Mark A. Kenny 1995 $0 $0
1994 $0 $0
1993 $0 $0
John H. Wasko 1995 $0 $0
Secretary
Treasurer 1994 $0 $0
1993 $0 $0
- -------
(1) See below "-Employment/Consulting Agreements," for a description of the
Company's employment agreements with Mr. Cutrona and Mr. Wasko.
Employment/Consulting Agreements.
The Company entered into an Employment Agreement with Joseph Cutrona
on September 5, 1995 which agreement was revised on October 17, 1996 for an
indefinite period of time, providing an annual salary of $75,000 for the period
from October 17, 1996 through December 31, 1996, and $100,000 thereafter until
modified by the Company. Mr. Cutrona is entitled to incentive bonuses in cash
and stock. Any incentive bonus paid to Mr. Cutrona shall be within the sole
discretion of the board of directors of the Company.
The Company entered into an Employment Agreement on October 17, 1996
with John Wasko for an indefinite period of time, providing an annual salary of
$50,000 for the period from October
17, 1966 through December 31, 1996, and $80,000 thereafter until
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modified by the Company. Mr. Wasko is entitled to incentive
bonuses in each year that the Company has net profits in amounts to
be determined by the Company. Any incentive bonus paid to Mr.
Wasko shall be within the sole discretion of the board of directors
of the Company.
The Company entered into a Consulting Agreement on October 18, 1996
with Mark A. Kenny for an indefinite period of time, providing a monthly fee of
$6,500.00 during the period from October 18, 1996 through and including February
28, 1997, and a monthly fee of $8,400.00 thereafter, in each case payable in
arrears on the last day of each month during the term of the Consulting
Agreement. Mr. Kenny is entitled to incentive bonuses in cash and stock. Any
incentive bonuses paid to Mr. Kenny shall be within the sole discretion
of the board of directors of the Company.
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CERTAIN TRANSACTIONS
During February 1995, the Company issued 45,765 shares of its Common
Stock in repayment of certain liabilities totaling $251,702. Those liabilities
include notes payable to Saddle Brook Investors of $149,633, note payable plus
accrued interest to a director of $34,273 and certain accounts payable of
$67,796.
During March 1995, John H. Wasko, then President of the Company, upon
exercise of his own option, acquired 70,520 shares of the Common Stock of the
Company at an exercise price of $0.02145 per share.
On March 3, 1995, the Company and JEC signed a purchase agreement
whereby JEC acquired all of the assets, rights and properties relating to the
Company's CO2 laser research and development agreement with LCL, subject to
certain liabilities, in full consideration for the forgiveness of the
indebtedness of the Company to JEC in the amount of $345,593 owed as of February
28, 1995.
On August 11, 1995, Robotic Lasers acquired Travel Link, by issuing
5,048,730 shares (before reverse split) of restricted New Common Stock of the
Company in exchange for 300 shares of the common stock of Travel Link owned by
Joseph Cutrona, Mark A. Kenny and Steven E. Pollan which represented all the
authorized, issued and outstanding shares of common stock of Travel Link. As of
August 11, 1995, the Company's business and operations consist solely of the
business and operations of Travel Link which continues to operate as a
wholly-owned subsidiary of the Company. Travel Link (a development-stage
enterprise) was incorporated on March 7, 1994. The principal business activity
of Travel Link is developing a computerized limousine reservation and payment
systems for the business traveler.
On September 30, 1995, 841,455 Common Shares of the Company were
purchased by Loeb Holding Corp. as agent ("Loeb"), for Warren D. Bagatelle, HSB
Capital and a number of other customers of, and trusts managed by Loeb. Loeb
received such shares as well as $750,000 in Promissory Notes in consideration
for $750,000 loaned to the Company in cash.
On December 1, 1995, the Company and Loeb signed an interim loan
agreement whereby Loeb loaned the Company the sum of $50,000 due in 60 days
together with interest of 9% to be used as working capital. Additionally on
December 4, 1995, January 16, 1996, February 23, 1996 and March 12, 1996, the
Company and Loeb signed additional interim loan agreements whereby Loeb loaned
the Company the sums of $100,000, $50,000, $25,000 and $25,000 respectively.
Each of these additional interim loans were due in 60 days from the date of each
agreement and accrued interest at 9% per annum.
Loeb has the option to convert the five interim loan
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agreements into two term Promissory Notes, one in the principal amount of
$237,500 and the other in the principal amount of $12,500. The two promissory
notes would supersede the above interim Loan Agreements and repayment of the
advances would be governed by these promissory notes and not by the provisions
of any of the interim loan agreements. In consideration for the conversion of
the interim loan agreements into the two term Promissory Notes, Loeb will
receive 420,728 shares of Common Stock of the Company.
The principal amount of the $237,500 note is to be repaid in 12 equal
quarterly payments commencing two (2) years from the date of said note.
Prepayments may be made at any time without penalty. Interest is accrued at a
rate of 9% per annum and interest payments are to be made quarterly at the end
of each calendar quarter, or at such earlier date that the Note becomes due and
payable as a result of acceleration, prepayment or as otherwise provided
therein. Interest shall begin to run from the date that the monies are or were
advanced to the Company.
The Promissory Note for $12,500 will accrue interest at the rate of
9% per annum payable quarterly and is convertible at the sole option of the
holder into a maximum of an additional 15% of the common shares of the Company
determined by a sliding scale based on the audited pretax profits of the Company
during the second and third years of operations of the Company on a sliding
scale based upon the Company achieving between 50% and 80% of the projections
provided to Loeb. (Example: If the Company achieves 80% or better of projection,
no conversion; if the Company achieves 50% or less of projection, conversion
into 15% of the Company; if the Company achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of 15% of the
Company, i.e., 70% achievement equals one-third of the 15% of the Company).
Unless previously converted, this $12,500 principal amount, together with any
accrued but unpaid interest, shall become a demand note after the third year of
operation of the Company.
In August 1994 and February 1995 Joseph Cutrona and Mark Kenny each
received (pre-split) shares of common stock in the Company for $7,840
of contributed services provided to the Company.
In August 1995 the Company granted Mr. Wasko a 5 year option to
purchase 25,000 shares of the Company`s common stock at a price of $0.60 per
share.
In August 1996, the Company gave notice to Mr. Pollan that it was
cancelling the 333,216 shares of its Common Stock which had been issued to him
in connection with the acquisition of Travel Link. The reason for such
cancellation related to various claims made by the Company against Mr. Pollan as
a result of material misrepresentation made to the Company and failure to
provide services to the Company. Mr. Pollan has informed the Company that he
will legally contest any attempt by the Company to cancel his shares.
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- ----------------------------------------------------------------
PRINCIPAL STOCKHOLDERS
The following tabulation shows the security ownership as of June 25, 1996 of (i)
each person known to the Company to be the beneficial owner of more than 5% of
the Company's outstanding Common Stock,(not including 333,216 shares issued to
Steven Pollan which the Company has given notice of cancellation of as a result
of certain misrepresentations by Mr. Pollan to the Company) (ii) each Director
and Officer of the Company, and (iii) all Directors and Officers as a group.
NUMBER OF PERCENT PERCENT
nAME & ADDRESS SHARES OWNED OF CLASS AFTER OFFERING
Loeb Holding Corp.
As Agent (1)
61 Broadway
New York, NY 10006 841,455 29.68% 23.15%
Warren D. Bagatelle
(1)(2)
Loeb Partners Corp.
61 Broadway
New York, NY 100061 848,194 29.92% 23.33%
Joseph Cutrona
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 666,433 23.51% 18.33%
Mark A Kenny
10 Lisa Drive
Chatham, NJ 07928 666,433 23.51% 18.33%
John H. Wasko
(3) (4)
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 115,872 4.09% 3.19%
All Officers and Directors
as a group (4 person) 2,296,932 81.02% 61.19%
(1) Does not include 420,728 Common Shares to be received by Loeb
Holding Corp., as agent for non-affiliated persons, upon conversion of the
interim loan agreements into two Promissory Notes.
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(2) Includes 841,455 Common Shares purchased by Loeb Holding Corp.
as agent for Warren D. Bagatelle, Managing Director of Loeb Partners Corp., HSB
Capital of which Warren Bagatelle is a partner and a number of other customers
of and trusts managed by, Loeb Partners Corp., and 6,739 Common Shares owned
directly by Warren D. Bagatelle and 2,233 Common Shares owned directly by HSB
Capital.
(3) Includes 29,383 Common Shares owned of record by Joan E.
Wasko, John Wasko's wife, of which Mr. Wasko disclaims beneficial
ownership, but of which he may be deemed beneficial owner.
(4) Includes a 5-year option to purchase 25,000 shares of the
Company's Common Stock at a price of $0.60 per share granted to Mr.
Wasko by the Company on August 11, 1995.
Messrs. Cutrona and Kenny may be deemed to be "parents" and
"promoters" of the Company, as those terms are defined in the rules and
regulations of the Securities Act of 1933, as amended. In August 1994 and
February 1995, Messrs. Cutrona and Kenny each received their Common Stock in the
Company for $7,840 of contributed services provided to the Company. In August
1994 and February 1995, Mr. Pollan received his common stock in the Company for
$3,920.
SELLING STOCKHOLDERS
In addition to the Securities, the Registration Statement, of which
this Prospectus forms a part, also covers the registration of an aggregate of
287,500 shares of Common Stock issuable upon the exercise of the Class A
Redeemable Warrants issued in a private placement. The Company will not receive
any proceeds from the sale of these shares but will receive proceeds from the
exercise of the warrants covered by such shares. The costs of qualifying these
287,500 shares of Common Stock under federal and state securities laws, together
with legal and accounting fees, printing and other costs in connection with this
offering, will be paid by the Company.
Pursuant to an agreement with the Underwriter, the 287,500 shares of
Common Stock registered in the Registration Statement, of which this Prospectus
forms a part, may not be sold for eighteen (18) months from the date
of this Prospectus, subject, however, to earlier release at the sole
discretion of the Underwriter. Such shares are being registered for resale
purposes only and will be offered pursuant to an alternate prospectus.
See "Underwriting."
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The terms and conditions of the Common Stock in the private placement are
identical to the terms and conditions of the shares of Common Stock being
offered pursuant to this Prospectus. All of the securities issued in the private
placement are not being registered in the Registration Statement, of which this
Prospectus forms a part. Only the shares of Common Stock issuable upon the
exercise of the Class A Redeemable Warrants issued in the private placement are
being registered for resale by such persons. Pursuant to an agreement with the
Underwriter, such shares of Common Stock may not be sold until eighteen months
from the date of this Prospectus, subject, however, to earlier release at the
sole discretion of the Underwriter. The certificates representing the 287,500
shares of Common Stock issuable on exercise of the Class A Redeemable Warrants
will have legends affixed setting forth such restrictions. The Underwriter may
release these securities from this eighteen month restriction at any time after
all securities subject to this offering have been sold. See "Underwriting." The
resale of securities by the Selling Stockholders are subject to prospectus
delivery and other requirements of the Securities Act. Sales of these
securities, or even the potential for such sales at any time, would likely have
an adverse effect on the market prices of the Common Stock and the Class A and
Class B Redeemable Warrants. The Company will not receive any proceeds from the
sale of the securities by the Selling Stockholders. If all of the Class A
Redeemable Warrants issued in the private placement are exercised, of which
there is no assurance, the Company will receive the gross proceeds therefrom
aggregating up to an additional $1,653,125.
Set forth below is a list of the Selling Stockholders and the number
of shares of Common Stock owned which are being registered pursuant to the
Registration Statement, of which this Prospectus forms a part:
No. of Shares No. of Shares Percentage
Owned Before issuable upon owned after
Name (1) Offering exercise of Offering(3)
- -------- -------- ----------- -----------
Class A Reedamble
-----------------
Warrants (2)
Steven C. Wright 0 12,500 0
Keith C. Kammer 0 12,500 0
Paul W. Leblanc 0 12,500 0
Mildred J. Greiss 0 12,500 0
Terry Nash 0 12,500 0
Joel B. Pipe 0 25,000 0
Theodore E. Hanson 0 25,000 0
Dennis Lafer 0 25,000 0
Vincent A. Ferranti 0 25,000 0
Jason J. Leinwand 0 12,500 0
James R. Welch 0 12,500 0
Daniel Churchill 0 25,000 0
Glen Cadrez, Jr. 0 12,500 0
John Albanese
Numismatics 0 12,500 0
Giuseppe Pappalardo 0 25,000 0
Joseph Perri 0 25,000 0
- --------------------------
(1) The persons named in the above table have sole voting and investment power
with respect to all of the Common Stock shown as
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beneficially owned by them, except as otherwise indicated.
(2) Pursuant to an agreement with the Underwriter, the shares underlying the
Class A Redeemable Warrants may not be sold for eighteen (18) months from the
date of this prospectus, subject, however, to earlier release at the sole
discretion of the Underwriter.
(3) Assumes all shares underlying Class A Redeemable Warrants
held by the Selling Stockholders are sold.
After making the investment in the private placement, the investors
did not own, nor did any of them have any right to acquire, any other securities
of the Company. None of the investors were affiliated with the Company at the
time of making their investment, at the time of this offering, or at any other
time.
Plan of Distribution
Subject to the eighteen (18) month restriction on the offer and sale
of 287,500 shares of Common Stock issuable on the exercise of the Class A
Redeemable Warrants of the Selling Stockholders, the securities offered hereby
may be sold from time to time directly by the Selling Stockholders.
Alternatively, the Selling Stockholders may, from time to time, offer such
securities through underwriters, dealers and/or agents. The distribution of
securities by the Selling Stockholders may be effected in one or more
transactions, privately-negotiated transactions or through sales to one or more
broker-dealers for resale of such securities as principals, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. Usual and customary or specifically negotiated
brokerage fees or commissions may be paid by the Selling Stockholders in
connection with such sales. The Selling Stockholders, and intermediaries through
whom such securities are sold, may be deemed "underwriters" within the meaning
of the Securities Act with respect to the securities offered, and any profits
realized or commissions received may be deemed underwriting compensation.
At the time a particular offer of securities is made by or on behalf
of the Selling Stockholders to the extent required, a prospectus will be
distributed which will set forth the number of securities being offered and the
terms of the offering, including the name or names of any underwriter, dealer or
agent, the purchase price paid by the underwriter for securities purchased from
the Selling Stockholders and any discounts, commissions or concessions allowed
or reallowed or paid to dealers and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended
("Exchange Act") and the regulations promulgated thereunder, any
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person engaged in the distribution of the securities of the Company offered by
this Prospectus may not simultaneously engage in market-making activities with
respect to such securities of the Company during the applicable "cooling off"
period (which is nine days) prior to the commencement of such distribution. In
addition, and without limiting the foregoing, the Selling Stockholders will be
subject to applicable provisions of the Exchange Act, and the rules and
regulations promulgated thereunder, including without limitation, Rules 10b-6
and 10b-7 in connection with transactions in such securities, which provisions
may limit the timing of purchases and sales of such securities by the Selling
Stockholders.
Sales of securities by the Selling Stockholders or even the potential
of such sales, would likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the freely
tradeable securities of the Company ("public float"), including this offering,
will be 1,059,101 shares of Common Stock, 1,300,000 Class A Redeemable Warrants,
and 800,000 Class B Redeemable Warrants (not including an aggregate of 287,500
shares of Common Stock issuable upon exercise of the Class A Redeemable Warrants
owned by the Selling Stockholders), which such securities are not transferable
for eighteen (18) months commencing on the date of this Prospectus or at such
earlier date as may be permitted by the Underwriter, which may release such
securities at any time after all securities subject to this offering have been
sold and assuming no exercise of the Underwriter's Purchase Option. See
"Descriptions of Securities" and "Underwriting".
DESCRIPTION OF SECURITIES
Common Stock
The Company is currently authorized to issue 75,000,000 shares of
Common Stock, having a par value of $.0001 per share of which 2,834,866
(including 333,216 shares issued to Steve Pollan) are outstanding prior to the
offering contemplated hereby. Each share of Common Stock entitles the holder
thereof to one vote on each matter submitted to the stockholders of the Company
for a vote thereon. The holders of Common Stock: (i) have equal ratable rights
to dividends from funds legally available therefor when, as and if declared by
the Board of Directors; (ii) are entitled to share ratably in all of the assets
of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) as noted above, are entitled to one
non-cumulative vote per share on all matters submitted to stockholders for a
vote at any meeting of stockholders. The Company has not paid any dividends on
its Common Stock to date. The Company anticipates that, for the
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foreseeable future, it will retain earnings, if any, to finance the continuing
operations of its business. The payment of dividends will depend upon, among
other things, capital requirements and operating and financial conditions of the
Company.
Redeemable Common Stock Purchase Warrants
The Company is offering 2,100,000 redeemable warrants, 1,300,000 of
which will be "Class A Redeemable Warrants" and 800,000 of which will be "Class
B Redeemable Warrants," at an anticipated public offering price of $.20 per
Class A Redeemable Warrant and $.10 per Class B Redeemable Warrant. Each
Redeemable Warrant shall be exercisable for a period of 48 months, commencing
six (6) months from the date on which the registration statement (the
"Registration Statement") of which this prospectus (the "Prospectus") forms a
part is declared effective (the "Effective Date") by the Securities and Exchange
Commission (the "Commission").
Class A Redeemable Warrants
Each Class A Redeemable Warrant shall entitle the holder to acquire
one share of Common Stock at a price equal to $5.75 per share. Commencing 12
months after the Effective Date, the Company will have the right at any time to
redeem all, but not less than all, of the Class A Redeemable Warrants at a price
equal to twenty cents ($.20) per Redeemable Warrant, provided that the closing
bid price of the Common Stock equals or exceeds $6.25 per share for any twenty
(20) trading days within a period of thirty (30) consecutive trading days ending
on the fifth trading day prior to the date of the notice of redemption.
Class B Redeemable Warrants
Each Class B Redeemable Warrant shall entitle the holder to acquire
one share of the Common Stock at a price equal to $6.75 per share. Commencing 12
months after the Effective Date, the Company will have the right at any time to
redeem all, but not less than all, of the Class B Redeemable Warrants at a price
equal to ten cents ($.10) per Redeemable Warrant, provided that the closing bid
price of the Common Stock equals or exceeds $7.25 per share for any twenty (20)
trading days within a period of thirty (30) consecutive trading days ending on
the fifth trading day prior to the date of the notice of redemption.
Preferred Stock
The Certificate of Incorporation of the Company authorizes
the issuance of up to 25,000,000 shares of Preferred Stock, $.0001
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par value per share. None of such Preferred Stock has been designated or issued.
The Board of Directors is authorized to issue shares of Preferred Stock from
time to time in one or more Class And, subject to the limitations contained in
the Certificate of Incorporation and any limitations prescribed by law, to
establish and designate any such limitations prescribed by law, to establish and
designate any such Class And to fix the number of shares and the relative
conversion rights, voting rights and terms of redemption (including sinking fund
provisions) and liquidation preferences. If shares of Preferred Stock with
voting rights are issued, such issuance could affect the voting rights of the
holders of the Common Stock by increasing the number of outstanding shares
having voting rights, and by the creation of class or series voting rights. If
the Board of Directors authorizes the issuance of shares of Preferred Stock with
conversion rights, the number of shares of Common Stock outstanding could
potentially be increased by up to the authorized amount. Issuance of shares of
Preferred Stock could, under certain circumstances, have the effect of delaying
or preventing a change in control of the Company and may adversely affect the
rights of holders of Common Stock. Also, the Preferred Stock could have
preferences over the Common Stock (and other series of preferred stock) with
respect to dividends and liquidation rights.
Private Placement
The terms and conditions of the Common Stock in the private placement
are identical to the terms and conditions of the shares of Common Stock. All of
the securities issued in the private placement are not being registered in the
Registration Statement, of which this Prospectus forms a part. Only the shares
of Common Stock issuable upon the exercise of the Class A Redeemable Warrants
issued in the private placement are being registered for resale by such persons.
Pursuant to an agreement with the Underwriter, such shares of Common Stock may
not be sold until eighteen months from the date of this Prospectus, subject,
however, to earlier release at the sole discretion of the Underwriter. The
certificates representing the 287,500 shares of Common Stock issuable on
exercise of the Class A Redeemable Warrants will have legends affixed setting
forth such restrictions. The Underwriter may release these securities from this
eighteen month restriction at any time after all securities subject to this
offering have been sold. See "Underwriting."
Transfer and Warrant Agent
Continental Stock Transfer & Trust Company is the Registrar
and Transfer Agent for the Common Stock and the Registrar and
Warrant Agent for the Redeemable Warrants.
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UNDERWRITING
General
Subject to the terms and conditions set forth in the Underwriting
Agreement by and between the Company and the Underwriter (the "Underwriting
Agreement"), the Underwriter has agreed to purchase on a "firm commitment"
basis, an aggregate of 800,000 shares of Common Stock and 2,100,000 Redeemable
Warrants (exclusive of the 120,000 shares of Common Stock and 315,000 Warrants
subject to the Over-Allotment Option).
The Underwriter has advised the Company that it proposes to offer the
Common Stock and Redeemable Warrants to the public at the public offering price
set forth on the cover page of this Prospectus. The Securities are offered by
the Underwriter subject to: (i) approval of certain legal matters by counsel to
the Underwriter; and (ii) certain other conditions specified in the Underwriting
Agreement.
The Company has agreed to sell the Securities to the Underwriter at a
discount of 10% of the public offering price thereof. The Company has also
agreed to pay the Underwriter the Non-Accountable Expense Allowance (as
previously defined) equal to 3% of the aggregate offering price of the
Securities ($50,000 of which was advanced to the Underwriter). Pursuant to the
provisions of the Underwriting Agreement, in the event that the Company's public
offering is terminated for any reason, the Underwriter shall be reimbursed for
all accountable expense incurred by it. Any amounts previously paid shall be
credited against any amounts due.
Prior to the Company's public offering, there has been no public
trading market for the Securities. The offering price of the Common Stock and
the exercise price of the Redeemable Warrants were determined by negotiation
between the Company and the Underwriter. The major factors considered by the
Company and the Underwriter in determining the public offering price of the
Common Stock and the exercise price of the Redeemable Warrants, in addition to
prevailing market conditions, were the Company's historical performance and
growth, management's assessment of the Company's business potential and earning
prospects, the prospects for growth in the industry in which the Company
operates, and the foregoing factors in relation to market valuations of other
similar companies. The public offering price may not bear any relationship
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to the Company's assets, book value, net worth or other criteria of value
applicable to the Company.
The Underwriter has required that all officers and directors and
holders of 5% or more of the issued and outstanding shares of Common Stock, and
securities exercisable, convertible or exchangeable for shares of Common Stock
agree to a lock-up of their securities for a period of not less than eighteen
(18) months in order for the Underwriter to engage in the Offering as well as in
order to maintain a more orderly trading market. Such shares will have a legend
placed on the certificates to express the lock-up.
The Underwriting Agreement prohibits the Company from issuing any
capital stock or other securities without the Underwriter`s prior consent for a
period of eighteen (18) months following the Effective Date of the Registration
Statement. This provision may limit the Company's ability to raise additional
equity capital. The purpose of such provision is to protect against unnecessary
dilution to the public shareholders.
The Over-Allotment Option
The Company has granted to the Underwriter the Over-Allotment Option
which is exercisable for a period of 45 days following the Effective Date of the
Registration Statement of which this Prospectus forms a part to purchase up to
an additional 120,000 shares of Common Stock and 315,000 Redeemable Warrants
(equal to an aggregate of up to 15% of the number of shares of Common Stock and
Redeemable Warrants offered by the Company to the public) for the purpose of
covering over-allotments. The Over-Allotment Option is exercisable upon the same
terms and conditions as are applicable to the sale of the Securities.
The Underwriter's Purchase Option
As part of the consideration to the Underwriter for its services in
connection with the public offering described herein, the Company has agreed to
issue and sell to the Underwriter, at the closing, for nominal consideration,
five (5) year warrants to purchase such number of shares of Common Stock and
Redeemable Warrants as shall equal 10% of the number of shares of Common Stock
and Redeemable Warrants (excluding the over-allotment option) being underwritten
for the account of the Company at a price of $.0001 per warrant (the
"Warrants"). The Warrants shall be exercisable at any time during a period of
four(4) years commencing at the beginning of the second year after their
issuance and sale at a price equaling 120% of the initial public offering price
of the shares of Common Stock and Redeemable Warrants.
During the period in which the Underwriter's Purchase Option
is exercisable, the holders thereof are given the opportunity to
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profit from a rise in the market price of the Securities which may result in a
dilution of the interest of the stockholders. The Company may find it more
difficult to raise additional equity capital if it should be needed for the
business of the Company while the Underwriter's Purchase Option is outstanding.
At any time when the holders thereof might be expected to exercise such
Warrants, the Company would probably be able to obtain additional equity capital
on terms more favorable than those provided by the Underwriter's Purchase
Option. Any profit realized on the sale of securities issuable upon the exercise
of the Underwriter's Purchase Option may be deemed additional underwriter
compensation.
Registration Rights
In connection with the underwriting of the Company's public offering,
the Company has granted to the Underwriter certain "piggy back" and "demand"
registration rights. Pursuant to the terms of the Underwriting Agreement, the
Company agrees that, for a period of seven (7) years from the date of the
closing of the public offering of the shares of Common Stock and Redeemable
Warrants (the "Closing"), if the Company intends to file a Registration
Statement or Statements for the public sale of securities for cash (other than a
Form S-8, Form S-4 or comparable Registration Statement), it will notify all of
the holders of the Warrants and/or underlying securities and if so requested it
will include therein material to permit a public offering of the securities
underlying said Warrants at the expense of the Company (excluding fees and
expenses of the holder's counsel and any underwriting or selling commissions).
In addition, for a period of five (5) years from such date, upon the written
demand of holder(s) representing a majority of the Warrants, the Company agrees,
on one occasion, to promptly register the underlying Securities at the expense
of the Company (excluding fees and expenses of the holder's counsel and any
underwriting or selling commissions).
Finder's Fees
No finder has been associated with the Company's public offering as
described herein; nor does the Company have any obligation to pay a finder's fee
to anyone in connection with any pending transaction involving the Company.
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Warrant Solicitation Fee
Pursuant to the Underwriting Agreement, the Company has agreed to
grant to the Underwriter a right of first refusal for a period of three (3)
years after the Effective Date of the Registration Statement for any publicly
offered sale of securities to be made by the Company or any of its present or
future subsidiaries. The Underwriting Agreement also provides that the
Underwriter shall act as the Company's exclusive agent with respect to the
solicitation of the Redeemable Warrants, and receive from the Company a
commission equal to 4% of the exercise price of the Redeemable Warrants (the
"Warrant Solicitation Fee") commencing twelve (12) months after the effective
date of the Registration Statement, payable upon exercise, if; (i) the market
price of the Common Stock on the date that any such Redeemable Warrant is
exercised is greater than the exercise price of the Redeemable Warrant; (ii) the
exercise of such Redeemable Warrant was solicited by the a member of the
National Association of Securities Dealers, Inc.; (iii) the Redeemable Warrant
is not held in a discretionary account; (iv) disclosure of this compensation
arrangement is made both at the time of the initial public offering and at the
time of the exercise of such Redeemable Warrant; and (v) solicitation of the
exercise is not in violation of Rule 10b-6 of the Exchange Act. No commission
will be paid to the Underwriter on Redeemable Warrants voluntarily exercised
within one year of the Effective Date or on Redeemable Warrants voluntarily
exercised at any time without solicitation by the Underwriter.
In addition, unless granted an exemption by the Commission from Rule
10b-6 under the Exchange Act, the Underwriter will be prohibited from engaging
in any market making activities or solicited brokerage activities with respect
to the Company's securities for the period from nine business days prior to any
solicitation of the exercise of any Redeemable Warrant or nine business days
prior to the exercise of any Redeemable Warrant based on a prior solicitation
until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the Underwriter may have to
receive such a fee for the exercise of the Redeemable Warrants following such
solicitation. As a result, the Underwriter may be unable to continue to provide
a market for the Company's securities during certain periods while the
Redeemable Warrants are exercisable.
Other Terms of the Underwriting
The Company has agreed not to issue, sell, offer to sell, grant any
option relating to the sale of or otherwise dispose of (directly or indirectly)
any of the Company's equity securities (including securities convertible into,
exercisable for or exchangeable into equity securities) without the
Underwriter's prior written consent, except for issuances pursuant to: (i) the
61
<PAGE>
exercise of the Underwriter's Purchase Option; (ii) the Company's public
offering of securities as described herein; (iii) a declaration of dividends,
recapitalization, reorganization or similar transaction; or (iv) a currently
existing stock incentive or option plan, for 18 months from the Effective Date.
In addition, each officer, director and stockholder who owns 5% or more of the
Company's equity securities has agreed not to sell, transfer, convey, pledge,
hypothecate or otherwise dispose of any of the respective securities of the
Company owned by them for a period of 18 months from the Effective Date without
the Underwriter's prior approval.
In connection with and as consideration for the Underwriter's
participation in the Company's public offering, the Company has given the
Underwriter the right, upon completion of such public offering, to designate a
person to attend all meetings of the Company's Board of Directors for a period
of five (5) years. Such person shall be entitled to attend all such meetings and
to receive all notices and other correspondence and communications sent by the
Company to members of its Board of Directors. As of the date hereof, the
Underwriter has not identified a designee nor has it expressed to the Company
the desire to exercise its right to select such a designee.
The Company shall retain the Underwriter as its financial consultant
for a period of 24 months commencing upon consummation of the proposed public
offering at a monthly retainer of $2,000, all of which is payable in advance
upon such consummation.
Indemnification
The Company has agreed to indemnify the Underwriter and others
against certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to officers, directors or persons controlling the Company, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy and is therefore unenforceable. The
Underwriter has agreed to indemnify the Company, its directors, and each person
who controls it within the meaning of Section 15 of the Securities Act with
respect to any statement in or omission from the Registration Statement, the
Prospectus or any amendment or supplement thereto if such statement or omission
was made in reliance upon information furnished in writing to the Company by the
Underwriter specifically for or in connection with the preparation of the
Registration Statement, the Prospectus, or any such amendment or supplement
thereto.
The foregoing summaries of certain terms and conditions of the
Underwriting Agreement and the Underwriter's Purchase Option do not purport to
be complete statements of the terms and/or contents
62
<PAGE>
of such agreements. Copies of the foregoing documents have been
filed with the Commission as exhibits to the Registration Statement
of which this Prospectus forms a part and are also on file at the
offices of the Underwriter and the Company. Reference is hereby
made to each such exhibit for a detailed description of the
provisions thereof which have been summarized above. See
"Available Information."
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
securities being offered by the Company will be passed upon for the Company by
McLaughlin & Stern, LLP, New York, New York. Legal matters for the Underwriter
will be passed upon by Scheichet & Davis, P.C., New York, New York.
EXPERTS
The Financial Statements of the Company included in this Prospectus
to the extent and for the periods indicated in their report have been reported
on by Wiss & Company, LLP, independent certified public accountants, as stated
in their report appearing herein in reliance upon such report given on the
authority of that firm as experts in accounting and auditing.
63
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated July 8, 1996, relating
to the consolidated financial statements of Genisys Reservation Systems, Inc.,
and Subsidiary
which appears in such the Prospectus.
We also consent to the reference to us under "Experts" in the Prospectus.
Wiss & Company, LLP
Woodbridge, New Jersey
October 29, 1996
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Consolidated Financial Statements:
Consolidated Balance Sheets at December 31, 1995: F-3
Consolidated Statements of Operations for the Four Months
Ended December 31, 1995, the Year Ended August 31, 1995, F-4
and the Periods From March 7, 1994 (date of inception) to
December 31, 1995
Consolidated Statements of Changes in Stockholders' Equity
(Deficiency) for the Four Months Ended December 31, 1995, the
Year Ended August 31, 1995, and the Period From March 7, 1994
(date of inception) to August 31, 1994 F-5
Consolidated Statements of Cash Flows for the Four Months
Ended December 31, 1995, the Year Ended August 31, 1995,
and the Periods From March 7, 1994 (date of inception) to
December 31, 1995
F-6
Notes to Consolidated Financial Statements F-7 to F-14
Consolidated Financial Statements (Unaudited) (June 30, 1996):
Consolidated Balance Sheets - March 31, 1996 and
December 31, 1995 (Unaudited) F-15
Consolidated Statements of Operations - Six and
Three Months Ended June 30, 1996 and Period
From March 7, 1994 (date of inception)
Through June 30, 1996 (Unaudited) F-16
Consolidated Statement of Stockholders` Equity
(Deficiency) - Six Months Ended June 30, 1996
(Unaudited) F-17
Consolidated Statements of Cash Flows - Six
Months Ended June 30, 1996 and 1995 and Period
From March 7, 1994 (date of inception) Through
June 30, 1996 (Unaudited) F-18
Notes to Consolidated Financial Statements (Unaudited) F-19 to F-22
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Genisys Reservation Systems, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Genisys
Reservation Systems, Inc. and Subsidiary (formerly Robotic
Lasers, Inc. and a Development Stage Company) as of December 31, 1995 and
August 31, 1995 and the related consolidated statements of operations,
changes in stockholders equity and cash flows for the four months ended
December 31, 1995, the year ended August 31, 1995, and for the periods from
March 7, 1994 (date of inception) to August 31, 1994 and December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Genisys
Reservation Systems, Inc. and Subsidiary (formerly Robotic Lasers, Inc. and a
Development Stage Company) at December 31, 1995 and August 31, 1995 and
the results of their operations and their cash flows for the four months ended
December 31, 1995, the year ended August 31, 1995 and for the periods from
March 7, 1994 (date of inception) to August 31, 1994 and December 31, 1995,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company and has
suffered recurring losses from operations that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
WISS & COMPANY, LLP
Woodbridge, New Jersey
July 8, 1996
F-2
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, August 31,
ASSETS 1995 1995
CURRENT ASSETS:
Cash $22,613 $11,147
Prepaid expenses 703 3,734
Total Current Assets 23,316 14,881
COMPUTER EQUIPMENT, LESS
ACCUMULATED DEPRECIATION
OF $17,393 302,381 -
DEPOSITS AND OTHER ASSETS 26,988 245,121
$352,685 $260,002
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Note payable - private investor $650,000 $435,000
Accounts payable and accrued expenses 98,012 87,242
Current portion of obligations under
computer equipment lease 45,012 -
Accounts payable - related parties 19,126 4,800
Accrued interest payable -
private investor 28,096 12,244
Payroll taxes payable 10,000 8,973
Loans payable - stockholders - 6,820
Total Current Liabilities 850,246 555,079
LONG-TERM PORTION OF OBLIGATIONS UNDER
COMPUTER EQUIPMENT LEASE
89,746 -
939,992 555,079
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, $.0001 par value:
25,000,000 shares authorized; none
outstanding
- -
Common stock, $.0001 par value:
75,000,000 shares authorized;
2,804,866 shares issued and outstanding 280 280
Additional paid-in capital 5,233 5,233
Deficit accumulated during development
stage (592,820) (300,590)
Total Stockholders' Equity (Deficiency) (587,307) (295,077)
$352,685 $260,002
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period From
Four Months Year March 7, 1994
Ended Ended (Date of Inception) to
December 31, August 31, August 31, December 31,
1995 1995 1994 1995
REVENUES AND
EXPENSES DURING
THE DEVELOPMENT
STAGE:
Revenues $ - $ - $ - $ -
Expenses:
General and
administrative 250,454 256,621 31,416 538,491
Depreciation and
amortization 17,473 240 94 17,807
Interest expense 24,303 12,219 - 36,522
292,230 269,080 31,510 592,820
NET LOSS
INCURRED DURING
THE DEVELOPMENT
STAGE $(292,230) $(269,080) $(31,510) $(592,820)
NET LOSS PER
COMMON SHARE $(.10) $(.11) $(.01) $(.23)
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING 2,804,866 2,539,739 2,524,379 2,584,399
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Total Shares Par Value Capital Stage
PERIOD ENDED
AUGUST 31, 1994:
Issuance of
common stock at
March 7, 1994
(inception) for
services rendered,
valued at
approximately
$.004 per share $10,000 2,524,379 $- $10,000 $ -
Net loss (31,510) - - - (31,510)
BALANCE,
AUGUST 31,
1994 (21,510) 2,524,379 - 10,000 (31,510)
YEAR ENDED
AUGUST 31, 1995:
Contribution of
services
rendered 9,600 - - 9,600 -
Net assets
received
(liabilities assumed)
in reverse
acquisition of
Robotic Lasers,
Inc. (14,087) 280,487 28 (14,115) -
Change in
par value - - 252 (252) -
Net loss (269,080) - - - (269,080)
BALANCE,
AUGUST 31,
1995 (295,077) 2,804,866 280 5,233 (300,590)
PERIOD ENDED
DECEMBER 31,
1995:
Net loss (292,230) - - - (292,230)
BALANCE,
DECEMBER 31,
1995 $(587,307) 2,804,866 $280 $5,233 $(592,820)
See accompanying notes to consolidated financial statements.
F-5
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period From
Four Months Year March 7, 1994
Ended Ended (Date of Inception), to
December 31, August 31, August 31, December 31,
1995 1995 1994 1995
CASH FLOWS
FROM OPERATING
ACTIVITIES:
Net loss $(292,230) $(269,080) $(31,510) $(592,820)
Adjustment to
reconcile net loss
to net cash
flows from
operating activities:
Depreciation and
amortization 17,473 240 94 17,807
Contribution of
services rendered
to capital ---- 9,600 10,000 19,600
Changes in operating
assets and liabilities:
Prepaid Expenses 3,031 (3,734) - (703)
Other assets 218,053 (243,255) (2,200) (27,402)
Accounts payable
and accrued expenses
10,770 73,155 - 83,925
Payrol1 taxes payable 1,027 8,973 - 10,000
Accrued interest
payable 15,852 12,244 - 28,096
Net cash flows
from operating
activities (26,024) (411,857) (23,616) (461,497)
CASH FLOWS FROM
INVESTING ACTIVITIES -
Acquisition of
computer equipment (319,774) - - (319,774)
CASH FLOWS FROM
FINANCING ACTIVITIES:
Advances from
(repayments to)
stockholders (6,820) (4,001) 10,821 -
Loans and advances
from related parties (14,326) (8,000) 12,800 19,126
Proceeds from
issuance of notes
payable 215,000 435,000 - 650,000
Payments under
computer equipment
leases (9,724) - - (9,724)
Proceeds from
sale and lease-back 144,482 - - 144,482
Net cash flows from
financing activities 357,264 422,999 23,621 803,884
NET CHANGE IN CASH 11,466 11,142 5 22,613
CASH, BEGINNING
OF PERIOD 11,147 5 - -
CASH, END OF PERIOD $22,613 $11,147 $ 5 $22,613
SUPPLEMENTAL CASH
FLOW INFORMATION:
Interest paid $8,426 $ - $ - $8,426
Net liabilities
assumed in reverse
acquisition $ - $14,087 $ - $14,087
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - History of the Company, Nature of the Business and Summary of
Significant Accounting Policies:
History of the Company and Nature of the Business - Genisys
Reservation Systems, Inc. (the "Company") was incorporated in April 1986 as
Robotic Lasers, Inc. In March 1995, the Company sold all of its assets,
rights and properties relating to a certain laser research and
development agreement (subject to certain liabilities). On
August 11, 1995, the Company acquired Corporate Travel Link, Inc.
("Travel Link") a development stage company, by issuing 5,048,730 shares of
its restricted common stock in exchange for all of the authorized, issued and
outstanding shares of common stock of Travel Link. For
accounting purposes, the share exchange transaction and combination of Travel
Link with the Company has been treated as a reverse acquisition. The previous
historical financial statements of the Company are no longer reported
and the financial statements of Travel Link (since its
formation in March 1994) are now reported as the historical consolidated
financial statements of the Company and its subsidiary.
The Company is a development stage company and is engaged in
developing a computerized limousine reservation system for the business
traveler. The Company anticipates that the proprietary software being
developed will enable a system of limousine reservations to be completely
computerized and operate without human intervention.
The Company has generated no revenues and has no commercial
operations to date. The Company has been unprofitable since inception and
expects to incur additional operating losses over the next several quarters.The
Company does not expect to generate any revenues from operations
during the fiscal year ending December 31, 1996.
Estimates and Uncertainties - The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results,
as determined at a later date, could differ from those estimates.
Principles of Consolidation - As indicated above, the consolidated
financial statements include the accounts of the Company's wholly-owned
subsidiary, Travel Link and, since August 11, 1995, those of the Company.
Retroactive effect has been given to the exchange of shares
for Travel Link to March 7, 1994. All significant intercompany transactions
and accounts have been eliminated in consolidation.
F-7
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Financial instruments include cash and equivalents,
other assets, accounts payable, accrued expenses and long-term debt.
The amounts reported for financial instruments are considered to be
reasonable approximations of their fair values, based on market information
available to management.
Cash and Equivalents - The Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be cash equivalents.
Concentration of Credit Risk - The Company maintains its cash balances in
several financial institutions. The accounts at each institution are insured
by the Federal Deposit insurance Corporation up to $100,000. At December 31,
1996, there were no uninsured balances.
Computer Equipment - Computer equipment is stated at cost and depreciated
using the straight-line method over an estimated useful life of 5 years.
Income Taxes - Deferred tax assets and liabilities are computed annually for
temporary differences between the financial statement and tax bases of assets
and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates
applicable to the periods in which the temporary differences are expected to
affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized.
Fiscal Year - In December 1995, the Board of Directors voted to change the
Company's fiscal year to a calendar year, effective December 31, 1995.
Net Income (Loss) Per Common Share - Net income (loss) per common share is
based upon the weighted average number of outstanding common shares. The
shares issuable upon the exercise of outstanding warrants and options
have been excluded since the assumed conversion would be
antidilutive, due to net losses for all periods presented.
Note 2 - Operating and Liquidity Difficulties and Management's Plans to
Overcome:
The accompanying financial statements of the Company have
been presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has reported net losses since inception
and expects to incur additional operating losses over the
next several quarters. The Company has also experienced liquidity difficulties
since inception, and in order to continue the development of the Company's
reservation system, needs significant additional financing. The Company
has financed its operations since inception with the proceeds
from the issuance of long term debt.
F-8
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Since inception, the operations of the Company have been
limited to market research and developing a software and hardware system for
computerizing the limousine reservation system. These efforts are at a
preliminary stage and will require further technical development within a
period of the next twelve months and additional financing
before a determination of the system's commercial feasibility can be made.
No assurance can be given that the Company's reservation system will achieve
commercial feasibility.
The Company's working capital and its capital requirements
will depend upon numerous factors, including, without limitation, the progress
of the Company's system development, competition, industry technological
advances and the ability of the Company to market its limousine
reservation system. The Company will require additional
significant financing to complete the system development, cover anticipated
losses and sustain operations in 1996 and beyond and, in addition, to satisfy
the repayment of long-term debt. There can be no assurance that the
financing needed for attaining commercial viability of the
Company's reservation system will be obtained. If the Company is unable to
raise sufficient capital, it will delay and could prevent the completion of
the development of the reservation system.
The Company intends to fund its operations and other capital
for the next twelve months substantially from the net proceeds of a
contemplated public offering, but there can be no assurance that the net
proceeds of such contemplated offering, if successful, will be sufficient
for these purposes. There is also no assurance that such
financing will be available, or that it will be available on acceptable terms.
Reference should be made to "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein for additional information.
Note 3 - Notes Payable to Stockholder:
In September 1995, the Company signed an agreement with a
private investor whereby the private investor converted
its $500,000 loan to the Company into two (2) Promissory Notes, with
principal amounts of $475,000 and $25,000, respectively. The $475,000 note
is to be repaid in twelve equal quarterly installments
commencing two years from the date of such note. This note bears interest at
nine percent (9%) per annum and interest payments are to be made quarterly at
the end of each calendar quarter or at such earlier date that this note
becomes due and payable as a result of
F-9
<PAGE>
ENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
acceleration, pre-payment or as otherwise provided therein.
Interest accrued through March 31, 1996 was calculated and was to be paid in
four (4) equal installments on March 31, June 30, September 30 and December 31,
1996. The $25,000 promissory note accrues interest at nine
percent (9%) per annum (payable quarterly) and is convertible
at the sole option of the note holder into a maximum of an additional 30% of
shares of common stock of the Company based on the Company achieving certain
results of operations as compared to the projected results of
operations provided to the private investor. If the Company
achieves pre-tax profit of at least 80% of the projected results of operations,
there is no conversion option. Unless previously converted, the principal of
this note shall be repaid by the Company in 12 equal quarterly
installments, commencing April 1, 1998. In December 1995, the
Company and private investor signed additional loan agreements whereby the
private investor loaned the Company an additional $150,000. During the first
quarter of 1996, the private investor loaned the Company an
additional $100,000. These additional loans are due 60 days
from the date of such loans and accrue interest at nine percent (9%) per annum.
The private investor has the option of converting these additional loans,
totaling $250,000, into two 9% term notes ($237,500 and $12,500)
and will receive 420,728 shares of common stock of the Company
in consideration for such conversion. The $237,500 note would be repaid in 12
equal quarterly installments commencing two (2) years from the date of such
note. The $12,500 note would be convertible at the sole option
of the holder into a maximum of an additional 15% of the
Company's shares of common stock based on the Company's achievement of
certain operating results as compared to projected results, as more fully
described above. Unless previously converted, this $12,500 note, together with
any accrued or accrued but unpaid interest, shall become a
demand note after the third year of operation of the Company.
Total borrowings from the private investor are $650,000 at
December 31, 1995 and $750,000 through March 1996. Accrued
interest was $28,096 at December 31, 1995 and $60,253 at June 30, 1996.
Therefore, the Company is technically in default on such notes. The Company
has not paid any interest under these loan agreements through June 30, 1996.
Accordingly, the notes have been classified as current liabilities in the
accompanying consolidated financial statements.
Note 4 - Commitments:
Leases - In September 1995, the Company entered into a sale
and lease-back arrangement whereby the Company sold the bulk of its computer
hardware and
F-10
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
commercially purchased software to a lessor for approximately
$170,000 and agreed to lease back such equipment for initial terms ranging from
24 to 30 months. The obligation under computer equipment lease at December 31,
1995 consists of the following:
Imputed
Interest
Description Rate
Capital lease payable in
monthly installments of
$3,945 through March 1998
and $2,367 through March 1999,
collateralized by the computer
equipment 25.4% $146,754
Capital lease payable in
monthly installments of
$2,105 through September 1997
and $421 through September 1998,
collateralized by the computer
equipment 20.4% 55,572
202,326
Less: Amount representing
interest 67,568
Present value of minimum
lease payments 134,758
Less: Current maturities 45,012
$89,746
The obligation under computer equipment lease matures as follows:
Year Ending December 31,
1996 $45,012
1997 51,565
1998 31,370
1999 6,811
$134,758
The Company leases its administrative facilities under a five-year lease
expiring in November 2000. The lease provides for annual rent of $25,500.
Rent expense totalled $7,000, $14,000 and $7,000 for the four months ended
December 31, 1995, the year ended August 31, 1995 and the period from March 7,
1994 (date of inception) to August 31, 1994, respectively.
F-11
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Employment Agreements - The Company entered into an employment
agreement with its President in September 1995.
The agreement provides for annual compensation of $75,000 effective
October 1996, and $100,000, effective January 1997.
Note 5 - Income Taxes:
Deferred income taxes reflect the net effects of temporary
differences between the amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The principal
temporary difference arises from the net operating loss carryforwards
and results in a deferred tax asset of approximately $236,000
at December 31, 1995 and $120,000 at August 31, 1995.
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
determined, based on its recurring net losses, lack of a commercially viable
product or system and it being a development stage
company, that a full valuation allowance is appropriate at December 31, 1995
and August 31, 1995.
A reconciliation of the provision (benefit) for income taxes
computed at the federal statutory rate of 34% and the effective tax rate of
income (loss) before income taxes is as follows:
Period Ended Year Ended
December 31, August 31,
1995 1994
Computed tax on net loss at
federal statutory rate $(99,000) $(91,000)
State income taxes, net of
federal income tax benefits (17,000) (16,000)
Tax effect of net operating
losses not currently usable 116,000 107,000
Provision (benefit) for
income taxes $ - $ -
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $600,000 expiring through 2010.
F-12
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Current tax law limits the use of net operating loss carryforwards after
there has been a substantial change in ownership (as defined) during a three
year period. Because of the possible future changes in common stock, the use
of the Company's net operating loss carryforwards may be subject to an annual
limitation. To the extent amounts available under the annual limitation are
not used, they may be carried forward for the remainder of 15 years from the
year the losses were originally incurred.
Note 6 - Stockholders' Equity:
Preferred Stock - The Company's Certificate of Incorporation
authorizes the issuance of up to 25,000,000 shares of Preferred Stock. None of
such Preferred Stock has been designated or issued to date. The Board of
Directors is authorized to issue shares of Preferred Stock from
time to time in one or more series and to establish and
designate any such series and to fix the number of shares and the relative
conversion rights, voting rights, terms of redemption and liquidation.
Warrants and Options - In August 1995, the Company granted an
option to purchase 25,000 shares of its common stock to an officer, exercisable
at $.60 per share through August 2000.
In connection with the lease described in Note 4, the Company
granted to the lessor a warrant to purchase a maximum of 12,721 shares of
common stock at an exercise price of $2 per share.
Note 7 - Subsequent Events:
Recent Sales of Common Stock - During the quarter ended
March 31, 1996, the Company sold 5,000 shares of its restricted common stock
to a former officer and director of the Company for $10,000. In addition, the
Company sold, to an unrelated private investor, 25,000 shares of its
restricted common stock for $50,000.
Reverse Stock Split - In July 1996, the Company's stockholders`
approved and effectuated a one for two reverse stock split, which has
been retroactively reflected in the accompanying consolidated financial
statements.
Private Offering - Pursuant to a private offering, the
Company issued 11.5 units to various unrelated parties in May and June 1996.
Each $50,000 unit consists of a $49,000 three-year promissory note (bearing
interest at 10% per annum) and 25,000 Class A redeemable common stock
purchase warrants valued at $1,000 per unit. Gross proceeds of this private
offering totalled $575,000, of which $563,500 was allocated to the notes and
$11,500 to the respective warrants.
F-13
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The principal and interest on the promissory notes are to be
repaid at the earlier of three years from issuance of such notes or 30 days
after the closing date of the Company's first underwritten public offering.
Each Class A common stock purchase warrant entitles the holder to
purchase up to 25,000 shares of the Company's common stock at
an exercise price of $12.50 per share. The rights represented by this warrant
are exercisable commencing 90 days after the effective date of a public
offering registration statement until four years thereafter. The
terms and conditions of these warrants are subject to adjustment
to conform with the warrants to be registered upon the effectiveness of the
contemplated registration statement to be filed with the Securities and Exchange
Commission. Warrants to purchase 287,500 shares of the
Company's common stock are currently outstanding pursuant to
this private offering.
Convertible Notes Payable - In April and June 1996, the
Company borrowed a total of $30,000 from two unrelated parties. These notes
bear interest at 7% per annum, payable on the last day of each calendar
quarter, commencing March 31, 1997. The maturity dates are the earlier of
January 1, 1998 or upon the consummation of a public offering of
the Company's common stock. If the maturity dates of these notes occur prior
to January 1, 1998, the notes may be converted into 15,000 shares of the
Company's common stock.
F-14
<PAGE>
Note 8 - Event Subsequent to Date of Auditors' Report.
In August 1996, the Company gave notice to a former officer that it was
cancelling the 333,216 shares of its common stock which had been issued to the
former officer in connection with the reverse acquisition described in Note 1.
Such cancellation relates to various claims made by the Company against the
former officer and failure to provide services to the Company. The former
officer has informed the Company that he will contest any attempt by the
Company to cancel his shares. Pending return of the shares they are considered
outstanding for all periods presented herein.
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY (formerly Robotic Lasers, Inc.)
A Development Stage Enterprise CONSOLIDATED BALANCE SHEETS
June December
30, 1996 31, 1995
(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 396,928 $ 22,613
Prepaid Expenses 523 703
Total Current Assets 397,451 23,316
EQUIPMENT, NET OF ACCUMULATED
DEPRECIATION OF $58,942 and
$17,393 419,663 302,381
OTHER ASSETS
Deposits and Other 28,847 26,988
845,961 $352,685
LIABILITIES AND STOCKHOLDERS` EQUITY (DEFICIENCY)
LIABILITIES-
Notes Payable - private
investor $ 750,000 $ 650,000
Accounts Payable and
accrued expenses 231,739 98,012
Current portion of
obligations under computer
equipment lease 65,367 45,012
Accrued interest payable -
private investor 63,973 28,096
Accrued consulting fees -
officer 40,500 ---
Loans and advances from
related parties 51,023 19,126
Payroll taxes payable --- 10,000
Total current liabilities 1,202,602 850,246
Long-term portion of
obligations under
computer equipment lease 78,256 89,746
Loans payable 563,500 --
Convertible notes payable 30,000 --
1,874,358 939,992
STOCKHOLDERS`EQUITY (DEFICIENCY):
Preferred Stock, $.0001 Par Value: 25,000,000
Shares Authorized; None Outstanding
Common Stock, $.0001 Par Value; 75,000,000
Shares Authorized-, 2,834,866 and 2,804,866
Shares Issued and Outstanding 283 280
Paid in Capital 76,730 5,233
Deficit Accumulated
During the Developmental
Stage (1,105,410) (592,820)
(1,028,397) (587,307)
$845,961 $352,685
See Accompanying Notes to Financial Statements
F-15
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
DURING THE DEVELOPMENT STAGE
(Unaudited)
Six Months Six Months
Ended Ended
June 30, 1996 June 30, 1995
REVENUES AND
EXPENSES DURING
THE DEVELOPMENT
STAGE $ - $ -
Revenue
Expenses -
General and
Adminstrative 422,428 128,311
Depreciation and
Amortizaation 41,669 381
Interest Expense 48,493 6,110
512,590 134,802
NET (LOSS)
DURING THE DEVELOPMENT
STAGE ($512,590) ($134,802)
NET (LOSS)
PER COMMON SHARE ($.18) ($.05)
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 2,825,455 2,534,772
F-16
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
DURING THE DEVELOPMENT STAGE
(Unaudited)
(CONTINUED)
From Inception
Three Months Three Months March 7, 1994
Ended Ended Through
June 30, 1996 June 30, 1995 June 30, 1996
REVENUES AND
EXPENSES DURING
THE DEVELOPMENT
STAGE
Revenue $ - $ - $ -
Expenses -
General and
Adminstrative 243,569 64,155 960,919
Depreciation and
Amortizaation 23,007 191 59,476
Interest Expense 26,345 3,055 85,015
292,921 67,401 1,105,410
NET (LOSS) INCURRED
DURING THE DEVELOPMENT
STAGE ($292,921) ($ 67,401) (1,105,410)
NET (LOSS) INCURRED
PER COMMON SHARE ($.10) ($.03) ($.42)
WEIGHTED AVERAGE
NUMBER OF
COMMON SHARES
OUTSTANDING 2,834,850 2,534,772 2,636,254
F-16 (continued)
See Accompanying Notes to Financial Statements
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS` EQUITY
(Unaudited)
Deficit
Accumulated
Additional During the
Common Stock Paid-In Development
Total Shares Value Capital Stage
BALANCE -
December 31, 1995 ($587,307) 2,804,866 $280 $5,233 ($592,820)
POCEEDS FROM
ISSUANCE OF
COMMON STOCK 60,000 30,000 3 59,997
PROCEEDS FROM
ISUANCE OF
WARRANTS 11,500 11,500
NET (LOSS)
FOR THE SIX
MONTHS ENDED
JUNE 30, 1996 (512,590) - - - (512,590)
BALANCE -
JUNE 30, 1996 ($1,028,397) 2,834,866 $283 $76,730 ($1,105,410)
See Accompanying Notes to Financial Statements
F-17
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
From Inception
March 7, 1994
Six Months Ended Six Months Ended Through
June 30, June 30, June 30,
1996 1995 1996
CASH FLOWS FROM
OPERATING ACTIVITIES
Net(Loss) ($512,590) ($134,802) ($1,105,410)
Adjustment to Reconcile
Net (Loss) to Cash
Flows from Operating Activities:
Depreciation and Amortization 41,669 381 59,476
Common Stock issued for
services rendered - 9,600 19,600
Changes in operating assets
and liabilities:
Other Assets (1,979) (243,255) (29,381)
Accounts Payable and
Accrued Expenses 164,227 21,085 258,152
Prepaid Expenses 180 (1,867) (523)
Accrued Interest Payable 35,877 -- 63,973
NET CASH FLOWS FROM
OPERATING ACTIVITIES (272, 616) (348,858) 734,113
CASH FLOWS FROM INVESTING
ACTIVITIES
Acquisition of Equipment (158,831) -- (478,605)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from Issuance
of Notes Payable 100,000 360,000 750,000
Payments under Computer
Equipment Lease (16,252) -- (25,976)
Proceeds from sale and
lease-back 25,117 -- 169,599
Proceeds from Issuance of
Common Stock 60,000 -- 60,000
Advances from related parties 31,897 -- 51,023
Proceeds from issuance of Notes
Payable And Related Warrants 575,000 -- 575,000
Proceeds from issuance of
Convertible Notes Payable 30,000 -- 30,000
NET CASH FLOWS FROM
FINANCING ACTIVITIES 805,762 360,000 1,609,646
NET INCREASE IN CASH 374,315 11,142 396,928
CASH - BEGINNING OF PERIOD 22,613 5 --
CASH - END OF PERIOD $ 396,928 $11,147 $396,928
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $13,084 $ -- $ 21,510
Net liabilities assumed
in reverse acquisition $ -- $ -- $14,087
See Accompanying Notes to Financial Statements
F-18
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 Basis of Presentation
The consolidated balance sheet at the end of the preceding fiscal year has been
derived from the audited consolidated balance sheet contained in the Company's
Form 1 O-KSB and is presented for comparative purposes. All other financial
statements are unaudited. In the opinion of management, all adjustments which
include only normal recurring adjustments necessary to present fairly the
financial position, results of operations and cash flows of all periods
presented have been made. The results of operations for interim periods are not
necessarily indicative of the operating results for the full year.
Footnote disclosures normally included in financial statements prepared
in accordance with the generally accepted accounting principles have been
omitted in accordance with the published rules and regulations of the Securities
and Exchange Commission. These consolidated financial statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Form 1 O-KSB for the most recent fiscal year.
Note 2 Activities of the Company
The Company is in the development stage and has not yet generated any
revenues from operations. The Company's funds have been provided from Loeb
Holding Corporation, as agent, LTI Ventures Leasing Corporation, and from
certain private offerings.
As reflected in the accompanying consolidated financial statements, the
Company has incurred net losses of $1, 1 05,41 0 since inception, and at June
30, 1996, had a working capital deficiency of $805,151. These factors. among
others, indicate that if the Company is unable to secure additional financing,
it may be unable to continue in existence. The accompanying financial
statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue in
existence.
Note 3 Long-Term Debt
On September 5, 1995, the Company and Loeb Holding Corp.,as agent, (Loeb) signed
an agreement whereby Loeb purchased 841,455 shares of Common Stock of the
Company, In consideration for the sale of the stock, Loeb agreed to loan the
Company up to a maximum of $500,000 as evidenced by two Promissory Notes dated
September 5, 1995, one in the principal amount of $475,000 and the other in the
principal amount of $25,000.
The principal amount of the $475,000 note is to be repaid in 12 equal
quarterly payments commencing two (2) years from the date of said note.
Prepayments may be made at any time without penalty. Interest is accrued at the
rate of nine percent (9%) per annum and interest payments are to be made
quarterly at the end of each calendar quarter, or at such earlier date that this
Note becomes due and payable as a result of acceleration, prepayment or as
otherwise provided herein. Interest shall begin to run from the date that the
monies are or were advanced to the Maker. On March 31, 1996, all interest
accrued through that date was calculated and was to be paid in four equal
installments on March 31, 1996, June 30, 1996, September 30, 1996 and December
31, 1996. In addition, the first quarterly interest payment shall be made on
March 31, 1996, for interest due for the first quarter of 1996, and quarterly
interest payments shall be made thereafter on March 31 st, June 30th, September
30th and December 31 st of each year.
F-19
<PAGE>
The Promissory Note for $25,000 accrues interest at the rate of nine
percent (9%) per annum payable quarterly and is convertible at the sole option
of the holder into a maximum of an additional 30% of the common shares of the
Company determined by a sliding scale based on the audited pretax profits of the
Company during the second and third years of operations of the Company on a
sliding scale based upon the Company achieving between 50% and 80% of the
projections provided to Loeb. (Example-. If the Company achieves 80% or better
of projection, no conversion; if the Company achieves 50% or less of projection,
conversion into 30% of the Company-, if the Company achieves between 50% and 80%
of projection, the note is convertible into the pro-rata portion of 30% of the
Company, i.e., 70% achievement equals one-third of the 30% of the Company.)
Unless previously converted, the principal amount of this note shall be
repaid by the Company in twelve (12) equal quarterly installments, the first
principal payment to be made on April 1, 1998.
On December 1, 1995, the Company and Loeb signed a convertible interim
loan agreement whereby Loeb loaned the Company the sum of $50,000 due in 60 days
together with interest of 9% to be used as working capital. Additionally on
December 4, 1995, January 16, 1996, February 23. 1996, and March 12, 1996, the
Company and Loeb signed additional convertible interim loan agreements whereby
Loeb loaned the Company the sums of $100,000, $50,000, $25,000 and $25,000
respectively. Each of these additional convertible interim loans were due in 60
days from the date of each agreement and accrued interest at 9% per annum.
Loeb has the option to convert the five convertible interim loan
agreements into two term Promissory Notes, one in the principal amount of
$237,500 and the other in the principal amount of $12,500. The two promissory
notes would supersede the above convertible interim loan agreements and
repayment of the advances would be governed by these promissory notes and not by
the provisions of any of the convertible interim loan agreements. In
consideration for the conversion of the interim loan agreements into the two
term Promissory Notes, Loeb will receive 420,728 shares of Common Stock of the
Company.
The principal amount of the $237,500 note is to be repaid in 12 equal
quarterly payments commencing two (2) years from the date of said note.
Prepayments may be made at any time without penalty. Interest is accrued at a
rate of nine percent (9%) per annum and interest payments are to be made
quarterly at the end of each calendar quarter, or at such earlier date that the
Note becomes due and payable as a result of acceleration, prepayment or as
otherwise provided therein. Interest shall begin to run from the date that the
monies are or were advanced to the Maker.
The Promissory Note for $12,500 will accrue interest at the rate of nine
percent (9%) per annum payable quarterly and is convertible at the sole option
of the holder into a maximum of an additional 15% of the common shares of the
Company determined by a sliding scale based on the audited pretax profits of the
Company during the second and third years of operations of the Company on a
sliding scale based upon the Company achieving between 50% and 80% of the
projections provided to Loeb. (Example- If the Company achieves 80% or better of
projection, no conversion- if the Company achieves 50% or less of projection,
conversion into 15% of the Company; if the Company achieves between 50% and 80%
of projection, the note is convertible into the pro-rata portion of 15% of the
Company, i.e., 70% achievement equals one-third of the 15% of the Company).
Unless previously converted, this $12,500 principal amount, together with any
accrued but unpaid interest, shall become a demand note after the third year of
operation of the Company.
There was no cash paid for interest for the six months ended June 30,
1996. As of the date of this report, no cash has been paid to Loeb for interest
and the Company is technically in default on the Loeb Notes. Accordingly, such
notes payable are classified as current liabilities in the accompanying
financial statements.
F-20
<PAGE>
Note 4 Computer Equipment Lease
On September 30, 1995, the Company entered into a sale and lease-back
arrangement with LTI Ventures Leasing Corp. (LTI) whereby the Company sold the
bulk of its computer hardware and commercially purchased software to LTI. In
consideration of the sale, the Company received a total of S169,599 and agreed
to lease back the hardware and software for initial terms ranging from 24 to 30
months at a monthly rental totaling $7,039.
As a consideration for entering into the aforementioned agreement with
the Company, LTI was granted a 5-year warrant to purchase a maximum of 12,721
shares of Common Stock of the Company for cash at a price of $2.00 per share.
Note 5 Loans Payable
Pursuant to a private offering, the Company issued 11. 5 units to
various unrelated third parties in May and June 1996. Each $50,000 unit
consists of a $49,000 three year promissory note bearing interest at 10% per
annum and a Class A redeemable common stock purchase warrant valued at $1,000
per unit.
The principal and interest on the promissory notes are to be repaid the
earlier of three years from issuance or thirty days after the closing date of
the first underwritten public offering of the Company's securities.
Each Class A common stock purchase warrant entitles the holder to
purchase up to 25,000 shares of the Company's common stock at an exercise price
of $5.75 per share. The rights represented by this warrant are exercisable
commencing 90 days after the effective date of the public offering registration
statement until four years thereafter. The terms and conditions of these
warrants are subject to adjustment to conform with the warrants to be registered
upon effectiveness of the registration statement filed with the Securities and
Exchange Commission. At June 30, 1996, warrants to purchase 287,500 shares of
the Company's common stock are outstanding, pursuant to this offering.
Note 6 Convertible Notes Payable
In April and June 1996, the Company borrowed a total of $30,000 from two
unrelated third parties. The maturity date is the earlier of January 1, 1998,
or the consummation of a public offering of the Company's common stock.
These notes bear interest at a rate of 7% per annum, payable on the last
day of each calendar quarter of each year, commencing March 31, 1997, to the
maturity date.
If the maturity date of these notes shall occur prior to January 1,
1998, in lieu of the $30,000 payment of the principal amount due, the principal
amount due shall be converted into 15,000 fully paid and non-assessable shares
of common stock of the Company.
Note 7 Subsequent Events
Stock Split - At the annual meeting, stockholders approved an amendment
to the Company's Certificate of Incorporation effecting a 2 for 1 reverse stock
split of the outstanding shares of Common Stock of the Company as of the record
date (June 25, 1996) from 5,669,731 shares to 2,834,866 shares. The
accompanying financial statements give retroactive effect to the stock split.
F-21
<PAGE>
Common Stock - In August 1996, the Company canceled 333,216 shares of
its Common Stock which had been issued to Steven E. Pollan in connection with
the acquisition of Corporate Travel Link. The reason for such cancellation
related to various claims made by the Company against Mr. Pollan as a result of
material misrepresentation made to the Company and failure to provide services
to the Company. Pending return of the shares, they will be considered
outstanding for all periods presented.
F - 22
<PAGE>
<PAGE>
No dealer, salesperson or other person
has been authorized to give any
information or to make any
representations in connection with this
Offering other than those contained in
this Prospectus
and, if given or made, such information
or representations must not be relied on
as having been GENISYS RESERVATIONS
authorized by the Company. This SYSTEMS, INC.
Prospectus does not constitute an offer R.D. WHITE & CO., INC.
to sell or a solicitation of
an offer to buy any security other than
the securities offered by this
Prospectus, or an offer or solicitation
of an offer to buy any securities by any
person in any jurisdiction in which such
offer or solicitation is not authorized
or is unlawful. The delivery of this
Prospectus shall not, under any circum
stances, create any implication that the
information herein is correct as of any
time subsequent to the date of this
Prospectus.
____________________________
TABLE OF CONTENTS Page
Available Information
Prospectus Summary 287,500 Shares Of
Risk Factors Common Stock Issuable
Use of Proceeds upon exercise of
Capitalization outstanding Class A
Dilution Warrants
Dividend Policy
Management's Discussion
and Analysis of
Financial Condition
and Results of GENISYS RESERVATION
Operations SYSTEMS, INC.
Business
Management
Certain Transactions
Principal Stockholder
Selling Stockholders
Description of Securities
Underwriting
Concurrent Sales by
Selling Stockholders
Legal Matters
Experts
Financial Statements
Until _________, 199_ (25 days after the
date of this Prospectus), all dealers
effecting transactions in the
Debentures, whether or not participating
in the distribution, may be required to
deliver a Prospectus. This is in
addition to the
obligation of dealers to deliver a
Prospectus when acting as underwriters
and with regard to their unsold
allotments or subscription.
<PAGE>
Alternate Cover Page
SUBJECT TO COMPLETION, DATED OCTOBER 28 , 1996 PROSPECTUS 287,500 Shares GENISYS
RESERVATION SYSTEMS, INC. This Prospectus relates to the offering of 278,500
shares of common stock (Common Stock), par value $.0001 per share, of Genisys
Reservation Systems, Inc. a New Jersey corporation (the Company) issuable upon
exercise of Class A Redeemable Warrants issued in a private placement. The
securities offered hereby may not be transferred for eighteen (18) months from
the date hereof, subject to earlier release at the sole discretion of R.D. White
& Co., Inc. which is acting as the underwriter in connection with a public
offering of the Company`s securities (the Underwriter). The certificates
evidencing such securities include a legend with such restrictions. The
Underwriter may release the securities held by the Selling Stockholder at any
time. The Securities offered by this Prospectus may be sold from time to time by
the Selling Stockholders, or by their transferees. No underwriting arrangements
have been entered into by the Selling Stockholders. The distribution of the
securities by the Selling Stockholders may be effected in one or more
transactions that may take place on the over-the- counter market including
ordinary broker`s transactions, privately-negotiated transactions or through
sales to one or more dealers for resale of such shares as principals at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling Stockholders
in connection with sales of such securities. Transfers of the securities may
also be made pursuant to applicable exemptions under the Securities Act of 1933
(the Securities Act) including but not limited to sales under Rule 144 under
the Securities Act. The Selling Stockholders and intermediaries through whom
such securities may be sold may be deemed "underwriters" within the meaning of
the Securities Act with respect to the securities offered, and any profits
realized or commissions received may be deemed underwriting compensation. The
Company has agreed to indemnify the Selling Stockholders against certain
liabilities, including liabilities under the Securities Act. On the date hereof,
the Company commenced pursuant to the Registration Statement of which this
Prospectus is a part of a public offering of 800,000 shares of Common Stock,
1,300,000 Class A Redeemable Warrants, and 800,000 Class B Redeemable Warrants.
See "Concurrent Sales." The Company will not receive any of the proceeds from
the sale of the securities by the Selling Stockholders, but will receive
proceeds from the options covered by such shares. All costs in incurred in the
registration of the securities of the Selling Stockholders are being borne by
the Company. See "Selling Stockholders." The Company intends to furnish its
security holders with annual reports containing audited financial statements and
the audit report of the independent certified public accountants and such
interim reports as it deems appropriate or as may be required by law. The
Company`s fiscal year ends December 31. AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY INVOLVES A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION OF THE
BOOK VALUE OF THE COMMON STOCK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS", WHICH BEGINS ON
PAGE , AND "DILUTION" page . THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE. ____________________________ The date of this Prospectus
October 29, 1996
<PAGE>
The Offering
Securities Offered by
Selling Stockholders............. 278,500 Shares Issuable
upon exercise of outstanding
Class A Redeemable Warrants
Securities Outstanding
Prior to the Company`s
Offering:
Common Stock................ 3,634,866 Shares
Series A Warrants........... 1,587,500 Warrants
Series B Warrants........... 800,000 Warrants
Securites Outstanding
After the Company`s
Offering:
Common Stock(1)(3).......... 3,922,366 Shares
Series A Warrants(2)........ 1,300,000 Warrants
Series B Warrants(2)........ 800,000 Warrants
Use of Net Proceeds..................See "Use of Proceeds"
Proposed Symbol(4)
Common Stock.........................GENS
Class A Warrants.....................GENSW
Class B Warrants.....................GENSZ
- ------------------------------
(1) Does not include: (a) 2,100,000 shares of Common Stock issuable
upon exercise of the Class A and Class B Warrants; (b) 120,000
shares of Common Stock issuable upon exercise of the Over-
Allotment Option and 315,000 shares of Common Stock issuable
upon the exercise of the Redeemable Warrants contained therein;
(c), or 420,728 shares to be received by Loeb Holding Corp., as
agent, upon conversion of the interim loan agreements into two
promissory notes. See "Description of Securities," "Certain
Transactions," "Principal Stockholders," and "Underwriting."
(2) Does not include the issuance of 315,000 Redeemable Warrants
issuable upon exercise of the Over-Allotment Option. See
"Underwriting" and "Description of Securities."
(3) Does not include shares of Common Stock issuable upon the
conversion of two promissory notes at the completion of this
Offering in the principal amounts of $20,000 and $10,000
respectively (the "Convertible Notes").
(4) The Shares of Common Stock and the Class A Redeemable Warrants
and Class B Redeemable Warrants are expected to be listed for
quotation on NASDAQ under the symbols: "GENS", "GENSW" and
"GENSZ", respectively. There can be no assurance given that the
Company will be able to satisfy on a continuing basis the
requirements for quotation of such securities on NASDAQ. See
"Risk Factors" and "Market for the Company's Securities and
Other Related Stockholder Matters."
<PAGE>
No dealer, salesperson or other person
has been authorized to give any
information or to make any
representations in connection with
this Offering other than those
contained in this Prospectus
and, if given or made, such
information or representations must
not be relied on as having been GENISYS RESERVATIONS
authorized by the Company. This SYSTEMS, INC.
Prospectus does not constitute an R.D. WHITE & CO., INC.
offer to sell or a solicitation of
an offer to buy any security other
than the securities offered by this
Prospectus, or an offer or solicita
tion of an offer to buy any securities
by any person in any jurisdiction in
which such offer or solicitation is
not authorized or is unlawful. The
delivery of this Prospectus shall not,
under any circumstances, create any
implication that the information
herein is correct as of any time
subsequent to the date of this
Prospectus.
____________________________
TABLE OF CONTENTS Page
Available Information 287,500 Shares Of
Prospectus Summary Common Stock Issuable
Risk Factors upon exercise of
Use of Proceeds outstanding Class A
Capitalization Warrants
Dilution
Dividend Policy
Management's Discussion
and Analysis of
Financial Condition GENISYS RESERVATION
and Results of SYSTEMS, INC.
Operations
Business
Management
Certain Transactions
Principal Stockholder
Selling Stockholders
Description of Securities
Underwriting
Concurrent Sales by
Selling Stockholders
Legal Matters
Experts
Financial Statements
Until _________, 199_ (25 days after
the date of this Prospectus), all
dealers effecting transactions in the
Debentures, whether or not
participating in the distribution, may
be required to deliver a Prospectus.
This is in addition to the
obligation of dealers to deliver a
Prospectus when acting as underwriters
and with regard to their unsold
allotments or subscription.
<PAGE>
PART II
Information Not Required in Prospectus
ITEM 24. Indemnification of Officers and Directors
The Company`s Certificate of Incorporation provides
in Article Fourth that no Director of this Corporation shall
be liable to the Corporation or
any of its shareholders for damages for breach of any duty owned to the
Corporation or its shareholders except for liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty to
the Corporation or its shareholders, (ii) not in good faith or involving a
knowing violation of law, or (iii) resulting in receipt by such person of an
improper personal benefit.
ITEM 25. Other Expenses of Issuance and Distribution
The expenses payable by Registrant in connection with the issuance
and distribution of the securities being registered (other than underwriting
discounts and commissions, non-accountable expenses of $132,600 ($152,484 if the
over-allotment option is exercised) are estimated as follows:
Securities and Exchange Commission Fees................$ 7,614.66
NASDAQ Stock Market listing fee........................$ 10,000.00
Transfer/Warrant Agent's fee and expenses..............$ 3,500.00
NASD filing fee........................................$ 934.00
Accounting fees and expenses...........................$35,000.00
Blue Sky fees and expenses.............................$30,000.00
Tombstone Advertisement................................$ 10,000.00
Printing Expenses (including Securities)................$ 40,000.00
Legal fees.............................................$ 90,000.00
Miscellaneous..........................................$ 7,943.34
Total............................................$235,000
ITEM 26. Recent Sales of Unregistered Securities
During February 1995, the Company issued 45,765 shares of its Common
Stock in repayment of certain liabilities totaling $251,702. Those liabilities
included notes payable to Saddle Brook Investors of $149,633, a note payable
plus accrued interest to a director of $34,273 and certain accounts payable of
$67,796.
II-1
<PAGE>
During March 1995, John H. Wasko, then President of the Company, upon
exercise of his own option, acquired 70,520 shares of the Common Stock of the
Company at an exercise price of $0.02145 per share.
On August 11, 1995, Robotic Lasers acquired Corporate Travel Link,
Inc., by issuing 5,048,730 shares (pre-split) of restricted New
Common Stock of the Company in exchange for 300 shares of the common stock of
Corporate Travel Link owned by Joseph Cutrona, Mark A. Kenny and Steven E.
Pollan which represented all the authorized, issued and outstanding shares of
common stock of Corporate Travel Link.
On September 30, 1995, 841,455 Common Shares of the Company were
purchased by Loeb Holding Corp. as agent ("Loeb"), for Warren D. Bagatelle, HSB
Capital and a number of other customers of, and trusts managed by Loeb. Loeb
received such shares as well as $750,000 in Promissory Notes in consideration
for $750,000 loaned to the Company in cash.
In August 1994 and February 1995 Joseph Cutrona and Mark Kenny each
received 1,332,866 (pre-split) shares of common stock in the Company for
$7,840 of contributed services provided to the Company.
In August 1995 the Company granted Mr. Wasko a 5 year option to
purchase 25,000 shares of the Companys' common stock at a price of $0.60 per
share.
On December 1, 1995, the Company and Loeb signed an interim loan
agreement whereby Loeb loaned the Company the sum of $50,000 due in 60 days
together with interest of 9% to be used as working capital. Additionally on
December 4, 1995, January 16, 1996, February 23, 1996 and March 12, 1996, the
Company and Loeb signed additional interim loan agreements whereby Loeb loaned
the Company the sums of $100,000, $50,000, $25,000 and $25,000 respectively.
Each of these additional interim loans were due in 60 days from the date of each
agreement and accrued interest at 9% per annum.
Loeb has the option to convert the five interim loan agreements into
two term Promissory Notes, one in the principal amount of $237,500 and the other
in the principal amount of $12,500. The two promissory notes would supersede the
above interim Loan Agreements and repayment of the advances would be governed by
these promissory notes and not by the provisions of any of the interim loan
agreements. In consideration for the conversion of the interim loan agreements
into the two term Promissory Notes, Loeb will receive 420,728 shares of Common
Stock of the Company.
During the quarter ended March 31, 1996, the Company sold 5,000
shares of the Company's restricted Common Stock to a former officer and the
director of the Company for $70,000. During the same period, the Company sold
25,000 shares of the Company's restricted Common Stock to an unrelated party for
$50,000.
II-2
<PAGE>
In May, 1996 the Company issued Class A Redeemable Warrants to
purchase 287,500 shares of its Common Stock in a private placement. Investors
purchased such securities for $50,000 per unit, each unit consisting of a
$49,000 promissory note and a Class A Redeemable common stock Purchase Warrant
valued at $1,000 per unit.
Neither the Company nor any person acting on its behalf offered or
sold the securities described above by means of any form of general solicitation
or general advertising. Each purchaser represented in writing that he acquired
the securities for his own account. A legend was placed on the certificate
stating that the restrictions on their transferability and sale. Each purchaser
signed a written agreement that the securities will not be sold without
registration under the Act or exemption therefrom. The Registrant believes such
issuances are exempt transactions not involving a public offering under Section
4(2) of the Securities Act of 1933, as amended.
ITEM 27. Exhibits and Financial Statement Schedules
(a) Exhibits
1.1 Form of Underwriting Agreement
1.2* Selected Dealer Agreement
3.1 Registrant's Articles of Incorporation
3.2 Registrant's By-Laws
4.1 Form of Common Stock Certificate
4.2 Redeemable Warrant Agreement with Form of Class A
and Class B Warrant and Warrant
Agreement
4.3 Form of Representative's Unit Purchase Option
5. * Opinion of McLaughlin & Stern, LLP
10.1 Employment Agreement dated October 17, 1996 between
Registrant and Joseph Cutrona.
10.2 Consulting Agreement dated October 18, 1996
between the Registrant and Mark A. Kenny.
10.3 Employment Agreeement dated October 17, 1996 between
Registrant and John Wasko.
II-3
<PAGE>
10.4 Copy of lease dated November 1, 1995 between Unicom and
Corporate Travel Link, Inc.
10.5 Copy of Agreement dated June 22, 1995 between
American Airlines, Inc., and Corporate Travel Link,
Inc., relating to Sabre Extension Program -
Associate Distribution and Services Agreement.
10.6 Copy of Agreement dated June 30, 1995 between
American Airlines, Inc. and Corporate Travel Link,
Inc., relating to Associate Sabre Equipment Lease
Agreement.
10.7 Copy of Agreement dated June 30, 1995 between
American Airlines, Inc., and Corporate Travel Link,
Inc. - non-standard system amendment to Corporate
Sabre Equipment Lease Agreement.
10.8Copy of Script Consulting Agreement dated June 21, 1995
between Worldspan, LP and Corporate Travel
Link, Inc.
10.9 Copy of Script Services agreement dated June 21, 1995
between Worldspan, LP and Corporate Travel
Link, Inc.
10.10 Copy of Galileo Services Display and Reservation
Agreement dated August 28, 1995 between Galileo
International Partnership and Corporate Travel
Link, Inc.
10.11 Copy of Ancillary Services Agreement dated August
28, 1995 between Galileo International Partnership
and Corporate Travel Link, Inc.
10.12 Copy of Worldspan Car Rental Associate Reservation
Agreement between Worldspan, LP and Corporate
Travel Link, Inc.
10.13 Copy of Interim Loan Agreement between the Registrant
and Loeb Holding Corporation and certain executives of
the Registrant.
10.14 Prosoft Consulting Agreement
21 List of Subsidiaries
24.1 Consent of Wiss & Company, LLP
II-4
<PAGE>
24.2 Consent of McLaughlin & Stern, LLP
(b) Financial Statement Schedules
* To be filed by Amendment
28.1 Executive Stock Issuance
Schedules other than those listed above have been omitted since they are either
not required, are not applicable or the required information is shown in the
financial statements or related notes.
ITEM 28. Undertakings
The undersigned Registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a) (3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) Include any additional or changed material
information on the plan of distribution;
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement for the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering;
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of
the offering; and
(b) Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the Underwriter to permit prompt delivery to each purchaser.
(c) If the Registrant requests acceleration of the effective date of he
Registration Statement under Rule 461 under the Securities Act, the Registrant
acknowledges that:
II-5
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer 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 Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suite 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 Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b) (1) or (4) or
497 (h) under the Securities Act shall be deemed to be part of this registration
as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus 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.
II-6
<PAGE>
SIGNATURES
In accordance with 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 of filing on Form SB- 2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Union, State of New Jersey, on October 29, 1996.
GENISYS RESERVATION SYSTEMS, INC.
By: /s/ Joseph Cutrona
Joseph Cutrona
President
In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following persons in the
capacities and on the dates stated.
/s/Joseph Cutrona President and Director October 29, 1996
Joseph Cutrona
/s/John H. Wasko Secretary, Treasurer
John H. Wasko and Director October 29, 1996
/s/Mark A. Kenny Director October 29, 1996
Mark A. Kenny
/s/Warren D. Bagatelle Director October 29, 1996
Warren D. Bagatelle
<PAGE>
EXHIBIT 1.1
GENISYS RESERVATION SYSTEMS, INC.
UNDERWRITING AGREEMENT
800,000 Shares of Common Stock and
2,100,000 Redeemable Warrants
, 1996
R.D. White & Co., Inc.
950 Third Avenue - 3rd. Floor
New York, New York 10022
Gentlemen:
Genisys Reservation Systems, Inc., a New Jersey corporation (the
"Company"), confirms its
agreement with R.D. White & Co., Inc. ("R.D. White") ( the "Underwriter") with
respect to the sale
by the Company and the purchase by the Underwriter of 800,000 shares (the
"Shares") of the
Company's common stock, $.0001 par value per share (the "Common Stock"), and
2,100,000
redeemable warrants to acquire one additional share of Common Stock ("Public
Warrants"). The
shares of Common Stock and Public Warrants will be immediately separable and
tradeable upon
issuance and will not trade as units. The Public Warrants will be comprised
of 1,300,000 Class A
Redeemable Warrants (the "Class A Warrants") and 800,000 Class B Redeemable
Warrants (the
"Class B Warrants"). Each Public Warrant is exercisable from , 1997 until,
, 2001. Each Class
A Warrant will have an initial exercise price of $5.75 for one (1) share of
Common Stock, and each
Class B Warrant shall have an initial exercise price of $6.75 for one (1) share
of Common Stock. The
Public Warrants will be subject to prior redemption by the Company as more
fully described in the
Registration Statement and Prospectus referred to below. The Shares, Class A
Warrants and Class
B Warrants are hereinafter referred to as the "Firm Securities." Upon your
request, as provided in
Section 2(b) of this Agreement, the Company shall also issue and sell to you up
to an additional
120,000 Shares and/or 195,000 Class A Warrants and 120,000 Class B Warrants for
the purpose of
covering over-allotments, if any, in the sale of the Firm Securities. Such
120,000 Shares and/or
195,000 Class A Warrants and 120,000 Class B Warrants are hereinafter referred
to as the "Option
Securities" The Firm Securities and the Options Securities are hereinafter
collectively referred to as
the "Public Offering Securities." The Company also proposes to issue and sell
to you warrants (the
"Underwriter's Warrants") pursuant to the Underwriter's Warrant Agreement dated
, 1996
between the Underwriter and the Company (the "Underwriter's Warrant Agreement"
for the
1
<PAGE>
purchase of an additional 80,000 Shares and/or 130,000 Class A Warrants and
80,000 Class B
Warrants. The Shares and/or Public Warrants issuable upon exercise of the
Underwriter's Warrants
are hereinafter referred to as the "Underwriter's Securities." The shares of
Common Stock issuable
upon exercise of the Public Warrants (including the Public Warrants issuable
upon exercise of the
Underwriter's Warrants) are hereinafter sometimes referred to as the "Warrant
Shares." The Public
Offering Securities, the Shares, the Public Warrants, the Underwriter's
Warrants, the Underwriter's
Securities and the Warrant Shares are more fully described in the Registration
Statement and the
Prospectus referred to below.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees
with, each of the Underwriters as of the date hereof, and as of the Closing
Date (hereinafter defined)
and the Option Closing Date (hereinafter defined), if any, as follows:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the
"Commission") a registration statement, and an amendment or amendments thereto,
on Form SB-2
(No. 333- ), including any related preliminary prospectus ("Preliminary
Prospectus"), for the
registration of the Shares, the Public Warrants, the Underwriter's Securities
and the Warrant Shares
under the Securities Act of 1933, as amended (the "Act"), which registration
statement and
amendment or amendments have been prepared by the Company in conformity with
the
requirements of the Act, and the Rules and Regulations of the Commission
thereunder. The
Company will promptly file a further amendment to said registration statement
in the form
heretofore delivered to the Underwriter and will not file any other amendment
thereto to which the
Underwriter shall have objected in writing after having been furnished with a
copy thereof. Except
as the context may otherwise require, such registration statement, as amended,
on file with the
Commission at the time the registration statement becomes effective (including
the prospectus,
financial statements, schedules, exhibits and all other documents or
information incorporated by
reference therein) and all information deemed to be a part thereof as of such
time pursuant to
paragraph (b) of Rule 430(A) of the rules and regulations) is hereinafter
called the "Registration
Statement", and the form of prospectus in the form first filed with the
Commission pursuant to Rule
424(b) of the rules and regulations is hereinafter called the "Prospectus."
For purposes hereof,
"Rules and Regulations" mean the rules and regulations adopted by the
Commission under either
the Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as applicable.
(ii) Neither the Commission nor any state regulatory authority has
issued any order preventing
or suspending the use of any Preliminary Prospectus, the Registration Statement
or Prospectus or
any part of any thereof and no proceedings for a stop order suspending the
effectiveness of the
Registration Statement or any of the Company's securities have been instituted
or are pending or
threatened. Each of the Preliminary Prospectus, the Registration Statement and
Prospectus at the
time of filing thereof conformed with the requirements of the Acts and the
Rules and Regulations,
and none of the Preliminary Prospectus, the Registration Statement or
Prospectus at the time of filing
thereof contained an untrue statement of a material fact or omitted to state a
material fact required
to be stated therein and necessary to make the statements therein, in light of
the circumstances under
which they were made, not misleading, except that this representation and
warranty does not apply
to statements made in reliance upon and in conformity with written information
furnished to the
2
<PAGE>
Company with respect to the Underwriter by or on behalf of the Underwriter
expressly for use in
such Preliminary Prospectus, Registration Statement or Prospectus or any
amendment or supplement
thereto. It is understood that the statements set forth in the Prospectus on
page 2 with respect to
stabilization, under the heading "Underwriting" and the identity of counsel to
the Underwriter under
the heading "Legal Matters" constitute the only information furnished in
writing by or on behalf of
the Underwriter for inclusion in the Registration Statement and Prospectus, as
the case may be.
(iii) When the Registration Statement becomes effective and at all
times subsequent thereto
up to the Closing Date (hereinafter defined) and each Option Closing Date
(hereinafter defined), if
any, and during such longer period as the Prospectus may be required to be
delivered in connection
with sales by the Underwriter or a dealer, the Registration Statement and the
Prospectus will contain
all statements which are required to be stated therein in accordance with the
Act and the Rules and
Regulations, and will conform to the requirements of the Act and the Rules and
Regulations; neither
the Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, contains
or will contain any untrue statement of a material fact or omit to state any
material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under
which they were made, not misleading, provided, however, that this
representation and warranty
does not apply to statements made or statements omitted in reliance upon and in
conformity with
information furnished to the Company in writing by or on behalf of the
(as set forth in
paragraph 1(a)(ii) hereof) expressly for use in the Preliminary Prospectus,
Registration Statement
or Prospectus or any amendment thereof or supplement thereto.
(iv) The Company has been duly organized and is validly existing as
a corporation in good
standing under the laws of the state of its incorporation. The Company does
not own an equity
interest in any corporation, partnership, trust, joint venture or other business
entity. The Company
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations require such
qualification or licensing except where the failure(s) to be so qualified,
licensed and in good
standing, individually or in the aggregate, would not materially and adversely
affect the condition,
financial or otherwise, or the earnings, business affairs, position, prospects,
value, operation,
properties, business or results of operations of the Company. The Company has
all requisite power
and authority (corporate and other), and has obtained any and all
authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar
matters), necessary to own or lease its properties and conduct its business as
described in the
Prospectus; the Company is and has been doing business in compliance with all
such authorizations,
approvals, orders, licenses, certificates, franchises and permits and all
federal, state, local and foreign
laws, rules and regulations and the Company has not received any notice of
proceedings relating to
the revocation or modification of any such authorization, approval, order,
license, certificate,
franchise, or permit which, singly or in the aggregate, if the subject of an
unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the
earnings, business affairs, position, prospects, value, operations, properties,
business, or results of
operations of the Company. The disclosures in the Registration Statement
concerning the effects
3
<PAGE>
of federal, state, local, and foreign laws, rules and regulations on the
Company's business as
currently conducted and as contemplated are correct in all material respects
and do not omit to state
a material fact necessary to make the statements contained therein not
misleading in light of the
circumstances in which they were made.
(v) The Company has a duly authorized, issued and outstanding
capitalization as set forth in
the Prospectus, and will have the adjusted capitalization set forth therein on
the Closing Date
(hereinafter defined) and the Option Closing Date (hereinafter defined), if any,
based upon the
assumptions set forth therein, and the Company is not a party to or bound by
any instrument,
agreement or other arrangement providing for it to issue any capital stock,
rights, warrants, options
or other securities, except for this Agreement and as described in the
Prospectus. The Common
Stock, the Shares, the Public Warrants, the Underwriter's Warrants, the
Underwriter's Securities and
the Warrant Shares (collectively, hereinafter sometimes referred to as the
"Securities") and all other
securities issued or issuable by the Company conform or, when issued and paid
for, will conform,
in all respects to all statements with respect thereto contained in the
Registration Statement and the
Prospectus. All issued and outstanding securities of the Company have been
duly authorized and
validly issued and are fully paid and non-assessable and the holders thereof
have no rights of
rescission with respect thereto, and are not subject to personal liability by
reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders
of any security of the Company or similar contractual rights granted by the
Company. The
Securities are not and will not be subject to any preemptive or other similar
rights of any
stockholder, have been duly authorized and, when issued, paid for and delivered
in accordance with
the terms hereof, will be validly issued, fully paid and non-assessable and will
conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability
solely as such holders; all corporate action required to be taken for the
authorization, issue and sale
of the Securities has been duly and validly taken; and the certificates
representing the Securities are
in due and proper form. Upon the issuance and delivery pursuant to the terms
hereof of the
Securities to be sold by the Company hereunder, the Underwriter will acquire
good and marketable
title to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security
interest, defect or other restriction or equity of any kind whatsoever.
(vi) The financial statements of the Company together with the
related notes and schedules
(if any) thereto, included in the Registration Statement, each Preliminary
Prospectus and the
Prospectus fairly present the financial position, income, changes in cash flow,
changes in
stockholders' equity and the results of operations of the Company at the
respective dates and for the
respective periods to which they apply and the pro forma financial information
included in the
Registration Statement, each Preliminary Prospectus and the Prospectus presents
fairly on a basis
consistent with that of the audited financial statements included therein, the
Company's pro forma
net income or loss per share, as the case may be, pro forma net tangible book
value, and the pro
forma capitalization and such financial statements have been prepared in
conformity with generally
accepted accounting principles and the Rules and Regulations, consistently
applied throughout the
periods involved. There has been no material adverse change or development
involving a material
change in the condition, financial or otherwise, or in the earnings, business
affairs, position,
4
<PAGE>
prospects, value, operation, properties, business or results of operation of
the Company whether or
not arising in the ordinary course of business, since the date of the financial
statements included in
the Registration Statement and the Prospectus, and the outstanding debt, the
property, both tangible
and intangible, and the business of the Company conforms in all material
respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
(vii) The Company (A) has paid all federal, state, local, and foreign
taxes for which it is
liable, including, but not limited to, withholding taxes and amounts payable
under Chapters 21
through 24 of the Internal Revenue Code of 1986, as amended (the "Code"), and
has furnished all
information returns it is required to furnish pursuant to the Code, (B) has
established adequate
reserves for such taxes which are not due and payable, and (C) does not have
any tax deficiency or
claims outstanding, proposed or assessed against it.
(viii) No transfer tax, stamp duty or other similar tax is payable
by or on behalf of the
Underwriter in connection with (A) the issuance by the Company of the
Securities, (B) the purchase
by the Underwriter of the Public Offering Securities, the Shares, the Public
Warrants and the
Warrant Shares and the purchase by the Underwriter of the Underwriter's Warrants
from the
Company, (C) the consummation by the Company of any of its obligations under
this Agreement,
or (D) resales of the Securities in connection with the distribution
contemplated hereby.
(ix) The Company maintains insurance policies, including, but not
limited to, general liability,
product liability and property insurance, which insures the Company and its
employees, against such
losses and risks generally insured against by comparable businesses. The
Company (A) has not
failed to give notice or present any insurance claim with respect to any matter,
including but not
limited to the Company's business, property or employees, under the insurance
policy or surety bond
in a due and timely manner, (B) does not have any disputes or claims against
any underwriter of such
insurance policies or surety bonds or has not failed to pay any premiums due
and payable thereunder,
or (C) has not failed to comply with all conditions contained in such insurance
policies and surety
bonds. There are no facts or circumstances under any such insurance policy or
surety bond which
would relieve any insurer of its obligation to satisfy in full any valid claim
of the company.
(x) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or
governmental proceeding (including, without limitation, those having
jurisdiction over
environmental or similar matters), domestic or foreign, pending or threatened
against (or
circumstances that may give rise to the same), or involving the properties or
business of the
Company which (A) questions the validity of the capital stock of the Company or
this Agreement,
the Underwriter's Warrant Agreement, the Warrant Agreement (as defined in
Section 1(xxxiii)
below) or of any action taken or to be taken by the Company pursuant to or in
connection with this
Agreement, the Underwriter's Warrant Agreement, or the Warrant Agreement, (B) is
required to be
disclosed in the Registration Statement which is not so disclosed (and such
proceedings as are
summarized in the Registration Statement are accurately summarized in all
material respects), or (C)
if adversely determined, might materially and adversely affect the condition,
financial or otherwise,
or the business affairs or business prospects, earnings, liabilities, prospects,
stockholders' equity,
5
<PAGE>
value, properties, business or assets of the Company.
(xi) The Company has full legal right, power and authority to
authorize, issue, deliver and
sell the Securities, enter into this Agreement, the Underwriter's Warrant
Agreement and the Warrant
Agreement and to consummate the transactions provided for herein and therein;
and each of this
Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement have
been duly and
properly authorized, executed and delivered by the Company. This Agreement,
the Underwriter's
Warrant Agreement and the Warrant Agreement each constitute a legal, valid and
binding agreement
of the Company enforceable against the Company in accordance with its terms, and
neither the
Company's issue and sale of the Securities or execution or delivery of this
Agreement, the
Underwriter's Warrant Agreement and the Warrant Agreement or its performance
hereunder and
thereunder, its consummation of the transactions contemplated herein and
therein, or the conduct of
its business as described in the Registration Statement, the Prospectus, and
any amendments or
supplements thereto, conflicts with or will conflict with or results or will
result in any breach or
violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or
result in the creation or imposition of any lien, charge, claim, encumbrance,
pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible
or intangible) of the Company pursuant to the terms of, (A) the certificate of
incorporation or by-
laws of the Company, (B) any license, contract, indenture, mortgage, deed of
trust, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or
instrument to which the Company is a party or by which it is or may be bound or
the which is
properties or assets (tangible or intangible) is or may be subject, or any
indebtedness, or (C) any
statute, judgment, decree, order, rule or regulation applicable to the Company
of any arbitrator,
court, regulatory body or administrative agency or other governmental agency or
body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or
foreign, having jurisdiction over the Company or any of its activities or
properties, in each case
except for conflicts, breaches, violations, defaults, creations or impositions
which do not and would
not have a material adverse effect on the condition, financial or otherwise, or
the earnings, business
affairs, position, shareholder's equity, value, operation, properties, business
or results of operations
of the Company.
(xii) No consent, approval, authorization or order of, and no
filing with, any court, regulatory
body, government agency or other body, domestic or foreign, is required for the
issuance of the
Securities pursuant to the Prospectus and the Registration Statement, the
issuance of the
Underwriter's Warrants, the execution, delivery or performance of this
Agreement, the Underwriter's
Warrant Agreement and the Warrant Agreement, and the transactions contemplated
hereby and
thereby, including, without limitation, any waiver of any preemptive, first
refusal or other rights that
any entity or person may have for the issue and/or sale of any of the
Securities, except such as have
been or may be obtained under the Act or may be required under state securities
or Blue Sky laws
in connection with the Underwriter's purchase and distribution of the Securities
and the
Underwriter's purchase of the Underwriter's Warrants to be sold by the Company
hereunder and
thereunder.
6
<PAGE>
(xiii) All executed agreements, contracts or other documents or
copies of executed
agreements, contracts or other documents filed as exhibits to the Registration
Statement to which
the Company is a party or by which it may be bound or to which its assets,
properties or business
may be subject have been duly and validly authorized, executed and delivered by
the Company and
constitute the legal, valid and binding agreements of the Company, enforceable
against the
Company, in accordance with their respective terms. The descriptions in the
Registration Statement
of agreements, contracts and other documents and statutes and regulations are
accurate and fairly
present the information required to be shown with respect thereto by Form SB-2,
and there are no
contracts or other documents which are required by the Act to be described in
the Registration
Statement or filed as exhibits to the Registration Statement which are not
described or filed as
required, and the exhibits which have been filed are complete and correct
copies of the documents
of which they purport to be copies.
(xiv) Subsequent to the respective dates as of which information is
set forth in the
Registration Statement and Prospectus, and except as may otherwise be indicated
or contemplated
herein or therein, the Company has not (A) issued any securities or incurred
any liability or
obligation, direct or contingent, for borrowed money, (B) entered into any
transaction other than in
the ordinary course of business, or (C) declared or paid any dividend or made
any other distribution
on or in respect of its capital stock of any class, and there has not been any
change in the capital
stock, or any change in the debt (long or short term) or liabilities or material
change in or affecting
the business affairs or prospects, management, stockholders' equity, properties,
business, financial
operations or assets of the Company.
(xv) No default exists in the due performance and observance of any
term, covenant or
condition of any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, partnership agreement,
note, loan or credit
agreement, purchase order, or any other material agreement or instrument
evidencing an obligation
for borrowed money, or any other material agreement or instrument to which the
Company is a party
or by which the Company may be bound or to which the property or assets
(tangible or intangible)
of the Company is subject or affected, which default would have a material
adverse effect on the
condition, financial or otherwise, earnings, business affairs, position,
shareholder's equity, value,
operation, properties, business or results of operations of the Company.
(xvi) The Company has generally enjoyed a satisfactory
employer-employee relationship
with its employees and is in compliance in all material respects with all
federal, state, local, and
foreign laws and regulations respecting employment and employment practices,
terms and conditions
of employment and wages and hours. There are no pending investigations
involving the Company,
by the U.S. Department of Labor, or any other governmental agency responsible
for the enforcement
of such federal, state, local, or foreign laws and regulations. There is no
unfair labor practice charge
or complaint against the Company pending before the National Labor Relations
Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or threatened against
or involving the
Company, or any predecessor entity, and none has ever occurred. No
representation question exists
respecting the employees of the Company and no collective bargaining agreement
or modification
7
<PAGE>
thereof is currently being negotiated by the Company. No grievance or
arbitration proceeding is
pending under any expired or existing collective bargaining agreements of the
Company. No labor
dispute with the employees of the Company exists, or, to the knowledge of the
Company is
imminent.
(xvii) Except as described in the Prospectus, the Company does not
maintain, sponsor or
contribute to any program or arrangement that is an "employee pension benefit
plan," an "employee
welfare benefit plan," or a "multiemployer plan" as such terms are defined in
Sections 3(2), 3(1) and
3(37), respectively, of the Employee Retirement Income Security Act of 1974, as
amended
("ERISA") ("ERISA Plans"). The Company does not maintain or contribute, now or
at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA.
No ERISA Plan (or any
trust created thereunder) has engaged in a "prohibited transaction" within the
meaning of Section 406
of ERISA or Section 4975 of the Code, which could subject the Company to any
tax
penalty on
prohibited transactions and which has not adequately been corrected. Each ERISA
Plan is in
compliance with all material reporting, disclosure and other requirements of
the
Code and ERISA
as they relate to any such ERISA Plan. Determination letters have been received
from the Internal
Revenue Service with respect to each ERISA Plan which is intended to comply with
Code Section
401(a), stating that such ERISA Plan and the attendant trust are qualified
thereunder. The Company
has never completely or partially withdrawn from a "multiemployer plan."
(xviii) Neither the Company nor any of its employees, directors,
stockholders, or affiliates
(within the meaning of the Rules and Regulations) of any of the foregoing has
taken or will take,
directly or indirectly, any action designed to or which has constituted or
which
might be expected
to cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price
of any security of the Company to facilitate the sale or resale of the
Securities or otherwise.
(xix) None of the patents, patent applications, trademarks, service
marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned or held by
the Company are in
dispute or are in any conflict with the right of any other person or entity.
The Company (i) owns or
has the license or other right to use, free and clear of all liens, charges,
claims, encumbrances,
pledges, security interests, defects or other restrictions or equities of any
kind whatsoever, all
patents, trademarks, service marks, trade names and copyrights, technology and
licenses and rights
with respect to the foregoing, used in the conduct of its business as now
conducted or proposed to
be conducted without infringing upon or otherwise acting adversely to the right
or claimed right of
any person, corporation or other entity under or with respect to any of the
foregoing and (ii) except
as set forth in the Prospectus, is not obligated or under any liability
whatsoever to make any
payments by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any
patent, trademark, service mark, tradename, copyright, know-how, technology or
other intangible
asset, with respect to the use thereof or in connection with the conduct of its
business or otherwise.
(xx) The Company has not received any notice of infringement of or
conflict with asserted
rights of others with respect to any trademark, service mark, trade name or
copyright or other
intangible asset used or held for use by it in connection with the conduct of
its businesses which,
8
<PAGE>
singly or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, might have a
material adverse effect on the condition, financial or otherwise, or the
business affairs, position,
properties, stockholder's equity, financial operations or assets of the Company.
(xxi) The Company has good and marketable title to, or valid and
enforceable leasehold
estates in, all items of real and personal property stated in the Prospectus,
to be owned or leased by
it free and clear of all liens, charges, claims, encumbrances, pledges,
security interest, defects, or
other restrictions or equities of any kind whatsoever, other than those
referred to in the Prospectus
and liens for taxes not yet due and payable.
(xxii) Wiss & Company, LLP., Certified Public Accountants, whose
report is filed with the
Commission as a part of the Registration Statement, are independent certified
public accountants as
required by the Act and the Rules and Regulations.
(xxiii) The Company has caused to be duly executed legally binding and
enforceable
agreements pursuant to which each of its officers, directors or any person or
entity deemed to be an
affiliate of the Company and any stockholders of the Company has agreed not to,
directly or
indirectly, offer to sell, sell, grant any option for the sale of, assign,
transfer, pledge, hypothecate or
otherwise encumber or dispose of any shares of Common Stock (either pursuant to
Rule 144 of the
Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not
less than 18 months following the effective date of the Registration Statement
without the prior
written consent of the Underwriter and that any Common Stock which has been
issued and is
outstanding on the effective date of the Registration Statement and is to be
sold or otherwise
disposed of pursuant to such Rule 144 with the consent of the Underwriter shall
only be sold or
otherwise disposed of through the Underwriter. The Company will cause the
Transfer Agent, as
defined below, to mark an appropriate legend on the face of stock certificates
representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(xxiv) There are no claims, payments, issuances, arrangements or
understandings, whether
oral or written, for services in the nature of a finder's or origination fee
with respect to the sale of the
Securities hereunder or any other arrangements, agreements, understandings,
payments or issuance
with respect to the Company, or any of its officers, directors, stockholders,
partners, employees or
affiliates that may affect the Underwriter' compensation, as determined by the
National Association
of Securities Dealers, Inc. ("NASD") and the Company is aware that the
Underwriter and each of
the Underwriter's shall compensate any of their respective personnel who may
have acted in such
capacities as they shall determine in their sole discretion.
(xxv) The Shares, the Common Stock and the Public Warrants have been
approved for
quotation on the Nasdaq SmallCap Market and upon notice of issuance, listing on
the Boston Stock
Exchange ("BSE").
(xxvi) Neither the Company, nor any of its officers, employees,
agents or any other person
acting on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift
9
<PAGE>
or similar benefit (other than legal price concessions to customers in the
ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or
official or employee of
any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or
foreign) or any political party or candidate for office (domestic or foreign)
or other person who was,
is, or may be in a position to help or hinder the business of the Company (or
assist the Company in
connection with any actual or proposed transaction) which (A) might subject the
Company, or any
other such person to any damage or penalty in any civil, criminal or
governmental litigation or
proceeding (domestic or foreign), (B) if not given in the past, might have had
a materially adverse
effect on the assets, business, operations or prospects of the Company, or (C)
if not continued in the
future, might adversely affect the assets, business, operations or prospects of
the Company. The
Company's internal accounting controls are sufficient to cause the Company to
comply with the
Foreign Corrupt Practices Act of 1977, as amended.
(xxvii) Except as set forth in the Prospectus, no officer, director,
or stockholder of the
Company, or any "affiliate" or "associate" (as these terms are defined in Rule
405 promulgated under
the Rules and Regulations) of any of the foregoing persons or entities has or
has had, either directly
or indirectly, (A) an interest in any person or entity which (1) furnishes or
sells services or products
which are furnished or sold or are proposed to be furnished or sold by the
Company, or (2) purchases
from or sells or furnishes to the Company any goods or services, or (B) a
beneficiary interest in any
contract or agreement to which the Company is a party or by which it may b
e bound or affected.
Except as set forth in the Prospectus under "Certain Transactions," there are
no existing agreements,
arrangements, understandings or transactions, or proposed agreements,
arrangements, understandings
or transactions, between or among the Company, and any officer, director,
Principal Security Holder
(as such term is defined in the Prospectus) of the Company, or any partner,
affiliate or associate of
any of the foregoing persons or entities.
(xxviii) Any certificate signed by any officer of the Company and
delivered to the
Underwriter or to Scheichet & Davis, P.C. ("Underwriter' Counsel") shall be
deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
(xxix) The minute books of the Company have been made available to
the Underwriter and
contain a complete summary of all meetings and actions of the directors and
stockholders of the
Company, since the time of its incorporation, and reflects all transactions
referred to in such minutes
accurately in all material respects.
(xxx) Except and to the extent described in the Prospectus, no
holders of any securities of
the Company or of any options, warrants or other convertible or exchangeable
securities of the
Company have the right to include any securities issued by the Company in the
Registration
Statement or any registration statement under the Act and no person or entity
holds any anti-dilution
rights with respect to any securities of the Company.
(xxxi) The Company has as of the effective date of the
Registration Statement (a) entered
into employment agreements with Joseph Cutrona and Mark Kenny providing for
annual salaries
10
<PAGE>
of $100,000, each on terms and conditions satisfactory to the Underwriter, and
(ii) purchased "Key-
Man" insurance on the lives of Joseph Cutrona and Mark Kenny which name the
Company as the
sole beneficiary on terms and conditions satisfactory to the Underwriter.
(xxxii) The Company has entered into a warrant agreement with respect
to the Public
Warrants, substantially in the form filed as Exhibit to the
Registration Statement ("Warrant
Agreement") with Continental Stock Transfer and Trust Company in form and
substance satisfactory
to the Underwriter.
(xxxiii) Immediately prior to the effective date of the
Registration Statement there shall be
no more than an aggregate of 2,511,650 shares of Common Stock issued and
outstanding (including
280,485 Shares of Common Stock held by non-management members of the public).
Except for
the Underwriter's Warrants, an option held by John Kelly to acquire 5,000
shares of Common Stock
upon conversion of a $10,000 promissory note, an option held by Jane Andrews to
acquire 10,000
shares of Common Stock upon conversion of a $20,000 promissory note, an option
held by John
Wasko to purchase 25,000 shares of the Company's Common Stock at an exercise
price of $.60 per
share, an option held by Loeb Holding Corp., as agent, to acquire 420,728
shares of Common Stock
upon conversion of certain interim loan agreements (the "Interim Loans") into
two long-term
promissory notes, an option held by Loeb Holding Corp., as agent, to acquire up
to 15% of the issued
and outstanding shares of Common Stock of the Company upon conversion of one of
the promissory
notes to be issued upon conversion of the Interim Loans, a warrant held by an
unaffiliated equipment
lessor to acquire 13,000 shares of Common Stock at an exercise price of $2.00
per share and
575,000 Class A Redeemable Warrants to purchase shares of Common Stock to be
issued to lenders
in the recent bridge financing of the Company, there are no securities with
equivalent rights as the
Common Stock, Common Stock or such equivalent securities, issuable upon the
exercise of options,
warrants and other contract rights, or securities convertible directly or
indirectly into Common Stock
or such equivalent securities issued or outstanding.
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein
contained, but subject to the terms and conditions herein set forth, the
Company agrees to sell to
each Underwriter, and each Underwriter, severally and not jointly, agrees to
purchase from the
Company at a price of $4.50 per Share, $.18 per Class A Warrant and $.09 per
Class B Warrant, that
number of Firm Securities set forth above, subject to such adjustment as the
Underwriter in its sole
discretion shall make to eliminate any sales or purchases of fractional shares.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements,
herein contained, but subject to the terms and conditions herein set forth, the
Company hereby grants
an option to the Underwriter to purchase all or any part of an additional
120,000 Shares at a price
of $4.50 per Share and/or 195,000 Class A Warrants and 120,000 Class B Warrants
at a price of $.18
per Class A Warrant and $.09 per Class B Warrant. The option granted hereby
will expire 45 days
after the date the Registration Statement becomes effective and may be
exercised in whole or in part
11
<PAGE>
from time to time upon notice by the Underwriter to the Company setting forth
the number of Option
Securities as to which the several Underwriter are then exercising the option
and the time and date
of payment and delivery for any such Option Securities. Any such time and date
of delivery (an
"Option Closing Date") shall be determined by the Underwriter, but shall not be
later than seven full
business days after the exercise of said option, nor in any event prior to the
Closing Date (hereinafter
defined), unless otherwise agreed upon by the Underwriter and the Company.
Nothing herein
contained shall obligate the Underwriter to make any over-allotments. No
Option Securities shall
be delivered unless the Firm Securities shall be simultaneously delivered or
shall theretofore have
been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of certificates
evidencing the Firm
Securities shall be made at the offices of R.D. White & Co., Inc. at
2 Broadway, New York, New
York 10004, or at such other place as shall be agreed upon by the Underwriter
and the Company.
Such delivery and payment shall be made at 10:00 a.m. (New York City time)
on , 1996 or at
such other time and date as shall be agreed upon by the Underwriter and the
Company, but no less
than three (3) nor more than ten (10) full business days after the effective
date of the Registration
Statement (such time and date of payment and delivery being herein called
"Closing Date"). In
addition, in the event that any or all of the Option Securities are purchased
by the Underwriter,
payment of the purchase price for, and delivery of certificates for, such
Option Securities shall be
made at the above mentioned office of the Underwriter or at such other place
as shall be agreed upon
by the Underwriter and the Company on each Option Closing Date as specified in
the notice from
the Underwriter to the Company. Delivery of the certificates for the Firm
Securities and the Option
Securities if any, shall be made to the Underwriter against payment by the
Underwriter, severally
and not jointly, of the purchase price for the Firm Securities and the Option
Securities if any, to the
order of the Company by New York Clearing House Funds. In the event such
option is exercised,
the Underwriter shall purchase that number of Option Securities then being
purchased subject to
such adjustments as the Underwriter in its discretion shall make to eliminate
any sales or purchases
of fractional shares. Certificates for the Firm Securities and the Option
Securities if any, shall be
in definitive, fully registered form, shall bear no restrictive legends and
shall be in such
denominations and registered in such names as the Underwriter may request in
writing at least two
(2) business days prior to Closing Date or the relevant Option Closing Date,
as the case may be. The
certificates for the Firm Securities and the Option Securities if any, shall
be made available to the
Underwriter at such office or such other place as the Underwriter may designate
for inspection,
checking and packaging no later than 9:30 a.m. on the last business day prior
to Closing Date or the
relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Underwriter the
Underwriter's Warrants at a purchase price of $.0001 per warrant, which
warrants shall entitle the
holders thereof to purchase an aggregate of 80,000 Shares and/or 130,000
Class A Warrants and
80,000 Class B Warrants. The Underwriter's Warrants shall be exercisable for
a period of four (4)
years commencing one (1) year from the Closing Date at a price of $6.00 per
Share, $.24 per Class
A Warrant and $.12 per Class B Warrant. The Underwriter's Warrant Agreement
and form of
Warrant Certificates with respect to each of the (i) Underwriter's Warrants to
purchase Shares and
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<PAGE>
(ii) Underwriter's Warrants to purchase Public Warrants, shall be substantially
in the form filed as
Exhibit to the Registration Statement. Payment for the
Underwriter's Warrants shall be
made on the Closing Date.
3. Public Offering of the Public Offering Securities. As soon after the
Registration Statement
becomes effective as the Underwriter deems advisable, the Underwriter shall
make a public offering
of the Firm Securities and such of the Option Securities as it may determine
(other than to residents
of or in any jurisdiction in which qualification of the Shares and Public
Warrants are required and
has not become effective) at the price and upon the other terms set forth in
the Prospectus. The
Underwriter may from time to time increase or decrease the public offering
price after distribution
of the Public Offering Securities has been completed to such extent as the
Underwriter, in its sole
discretion deems advisable. The Underwriter may enter into one or more
agreements as it
Underwriter, in its sole discretion, deems advisable with one or more
broker-dealers who shall act
as dealers in connection with such public offering. Investors in the public
offering will be required
to purchase at leastone Share and one Public Warrant together or in multiples
thereof. Such Public
Offering Securities of Securities will be immediately separable and tradeable
upon issuance and will
not be registered or listed on any exchange for trading as units.
4. Covenants and Agreements of the Company. The Company covenants and
agrees with
each of the Underwriter as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any
amendments thereto to become effective as promptly as practicable (such
Registration Statement to
be in form and substance satisfactory to the Underwriter and Underwriter's
Counsel) and will not at
any time, whether before or after the effective date of the Registration
Statement, file any
amendment to the Registration Statement or supplement to the Prospectus or
file any document
under the Act or Exchange Act before termination of the offering of the Public
Offering Securities
by the Underwriter of which the Underwriter shall not previously have been
advised and furnished
with a copy, or to which the Underwriter shall have objected or which is not
in compliance with the
Act, the Exchange Act or the Rules and Regulations.
(b) As soon as the Company is advised or obtains knowledge thereof
the Company will
advise the Underwriter and confirm by notice in writing, (i) when the
Registration Statement, as
amended, becomes effective, if the provisions of Rule 430A promulgated under
the Act will be relied
upon, when the Prospectus has been filed in accordance with said Rule 430A and
when any post-
effective amendment to the Registration Statement becomes effective, (ii) of
the issuance by the
Commission of any stop order or of the initiation, or the threatening, of any
proceeding, suspending
the effectiveness of the Registration Statement or any order preventing or
suspending the use of the
Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereto, or the institution
of proceedings for that purpose (iii) of the issuance by the Commission or by
any state securities
commission of any proceedings for the suspension of the qualification of any of
the Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that
purpose, (iv) of the receipt of any comments from the Commission; and (v) of
any request by the
13
<PAGE>
Commission for any amendment to the Registration Statement or any amendment or
supplement to
the Prospectus or for additional information. If the Commission or any state
securities commission
authority shall enter a stop order or suspend such qualification at any time,
the Company will make
every effort to obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the
Underwriter and Underwriter' Counsel) or transmit the Prospectus by a means
reasonably calculated
to result in filing with the Commission pursuant to Rule 424 (b)(1) (or, if
applicable and if consented
to by the Underwriter, pursuant to Rule 424 (b)(47) not later than the
Commission's close of business
on the earlier of (i) the second business day following the execution and
delivery of this Agreement
and (ii) the fifth business day after the effective date of the Registration
Statement.
(d) The Company will give the Underwriter notice of its intention to
file or prepare any
amendment to the Registration Statement (including any post-effective
amendment) or any
amendment or supplement to the Prospectus (including any revised prospectus
which the Company
proposes for use by the Underwriter in connection with the offering of the
Securities which differs
from the corresponding prospectus on file at the Commission at the time the
Registration Statement
becomes effective, whether or not such revised prospectus is required to be
filed pursuant to Rule
424(b) of the Rules and Regulations), and will furnish the Underwriter with
copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the
case may be, and will not file any such prospectus to which the Underwriter or
Underwriter' Counsel,
shall reasonably object.
(e) The Company shall take all action, in cooperation with the
Underwriter, at or prior to the
time the Registration Statement becomes effective, to qualify the Public
Offering Securities for
offering and sale under the securities laws of such jurisdictions as the
Underwriter may designate
to permit the continuance of sales and dealings therein for as long as may be
necessary to complete
the distribution, and shall make such applications, file such documents and
furnish such information
as may be required for such purpose; provided, however, the Company shall not
be required to
qualify as a foreign corporation or file a general or limited consent to
service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will,
unless the Underwriter agrees that such action is not at the time necessary or
advisable, use all
reasonable efforts to file and make such statements or reports at such times as
are or may reasonably
be required by the laws of such jurisdiction to continue such qualification.
It is agreed that
Underwriter's Counsel (or its designees) shall perform all such required
Blue Sky legal services.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company
shall use all reasonable efforts to comply with all requirements imposed upon
it by the Act and the
Exchange Act, as now and hereafter amended and by the Rules and Regulations, as
from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Securities in
accordance with the provisions hereof and the Prospectus, or any amendments or
supplements
thereto. If at any time when a prospectus relating to the Securities is
required to be delivered under
the Act, any event shall have occurred as a result of which, in the reasonable
opinion of counsel for
14
<PAGE>
the Company or Underwriter' Counsel, the Prospectus, as then amended or
supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the
Act and the Rules and Regulations, the Company will notify the Underwriter
promptly and prepare
and file with the Commission an appropriate amendment or supplement in
accordance with Section
10 of the Act, each such amendment or supplement to be satisfactory to
Underwriter' Counsel, and
the Company will furnish to the Underwriter copies of such amendment or
supplement as soon as
available and in such quantities as the Underwriter may request.
(g) As soon as practicable, but in any event not later than 45 days
after the end of the 12-
month period beginning on the day after the end of the fiscal quarter of the
Company during which
the effective date of the Registration Statement occurs (90 days in the event
that the end of such
fiscal quarter is the end of the Company's fiscal year), the Company shall make
generally available
to its security holders, in the manner specified in Rule 158(b) of the Rules
and Regulations, and to
the Underwriter, an earnings statement which will be in the detail required by,
and will otherwise
comply with, the provisions of Section 11(a) of the Act and Rule 158(a) of the
Rules and
Regulations, which statement need not be audited unless required by the Act,
covering a period of
at least 12 consecutive months after the effective date of the Registration
Statement.
(h) During a period of seven years after the date hereof, the
Company will furnish to its
stockholders, as soon as practicable, annual reports (including financial
statements audited by
independent public accountants) and unaudited quarterly reports of earnings,
and will deliver to the
Underwriter:
(i) concurrently with furnishing such quarterly reports to its
stockholders, statements of
income of the Company for each quarter in the form furnished to the Company's
stockholders and
certified by the Company's principal financial or accounting officer;
(ii) concurrently with furnishing such annual reports to its
stockholders, a balance sheet
of the Company as at the end of the preceding fiscal year, together with
statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal year,
accompanied by a copy
of the certificate thereon of independent certified public accountants;
(iii) as soon as they are available, copies of all reports
(financial or other) mailed to
stockholders;
(iv) as soon as they are available, copies of all reports and
financial statements furnished
to or filed with the Commission, the NASD or any securities exchange;
(v) every press release and every material news item or article
of interest to the financial
community in respect of the Company or its affairs which was released or
prepared by or on behalf
of the Company; and
15
<PAGE>
(vi) any additional information of a public nature concerning
the Company (and any future
subsidiaries) or its businesses which the Underwriter may reasonably request.
During such seven-year period, if the Company has active subsidiaries, the
foregoing financial
statements will be on a consolidated basis to the extent that the accounts of
the Company and its
subsidiaries are consolidated, and will be accompanied by similar financial
statements for any
significant subsidiary which is not so consolidated.
(i) The Company will maintain a Transfer Agent, counsel, accounting
firm, financial printer
and, if necessary under the jurisdiction of incorporation of the Company, a
Registrar (which may be
the same entity as the Transfer Agent) for its Public Offering Securities,
Common Stock and Public
Warrants all of whom shall be reasonably acceptable to the Underwriter. Such
Transfer Agent shall,
for a period of five years following the Closing Date, deliver to the
Underwriter the monthly
securities position of the Company's stockholders of record.
(j) The Company will furnish to the Underwriter or on the
Underwriter's order, without
charge, at such place as the Underwriter may designate, copies of each
Preliminary Prospectus, the
Registration Statement any pre-effective or post-effective amendments thereto
(two of which copies
will be signed and will include all financial statements and exhibits), the
Prospectus, and all
amendments and supplements thereto, including any Prospectus prepared after
the effective date of
the Registration Statement, in each case as soon as available and in such
quantities as the
Underwriter may reasonably request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide
the Underwriter with true copies of duly executed, legally binding and
enforceable agreements
pursuant to which for a period of not less than 18 months after the effective
date of the Registration
Statement, each holder of securities issued by the Company and outstanding at
the effective date of
the Registration Statement (including securities convertible into Common Stock
of the Company)
agrees that it or he or she will not, directly or indirectly, issue, offer to
sell, sell, grant an option for
the sale of, assign, transfer, pledge, hypothecate or otherwise encumber or
dispose of any of such
securities (either pursuant to Rule 144 of the Rules and Regulations or
otherwise) or dispose of any
beneficial interest therein without the prior written consent of the
Underwriter (collectively, the
"Lock-up Agreements"). The Lock-up Agreements shall also provide that any
such securities that
may be sold pursuant to Rule 144 (with the Underwriter's consent) shall be
executed through the
Underwriter. The commission for any such open market transactions shall not
exceed 5% and the
sales price shall be reasonably related to the market. During the three year
period commencing with
the effective date of the Registration Statement, the Company shall not issue
any securities under
Regulation S and not, without the prior written consent of the Underwriter,
sell, contract or offer to
sell, issue, transfer, assign, pledge, distribute, or otherwise dispose of,
directly or indirectly, any debt
security of the Company or any shares of Common Stock or any issue of preferred
stock of the
Company, or any options, rights or warrants with respect to any shares of
Common Stock or any
issue of preferred stock of the Company, (other than upon exercise of the
Underwriter's Warrants).
On or before the Closing Date, the Company shall deliver instructions to the
Transfer Agent
16
<PAGE>
authorizing it to place appropriate legends on the certificates representing
the securities subject to
the Lock-up Agreement and to place appropriate stop transfer orders on the
Company's ledgers.
(l) Neither the Company, nor any of its officers, directors,
stockholders or affiliates (within
the meaning of the Rules and Regulations) will take, directly or indirectly,
any action designed to,
or which might in the future reasonably be expected to cause or result in,
stabilization or
manipulation of the price of any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner,
and subject to the conditions, set forth under "Use of Proceeds" in the
Prospectus. No portion of the
net proceeds will be used, directly or indirectly, to acquire any securities
issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be
required (including, but not limited to, a Form SR as may be required pursuant
to Rule 463 under
the Act) from time to time, under the Act, the Exchange Act and the Rules and
Regulations, and all
such reports, forms and documents filed shall comply as to form and substance
with the applicable
requirements under the Act, the Exchange Act and the Rules and Regulations.
(o) The Company shall furnish to the Underwriter as early as
practicable prior to each of the
date hereof, the Closing Date and each Option Closing Date, if any, but no
later than two (2) full
business days prior thereto, a copy of the latest available unaudited interim
financial statements of
the Company (which in no event shall be as of a date more than thirty (30) days
prior to the date of
the Registration Statement) which have been read by the Company's independent
public accountants,
as stated in their letters to be furnished pursuant to Section 6(j) hereof.
(p) The Company shall cause the Shares, the Common Stock and the
Public Warrants to be
listed on the Nasdaq SmallCap Market and upon the request of the Underwriter to
be listed on the
BSE, and for a period of seven (7) years from the date hereof, use its best
efforts to maintain such
listings of the Shares, the Common Stock and the Public Warrants to the extent
outstanding.
(q) For a period of five (5) years from the Closing Date, the Company
shall furnish to the
Underwriter at the Underwriter's request and at the Company's sole expense, the
list of holders of
all of the Company's securities.The Company shall also instruct Depository
Trust Company ("DTC")
to send to the Underwriter a copy of the securities positions of all of the
security holders of the
Company on DTC's records on a weekly basis for a period of three (3) calendar
months following
the effective date, on a monthly basis for a period of three (3) years
following the effective date and,
in addition thereto, as frequently as may be reasonably requested by the
Underwriter,
(r) The Company shall as soon as practicable, (i) but in no event
more than five business days
before the effective date of the Registration Statement, file a Form 8-A with
the Commission
providing for the registration under the Exchange Act of the Securities and
(ii) but in no event more
than 30 days from the effective date of the Registration Statement, take all
necessary and appropriate
actions to be included in Standard and Poor's Corporation Descriptions and
Moody's Manual in order
17
<PAGE>
to satisfy the requirements for "manual exemption" in those states where
available and to maintain
such inclusion for as long as the Securities are outstanding.
(s) Until the completion of the distribution of the Securities,
the Company shall not without
the prior written consent of the Underwriter and Underwriter's Counsel, issue,
directly or indirectly
any press release or other communication or hold any press conference with
respect to the Company
or its activities or the offering contemplated hereby, other than trade
releases issued in the ordinary
course of the Company's business consistent with past practices with respect
to the Company's
operations.
(t) For a period of three (3) years after the effective date of the
Registration Statement, the
Underwriter shall have the right to designate, one (1) individual for election
to the Company's Board
of Directors ("Board") and the Company shall cause such individual to be
elected to the Board
(provided such person is reasonable qualified and is not an officer, director,
employee or principal
of the Underwriter). In the event the Underwriter shall not have designated
such individual at the
time of any meeting of the Board or such person is unavailable to serve, or at
the end of the period
of three (3) years, the Company shall notify the Underwriter of each meeting of
the Board and an
individual designated by the Underwriter shall be permitted to attend all
meetings of the Board and
to receive all notices and other correspondence and communications sent by the
Company to
members of the Board for a period of five (5) years after the effective date.
Such individual shall
be reimbursed for all out-of-pocket expenses incurred in connection with his
or her service on, or
attendance at meetings of, the Board. The Company shall provide its outside
directors with
compensation in the form of cash and/or options on its Common Stock as deemed
appropriate and
customary for similar companies.
(u) The Company hereby grants to the Underwriter a right of first
refusal on the terms and
subject to the conditions set forth in this paragraph, for a period of three
years from the effective date
of the Registration Statement, to purchase for its account or to sell for the
account of the Company
or its present or future subsidiaries, any securities of the company or any of
its present or future
subsidiaries, with respect to which the Company or any of its present or future
subsidiaries may seek
a public or private sale. The Company, for a period of three years from the
effective date of the
Registration Statement, will consult, and will cause such present or future
subsidiaries to consult
with the Underwriter with regard to any such offering or placement and will
offer, or cause any of
its present or future subsidiaries to offer, to the Underwriter the
opportunity, on terms not more
favorable to the Company or such present or future subsidiary than they can
secure elsewhere, to
purchase or sell any such securities. If the Underwriter fails to accept
in writing such proposal made
by the Company or any of its present or future subsidiaries within fifteen
business days after receipt
of a notice containing such notice, then the Underwriter shall have no further
claim or right with
respect to the proposal contained in such notice. If, thereafter, such
proposal is materially modified,
the Company shall again consult, and cause each present or future subsidiary
to consult, with the
Underwriter in connection with such modification and shall in all respects
have the same obligations
and adopt the same procedures with respect to such proposal as are provided
hereinabove with
respect to the original proposal.
18
<PAGE>
(v) For a period equal to the lesser of (i) seven (7) years from
the date hereof, and (ii) the date
of the sale to the public of the securities issuable upon exercise of the
Underwriter's Securities, the
Company will not take any action or actions which may prevent or disqualify
the Company's use of
any form otherwise available for the registration under the Act of the
securities issuable upon
exercise of the Underwriter's Securities.
(w) Commencing one year from the date hereof, the Company shall pa
the Underwriter a
commission equal to four percent (4%) of the exercise price of the Public
Warrants, payable on the
date of the exercise thereof on terms provided for in the Warrant Agreement.
The Company will not
solicit the exercise of the Public Warrants other than through the Underwriter
and will not authorize
any other dealer or engage in such solicitation without the Underwriter's prior
written consent.
(x) On or before the effective date of the Registration Statement, the
Company shall have
retained a financial public relations firm reasonably satisfactory to the
Underwriter, which shall be
continuously engaged from such engagement date to a date twelve (12) months
from the Closing
Date.
(y) The Company agrees that, for a period of seven (7) years from the
date of the closing of
the public offering of the shares of the Public Offering Securities (the
"Closing"), if the Company
intends to file a Registration Statement or Statements for the public sale
of securities for cash (other
than a Form S-8, Form S-4 or comparable Registration Statement), it will notify
all of the holders
of the Representative's Securities and if so requested it will include therein
material to permit a
public offering of the Representative's Securities at the expense of the
Company (excluding fees and
expenses of the holder's counsel and any underwriting or selling commissions),
In addition, for a
period of five (5) years from the Closing, upon the written demand of holder(s)
representing a
majority of the Representative's Securities, the Company agrees, on one
occasion, to promptly
register the Representative's Securities at the expense of the Company
(excluding fees and expenses
of the holder's counsel and any underwriting or selling commissions).
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date
and the Option Closing
Date (to the extent not paid at the Closing Date) all expenses and fees (other
than fees of
Underwriter' Counsel, except as provided in (iv) below) incident to the
performance of the
obligations of the Company under this Agreement, the Underwriter's Warrant
Agreement and the
Warrant Agreement including, without limitation, (i) the fees and expenses of
accountants and
counsel for the Company, (ii) all costs and expenses incurred in connection
with the preparation,
duplication, printing, (including mailing and handling charges) filing,
delivery and mailing
(including the payment of postage with respect thereto) of the Registration
Statement and the
Prospectus and any amendments and supplements thereto and the printing,
mailing (including the
payment of postage with respect thereto) and delivery of this Agreement, the
Underwriter's Warrant
Agreement, the Warrant Agreement, and related documents, including the cost of
all copies thereof
and of the Preliminary Prospectuses and of the Prospectus and any amendments
thereof or
19
<PAGE>
supplements thereto supplied to the Underwriter and such dealers as the
Underwriter may request,
in quantities as hereinabove stated, (iii) the printing, engraving, issuance
and delivery of the
Securities, including, but not limited to, (x) the purchase by the Underwriter
of the Securities and
the purchase by the Underwriter of the Underwriter's Warrants from the Company,
(y) the
consummation by the Company of any of its obligations under this Agreement, the
Underwriter's
Warrant Agreement, and the Warrant Agreement, and (z) resale of the Securities
by the Underwriter
in connection with the distribution contemplated hereby, (iv) the qualification
of the Securities under
state or foreign securities or "Blue Sky" laws and determination of the status
of such securities under legal investment laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum", the "Supplemental Blue Sky
Memorandum" and "Legal Investments Survey," if any, and disbursements and fees
of counsel in connection therewith, provided, however, that the Company's
obligation with respect to such "Blue Sky" fees and disbursement of counsel
shall not exceed $30,000 (v) advertising costs and expenses, including but not
limited to costs and expenses in connection with the "road show", information
meetings and presentations, bound volumes and prospectus memorabilia, tombstones
in the Wall Street Journal and other appropriate publications, (vi) costs, fees
and expenses in connection with due diligence investigations, including but not
limited to the costs of background checks on key management and/or personnel of
the Company and the fees of any independent counsel or consultant retained,
(vii) fees and expenses of the transfer agent, warrant agent, escrow agent, if
any, and registrar, (viii) applications for assignments of a rating of the
Securities by qualified rating agencies, (ix) the fees payable to the
Commission, Nasdaq and the NASD, and (x) the fees and expenses incurred in
connection with the listing of the Securities on the Nasdaq SmallCap Market, the
BSE and any other exchange. (b) If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 6, Section 10(a) or
Section 12, the Company shall reimburse and indemnify the Underwriter for all of
its actual out-of-pocket expenses, including the fees and disbursements of
Underwriter' Counsel (and in addition to fees and expenses of Underwriter's
Counsel incurred pursuant to Section 5(a)(iv) above for which the Company shall
remain liable), provided, however, that in the event of a termination pursuant
to Section 10(a) hereof such obligation of the Company shall not exceed $50,000.
(c) The Company further agrees that, in addition to the expenses payable
pursuant to subsection (a) of this Section 5, it will pay to the Underwriter on
the Closing Date by certified or bank cashier's check or, at the election of the
Underwriter, by deduction from the proceeds of the offering contemplated herein
a non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the Firm Securities. In the
event the Underwriter elects to exercise the over-allotment option described in
Section 2(b) hereof, the Company further agrees to pay to the Underwriter on
each Option Closing Date (by certified or bank cashier's check or, at the
Underwriter's election, by deduction from the proceeds of the offering) a
non-accountable expense allowance equal to three percent (3%) of the gross
proceeds received by the Company from the sale of the relevant Option
Securities. (d) The Underwriter shall not be responsible for any expense of the
Company or others or for
20
<PAGE>
any charge or claim related to the offering contemplated by hereunder in the
event that the sale of
the Securities as contemplated hereunder is not consummated.
6. Conditions of the Underwriter' Obligations. The obligations of
the Underwriter
hereunder shall be subject to the continuing accuracy of the representations
and warranties of the
Company herein as of the date hereof and as of the Closing Date and each Option
Closing Date, if
any, as if they had been made on and as of the Closing Date or each Option
Closing Date, as the case
may be; the accuracy on and as of the Closing Date or Option Closing Date,
if any, of the statements
of the officers of the Company made pursuant to the provisions hereof; and the
performance by the
Company on and as of the Closing Date and each Option Closing Date, if any, of
its covenants and
obligations hereunder and to the following further conditions:
(a) The Registration Statement, which shall be in form and substance
satisfactory to the
Underwriter and Underwriter's Counsel, shall have become effective no later
than 12:00 p.m., New
York time, on the date of this Agreement or such later date and time as shall
be consented to in
writing by the Underwriter, and, at the Closing Date and each Option Closing
Date, if any, no stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the
Commission and any request on the part of the Commission for additional
information shall have
been complied with to the reasonable satisfaction of Underwriter's Counsel. If
the Company has
elected to rely upon Rule 430A of the Rules and Regulations, the price of the
Public Offering
Securities and any price-related information previously omitted from the
effective Registration
Statement pursuant to such Rule 430A shall have been transmitted to the
Commission for filing
pursuant to Rule 424(b) of the Rules and Regulations within the prescribed
time period, and prior
to the Closing Date the Company shall have provided evidence satisfactory to
the Underwriter of
such timely filing, or a post-effective amendment providing such information
shall have been
promptly filed and declared effective in accordance with the requirements of
(b) The Underwriter shall not have advised the Company that the
Registration Statement, or
any amendment thereto, contains an untrue statement of fact which, in the
Underwriter's opinion,
is material, or omits to state a fact which, in the Underwriter's opinion, is
material and is required
to be stated therein or is necessary to make the statements therein not
misleading, or that the
Prospectus, or any supplement thereto, contains an untrue statement of fact
which, in the
Underwriter's opinion, is material and is required to be stated therein or is
necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(c) On or prior to the Closing Date, the Underwriter shall have
received from Underwriter's
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of
the Securities, the Underwriter's Warrants, the Registration Statement, the
Prospectus and other
related matters as the Underwriter may request and Underwriter's Counsel shall
have received such
papers and information as they request to enable them to pass upon such matters.
21
<PAGE>
(d) On the Closing Date, the Underwriter shall have received the
favorable opinion of
McLaughlin & Stern, LLP, counsel to the Company, dated the Closing Date,
addressed to the Underwriter and in form and substance satisfactory to
Underwriter's Counsel, to the effect that: (i) the Company (A) has been duly
organized and is validly existing as a corporation in good standing under the
laws of its jurisdiction, and (B) has all requisite corporate power and
authority, and has obtained any and all authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus; the Company
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing; to such
counsel's knowledge, the Company has not received any notice of proceedings
relating to the revocation or modification of any such authorization, approval,
order, license, certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
materially adversely affect the business, operations, condition, financial or
otherwise, or the earnings, business affairs or prospects, properties, business,
assets or results of operations of the Company. The disclosures in the
Registration Statement concerning the effects of federal, state and local laws,
rules and regulations on the Company's business as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
fact necessary to make the statements contained therein not misleading in light
of the circumstances in which they were made. (ii) to such counsel's knowledge,
the Company does not own an equity interest in any other corporation,
partnership, joint venture, trust or other business entity; (iii) the Company
has a duly authorized, issued and outstanding capitalization as set forth in the
Prospectus, and any amendment or supplement thereto, under "Capitalization",
and, to such counsel's knowledge, after due inquiry, the Company is not a party
to or bound by any instrument, agreement or other arrangement providing for it
to issue any capital stock, rights, warrants, options or other securities,
except for this Agreement, the Underwriter's Warrant Agreement, the Warrant
Agreement and as described in the Prospectus. The Securities, and all other
securities issued or
issuable by the Company, conform in all material respects to all statements
with respect thereto
contained in the Registration Statement and the Prospectus. All issued and
outstanding securities
of the Company have been duly authorized and validly issued and are fully
paid and non-assessable;
the holders thereof have no rights of rescission with respect thereto, and are
not subject to personal
liability under the laws of the State of New Jersey as currently in effect by
reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders
of any security of the Company. The Securities to be sold by the Company
hereunder and under the
Underwriter's Warrant Agreement are not and will not be subject to any
preemptive or other similar
rights of any stockholder, have been duly authorized and, when issued, paid
for and delivered in
accordance with the terms hereof, will be validly issued, fully paid and
non-assessable and conform
to the description thereof contained in the Prospectus; the holders thereof
will not be subject to any
22
<PAGE>
liability solely as such holders; all corporate action required to be taken
for the authorization, issue
and sale of the Securities has been duly and validly taken; and the
certificates representing the
Securities are in due and proper form. The Public Warrants and the
Underwriter's Warrants
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and
payment therefore the number and type of securities of the Company called
for thereby. Upon the
issuance and delivery pursuant to this Agreement of the Securities to be sold
by the Company, the
Underwriter and the Underwriter will acquire good and marketable title to the
Securities free and clear of any pledge, lien, charge, claim, encumbrance,
pledge, security interest, or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the Underwriter in
connection with (A) the issuance by the Company of the Securities, (B) the
purchase by the Underwriter and the Underwriter of the Securities from the
Company, (C) consummation by the Company of any of its obligations under this
Agreement, or (D) resales of the Securities in connection with the distribution
contemplated hereby. (iv) the Registration Statement is effective under the Act,
and, if applicable, filing of all pricing information has been timely made in
the appropriate form under Rule 430A, and, to such counsel's knowledge, after
due inquiry no stop order suspending the use of the Preliminary Prospectus, the
Registration Statement or Prospectus or any part of any thereof or suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending, threatened or
contemplated under the Act; (v) each of the Preliminary Prospectus, the
Registration Statement, and the Prospectus and any amendments or supplement
thereto (other than the financial statements and other financial and statistical
data included therein, as to which no opinion need be rendered) comply as to
form in all material respects with the requirements of the Act and the Rules and
Regulations. (vi) to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be described in
the Registration Statement and the Prospectus and filed as exhibits to the
Registration Statement other than those described in the Registration Statement
(or required to be filed under the Exchange Act if upon such filing they would
be incorporated, in whole or in part, by reference therein) and the Prospectus
and filed as exhibits thereto, and the exhibits which have been filed are
correct copies of the documents of which they purport to be copies; (B) the
descriptions in the Registration Statement and the Prospectus and any supplement
or amendment thereto of contracts and other documents to which the Company is a
party or by which it is bound, including any document to which the Company is a
party or by which it is bound, incorporated by reference into the Prospectus and
any supplement or amendment thereto, are accurate in all material respects and
fairly represent the information required to be shown under the Act and the
Rules and Regulations of the Commission thereunder; (C) there is not pending or
threatened against the Company any action, arbitration, suit, proceeding,
inquiry, investigation, litigation, governmental or other proceeding (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, pending or threatened against (or circumstances
that may give rise to the same), or involving the properties or business of the
Company which (1) is required to be disclosed in the Registration Statement
which is not so 23
<PAGE>
disclosed (and such proceedings as are summarized in the
Registration Statement are accurately summarized in all respects), (2) questions
the validity of the capital stock of the Company or this Agreement or of any
action taken or to be taken by the Company pursuant to or in connection with any
of the foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described as
required; and (E) except as disclosed in the Prospectus, there is no action,
suit or proceeding pending, or threatened, against or affecting the Company
before any court or arbitrator or governmental body, agency or official (or any
basis thereof known to such counsel) in which an adverse decision which may
result in a material adverse change in the condition, financial or otherwise, or
the earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of the Company, could adversely
affect the present or prospective ability of the Company to perform its
obligations under this Agreement, the Underwriter's Warrant Agreement or the
Warrant Agreement or which in any manner draws into question the validity or
enforceability of this Agreement, the Underwriter's Warrant Agreement or the
Warrant Agreement; (vii) the Company has full legal right, power and authority
to enter into this Agreement, the Underwriter's Warrant Agreement and the
Warrant Agreement and to consummate the transactions provided for therein; and
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement
has been duly authorized, executed and delivered by the Company. This Agreement,
the Underwriter's Warrant Agreement and the Warrant Agreement assuming due
authorization, execution and delivery by each other party hereto and thereto
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any action,
legal or equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and neither the Company's execution or delivery of
this Agreement, the Underwriter's Warrant Agreement and the Warrant Agreement,
its performance hereunder or thereunder, its consummation of the transactions
contemplated herein or therein, or the conduct of its business as described in
the Registration Statement, the Prospectus, and any amendments or supplements
thereto, conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes or will
constitute a default under, or result in the creation or imposition of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever upon, any property or assets
(tangible or intangible) of the Company pursuant to the terms of, (A) the
certificate of incorporation or by-laws of the Company, (B) any license,
contract, indenture, mortgage, deed of trust, voting trust agreement,
stockholders agreement, note, loan or credit agreement or any other agreement or
instrument to which the Company is a party or by which it is or may be bound or
to which any of its properties or assets (tangible or intangible) is or may be
subject, or any indebtedness, or (C) any statute, judgment, decree, order, rule
or regulation applicable to the Company of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body (including,
without limitation, those having jurisdiction over environmental or similar
matters), domestic or foreign, having jurisdiction over the Company or any of
its activities or properties, except for conflicts, breaches, violations,
defaults, creations or 24
24
<PAGE>
impositions which do not and would not have a material adverse effect on the
condition, financial or otherwise, or the earnings, business affairs, position,
shareholder's equity, value, operations, properties, business or results of
operations of the Company. (viii) except as described in the Prospectus, no
consent, approval, authorization or order, and no filing with, any court,
regulatory body, government agency or other body (other than such as may be
required under Blue Sky laws, as to which no opinion need be rendered) is
required in connection with the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the issuance of the Underwriter's
Warrants, the performance of this Agreement, the Underwriter's Warrant Agreement
and the Warrant Agreement and the transactions contemplated hereby and thereby;
(ix) the properties and business of the Company conform to the description
thereof contained in the Registration Statement and the Prospectus; (x) , the
Company is not in breach of, or in default under, any term or provision of any
license, contract, indenture, mortgage, installment sale agreement, deed of
trust, lease, voting trust agreement, stockholders' agreement, partnership
agreement, note, loan or credit agreement or any other agreement or instrument
evidencing an obligation for borrowed money, or any other agreement or
instrument to which the Company is a party or by which the Company may be bound
or to which the property or assets (tangible or intangible) of the Company is
subject or affected, which could materially adversely affect the Company; and
the Company is not in violation of any term or provision of its Certificate of
Incorporation or By-Laws, or in violation of any franchise, license, permit,
judgment, decree, order, statute, rule or regulation the result of which would
materially and adversely affect the condition, financial or otherwise, or the
earnings, business affairs, position, shareholders' equity, value operation,
properties, business or results of operations of the Company. (xi) the Company
owns or possesses, free and clear of all liens or encumbrances and rights
thereto or therein by third parties, the requisite licenses or other rights to
use all trademarks, service marks, copyrights, service names, trade names,
patents, patent applications and licenses necessary to conduct its business
(including, without limitation any such licenses or rights described in the
Prospectus as being owned or possessed by the Company), and to the best of such
counsel's knowledge after reasonable investigation, there is no claim or action
by any person pertaining to, or proceeding, pending, or threatened, which
challenges the exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's business
(including, without limitations, any such licenses or rights described in the
Prospectus as being owned or possessed by the Company). (xii) except as
described in the Prospectus, the Company does not (A) maintain, sponsor, or
contribute to any ERISA Plans, (B) maintain or contribute now or at any time
previously, to a defined benefit plan, as defined in Section 3(35) of ERISA, and
(C) has never completely or partially withdrawn from a "multiemployer plan"; and
25
<PAGE>
(xiii) the Securities have been approved for listing on the Nasdaq SmallCap
Market and the BSE, and the Company's Registration Statement on Form 8-A under
the Exchange Act has become effective. (xiv) to such counsel's knowledge, the
persons listed under the caption "Principal Stockholders" in the Prospectus are
the respective "beneficial owners" (as such phrase is defined in regulation
13d-3 under the Exchange Act) of the securities set forth opposite their
respective names thereunder as and to the extent set forth therein; (xv) to such
counsel's knowledge, except as described in the Prospectus, no person,
corporation, trust, partnership, association or other entity has the right to
include and/or register any securities of the Company in the Registration
Statement, require the Company to file any registration statement or, if filed,
to include any security in such registration statement; (xvi) to such counsel's
knowledge, except as described in the Prospectus, there are no claims, payments,
issuances, arrangements or understandings for services in the nature of a
finder's or origination fee with respect to the sale of the Public Offering
Securities hereunder or the financial consulting arrangement between the
Underwriter and the Company, if any, or any other arrangements, agreements,
understandings, payments or issuances that may affect the Underwriter'
compensation, as determined by the NASD; (xvii) the Lock-up Agreements are
legal, valid and binding obligations of the parties thereto, enforceable against
each such party and any subsequent holder of the securities subject thereto in
accordance with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or equitable);
and (xviii) all action under the Act necessary to make the public offering and
consummate the sale of the Securities as provided in this Agreement has been
taken by the Company. The consummate
the sale of the Securities as provided in this Agreement has been taken by the
Company. The provisions of the Certificate of Incorporation and By-laws of the
Company comply as to form in all material respects with the Act and the Rules
and Regulations. Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and
representatives of the independent public accountants for the Company, at which
conferences such counsel made inquiries of such officers, representatives and
accountants and discussed the contents of the Preliminary Prospectus, the
Registration Statement, the Prospectus, and related matters were discussed and,
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Preliminary Prospectus, the Registration Statement and Prospectus, on the basis
of the foregoing, no facts have come to the attention of such counsel which
leads counsel to believe that either the Registration Statement or any amendment
thereto, at the time such Registration Statement or amendment became effective
or the Preliminary Prospectus or Prospectus or amendment or 26
<PAGE>
supplement
thereto as of the date of such opinion contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data included in
the Preliminary Prospectus, the Registration Statement or Prospectus). In
rendering such opinion, such counsel may rely (A) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance satisfactory to Underwriter's Counsel) of other counsel
acceptable to Underwriter's Counsel, familiar with the applicable laws; (B) as
to matters of fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to Underwriter's Counsel if requested. The opinion of such counsel for
the Company shall state that the opinion of any such other counsel is in form
satisfactory to such counsel and that the Underwriter and they are justified in
relying thereon. At each Option Closing Date, if any, the Underwriter shall have
received the favorable opinion of McLaughlin & Stern, LLP, counsel to the
Company, dated the Option Closing Date, addressed to the Underwriter and in form
and substance satisfactory to Underwriter's Counsel confirming as of such Option
Closing Date the statements made in its opinion delivered on the Closing Date.
(e) On or prior to each of the Closing Date and the Option Closing Date, if any,
Underwriter's Counsel shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in subsection (c) of this Section 6,
or in order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or covenants of the Company herein contained. (f)
Prior to each of Closing Date and each Option Closing Date, if any, (i) there
shall have been no adverse change nor development involving a prospective change
in the condition, financial or otherwise, prospects, stockholders' equity or the
business activities of the Company, whether or not in the ordinary course of
business, from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company, (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) the Company shall not
have issued any securities (other than the Securities) or declared or paid any
dividend or made any distribution in respect of its capital stock of any class
and there shall not have been any change in the capital or any change in the
debt (long or short term) or liabilities or obligations of the Company
(contingent or otherwise); (v) no material amount of the assets of the Company
shall have been pledged or mortgaged, except as set forth in the Registration
Statement and Prospectus (vi) no action, suit or proceeding, at law or in
equity, shall have been pending or threatened (or 27
<PAGE>
circumstances giving rise
to same) against the Company, or affecting any of its properties or business
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
adversely affect the business, operations, management prospects or financial
condition or assets of the Company, except as set forth in the Registration
Statement and Prospectus: and (vii) no stop order shall have been issued under
the Act and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission. (g) At each of the Closing Date and each Option
Closing Date, if any, the Underwriter shall have received a certificate of the
principal executive officer and the chief financial or chief accounting officer
of the Company, dated the Closing Date or Option Closing Date, as the case may
be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that: (i) The
representations and warranties in this Agreement of the Company are true and
correct, as if made on and as of the Closing Date or the Option Closing Date, as
the case may be, and the Company has complied with all agreements and covenants
and satisfied all conditions contained in this Agreement on its part to be
performed or satisfied at or prior to such Closing Date or Option Closing Date,
as the case may be; (ii) No stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued, and no proceedings
for that purpose have been instituted or are pending or, are contemplated or
threatened under the Act; (iii) The Registration Statement and the Prospectus
and, if any, each amendment and each supplement thereto, contain all statements
and information required to be included therein, and none of the Registration
Statement, the Prospectus nor any amendment or supplement thereto includes any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and neither the Preliminary Prospectus or any supplement thereto included any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and (iv)
Since the dates as of which information is given in the Registration Statement
and the Prospectus, (A) there has not been any material change in the shares of
Common Stock or liabilities of the Company except as set forth in or
contemplated by the Prospectus; (B) there has not been any material adverse
change in the general affairs, management, business, financial condition or
results of operations of the Company, whether or not arising from transactions
in the ordinary course of business, as set forth in or contemplated by the
Prospectus; (C) the Company has not sustained any material loss or interference
with its business from any court or from legislative or other governmental
action, order or decree, whether foreign or domestic, or from any other
occurrence, not described in the Registration Statement and Prospectus; (D)
there has not occurred any event that makes untrue or incorrect in any material
respect any statement or information contained in the 28
<PAGE>
Registration
Statement or Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make the statements or
information therein,hat Registration Statement or Prospectus or that is not
reflected in the Registration Statement or Prospectus but should be reflected
therein in order to make the statements or information therein, in light of the
circumstances in which they were made, not misleading in any material respect;
(E) the Company has not incurred up to and including the Closing Date or the
Option Closing Date, as the case may be, other than in the ordinary course of
its business, any material liabilities or obligations, direct or contingent; (F)
the Company has not paid or declared any dividends or other distributions on its
capital stock; (G) the Company has not entered into any transactions not in the
ordinary course of business; (H) there has not been any change in the capital
stock or long-term debt or any increase in the short-term borrowings (other than
any increase in the short-terms borrowings in the ordinary course of business)
of the Company; (I) the Company has not sustained any material loss or damage to
its property or assets, whether or not insured; and (J) there has occurred no
event required to be set forth in an amended or supplemented Prospectus which
has not been set forth. References to the Registration Statement and the
Prospectus in this subsection (g) are to such documents as amended and
supplemented at the date of such certificate. (h) By the Closing Date, the
Underwriter will have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriter, as described in the
Registration Statement. (i) At the time this Agreement is executed, the
Underwriter shall have received a letter, dated such date, addressed to the
Underwriter in form and substance satisfactory (including the non- material
nature of the changes or decreases, if any, referred to in clause (iii) below)
in all respects to the Underwriter and Underwriter's Counsel, from Wiss &
Company, LLP,: (i) confirming that they are independent accountants with respect
to the Company within the meaning of the Act and the applicable Rules and
Regulations; (ii) stating that it is their opinion that the financial statements
of the Company included in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the Act and the
Rules and Regulations thereunder and that the Underwriter may rely upon the
opinion of Wiss & Company, LLP, with respect to the financial statements and
supporting schedules included in the Registration Statement; (iii) stating that,
on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the boards of directors of the
Company, consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would lead them to
believe that (A) the unaudited financial statements, if any, of the Company
included in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations or 29
<PAGE>
are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, or (B) at a specified date not more than five (5) days
prior to the effective date of the Registration Statement, there has been any
change in the capital stock or long- term debt of the Company, or any decrease
in the stockholders' equity or net current assets or net assets of the Company
as compared with amounts shown in the [ ] 199 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any change or decrease, setting forth
the amount of such change or decrease; (iv) setting forth, at a date not later
than five (5) days prior to the date of the Registration Statement, the amount
of liabilities of the Company (including a breakdown of commercial paper and
notes payable to banks) ; (v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement;generally accepted auditing standards) set forth in the letter and
found them to be in agreement; (vi) stating that they have in addition carried
out certain specified procedures, not constituting an audit, with respect to
certain pro forma financial information which is included in the Registration
Statement and the Prospectus and that nothing has come to their attention as a
result of such procedures that caused them to believe such unaudited pro forma
financial information does not comply in form in all respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or that the
pro forma adjustments have not been properly applied to the historical amounts
in the compilation of that information; (vii) stating that they have not during
the immediately preceding five (5) year period brought to the attention of any
of the Company's management any "weakness," as defined in Statement of Auditing
Standard No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit," in any of the Company's internal controls; and (viii)
statements as to such other matters incident to the transaction contemplated
hereby as the Underwriter may request. (j) On or prior to the Closing Date and
each Option Closing Date, if any, the Underwriter shall have received from Wiss
& Company, LLP, a letter, dated as of the Closing Date or the Option Closing
Date, as the case may be, to the effect that they reaffirm the statements made
in the letter furnished pursuant to subsection (i) of this Section, except that
the specified date in the referred to 30
<PAGE>
shall be a date not more than five
days prior to the Closing Date or the Option Closing Date, as the case may be,
and, if the Company has elected to rely on Rule 430A of the Rules and
Regulations, to the further effect that they have carried out procedures as
specified in clause (v) of subsection (i) of this Section with respect to
certain amounts, percentages and financial information as specified by the
Underwriter and deemed to be a part of the Registration Statement pursuant to
Rule 430A(b) and have found such amounts, percentages and financial information
to be in agreement with the records specified in such clause (v). (k) On each of
Closing Date and Option Closing Date, if any, there shall have been duly
tendered to the Underwriter for the several Underwriter's accounts the
appropriate number of Securities. (l) No order suspending the sale of the
Securities in any jurisdiction designated by the Underwriter pursuant to
subsection (e) of Section 4 hereof shall have been issued on either the Closing
Date or the Option Closing Date, if any, and no proceedings for that purpose
shall have been instituted or shall be contemplated. (m) On or before Closing
Date, the Shares, the Common Stock and the Public Warrants shall have been
approved for quotation on the Nasdaq SmallCap Market and shall have been
authorized upon official notice of issuance for trading on the BSE. (n) On or
before Closing Date, there shall have been delivered to the Underwriter the
Lock- up Agreements, in form and substance satisfactory to the Underwriter. (o)
On or before the Closing Date, the Company shall have executed the Underwriter's
Warrant Agreement and the Warrant Agreement together with the applicable Warrant
Certificates, each in form and substance satisfactory to the Underwriter. (p) On
or before the Closing Date the Underwriter shall have received executed copies
of the employment agreements and insurance policies referred to in Section 1 (a)
(xxxi) hereof, each to the satisfaction of the Underwriter. If any condition to
the Underwriter's obligations hereunder to be fulfilled prior to or at the
Closing Date or the relevant Option Closing Date, as the case may be, is not so
fulfilled, the Underwriter may terminate this Agreement or, if the Underwriter
so elects, it may waive any such conditions which have not been fulfilled or
extend the time for their fulfillment. 7. Indemnification. (a) The Company
agrees to indemnify and hold harmless each of the Underwriter (for purposes of
this Section 7 "Underwriter" shall include the officers, directors, partners,
employees, agents and counsel of the Underwriter, including specifically each
person who may be substituted for an Underwriter as provided in Section 11
hereof), and each person, if any, who controls the 31
<PAGE>
Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions in respect thereof),
whatsoever (including but not limited to any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever), as such are
incurred, to which the Underwriter or such controlling person may become subject
under the Act, the Exchange Act, or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
(i) in any Preliminary Prospectus, the Registration Statement or the Prospectus
(as from time to time amended and supplemented); (ii) in any post-effective
amendment or amendments or any time new registration statement and prospectus in
which is included securities of the Company issued or issuable upon exercise of
the Securities; or (iii) in any application or other document or written
communication (in this Section 7 collectively called "Application") executed by
the Company or based upon written information furnished by the Company in any
jurisdiction in order to qualify the Securities under the securities laws
thereof or filed with the Commission, any securities commission or agency,
Nasdaq, the BSE or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading (in the case of the Prospectus, in the
light of the circumstances under which they were made), unless such statement or
omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to any Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment thereof or supplement thereto, or in
any Application, as the case may be. The indemnity agreement in this subsection
(a) shall be in addition to any liability which the Company may have at common
law or otherwise. (b) the Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who has signed the
Registration Statement, and each other person, if any, who controls the Company
within the meaning of the Act, to the same extent as the foregoing indemnityors,
each of its officers who has signed the Registration Statement, and each other
person, if any, who controls the Company within the meaning of the Act, to the
same extent as the foregoing indemnity from the Company to the Underwriter but
only with respect to statements or omissions, if any, made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any Application made in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
the Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such Application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriter in connection with this offering. The
Company acknowledges that the statements with respect to the public offering of
the Securities set forth under the heading "Underwriting" and the stabilization
legend in the Prospectus have been furnished by the Underwriter expressly for
use therein and constitute the only information furnished in writing by or on
behalf of the Underwriter for inclusion in the Prospectus. 32
<PAGE>
(c) Promptly
after receipt by an indemnified party under this Section 7 of notice of the
commencement of any action, suit or proceeding, such indemnified party shall, if
a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom indemnification is
to be sought in writing of the commencement thereof (but the failure so to
notify an indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been prejudiced
in any material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties 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 or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was not
unreasonably withheld. (d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
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 the express provisions of this Section 7 provide for indemnification in
such case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to the amount
paid as a result of such losses, claims, damages, expenses or liabilities (or
actions in respect thereof) (A) in such proportion as is appropriate to reflect
the relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) 33
<PAGE>
above but also the
relative fault of each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand in connection with the statements or
omissions that resulted inty to be indemnified on the other hand in connection
with the statements or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable considerations.
In any case where the Company is a contributing party and the Underwriter are
the indemnified party, the relative benefits received by the Company, on the one
hand, and the Underwriter, on the other, shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Public Offering
Securities (before deducting expenses) bear to the total underwriting discounts
received by the Underwriter hereunder, in each case as set forth in the table in
the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, or by the Underwriter, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this
subdivision (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subdivision (d) the Underwriter shall not be required to contribute any amount
in excess of the underwriting discount applicable to the Securities purchased by
the Underwriter hereunder. No person guilty of 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. For purposes of this Section 7, each person, if any, who
controls the Company within the meaning of the Act, each officer of the Company
who has signed the Registration Statement, and each director of the Company
shall have the same rights to contribution as the Company, subject in each case
to this subparagraph (d), Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect to which a claim for contribution may be made
against another party or parties under this subparagraph (d), notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subparagraph (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution agreement
set forth above shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise. 8. Representations and Agreements to
Survive Delivery. All representations, warranties and agreements contained in
this Agreement or contained in certificates of officers of the Company submitted
pursuant hereto, shall be deemed to be representations, warranties and
agreements at the Closing Date and any Option Closing Date, as the case may be,
and such representations, warranties and agreements of the Company and the
respective indemnity agreements contained in Section 7 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company, any controlling person of any
Underwriter or the Company, and shall survive termination of this Agreement or
the issuance and deliver of the Securities to the Underwriter and the
Underwriter, as the case may be. 34
<PAGE>
9. Effective Date. This Agreement shall
become effective at 10:00 a.m., New York City time, on the next full business
day following the date hereof, or at such earlier time after the Registration
Statement becomes effective as the Underwriter, in it's discretion, shall
release the Securities for the sale to the public; provided, however, that the
provisions of Sections 5, 7 and 10 of this Agreement shall at all times be
effective. For purposes of this Section 9, the Securities to be purchased
hereunder shall be deemed to have been so released upon the earlier of dispatch
by the Underwriter of telegrams to securities dealers releasing such shares for
offering or the release by the Underwriter for publication of the first
newspaper advertisement which is subsequently published relating to the
Securities. 10. Termination. (a) Subject to subsection (b) of this Section 10,
the Underwriter shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Underwriter's opinion will in the immediate future disrupt the financial
markets; or (ii) any material adverse change in the financial markets shall have
occurred; or (iii) if trading on the New York Stock Exchange, the American Stock
Exchange, or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or if there shall have been an
escalation in an existing war or major hostilities or a national emergency shall
have been declared in the United States; or (v) if a banking moratorium has been
declared by a state or federal authority; or (vi) if a moratorium in foreign
exchange trading has been declared; or (vii) if the Company, shall have
sustained a loss material or substantial to the Company by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in the
Underwriter's opinion, make it inadvisable to proceed with the delivery of the
Securities; or (vii) if there shall have been such a material adverse change in
the condition (financial or otherwise), business affairs or prospects of the
Company, whether or not arising in the ordinary course of business, which would
render, in the Underwriter's judgment, either of such parties unable to perform
satisfactorily its respective obligations as contemplated by this Agreement or
the Registration Statement, or such material adverse change in the general
market, political or economic conditions, in the United States or elsewhere as
in the Underwriter's judgment would make it inadvisable to proceed with the
offering, sale and/or delivery of the Securities. (b) If this Agreement is
terminated by the Underwriter in accordance with the provisions of Section
10(a), the Company shall promptly reimburse and indemnify the Underwriter for
all of its actual out-of-pocket expenses, including the fees and disbursements
of counsel for the Underwriter in an amount not to exceed $50,000 (less amounts
previously paid pursuant to Section 5(c) above). Notwithstanding any contrary
provision contained in this Agreement, if this Agreement shall not be carried
out within the time specified herein, or any extension thereof granted to the
Underwriter, by reason of any failure on the part of the Company to perform an
undertaking or satisfy any condition 35
<PAGE>
of this Agreement to be performed or
satisfied by the Company (including, without limitation, pursuant to Section 6
or Section 12) then, the Company shall promptly reimburse and indemnify the
Underwriter for all of its actual out-of-pocket expenses, including the fees and
disbursements of counsel for the Underwriter (less amounts previously paid
pursuant to Section 5 (c) above). In addition, the Company shall remain liable
for all Blue Sky counsel fees and expenses and Blue Sky filing fees.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failureshall terminate
(or, if such default shall occur with respect to any Option Securities to be
purchased on any Option Closing Date, the Underwriter may at the Underwriter's
option, by notice from the Underwriter to the Company, terminate the
Underwriter's obligation to purchase Option Securities from the Company on such
date) without any liability on the part of any non-defaulting party other than
pursuant to Section 5, Section 7 and Section 10 hereof. No action taken pursuant
to this Section shall relieve the Company from liability, if any, in respect of
such default. 13. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be in writing and shall be deemed
to have been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriter shall be directed to the
Underwriter at 950 Third Avenue - 3rd Floor, New York, New York 10022,
Attention: Mr. John Piscopo, President, with a copy to Scheichet & Davis, P.C.,
505 Park Avenue, New York, NY 10022, Attention: William J. Davis, Esq. Notices
to the Company shall be directed to the Company at 2401 Morris Avenue, 3rd
Floor, Union, New Jersey 07083, Attn: Joseph Cutrona, President, with a copy to
McLaughlin & Stern, LLP, 260 Madison Avenue, New York, NY 10016, Attention:
David Sass, Esq. 14. Parties. This Agreement shall inure solely to the benefit
of and shall be binding upon, the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal Underwriter 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 Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase. 15. Construction. This Agreement
shall be governed by and construed and enforced in accordance with the laws of
the State of New York without giving effect to the choice of law or conflict of
laws principles. 36
<PAGE>
16. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which taken together shall be deemed to be one and the same instrument. 17.
Entire Agreement; Amendments. This Agreement, the Underwriter's Warrant
Agreement and the Warrant Agreement constitute the entire agreement of the
parties hereto and supersede alle
and the Warrant Agreement constitute the entire agreement of the parties hereto
and supersede all prior written or oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may not
be amended except in a writing, signed by the Underwriter and the Company. If
the foregoing correctly sets forth the understanding between the Underwriter and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us. Very truly
yours, GENISYS RESERVATION SYSTEMS, INC. By: Joseph Cutrona, President Confirmed
and accepted as of the date first above written R.D. White & Co., Inc. By: Louis
Pagano, Chairman
<PAGE>
EXHIBIT 3.1 CERTIFICATE OF INCORPORATION OF JECO2
LASERS, INC. The undersigned, for the purposes of forming a corporation pursuant
to the New Jersey Business Corporation Act, hereby certifies as follows: FIRST:
The name of the corporation is JECO2 LASERS, INC. SECOND: The location of the
principal office is at 59 North Fifth Street, Saddle Brook, County of Bergen and
the State of New Jersey, 07662. The name of the agent therein and in charge
thereof upon whom process against this corporation may be served is
charge thereof upon whom process against this corporation may be served is
John H. Wasko.
THIRD: The purposes for which this corporation is formed are:
a. To engage in research, exploration, laboratory and development
work of laser
applications and the manufacturing , assembling, importing, exporting and
selling of lasers and
associated equipment and devices.
b. To engage in any activity within the purposes for which
corporations may be
organized under the "New Jersey Business Corporation Act" and all such
activities shall, by this
statement, be deemed to be within the purposes of the corporation.
c. To subscribe for, purchase, invest in, hold own, assign, pledge
and otherwise dispose
of shares of capital stock, bonds, mortgages, debentures, notes and other
securities, obligations,
contracts and evidences of indebtedness of corporations of the State of New
Jersey and all other
states and territories of the United States and in foreign countries, including
corporations whose
funds are or may be invested in the shares of stocks, bonds and other
securities of any other
corporation; to exercise with respect to any such shares of stocks, bonds and
other securities of
corporations, any and all rights, powers and privileges of individual
ownership, including the
right to vote, to issue bonds and other obligations, and to secure the same
by pledging or
mortgaging the whole or any part of the property of the company, and to sell
or pledge such
bonds and other obligations for proper corporate purposes, and to do any and
all acts and things
tending to increase the value of the property at any time held by the company.
d. To purchase, acquire, hold and dispose the stocks, bonds and
other evidences of
indebtedness of any corporation, domestic or foreign, and issue in exchange
therefor its stocks,
bonds or other obligations.
e. To buy, sell or otherwise acquire, hold, own, use, mange, improve,
maintain, develop,
sell, rent, mortgage, transfer or exchange real estate; to trade in and deal
with real property,
improved or unimproved, in the State of New Jersey and all other states and
territories of the
<PAGE>
United States and in foreign countries.
f. To purchase, acquire, hold, transfer and dispose of stocks, bonds
and mortgages, notes
or other evidences of indebtedness of any person or corporation, and to issue,
execute and
deliver in exchange therefor its stocks, bonds, or mortgages, notes, and other
obligations, and to
do all such other things conducive to the objects herein set forth.
g. To conduct its business at one or more offices, and unlimitedly
and without restriction
to hold, purchase lease, mortgage, and convey real and personal property, in
or out of the state,
and in such place and places in the several states and territories of the
United States, and in
foreign countries, as shall, from time to time, be found necessary, and
convenient for the purpose
of the company's business.
h. To do all and everything necessary, suitable, convenient or
proper for the
accomplishment of any of the purposes, or the attainment of any one or more
of the objects
herein enumerated, or incidental to the powers herein named, or which shall
at any time appear
conducive or expedient for the protection or benefit of the corporation, either
as holders of or
interested in, any property or otherwise, with all the powers now or hereafter
conferred by the
laws of New Jersey, upon corporations under the Act hereinafter referred to.
I. To carry on any other business which may, in the discretion of the
directors, seems
advantageous and capable of being carried on in conjunction with the above, or
calculated
directly or indirectly to enhance the value of the corporation's property or
rights.
j. To acquire the good will, business, property and assets, and to
assume or undertake the
whole or any part of the liabilities of any person, firm, association or
corporation, and to pay for
the same in cash, stocks, bonds, debentures or other securities of this
corporation, or otherwise,
as the directors may determine.
FOURTH: The total authorized capital stock of this corporation in
ten million
(10,000,000) shares, par value, $.01 per share of the common stock.
The corporation may issue its entire authorized capital stock or such
part thereof as the
directors may determine, for such consideration as from time to time, may be
fixed by the Board
of Directors, or otherwise prescribed by law. Any ans all such shares when so
issued and sold
shall be fully paid ans non-asscesable, and the holder of such shares shall
be liable to the
corporation or its creditors in respect thereto. Every share of such stock
shall be equal to every
other share of such stock.
FIFTH: The name and post office address of the incorporator of the
incorporation is as
follows:
NAME POST OFFICE ADDRESS
Purl A. Wurtzel 640 Palisade Avenue
Englewood Cliffs, NJ 07632
<PAGE>
SIXTH: The Board of Directors shall consist of the following:
NAME POST OFFICE ADDRESS
John H. Wasko 132 Elmwood Drive
Elmwood Park, NJ 07407
James S. Strauch 32 Cherry Street
Tenafly, NJ 07670
Paul A. Wurtzel 157 Highwood Avenue
Tenafly, NJ 07670
J. Earl Templeton 222 Firth Road
Inverness, IL 60067
Bert Sager 9000 S.W. 52nd Avenue
Miami, FL 33156
SEVENTH: The period of existence of this corporation is unlimited.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this ______
day of
April, 1986.
___________________
PAUL A. WURTZEL
Signed, Signed and
Delivered in the Presence of
_______________________
CAROLYN S. PLATT
<PAGE>
STATE OF NEW JERSEY
COUNTY OF BERGEN
BE IT REMEMBERED, that on this ______ day of April, 1986, before me,
a Notary
Public of the State of New Jersey, personally appeared PAUL A. WURTZEL, who
I am satisfied
is the person named in and who subscribed the foregoing Certificate, and I
having first made
known to him the contents thereof, he did acknowledge that he signed, sealed
and delivered the
same as his voluntary act and deed for the uses and purposes therein expressed.
_______________________
CAROLYN S. PLATT
Notary Public of New Jersey
My commission expires Dec. 18, 1988
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
JECO2 LASERS, INC.
TO: SECRETARY OF STATE
STATE OF NEW JERSEY
Pursuant to the provisions of Section 14A:9-2 (4) and Section
14A:9-4 (3) Corporation,
General, of the New Jersey Statutes, the undersigned corporation executes the
following
Certificate of Amendment of the Certificate of Incorporation:
1. The name of the corporation is JECO2 Lasers, Inc.
2. The following amendment to the Certificate of Incorporation was
approved by the
directors and thereafter duly adopted by the shareholders of the corporation
on the 22nd day of
December, 1987.
RESOLVED, that Article First of the Certificate of Incorporation be
amended to read as
follows:
"The name of the Corporation is Robotic Lasers, Inc."
RESOLVED, that the Certificate of Incorporation of this Company, as
heretofore
amended, be further amended by revising Article Fourth thereof, to be and read
as follows:
"ARTICLE FOURTH: The number of shares which the Corporation shall be
authorized
to issue shall be 100,000,000 shares consisting of 75,000,000 Common shares
with a par value of
$.0001 each, and 25,000,000 Preferred shares with a par value of $.0001 each.
The designations,
privileges, and voting powers of the shares of each class ans the restrictions
and qualifications
shall be the same in all respects as though shares of one class, except as
follows:
(a) The Preferred Shares may be issued from time to time in
one or more series,
each of such series to have such powers, designations, preferences and
relative, participating or
optional or other special rights and such qualifications, limitations or
restrictions thereon, as
expressly provided herein, or to the extent provided by law, or in a resolution
or resolutions
providing for the issuance of such series, adopted by the Board of Directors,
which is hereby
vested with such authority in respect thereof. Without limiting the generality
of the foregoing,
the Board of Directors is hereby expressly empowered to provide for the
issuance of Preferred
Shares at any time and from time to time in one or more series, and to fix as
to each such series,
by resolution or resolutions providing for the issuance of such series:
(I) the number of shares to constitute such series, and the
designations thereof;
<PAGE>
(ii) holders of Preferred Stock shall be entitled to vote
on a pari-pasu basis with
the holders of Common Stock with each share of Preferred Stock entitled to
one vote. Holders
of Preferred Stock shall be entitled to dividends when and if declared, on a
preferred basis to
holders of Common Stock. Dividends shall be noncumulative. On liquidation,
the holders of
Preferred Stock shall be entitled to a liquidation preference in an amount
equal to the par value
of each share of Preferred Stock. Holders of Preferred Stock shall not have
preemptive rights;
(iii) the rate of dividend, if any, and the extent of further
participation in dividend
distributions, if any, and whether dividends shall be cumulative of
noncumulative;
(iv) whether or not such series shall be redeemable, and
if so, the terms ans
conditions upon which shares of such series shall be redeemable;
(v) the extent, if any, to which such series shall have the
benefit of any sinking
fund provision for the redemption or purchase of shares;
(vi) the rights, if any, of such series, in the event of
the dissolution of the
Corporation, or upon any distribution of the assets of the Corporation;
(vii) whether or not the shares of such series shall be
convertible, and if so, the
terms and conditions on which shares of such series shall be convertible; and
(viii) such other powers, designations, preferences, and
relative, participating,
optional or other special rights, and such qualifications, limitations or
restrictions thereon, s and
to the extent permitted by law.
(b) Except as otherwise provided by law, the Board of Directors shall
have full authority
to issue at any time and from time to time Common Shares in any manner and
amount and for
such consideration as it in its absolute discretion shall determine.
(c) No Director of this Corporation shall be liable to the Corporation
or any of its
shareholders for damages for breach of any duty owned to the Corporation or
its shareholders
except for liability for any breach of duty based upon an act or omission (i)
in breach of such
person's duty of loyalty to the Corporation or its shareholders, (ii) not in
good faith or involving
a knowing violation of law, or (iii) resulting in receipt by such person of an
improper personal
benefit."
3. The number of shares outstanding at the time of the adoption of
the amendment was
907,306.5. The total number of shares entitled to vote thereon was 907,206.5.
4. The number of shares voting for and against such amendment is as
follows:
NUMBER OF SHARES VOTING NUMBER OF SHARES VOTING
FOR AMENDMENT AGAINST AMENDMENT
534,948,75 43,908,75
<PAGE>
5. The effective date of this Amendment to the Certificate of
Incorporation shall be the
date of filing with the Secretary of State of New Jersey.
ROBOTIC LASERS, INC.
formerly known as
JECO2 LASERS, INC.
By:________________________
JOHN H. WASKO, President
ATTEST:
__________________________
JOHN F. CARLSON, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
ROBOTIC LASERS, INC.
To: The Secretary of State
State of New Jersey
Pursuant to the provision of Section 14A:9-2(4) and Section 14A:9-4(3)
Corporations,
General, of the New Jersey Statutes, the undersigned corporation executes the
following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is ROBOTIC LASERS, INC.
2. The following amendment to the certificate of Incorporation
was approved by the
directors and whereafter duly adopted by the shareholders of the corporation on
the 9th day of
August, 1995.
RESOLVED, that Article FOURTH of the Certificate of Incorporation be
amended to
read as follows:
"ARTICLE FOURTH: The number of shares which the Corporation shall be authorized
to issue
shall be 100,000,000 shares consisting of 75,000,000 common shares with a par
value of $.0001
each, and 25,000,000 Preferred shares with a par value of $.0001 each.
The designations,
preferences, privileges, and voting powers of the shares of each class and the
restrictions and
qualifications shall be the same in all respects as though shares of one class,
except as follows:
(a) The Preferred Shares may be issued from time to time in one or
more series, each of
such series to have such powers, designations, preferences and relative,
participating or optional
or other special rights and such qualifications, limitations or restrictions
thereon, as expressly
provided herein, or to the extent provided by law, or in a resolution or
resolutions providing for
the issuance of such series, adopted by the Board of Directors, which is
hereby vested with such
authority in respect thereof, without limiting the generality of the foregoing,
the Board of
Directors is hereby empowered to provide for the issuance of Preferred Shares
at any time and
from time to time in one or more series, and to fix as to each such series, by
resolution or
resolutions providing for the issuance of such series:
(I) the number of shares to constitute such series, and the
designations thereof;
(ii) holders of Preferred Stock shall be entitled to vote on
a paripasu basis with the
holders of Common Stock with each share of Preferred Stock entitled to one vote.
Holders of
Preferred Stock shall be entitled to dividends when and if declared, on a
preferred basis to
holders of common stock. Dividends shall be noncumulative. On liquidation,
the holders of
Preferred Stock shall be entitled to a liquidation preference in an amount
equal to the par value
of each share of Preferred Stock. Holders of Preferred Stock shall not have
preemptive rights;
(iii) the rate of dividend, if any, and the extent of further
participation in dividend
distributions, if any, and whether dividends shall be cumulative or
noncumulative;
(iv) whether or not such series shall be redeemable, and if
so, the terms and
<PAGE>
conditions upon which shares of such series shall be redeemable;
(v) the extent, if any, to which such series shall have the
benefit of any sinking
fund provision for the redemption or purchase of shares;
(vi) the rights, if any, of such series, in the event of the
dissolution of the
Corporation, or upon any distribution of the assets of the Corporation;
(vii) whether or not the shares of such series shall be
convertible, and if so, the
terms and conditions on which shares of such series shall be convertible; and
(viii) such other powers, designations, preferences, and
relative, participation,
optional or other special rights, and such qualifications, limitations or
restrictions thereon, as and
to the extent permitted by law.
(b) Except as otherwise provided by law, the Board of Directors
shall have full
authority to issue at any time and from time to time Common Shares in any
manner and amount
for such consideration as it in its absolute discretion shall determine.
(c) No Director of this Corporation shall be liable to the Corporation
or any of its
stockholders for damages for breach of any duty owned to the Corporation or its
shareholders
except for liability for any breach of duty based upon an act or omission (I)
in breach of such
person's duty of loyalty to the Corporation or its shareholders, (ii) not in
good faith or involving
a knowing violation of law, or (iii) resulting in receipt by such person of an
improper personal
benefit."
3. The number of shares entitled to vote upon the Amendment was
30,853,352.
4. The number of shares voting for and against such amendment are as
follows:
FOR AGAINST
17,814,554 13,038,798
5. The stated capital of the corporation is reduced in the amount of
$3,029.23. The
manner in which the reduction is effected is as follows:
The Corporation effected a 55 for one reserve stock split
whereby the number of
issued and outstanding shares was reduced by such amount.
The amount of stated capital of the corporation after giving effect
to the reduction is
$56.10.
6. On or about August 16, 1995, the Company will mail to each
stockholder instructions
on how to redeem their present stock certificates for the Reverse Stock Split
Common Stock
Certificates of the Company. Shareholders should not retain their stock
certificates representing
shares of Common Stock but should send them to the Company's transfer agent
upon receipt of
the instructions. Thereafter, on or about August 30, 1995, the Company will
mail a certificate
representing the number of Reverse Stock Split shares of Common Stock owned by
the
Shareholders.
<PAGE>
Dated this 9th day of August, 1995.
ROBOTIC LASERS, INC.
By:________________________
John H. Wasko, President
<PAGE>
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION OF
ROBOTIC LASERS, INC.
______________________________________________________________________________
To: The Secretary of State of the State of New Jersey
Pursuant to the provisions of Section 14A:9-2(4) and Section
14A:9-4(3) of the New Jersey Business Corporation Act, the
undersigned corporation (the "Corporation") hereby executes the
following Certificate of Amendment to its Certificate of
Incorporation:
i. The name of the Corporation is ROBOTIC
LASERS, INC.
ii. The following amendments to the Certificate of
Incorporation were approved by the directors of
the Corporation and thereafter duly adopted by
the shareholders of the Corporation on the 16th
day of July, 1996.
RESOLVED, that Article FIRST of the Certificate of Incorporation be amended
to read as follows:
"FIRST: The name of the corporation is Genisys
Reservation Systems, Inc."
RESOLVED, that Article FOURTH of the Certificate of
Incorporation be
amended to read as follows:
"FOURTH: The number of shares which the Corporation shall be authorized
to issue shall be 100,000,000 shares consisting of 75,000,000 Common Shares
with a par value of $.0001 each, and 25,000,000 Preferred Shares with a par
value of $.0001 each. The designations, preferences, privileges, and voting
powers of the shares of each class and the restrictions and qualifications
shall be
the same in all respects as though shares of one class, except as follows:
<PAGE>
(a) The Preferred Shares may be issued from time to time in one or more
series, each of such series to have such powers, designations, preferences and
relative participating or optional or other special rights and such
qualifications, limitations or restrictions thereon, as expressly provided
herein,
or to the extent provided by law, or in a resolution or resolutions providing
for the issuance of such series, adopted by the Board of Directors, which is
hereby vested with such authority in respect thereof. Without limiting the
generality of the foregoing, the Board of Directors is hereby expressly
empowered to provide for the issuance of Preferred Shares at any time and
from time to time in one or more series, and to fix as to each such series, by
resolution or resolutions providing for the issuance of such series:
(i) the number of shares to constitute such series, and the
designations thereof;
(ii) holders of Preferred Shares shall be entitled to vote on a pari-
passu basis with the holders of Common Shares with each share of
Preferred Shares entitled to one vote. Holders of Preferred Shares shall
be entitled to dividends when and if declared, on a preferred basis to
holders of Common Shares. Dividends shall be non-cumulative. On
liquidation, the holders of Preferred Shares shall be entitled to a
liquidation preference in an amount equal to the par value of each share
of Preferred Shares. Holders of Preferred Shares shall not have
preemptive rights;
(iii) the rate of dividend, if any, and the extent of further
articipation in dividend distributions, if any, and whether dividends shall
be cumulative or non-cumulative;
(iv) whether or not such series shall be redeemable, and if so, the
terms and conditions upon which shares of such series shall be
redeemable;
(v) the extent, if any, to which such series shall have the benefit of
any sinking fund provision for the redemption or purchase of shares;
(vi) the rights, if any, of such series, in the event of the dissolution
of the Corporation, or upon any distribution of the assets of the
Corporation;
<PAGE>
(vii) whether or not the shares of such series shall be convertible,
and if so, the terms and conditions on which shares of such series shall
be convertible; and
(viii) such other powers, designations, preferences, and relative
participating, optional or other special rights, and such qualifications,
limitations or restrictions thereon, as and to the extent permitted by law.
(b) Except as otherwise provided by law, the Board of Directors shall
have full authority to issue at any time and from time to time Common Shares
in any manner and amount and for such consideration as it in its absolute
discretion, shall determine.
(c) No Director of the Corporation shall be liable to the Corporation or
any of its shareholders for damages for breach of any duty owned to the
Corporation or its shareholders except for liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty
to the Corporation or its shareholders; (ii) not in good faith or involving a
knowing violation of law; or (iii) resulting in receipt by such person of an
improper personal benefit."
3. The number of Common Shares entitled to vote upon the amendments to the
Certificate of Incorporation set forth in paragraph 2 hereof was 5,669,731.5.
4. The number of shares voting for and against each such amendment are as
follows:
FOR AGAINST
5,208,010 461,721.5
5. The stated capital of the Corporation is reduced in the
amount of $283.48.
The manner in which the reduction is effected is as follows:
The Corporation effected a two for one reverse stock
split whereby the
number of issued and outstanding Common Shares was
reduced by such
amount.
The amount of stated capital of the Corporation after giving
effect to the reduction
is $283.49.
<PAGE>
6. On or about August 23, 1996, the Company will mail to
each shareholder
instructions on how to redeem their present stock certificates for Common Share
certificates of
the Company reflecting the reverse stock split set forth in paragraph 5 hereof.
Shareholders
should not retain their certificates representing Common Shares but should send
them to the
Company's transfer agent upon receipt of the instructions from the Corporation.
Thereafter, on
or about September 27, 1996, the Company will mail a certificate representing
the number of
Common Shares owned by each shareholder after giving effect to the reverse
stock split.
Dated this 25th day of July, 1996.
GENISYS RESERVATION SYSTEMS, INC.,
formerly known as
ROBOTIC LASERS, INC.
By: Joseph Cutrona, Presidentt
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
ROBOTIC LASERS, INC.
ARTICLE I
OFFICES
SECTION I. OFFICES. The corporation may have offices, either
within or without the State of New Jersey, at such place or places
as the Board of Directors may from time to time appoint or the
business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings
of shareholders
for the election of directors and for such other business
as may
be stated in the notice of meeting, shall be held at such
place,
either within or without the State of New Jersey, and at
such
time and date as the Board of Directors, by resolution,
shall
determine and as set forth in the notice of meeting.
In the event
the Board of Directors fails to so determine the time, date and
place of meeting, the annual meeting of shareholders shall be held
at the registered office of the corporation in New Jersey on
December 15.
If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding business
day. At each annual meeting, the shareholders entitled to vote
shall elect a Board of Directors and they may transact such other
corporate business as shall be stated in the notice of meeting.
SECTION 2. VOTING. Each shareholder entitled to vote in
accordance with the terms of the Certificate of incorporation and
in accordance with the provisions of these By-Laws shall be
entitled to one vote, in person or by proxy, for each share
entitled to vote held by such shareholder, but no proxy shall be
voted after eleven months from its date of execution. Upon the
demand of any shareholder, before the voting begins, the vote for
directors shall be by ballot. All elections-for directors shall
be decided by plurality of vote; all other questions shall be
decided by majority vote, except as otherwise provided by the
<PAGE>
Certificate Of Incorporation or the laws of the state of New
Jersey.
A complete list of the shareholders entitled to vote at the
ensuing election, arranged in alphabetical order, with the address
of each, and the number of shares held by each, shall be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any shareholder who is
present.
SECTION 3. QUORUM. Except as otherwise required by law, by the
Certificate of incorporation or by these By-Laws, the presence, in
person or by proxy, of stockholders holding a majority of the
shares of the corporation entitled to vote shall constitute a
quorum at all meetings of the shareholders. in case a quorum shall
not be present at any meeting, a majority in interest of the
shareholders entitled to vote thereat, present in person or by
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until the
requisite amount of shares entitled to vote shall be represented.
At any such adjourned meeting at which the requisite amount of
shares entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as
originally noticed; but only those shareholders entitled to vote
at the meeting as originally noticed shall be entitled to vote any
adjournment or adjournments thereof.
SECTION 4. SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose or purposes may be called by
resolution of the Board of Directors or by the holders of ten
percent (10%) or more of the shares entitled to vote, and may be
held at such time and place within or without the State of New
Jersey, as shall be stated in the notice of the meeting.
SECTION 5. NOTICE OF MEETINGS. Written notice, stating the
place, date and time of the meeting, and the purpose or purposes
of the meeting, shall be given to each shareholder entitled to
vote thereat at his address as it appears on the records of the
corporation, not less than ten nor more than sixty days before the
date of the meeting. No business other than that stated in the
notice shall be transacted at any meeting without the unanimous
consent of all the shareholders entitled to vote .thereat.
SECTION 6. ACTION WITHOUT MEETING. Except as otherwise provided
by the Certificate of Incorporation, whenever the vote of
shareholders at a meeting thereof is required or permitted to be
taken in connection with any corporate action by any provisions of
the statutes or of the Certificate of incorporation or of these
By-Laws, the meeting and vote of shareholders may be dispensed
with, if all the shareholders who-would have been entitled to vote
upon the action if such meeting were held, shall consent in
writing to such corporate action being taken.
<PAGE>
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. The number of directors shall be
determined from time to time by resolution of the Board of
Directors. The directors shall be elected at the annual meeting
of the stockholders and each director shall be elected to serve
until his successor shall be elected and shall quality. Directors
need not be shareholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee or
other officer may resign at any time. Such resignation shall be
made in writing, and shall take effect at the time specified
therein, and if no time be specified, at the time of its receipt
by the President or Secretary. The acceptance of a resignation
shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of
a committee or other officer becomes vacant, the majority of the
remaining directors, even though less than a quorum of the board
or by a sole remaining director, except as otherwise provided by
the Certificate of Incorporation, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term
and until his successor shall be duly chosen and shall qualify.
SECTION 4. REMOVAL. Except where the Certificate of
Incorporation contains provisions authorizing cumulative voting or
the election of one or more directors by class, or requires all
action by shareholders to be by a greater vote, any one or more of
the directors may be removed, (a) either for cause or, if the
Certificate of Incorporation provides for removal without cause,
at any time, by vote of the shareholders holding a majority of the
outstanding shares of the corporation entitled to vote, present in
person or by proxy, at any special meeting of the shareholders or
by the unanimous written consent of the shareholder entitled to
vote thereon or, (b) for cause, by action of the Board of
Directors at any regular or special meeting of the board. A
vacancy or vacancies occurring from such removal may be filled at
the special meeting of the Board of Directors by the unanimous
written consent of the Board of Directors or by the unanimous
written consent of the shareholders entitled to vote thereon.
SECTION 5. INCREASE OF NUMBER. Except as otherwise provided by
the Certificate of Incorporation, the number of directors may be
increased by the affirmative vote of a majority of the directors,
though less than a quorum, or, by the affirmative vote of a
majority in interest of the shareholders, at the annual meeting or
at a special meeting called for that purpose, and by like vote the
additional directors may be chosen at such meeting to hold office
until the next annual election and until their successors are
elected and qualify.
<PAGE>
SECTION 6. POWERS. The Board of Directors shall exercise all of
the powers of the corporation except such as are by law, or by the
Certificate of Incorporation of the corporation or by these By-
Laws conferred upon or reserved to the stockholders.
SECTION 7. COMMITTEES. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, by
resolution or resolutions passed by a majority of the entire Board
of Directors, appoint one or more committees, each committee to
consist of one or more of the directors as alternate members of
any committee, who may replace any absent or disqualified member
at any meeting of the committee. Any such committee, to the
extent provided in the resolution or in the By-Laws of the
corporation, shall have and may exercise the powers of the
business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers which may
require it.
SECTION 8. MEETINGS. The newly elected directors may hold their
first meeting for the purpose of organization and the transaction
of business, if a quorum be present, immediately after the annual
meeting of the stockholders; or the time and place of such meeting
may be fixed by consent in writing of all the directors.
Regular meetings of the Board of Directors may be held without
notice at such places and times as shall be determined from time
to time by resolution of the Board of Directors.
Special meetings of the Board of Directors may be called by. the
President or by the Secretary on the written request of any two
directors on at least two days' notice to each director and shall
be held at such place or places as may be determined by the
directors, or as shall be stated in the call of the meeting.
Any or all directors may participate in a meeting of the Board
of Directors or a committee of the Board of-Directors by means of
a conference telephone or any means of communication by which all
persons participating in the meeting are able to hear each other.
SECTION 9. QUORUM. A majority of the directors shall constitute
a quorum for the transaction of business, except as may be
otherwise provided by the Certificate of Incorporation. If at any
meeting of the Board of Directors there shall be less than a
quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at
the meeting which shall be so adjourned.
SECTION 10. COMPENSATION. Directors shall not receive any
stated salary for their services as directors or as members of
committees, but by resolution of the Board of Directors a fixed
fee and expenses of attendance may be allowed for attendance at
of the corporation. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he shall
<PAGE>
each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other
officer, agent or otherwise, and receiving capacity as an officer,
agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, May be taken without a meeting, if prior
or subsequent to such action a written consent thereto is signed
by all members of the Board of Directors, or of such committee as
the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. The officers of the corporation shall be
a President, a Treasurer, and a Secretary, all of whom shall be
elected by the Board of Directors and who shall hold office until
their successors are elected and qualified. In addition, the
Board of Directors may elect a Chairman, one or more vice-
Presidents and such Assistant Secretaries and Assistant
Treasurers as they may deem proper. None of the officers of the
corporation need be directors. The officers shall be elected at
the first meeting of the Board of Directors after each annual
meeting. More than two offices may be held by the same person.
Any officer may be removed at any time by the affirmative vote of
a majority (unless the Certificate of Incorporation requires a
larger vote) of the directors present at a regular meeting of
directors called for that purpose.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors
may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman, of the Board of Directors,
if one be elected, shall preside at all meetings of the Board of
Directors and he shall have and perform such other duties as from
time to time may be assigned to him by the Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief
executive officer of the corporation and shall have the general
powers and duties of supervision and management usually vested in
the office of President of a corporation. He shall preside at
all meetings of the shareholders if present thereat, and in the
absence of non-election of the Chairman of the Board of
Directors, at all meetings of the Board of Directors, and shall
gave general supervision, direction and control of the business
of the corporation. Except as the Board of Directors shall
authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the
<PAGE>
corporation, and shall cause the seal to be affixed to any
instrument requiring it and when so affixed the seal shall be
attested by the signature of the Secretary or the Treasurer or an
Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. Each vice-President shall have such
powers and shall perform such duties as shall be assigned to him
by the Board of Directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of
the corporate funds and securities and shall keep full and
accurate account of receipts and disbursement in books belonging
to the corporation. He shall deposit all moneys and other
valuables in the name and to the credit of the corporation in
such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as
may be ordered by the Board of Directors, or the President,
taking proper vouchers for such disbursement. He shall render to
the President and the Board of Directors at the regular meetings
of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial
condition of the corporation, If required by the Board of
Directors, he shall give the corporation a bond for the faithful
discharge of his duties in such amount and with such surety as
the Board of Directors shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be
given, notice of all meetings of shareholders and directors, and
all other notices required by law or by these By-Laws, and in
case of his absence or refusal or neglect so to do, any such
notice may be given by any person thereunto directed by the
President, or by the directors, or shareholders, upon whose
requisition the meting is called as provided in these By-Laws.
He shall record all the proceedings of the meetings of the
corporation and of the directors in a book to be kept for that
purpose, and shall perform such other duties as may be assigned
to him by the directors or the President. he shall have the
custody of the seal of the corporation and shall affix the same
to all instruments requiring it, when authorized by the Board of
Directors or the President, and attest the same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.
Assistant Treasurers and Assistant Secretaries if any, shall be
elected and shall have such powers and shall perform such duties
as shall be assigned to them, respectively by the Board of
Directors.
<PAGE>
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES. Certificates signed by the chairman
or Vice Chairman of the Board of Directors, if they be elected,
President or Vice-President, and the Treasurer or an Assistant
Treasurer, or Secretary or an Assistant Secretary, shall be
issued to each shareholder certifying the number of shares owned
by him in the corporation. When such certificates are
countersigned (1) by a transfer agent other than the corporation
or its employee, or, (2) by a registrar other than the
corporation or its employee, the signatures of such officers may
be facsimiles.
SECTION 2. LOST CERTIFICATES. A new certificate may be issued
in the place of any certificate theretofore issued by the
corporation, alleged to have been lost or destroyed, and the
Board of Directors may, in its discretion, require the owner of
the lost or destroyed certificate, or his legal representatives,
to give the corporation a bond, in such sum as they may direct
not exceeding double the value of the stock , to indemnify the
corporation against any claim that may be made against it on
account of the alleged loss of any such certificate, or the
issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. Shares of the corporation shall
be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal
representatives, and upon such transfer the old certificates
shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and
ledgers, or to such other person as the directors may designate,
by whom they shall be canceled, and new certificates shall
thereupon be issued. A record shall be made of each-transfer and
whenever a transfer shall be made for collateral security, and
not absolutely, it shall be so expressed in the entry of the
transfer.
SECTION 4. SHAREHOLDERS RECORD DATE. In order that the
corporation may determine the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date , which
shall not be more than sixty nor less that ten days before the
date of such meeting, nor more that sixty days prior to any other
action. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting provided, however, that the Board
<PAGE>
of Directors may fix a new record date for the adjournment
meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the
Certificate of Incorporation, the Board of Directors may, out of
funds legally available therefor at any regular or special
meeting, declare dividends upon the outstanding shares of the
corporation as and when it deems expedient. Before declaring any
dividend there may be set apart out of any funds of the
corporation available for dividends, such sum or sums s the Board
of Directors from time to time in its discretion deems proper for
working capital or as a reserve fund to meet contingencies or for
equalizing dividends or for such other purposes as the Board of
Directors shall deem conducive to the interests of the
corporation.
SECTION 6. SEAL. The corporate seal shall be circular in form
and shall contain the name of the corporation, the year of its
creation and the words "CORPORATE SEAL NEW JERSEY. Said seal may
be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. The fiscal year of the corporation
shall be determined by resolution of the Board of Directors.
SECTION 8. CHECKS. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued
in the name of the corporation shall be signed by such officer or
officers, agent or agents of the corporation, and in such manner
as shall be determined from time to time by resolution of the
Board of Directors.
SECTION 9. NOTICE OF WAIVER OF NOTICE. Whenever any notice is
required by these By-Laws to be given, personal notice is not
meant unless expressly so stated. In computing the period o time
for the giving of any notice, the day on which the notice is
given shall be excluded, and the day on which the matter noticed
is to occur shall be included. If notice is given by the mail,
the notice shall be deemed to be given when deposited in the mail
addressed to the person to whom it is directed at his last
address as it appears on the records of the corporation, with
postage prepaid thereon. Shareholders not entitled to vote shall
not be entitled to receive notice of any meetings except as
otherwise provided by statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate
of Incorporation of the corporation or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to
said-notice, whether before or after the, time stated therein,
shall be deemed equivalent thereto..
<PAGE>
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and BY-Laws may be
made at any annual meeting thereof if notice of the proposed
alteration or repeal or By-Law or By-Laws to be made be contained
in the notice of such special meeting, by the affirmative vote of
a majority (unless the Certificate of Incorporation requires a
larger vote) of the shares issued and outstanding and entitled to
vote thereat, or by the affirmative vote of a majority (unless
the Certificate of Incorporation requires a larger vote) of the
Board of Directors, at any regular meeting of the Board of
Directors, or at any special meeting of the Board of Directors,
if notice of the proposed alteration or repeal, or By-Law or By-
Taws, to be made, be contained in the notice of such special
meeting. Provided, however, that any By-Laws made by the Board
of Directors may be altered or repealed by the shareholders.
<PAGE>
EXHIBIT 4.1
COMMON STOCK COMMON STOCK
PAR VALUE $.001 PAR VALUE $.001
SHARES
SEE REVERSE FOR CERTAIN
DEFINITIONS AND LIMITATIONS CUSIP
GENYSIS RESERVATION SYSTEMS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW JERSEY
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, OF
GENYSIS RESERVATION SYSTEMS, INC.
(hereinafter called the Corporation) transferable on the books of
the Corporation or by the holder hereof, in person or b duly
authorized Attorney, upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned and
registered by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
Countersigned and Registered:
CONTINENTAL STOCK TRANSFER & TRUST CO.
Transfer Agent and Registrar
AUTHORIZED SIGNATURE
SECRETARY
PRESIDENT
The following abbreviations, when used in the inscription on the
face of this certificate, shall be constured as though they were
written out in full according to applicable laws or regulations:
<PAGE>
TEN COM - as tentnants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
Under Uniform Gifts to Minor Act
(State)
Addtional abbreviations may also be used though not in the above
list.
For Value received hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)
Shares
of the Common Stock represented by the within Certificate and do
hereby irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
<PAGE>
Dated
SIGNATURE
Signature(s) Guaranteed
By
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations
and Credit Unions WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-1 5.
NOTICE: The signature of this assignment must correspond with
name(s) as written upon the face of the certificate in every
particular without alteration or enlargement or any change
whatever.
<PAGE>
EXHIBIT 4.2
GENISYS RESERVATION SYSTEMS, INC.
AND
CONTINENTAL STOCK TRANSFER
AND TRUST COMPANY
REDEEMABLE WARRANT AGREEMENT
Dated as of , 1996
<PAGE>
AGREEMENT, dated as of this _____ day of ___________,
1996, between GENISYS RESERVATION SYSTEMS, INC., a New
Jersey corporation (the "Company"), and CONTINENTAL STOCK
TRANSFER AND TRUST COMPANY, as Warrant Agent (the
"Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with (i) the offering to the public
pursuant to the Prospectus (the "Prospectus") contained in the
Company's Registration Statement on Form SB-2 (Registration No.
) of up to 800,000 shares of the Company's common stock,
$.0001 par value per share (the "Common Stock"), (ii) the offering to
the public pursuant to the Prospectus of up to 2,100,000 redeemable
warrants (the "Warrants") comprised of 1,300,000 Class A
Redeemable Warrants ("Class A Warrants") and 800,000 Class B
Redeemable Warrants ("Class B Warrants"), each Warrant entitling
the holder thereof to purchase one additional share of Common Stock,
(iii) the over-allotment option to purchase up to an additional 120,000
shares of Common Stock and/or 195,000 Class A Warrants and
120,000 Class B Warrants, (the "Over-allotment Option"), and (iv) the
sale to R.D. White & Co., Inc. ("R.D. White"), its successors and
assigns (the "Underwriter"), of warrants (the "Underwriter's
Warrants") to purchase up to 80,000 shares of Common Stock and/or
130,000 Class A Warrants and 80,000 Class B Warrants, the
Company will issue up to 2,625,000 Warrants (subject to increase as
provided in the Underwriter's Warrant Agreement and herein); and
WHEREAS, the Company desires to provide for the issuance
of certificates representing the Warrants; and
1
<PAGE>
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing to so act,
in connection with the issuance, registration, transfer and exchange of
certificates representing the Warrants and the exercise of the
Warrants.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth and for the purpose of
defining the terms and provisions of the Warrants and the certificates
representing the Warrants and the respective rights and obligations
thereunder of the Company, R.D. White, the holders of certificates
representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:
SECTION 1. Definitions. As used herein, the following
terms shall have the following meanings, unless the context shall
otherwise require:
(a) "Common Stock" shall mean stock of the Company of any
class whether now or hereafter authorized, which has the right to
participate in the voting and in the distribution of earnings and assets
of the Company without limit as to amount or percentage.
(b) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal
business in New York, New York, shall be administered, which office
is located on the date hereof at 2 Broadway, New York, New York
10004.
(c) "Exercise Date" shall mean, subject to the provisions of
Section 5(b) hereof, as to any Warrant, the date on which the Warrant
Agent shall have received both (i) the Warrant Certificate representing
2
<PAGE>
such Warrant, with the exercise form thereon duly executed by the
Registered Holder hereof or his attorney duly authorized in writing,
and (ii) payment in cash or by check made payable to the Warrant
Agent for the account of the Company, of the amount in lawful money
of the United States of America equal to the applicable Purchase Price
in good funds.
(d) "Initial Warrant Exercise Date" shall mean ,1997.
(e) "Initial Warrant Redemption Date" shall mean six (6)
months after the date of the Prospectus.
(f) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, $5.75 per share for each Class A
Warrant and $6.75 per share for each Class B Warrant and further
subject to the Company's right, in its sole discretion, to decrease the
Purchase Price.
(g) "Registered Holder" shall mean the person in whose name
any certificate representing the Warrants shall be registered on the
books maintained by the Warrant Agent pursuant to Section 6.
(h) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary
power to elect a majority of the Board of Directors of such
corporation (regardless of whether or not at the time stock of any
other class or classes of such corporation shall have or may have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
(i) "Transfer Agent" shall mean Continental Stock Transfer
and Trust Company, or its authorized successor.
(j) "Underwriting Agreement" shall mean the underwriting
agreement dated ____________, 1996 between the Company and the
3
<PAGE>
Underwriter relating to the purchase for resale to the public of
800,000 shares of Common Stock, 1,300,000 Class A Warrants and
800,000 Class B Warrants plus an over-allotment option of 120,000
shares of Common Stock and/or 195,000 Class A Warrants and
120,000 Class B Warrants.
(k) "Underwriter's Warrant Agreement" shall mean the
agreement dated as of , 1996 between the Company and the
Underwriter relating to and governing the terms and provisions of the
Underwriter's Warrants.
(l) "Warrant Certificate" shall mean certificates representing
each of the Warrants substantially in the form annexed hereto as
Exhibit A.
(m) "Warrant Expiration Date" shall mean, unless the
Warrants are redeemed as provided in Section 9 hereof prior to such
date, 5:00 p.m. (New York time), on , 2001, or, if such date
shall in the State of New York be a holiday or a day on which banks
are authorized to close, then 5:00 p.m. (New York time) on the next
following day which in the State of New York is not a holiday or a
day on which banks are authorized to close, subject to the Company's
right, prior to the Warrant Expiration Date, in its sole discretion, to
extend such Warrant Expiration Date on five business days prior
written notice to the Registered Holders.
(n) "Warrant Agent" shall mean Continental Stock Transfer
and Trust Company, or its authorized successor.
SECTION 2. Warrants and Issuance of Warrant
Certificates.
(a) Each Warrant shall initially entitle the Registered Holder
of the Warrant Certificate representing such Warrant to purchase at
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the Purchase Price therefor from the Initial Warrant Exercise Date
until the Warrant Expiration Date one share of Common Stock upon
the exercise thereof, subject to modification and adjustment as
provided in Section 8.
(b) Upon execution of this Agreement, Warrant Certificates
representing 1,300,000 Class A Warrants to purchase up to an
aggregate of 1,300,000 shares of Common Stock and 800,000 Class
B Warrants to purchase up to an aggregate 800,000 shares of
Common Stock (subject to modification and adjustment as provided
in Section 8) shall be executed by the Company and delivered to the
Warrant Agent.
(c) Upon exercise of the Over-allotment Option, in whole or
in part, Warrant Certificates representing up to 195,000 Class A
Warrants to purchase up to an aggregate of 195,000 shares of
Common Stock and 120,000 Class B Warrants to purchase up to an
aggregate of 120,000 shares of Common Stock (subject to
modification and adjustment as provided in Section 8) shall be
executed by the Company and delivered to the Warrant Agent.
(d) Upon exercise of the Underwriter's Warrants as provided
therein, Warrant Certificates representing all or a portion of 130,000
Class A Warrants to purchase up to an aggregate of 130,000 shares
of Common Stock and 80,000 Class B Warrants to purchase up to an
aggregate of 80,000 shares of Common Stock (subject to modification
and adjustment as provided in Section 8 hereof and in the
Underwriter's Warrant Agreement), shall be countersigned, issued and
delivered by the Warrant Agent upon written order of the Company
signed by its Chairman of the Board, President or a Vice President and
by its Treasurer or an Assistant Treasurer or its Secretary or an
Assistant Secretary.
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(e) From time to time, up to the Warrant Expiration Date, as
the case may be, the Warrant Agent shall countersign and deliver
Warrant Certificates in required denominations of one or whole
number multiples thereof to the person entitled thereto in connection
with any transfer or exchange permitted under this Agreement. No
Warrant Certificates shall be issued except (i) Warrant Certificates
initially issued hereunder, (ii) Warrant Certificates issued upon any
transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7, (iv) Warrant Certificates issued
pursuant to the Underwriter's Warrant Agreement (including Warrants
in excess of the Underwriter's Warrants to purchase 80,000 shares of
Common Stock and/or 130,000 Class A Warrants and 80,000 Class
B Warrants issued as a result of the anti-dilution provisions contained
in the Underwriter's Warrant Agreement), and (v) at the option of the
Company, Warrant Certificates in such form as may be approved by
its Board of Directors, to reflect any adjustment or change in the
Purchase Price, the number of shares of Common Stock purchasable
upon exercise of the Warrants or the redemption price therefor made
pursuant to Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with
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any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which Warrants may
be listed, or to conform to usage. The Warrant Certificates shall be
dated the date of issuance thereof (whether upon initial issuance,
transfer, exchange or in lieu of mutilated, lost, stolen or destroyed
Warrant Certificates).
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice
President and by its Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary, by manual signatures or by
facsimile signatures printed thereon, and shall have imprinted thereon
a facsimile of the Company's seal. Warrant Certificates shall be
manually countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such
officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent and
issue and delivery thereof, such Warrant Certificates, nevertheless,
may be countersigned by the Warrant Agent, issued and delivered with
the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be such officer of the
Company.
SECTION 4. Exercise.
(a) Warrants in denominations of one or whole number
multiples thereof may be exercised at any time commencing with the
Initial Warrant Exercise Date, and ending at the close of business on
the Warrant Expiration Date, upon the terms and subject to the
conditions set forth herein (including the provisions set forth in
Sections 5 and 9 hereof) and in the applicable Warrant Certificate. A
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Warrant shall be deemed to have been exercised immediately prior to
the close of business on the Exercise Date, provided that the Warrant
Certificate representing such Warrant, with the exercise form thereon
duly executed by the Registered Holder thereof or his attorney duly
authorized in writing, together with payment in cash or by check made
payable to the Warrant Agent for the account of the Company, of an
amount in lawful money of the United States of America equal to the
applicable Purchase Price has been received in good funds by the
Warrant Agent. The person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as the
holder of such securities as of the close of business on the Exercise
Date. As soon as practicable on or after the Exercise Date and in any
event within five business days after such date, the Warrant Agent on
behalf of the Company shall cause to be issued to the person or
persons entitled to receive the same a Common Stock certificate or
certificates for the shares of Common Stock deliverable upon such
exercise, and the Warrant Agent shall deliver the same to the person
or persons entitled thereto. Upon the exercise of any Warrant, the
Warrant Agent shall promptly notify the Company in writing of such
fact and of the number of securities delivered upon such exercise and,
subject to subsection (b) below, shall cause all payments of an amount
in cash or by check made payable to the order of the Company, equal
to the Purchase Price, to be deposited promptly in the Company's
bank account.
(b) At any time upon the exercise of any Warrants after 181
days from the date hereof, the Warrant Agent shall, on a daily basis,
within two business days after such exercise, notify the Underwriter,
and its successors or assigns, of the exercise of any such Warrants and
shall, on a weekly basis (subject to collection of funds constituting the
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<PAGE>
tendered Purchase Price, but in no event later than five business days
after the last day of the calendar week in which such funds were
tendered), remit to the Underwriter (so long as the Underwriter
solicited the exercise of such Warrant as indicated upon the
Subscription Form attached to the Warrant Certificate tendered for
exercise), an amount equal to four percent (4%) of the Purchase Price
of such Warrants being then exercised unless (1) the Underwriter shall
have notified the Warrant Agent that the payment of such amount
with respect to such Warrant is violative of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934,
as amended, (the "Exchange Act"), or the rules and regulations of the
National Association of Securities Dealers, Inc. ("NASD") or
applicable state securities of "blue sky" laws, or (2) the Warrants are
those underlying the Underwriter's Warrants, or (3) the market price
of the Common Stock on the subject Exercise Date is lower than the
Purchase Price, or (4) the Warrants are held in a discretionary
account, or (5) the Warrants are exercised in an unsolicited
transaction, in any of which events the Warrant Agent shall pay such
amount to the Company; provided that the Warrant Agent shall not be
obligated to pay any amounts pursuant to this Section 4(b) during any
week that such amounts payable are less than $1,000 and the Warrant
Agent's obligation to make such payments shall be suspended until the
amount payable aggregate $1,000, and provided further, that, in any
event, any such payment (regardless of amount) shall be made not less
frequently than monthly.
(c) The Company shall not be required to issue fractional
shares upon the exercise of Warrants. Warrants may only be
exercised in such multiples as are required to permit the issuance by
the Company of one or more whole shares. If one or more Warrants
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<PAGE>
shall be presented for exercise in full at the same time by the same
Registered Holder, the number of whole shares which shall be issuable
upon such exercise thereof shall be computed on the basis of the
aggregate number of shares purchasable on exercise of the Warrants
so presented. If any fraction of a share would, except for the
provisions provided herein, be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall pay an amount in
cash equal to such fraction multiplied by the then current market value
of a share of Common Stock, determined as follows:
(1) If the Common Stock is listed or admitted to
unlisted trading privileges on the New York Stock Exchange
("NYSE") or the American Stock Exchange ("AMEX") or is traded
on The Nasdaq National Market (" Nasdaq/NM"), the current market
value of a share of Common Stock shall be the closing sale price of
the Common Stock at the end of the regular trading session on the last
business day prior to the date of exercise of the Warrants on
whichever of such exchanges or Nasdaq/NM had the highest average
daily trading volume for the Common Stock on such day; or
(2) If the Common Stock is not listed or admitted to
unlisted trading privileges on either the NYSE or the AMEX and is
not traded on Nasdaq/NM, but is quoted or reported on Nasdaq, the
current market value of a share of Common Stock shall be the average
of the last reported closing bid and asked prices (or the last sale price,
if then reported by Nasdaq) of the Common Stock at the end of the
regular trading session on the last business day prior to the date of
exercise of the Warrants as quoted or reported on Nasdaq, as the case
may be; or
(3) If the Common Stock is not listed or admitted to
unlisted trading privileges on either of the NYSE or the AMEX, and
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<PAGE>
is not traded on Nasdaq/NM or quoted or reported on Nasdaq, but is
listed or admitted to unlisted trading privileges on the BSE or other
national securities exchange (other than the NYSE or the AMEX), the
current market value of a share of Common Stock shall be the closing
sale price of the Common Stock at the end of the regular trading
session on the last business day prior to the date of exercise of the
Warrants on whichever of such exchanges has the highest average
daily trading volume for the Common Stock on such day; or
(4) If the Common Stock is not listed or admitted to
unlisted trading privileges on any national securities exchange, or
listed for trading on Nasdaq/NM or quoted or reported on Nasdaq,
but is traded in the over-the-counter market, the current market value
of a share of Common Stock shall be the average of the last reported
bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. on the last business day prior to the date of
exercise of the Warrants; or
(5) If the Common Stock is not listed or admitted to
unlisted trading privileges on any national securities exchange, or
listed for trading on Nasdaq/NM or quoted or reported on Nasdaq,
and bid and asked prices of the Common Stock are not reported by
the National Quotation Bureau, Inc., the current market value of a
share of Common Stock shall be an amount, not less than the book
value thereof as of the end of the most recently completed fiscal
quarter of the Company ending prior to the date of exercise,
determined in accordance with generally accepted accounting
principles, consistently applied.
SECTION 5. Reservation of Shares; Listing; Payment of
Taxes; etc.
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<PAGE>
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of Warrants, such number of shares of
Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of
Common Stock which shall be issuable upon exercise of the Warrants
shall, at the time of delivery thereof, be duly and validly issued and
fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each securities
exchange, if any, on which the other shares of outstanding Common
Stock of the Company are then listed.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder require
registration with, or approval of, any governmental authority under
any federal securities law before such securities may be validly issued
or delivered upon such exercise, then the Company will file a
registration statement under the federal securities laws or a post
effective amendment, use its best efforts to cause the same to become
effective and use its best efforts to keep such registration statement
current while any of the Warrants are outstanding and deliver a
prospectus which complies with Section 10(a)(3) of the Securities Act
of 1933, as amended, (the "Act"), to the Registered Holder exercising
the Warrant (except, if in the opinion of counsel to the Company, such
registration is not required under the federal securities law or if the
Company receives a letter from the staff of the Securities and
Exchange Commission (the "Commission") stating that it would not
take any enforcement action if such registration is not effected). The
Company will use its best efforts to obtain appropriate approvals or
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<PAGE>
registrations under state "blue sky" securities laws. With respect to
any such securities, however, Warrants may not be exercised by, or
shares of Common Stock issued to, any Registered Holder in any state
in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with
respect to the issuance of Warrants, or the issuance or delivery of any
shares of Common Stock upon exercise of the Warrants; provided,
however, that if shares of Common Stock are to be delivered in a
name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid
to the Warrant Agent the amount of transfer taxes or charges incident
thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates
representing shares of Common Stock or other securities required
upon exercise of the Warrants, and the Company will comply with all
such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or
may be transferred in whole or in part. Warrant Certificates to be so
exchanged shall be surrendered to the Warrant Agent at its Corporate
Office, and the Company shall execute and the Warrant Agent shall
countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Register Holder making the
exchange shall be entitled to receive.
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(b) The Warrant Agent shall keep, at such office, books in
which, subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and the transfer thereof. Upon due
presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute and the Warrant Agent shall
issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of
Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription
or exercise form, as the case may be, on the reverse thereof shall be
duly endorsed or be accompanied by a written instrument or
instruments or transfer and subscription, in form satisfactory to the
Company and the Warrant Agent, duly executed by the Registered
Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the
Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection
therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly canceled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer
thereof, the Company and the Warrant Agent may deem and treat the
Registered Holder of any Warrant Certificate as the absolute owner
thereof of each Warrant represented thereby (notwithstanding any
notations of
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<PAGE>
ownership or writing thereon made by anyone other than the
Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the
Company and the Warrant Agent of evidence satisfactory to them of
the ownership of and the loss, theft, destruction or mutilation of any
Warrant Certificate and (in the case of loss, theft or destruction) of
indemnity satisfactory to them, and (in case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and the
Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall also
comply with such other reasonable regulations and pay such other
reasonable charges as the Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number
of Shares of Common Stock Deliverable.
(a)(i) Except as hereinafter provided, in the event the
Company shall, at any time or from time to time after the date hereof,
issue any shares of Common Stock for a consideration per share less
than the "Fair Market Value" (as defined in Section 8(g)) 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
issuance, subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the
Purchase Price for the Warrants (whether or not the same shall be
issued and outstanding) in effect immediately prior to such Change of
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Shares shall be changed to a price (including any applicable fraction
of a cent to the nearest cent) determined by dividing (i) the sum of (a)
the total number of shares of Common Stock outstanding immediately
prior to such Change of Shares, multiplied by the Purchase Price in
effect immediately prior to such Change of Shares and (b) the
consideration, if any, received by the Company upon such sale,
issuance, subdivision or combination, by (ii) the total number of shares
of Common Stock outstanding immediately after such Change of
Shares; provided, however, that in no event shall the Purchase Price
be adjusted pursuant to this computation to an amount in excess of the
Purchase Price in effect immediately prior to such computation,
except in the case of a combination of outstanding shares of Common
Stock.
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, 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, in each case, without
16
<PAGE>
deduction for any expenses incurred by the Company in connection
with such transaction.
(B) In case of the issuance or sale (other than as a dividend or
other distribution on any stock of the Company) 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 on the basis of
a record of values of similar property or services.
(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 securities including shares of
Common Stock shall be deemed to involve the issuance of such shares
of Common Stock for a consideration other than cash immediately
prior to the close of business on the date fixed for the determination
of security holders entitled to receive such shares, and the value of the
consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (B) of this Section 8(a).
(E) The number of shares of Common Stock at any 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 warrants and
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<PAGE>
upon the conversion or exchange of convertible or exchangeable
securities.
(ii) Upon each adjustment of the Purchase Price pursuant to
this Section 8, the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall be the number derived by
multiplying the number of shares of Common Stock purchasable
immediately prior to such adjustment by the Purchase Price in effect
prior to such adjustment and dividing the product so obtained by the
applicable adjusted Purchase Price.
(b) In case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock, for a consideration per share (determined
as provided in Section 8(a)(i) and as provided below) less than the
Fair Market Value in effect immediately prior to the issuance of such
options, rights or warrants, or such convertible or exchangeable
securities, or without consideration (including the issuance of any such
securities by way of dividend or other distribution), the Purchase Price
for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such
options, rights or warrants, or such convertible or exchangeable
securities, as the case may be, shall be reduced to a price determined
by making the computation in accordance with the provisions of
Section 8(a)(i) 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 warrants (assuming exercise in full even if not
then currently exercisable or currently exercisable in full) shall be
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<PAGE>
deemed to be issued and outstanding at the time such options, rights
or warrants were issued, for a consideration equal to the minimum
purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any,
received by the Company for such options, rights or warrants;
provided, however, that upon the expiration or other termination of
such options, rights or warrants, if any thereof shall not have been
exercised, the number of shares of Common Stock deemed to be
issued and outstanding pursuant to this subsection (A) (and for the
purposes of subsection (E) of Section 8(a)(i) hereof) shall be reduced
by the number of shares as to which options, warrants and/or rights
shall have expired, and such number of shares shall no longer be
deemed to be issued and outstanding, and the Purchase 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 warrants 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
termination of the right to convert or exchange such convertible or
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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)(i) 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
Purchase 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 price per share provided
for in any of the options, rights or warrants 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 (B) of this Section 8(b) are
convertible or exchangeable, such options, rights or warrants 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 warrants or convertible or
exchangeable securities.
(c) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par value,
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<PAGE>
or from no par value to par value or as a result of a 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 Warrants (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 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 Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of
such Warrant the kind and amount of securities and property
receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable
upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and
shall forthwith file at the Corporate Office of the Warrant Agent 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
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<PAGE>
successive reclassifications and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon
exercise of the Warrants, the Warrant Certificates theretofore and
thereafter issued shall, unless the Company shall exercise its option to
issue new Warrant Certificates pursuant to Section 2(e) hereof,
continue to express the Purchase Price per share and the number of
shares purchasable thereunder as the Purchase Price per share and the
number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
(e) After each adjustment of the Purchase 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 Purchase Price as so adjusted, (ii) the number of
shares of Common Stock purchasable upon exercise of each Warrant,
after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof
to be sent by ordinary first class mail to each Registered Holder at his
last address as it shall appear on the registry books of the Warrant
Agent. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity thereof except as the holder to
whom the Company failed to mail such notice, or except as to the
holder whose notice was defective. The affidavit of an officer of the
Warrant Agent or 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.
22
<PAGE>
(f) No adjustment of the Purchase Price shall be made as a
result of or in connection with (A) the issuance of shares of Common
Stock underlying the Warrants or the units issuable upon exercise of
the Underwriter's Warrants pursuant to the Underwriter's Warrant
Agreement, or (B) the issuance or sale of shares of Common Stock if
the amount of said adjustment shall be less than $.10, 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. In addition, Registered Holders shall not be entitled to
cash dividends paid by the Company prior to the exercise of any
Warrant or Warrants held by them.
(g) "Fair Market Value" shall mean the value of a share of
Common Stock as determined in accordance with the following
provisions:
(1) If the Common Stock is listed or admitted to
unlisted trading privileges on the NYSE or the AMEX or is traded on
the Nasdaq/NM, the Fair Market Value of a share of Common Stock
shall be equal to the average of the closing sale price of the Common
Stock during the thirty (30) trading days immediately preceding the
date of the event which requires the determination of Fair Market
Value on whichever of such exchanges or Nasdaq/NM had the total
highest daily trading volume for the Common Stock during such thirty
(30) day trading period.
(2) If the Common Stock is not listed or admitted to
unlisted trading privileges on either the NYSE or the AMEX and is
not traded on Nasdaq/NM, but is quoted or reported on Nasdaq, the
Fair Market Value of a share of Common Stock shall be the average
23
<PAGE>
of the last reported closing bid and asked prices (or the last sale price,
if then reported on Nasdaq) of the Common Stock
during the thirty (30) trading days immediately preceding the date of event
which requires the
determination of Fair Market Value.
(3) If the Common Stock is not listed or admitted to
unlisted trading privileges on
either of the NYSE or the AMEX and is not traded on Nasdaq/NM or quoted or
reported on Nasdaq,
but is listed or admitted to unlisted trading privileges on the BSE or another
national securities
exchange (other than the NYSE or the AMEX), the Fair Market Value of a share of
Common Stock
shall be the average of the closing sale price of the Common Stock during the
thirty (30) trading days
immediately preceding the date of the event which requires the determination of
Fair Market Value.
(4) If the Common Stock is not listed or admitted to
unlisted trading privileges on
any national securities exchange, or listed for trading on Nasdaq/NM or quoted
or reported on
Nasdaq, but is traded in the over-the-counter market, the Fair Market Value of
a share of Common
Stock shall be the average of the average of the last reported bid and asked
prices of the Common
Stock reported by the National Quotation Bureau, Inc. for the thirty (30)
trading days immediately
preceding the date of the event which requires the determination of Fair
Market Value.
(5) If the Common Stock is not listed or admitted to
unlisted trading privileges on
any national securities exchange, or listed for trading on Nasdaq/NM or
quoted or reported on
Nasdaq, and bid and asked prices of the Common Stock are not reported by the
National Quotation
Bureau, Inc., the Fair Market Value of a share of Common Stock shall be an
amount, not less than
the book value thereof as of the end of the most recently completed fiscal
quarter of the company
ending prior to the date requiring a determination of fair market value,
determined in accordance with
general accepted accounting principles, consistently applied.
SECTION 9. Redemption.
(a) Commencing on the Initial Warrant Redemption Date, the Company
may, on 30 days'
prior written notice redeem all the Warrants, other than the Warrants
underlying the Underwriter's
24
<PAGE>
Warrants which shall not be redeemable, at ten cents ($.10) per Warrant,
provided, however, that
before any such call for redemption of Class A Warrants can take place the
closing sale price of the
Common Stock as quoted on the principal market on which such shares shall then
be trading, shall
have, for only twenty (20) trading days within a period of thirty (30)
consecutive trading days ending
on the fifth (5th) day prior to the date on which the notice contemplated by
(b) and (c) below is given,
equalled or exceeded $6.25 per share (subject to adjustment in the event of
any stock splits or other
similar events as provided in Section 8 hereof), and before any such call for
redemption of Class B
Warrants can take place the closing sale price of the Common Stock as quoted
on the principal
market on which such shares shall then be trading, shall have, for only twenty
(20) trading days within
a period of thirty (30) consecutive trading days ending on the fifth (5th) day
prior to the date on
which the notice contemplated by (b) and (c) below is given, equalled or
exceeded $7.25 per share
(subject to adjustment in the event of any stock splits or other similar
events as provided in Section
8 hereof).
(b) In case the Company shall exercise its right to redeem all of
the Class A or Class B
Warrants so redeemable, it shall give or cause notice to such effect to be
given to the Underwriter
in the same manner that notice is required to be given by the Underwriter's
Warrant Agreement. The
Underwriter may, at its option, solicit exercises of the Warrants. In the
event that the Underwriter
does not commence solicitation of exercises of the Warrants within thirty (30)
days of notice from
the Company, the Company may give notice of redemption to the Registered
Holders of the Warrants
by mailing to such Registered Holders a notice of redemption, first class,
postage prepaid, at their last
address as shall appear on the records of the Warrant Agent. Any notice mailed
in the manner
provided herein shall be conclusively presumed to have been duly given whether
or not the Registered
Holder receives such notice. Not less than five business days prior to the
mailing to the Registered
Holders of the Warrants of the notice of redemption, the Company shall deliver
or cause to be
delivered to the Underwriter a similar notice telephonically and confirmed in
writing together with
a list of the Registered Holders (including their respective addresses and
number of Warrants
beneficially owned) to whom such notice of redemption has been or will be
given.
(c) The notice of redemption shall specify (i) the redemption price,
(ii) the date fixed for
redemption, which shall in no event be less than thirty (30) days after the
date of mailing of such
25
<PAGE>
notice, (iii) the place where the Warrant Certificate shall be delivered and
the redemption price shall
be paid, (iv) that the Underwriter is the Company's warrant solicitation agent
and may receive the
commission contemplated by Section 4(b) hereof, and (v) that the right to
exercise the Warrant shall
terminate at 5:00 p.m. (New York time) on the business day immediately
preceding the date fixed for
redemption. The date fixed for the redemption of the Warrants shall be the
Redemption Date. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of
the proceedings for such redemption except as to a holder (a) to whom notice
was not mailed or (b)
whose notice was defective. An affidavit of the Warrant Agent or the Secretary
or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in
the absence of fraud,
be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m.
(New York time) on
the business day immediately preceding the Redemption Date. The redemption
price payable to the
Registered Holders shall be mailed to such persons at their addresses of
record.
(e) The Company shall indemnify the Underwriter and each person, if
any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
any of them may
become subject under the Act, the Exchange Act or otherwise, arising from the
registration statement
or prospectus referred to in Section 5(b) hereof to the same extent and with
the same effect (including
the provisions regarding contribution) as the provisions pursuant to which the
Company has agreed
to indemnify the Underwriters contained in Section 7 of the Underwriting
Agreement.
(f) Five business days prior to the Redemption Date, the Company
shall furnish to the
Underwriter (i) an opinion of counsel to the Company, dated such date and
addressed to Underwriter,
and (ii) a "cold comfort" letter dated such date addressed to the Underwriter,
signed by the
independent public accountants who have issued a report on the Company's
financial statements
included in such registration statement, in each case covering substantially
the same matters with
respect to such registration statement (and the prospectus included therein)
and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are
26
<PAGE>
customarily covered in opinions of issuer's counsel and in accountants' letters
delivered to
underwriters in underwritten public offerings of securities.
(g) The Company shall as soon as practicable after the Redemption
Date, and in any event
within 15 months thereafter, make "generally available to its security holders"
(within the meaning
of Rule 158 under the Act) an earnings statement (which need not be audited)
complying with Section
11(a) of the Act and covering a period of at least 12 consecutive months
beginning after the
Redemption Date.
(h) The Company shall deliver within five business days prior to the
Redemption Date 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 such registration
statement and permit the 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 independent auditors, all to such reasonable
extent and at such
reasonable times and as often as the Underwriter shall reasonably request.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company
and the Underwriter, and its duties shall be determined solely by the
provisions hereof. The Warrant
Agent shall not, by issuing and delivering Warrant Certificates or by any
other act hereunder, be
deemed to make any representations as to the validity or value or authorization
of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon
exercise of any Warrant or whether any stock issued upon exercise of any
Warrant is fully paid and
nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder
of Warrant Certificates to make or cause to be made any adjustment of the
Purchase Price provided
in this Agreement, or to determine whether any fact exists which may require
any such adjustment,
or with respect to the nature or extent of any such adjustment, when made, or
with respect to the
4736-2
27
<PAGE>
method employed in making the same. It shall not (i) be liable for any recital
or statement of fact
contained herein or for any action taken, suffered or omitted by it in reliance
on any Warrant Certificate or other document or instrument believed by it in
good faith to be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part of the Company
to comply with any of its covenants and obligations contained in this Agreement
or in any Warrant Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own gross negligence or willful
misconduct. (c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel. (d) Any
notice, statement, instruction, request, direction, order or demand of the
Company shall be sufficiently evidenced by an instrument signed by the Chairman
of the Board of Directors, President or any Vice President (unless other
evidence in respect thereof is herein specifically prescribed). The Warrant
Agent shall not be liable for any action taken, suffered or omitted by it in
accordance with such notice, statement, instruction, request, direction, order
or demand. (e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct. (f) The Warrant Agent may resign its duties
and be discharged from all further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant Agent's own gross negligence or
willful misconduct), after giving 30 days' prior written notice to the Company.
At least 15 days prior to the date such resignation is to become effective, the
Warrant Agent shall cause a copy of such notice of resignation to be mailed to
the Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation the Company shall appoint in writing a new warrant agent. If
the Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation by the resigning Warrant
Agent, then the Registered Holder
<PAGE>
of any Warrant Certificate may apply
to any court of competent jurisdiction for the appointment of a new warrant
agent. Any new warrant agent, whether appointed by the Company or by such a
court, shall be a bank or trust company having a capital and surplus, as shown
by its last published report to its stockholders, of not less than $10,000,000
or a stock transfer company doing business in Massachusetts or New York. After
acceptance in writing of such appointment by the new warrant agent is received
by the Company, such new warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the warrant agent, without any further assurance, conveyance, act or deed; but
if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate. (g) Any corporation into which
the Warrant Agent or any new warrant agent may be converted or merged, any
corporation resulting from any consolidation to which the Warrant Agent or any
new warrant agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent or any new warrant agent shall be
a successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holders of each Warrant
Certificate. (h) The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity. (i) The Warrant Agent
shall retain for a period of two years from the date of exercise any Warrant
Certificate received by it upon such exercise.
29
<PAGE>
SECTION 11. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; (ii) to reflect an increase in the number of Warrants which are to be
governed by this Agreement resulting from a subsequent public offering of
Company securities which includes warrants having the same terms and conditions
as the Warrants originally covered by or subsequently added to this Agreement
under this Section 11; or (iii) that they may deem necessary or desirable and
which shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders representing not less that 66-2/3% of the
Warrants then outstanding (including, for this purpose Warrants issuable to the
Underwriter pursuant to the Underwriter's Warrants, whether or not then
outstanding); provided, further, that no change in the number or nature of the
securities purchasable upon the exercise of any Warrant, or to increase the
Purchase Price therefor, shall be made without the consent in writing of the
Registered Holder of the Warrant Certificate, other than such changes as are
specifically prescribed by this Agreement as originally executed. In addition,
this Agreement may not be modified, amended or supplemented without the prior
written consent of the Underwriter, other than to cure any ambiguity or to
correct any provision which is inconsistent with any other provision of this
Agreement or to make any such change that is necessary or desirable and which
shall not adversely affect the interests of the Underwriter and except as may be
required by law. SECTION 12. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first-class postage prepaid, or delivered to a
telegraph office for transmission if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company at Genisys Reservation
Systems, Inc., 2401 Morris Avenue, 3rd Floor, Union, New Jersey 07083,
Attention: Joseph Cutrona, President, or at such other address as may have been
furnished
30
<PAGE>
to the Warrant Agent in writing by the company; and if to the Warrant Agent, at
its Corporate Office. Copies of any notice delivered pursuant to this Agreement
shall be delivered to R.D. White at R.D. White & Co., Inc., 950 Third Avenue,
3rd Floor, New York, New York 10022, Attention: John Piscopo, with a copy to
Scheichet & Davis, P.C., 505 Park Avenue, 20th Floor, New York, New York 10022,
Attention: William J. Davis, or at such other address as may have been furnished
to the Company and the Warrant Agent in writing. SECTION 13. Construction. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York without giving effect to conflicts of laws. SECTION 14.
Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the Company, the Warrant Agent and their respective successors and assigns and
the holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation. The Underwriters (as defined in
the Underwriting Agreement) are, and shall at all times irrevocably be deemed to
be, third-party beneficiaries of this Agreement, with full power, authority and
standing to enforce the rights granted to it hereunder. SECTION 15.
Counterparts. This Agreement may be executed in several counterparts, which
taken together shall constitute a single document. IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the first
date first above written. GENISYS RESERVATION SYSTEMS, INC. CONTINENTAL STOCK
TRANSFER AND TRUST COMPANY
31
<PAGE>
By: By:
Joseph Cutrona, President
32
<PAGE>
EXHIBIT A
No. Class A W VOID AFTER ____________, 2001 ____________ CLASS A WARRANTS CLASS
A REDEEMABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF COMMON STOCK GENISYS
RESERVATION SYSTEMS, INC. CUSIP __________ THIS CERTIFIES THAT, FOR VALUE
RECEIVED or registered assigns (the "Registered Holder") is the owner of the
number of Redeemable Warrants (the "Warrants") specified above. Each Warrant
initially entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common Stock,
$.0001 par value, of Genysis Reservation Systems, Inc., a New Jersey
corporation (the
"Company"), at any time between , 1997 (the "Initial Warrant Exercise Date"),
and the Expiration Date (as hereinafter defined) upon the presentation and
surrender of this Warrant Certificate with the Subscription Form on the reverse
hereof duly executed, at the corporate office of Continental Stock Transfer and
Trust Company, 2 Broadway, New York, New York 10004, as Warrant Agent, or its
successor (the "Warrant Agent"), accompanied by payment of $5.75 subject to
adjustment (the "Purchase Price"), in lawful money of the United States of
America in cash or by check made payable to the Warrant Agent for the account of
the Company. This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Redeemable Warrant Agreement (the "Warrant Agreement"), dated
________________, 1996, by and between the Company and the Warrant Agent. In the
event of certain contingencies provided for in the Warrant Agreement, the
Purchase Price and the number of shares of Common Stock subject to purchase upon
the exercise of each Warrant represented hereby are subject to modification or
adjustment. Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrant represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and
33
<PAGE>
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants. The term "Expiration Date" shall mean 5:00 p.m. (New York time) on ,
2001. If each such date shall in the State of New York be a holiday or a day on
which the banks are authorized to close, then the Expiration Date shall mean
5:00 p.m. (New York time) the next following day which in the State of New York
is not a holiday or a day on which banks are authorized to close. The Company
shall not be obligated to deliver any securities pursuant to the exercise of
this Warrant unless a registration statement under the Securities Act of 1933,
as amended (the "Act), with respect to such securities is effective or an
exemption thereunder is available. The Company has covenanted and agreed that it
will file a registration statement under the Federal securities laws, use its
best efforts to cause the same to become effective, use its best efforts to keep
such registration statement current, if required under the Act, while any of the
Warrants are outstanding, and deliver a prospectus which complies with Section
10(a)(3) of the Act to the Registered Holder exercising this Warrant. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful. This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office of the Warrant
Agent, for a new Warrant Certificate or Warrant Certificates of like tenor
representing an equal aggregate number of Warrants, each of such new Warrant
Certificates to represent such number of Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment and
payment of any tax or other charge imposed in connection therewith or incident
thereto, for registration of transfer of this Warrant Certificate at such
office, a new Warrant Certificate of Warrant Certificates representing an equal
aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement. Prior to
the exercise of any Warrant represented hereby, the Registered Holder shall not
be entitled to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided in the Warrant Agreement. Subject to the provisions
of the Warrant Agreement, this Warrant may be redeemed at the option of the
Company, at a redemption price of $.10 per Warrant, at any time commencing six
(6) months after the Initial Warrant Exercise Date, provided that (i) the
closing bid price for the Common Stock is reported by The Nasdaq Stock Market,
Inc. ("Nasdaq"), if the Common Stock is then traded in the over-the-counter
market or (ii) the closing sale price, if the Common Stock is then traded on
Nasdaq/NM or a national securities exchange, shall have equalled or exceeded for
any twenty (20) trading days within a period of thirty (30) consecutive trading
days ending on the fifth (5th) day prior to the Notice of Redemption, as defined
below, $6.25 per share (subject to adjustment in the event of any stock splits
or other similar events). Notice of redemption (the "Notice of Redemption")
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the
<PAGE>
Warrant Agreement. On and after the date fixed for redemption, the Registered
Holder shall have no rights with respect to the Warrants except to receive the
$.10 per Warrant upon surrender of this Warrant Certificate. Under certain
circumstances, R.D. White & Co., Inc. collectively shall be entitled to receive
an aggregate of four percent (4%) of the Purchase Price of the Warrants
represented hereby. Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat the Registered
Holder as the absolute owner hereof and of each Warrant represented hereby
(notwithstanding any notations of ownership or writing hereon made by anyone
other than a duly authorized officer of the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the contrary, except as
provided in the Warrant Agreement. This Warrant Certificate shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to conflicts of laws. This Warrant Certificate is not valid unless
countersigned by the Warrant Agent. IN WITNESS WHEREOF, the Company has caused
this Warrant Certificate to be duly executed, manually or in facsimile by two of
its officers thereunto duly authorized and a facsimile of its corporate seal to
be imprinted hereon.
Dated: ________________, 1996
[SEAL] GENISYS RESERVATION SYSTEMS, INC.
By: Joseph Cutrona, President By:
John Wasko, Secretary
COUNTERSIGNED: CONTINENTAL STOCK TRANSFER AND TRUST COMPANY
as Warrant Agent By: _____________________
Name: _____________________ Title: ____________________
35
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise Warrants
represented by this Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Warrants, and requests that certificates for such
securities shall be issued in name of PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER (please print or type name and address) and be delivered to
(please print or type name and address) and if such number of Warrants shall not
be all the Warrants evidenced by this Warrant Certificate, that a new Warrant
Certificate for the balance of such Warrants be registered in the name of, and
delivered to, the Registered Holder at the address stated below.
4736-2
36
<PAGE>
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1. The exercise of this Warrant was
solicited by R.D. White & Co., Inc.
2. The exercise of this Warrant was not
solicited.
Dated: X
Address Social Security or Taxpayer Identification Number Signature Guaranteed
37
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants FOR
VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
(please print or type name and address) ___________________________ of the
Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints ____________________ Attorney to transfer this
Warrant Certificate on the of the Company, with full power of substitution
in the premises. Dated: X Signature Guaranteed THE SIGNATURE TO THE
ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED
BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE CONTINENTAL
STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST
STOCK EXCHANGE OR BOSTON STOCK EXCHANGE.
38
<PAGE>
EXHIBIT B
No. Class B W VOID AFTER ____________, 2001 ____________ CLASS B WARRANTS
CLASS A REDEEMABLE WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF COMMON
STOCK GENISYS RESERVATION SYSTEMS, INC. CUSIP __________ THIS CERTIFIES
THAT, FOR VALUE RECEIVED or registered assigns (the "Registered Holder") is
the owner of the number of Redeemable Warrants (the "Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and
nonassessable share of Common Stock, $.0001 par value, of Genysis
Reservation Systems, Inc., a New Jersey corporation (the "Company"),
at any time between,
1997 (the "Initial Warrant Exercise Date"), and the Expiration Date (as
hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed,
at the corporate office of Continental Stock Transfer and Trust Company, 2
Broadway, New York, New York 10004, as Warrant Agent, or its successor (the
"Warrant Agent"), accompanied by payment of $6.75 subject to adjustment
(the "Purchase Price"), in lawful money of the United States of America in
cash or by check made payable to the Warrant Agent for the account of the
Company. This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Redeemable Warrant Agreement (the "Warrant
Agreement"), dated ________________, 1996, by and between the Company and
the Warrant Agent. In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price and the number of shares of
Common Stock subject to purchase upon the exercise of each Warrant
represented hereby are subject to modification or adjustment. Each Warrant
represented hereby is exercisable at the option of the Registered Holder,
but no fractional interests will be issued. In the case of the exercise of
less than all the Warrant represented hereby, the Company shall cancel this
Warrant Certificate upon the surrender hereof and
39
<PAGE>
shall execute and deliver a new Warrant Certificate or Warrant Certificates
of like tenor, which the Warrant Agent shall countersign, for the balance
of such Warrants. The term "Expiration Date" shall mean 5:00 p.m. (New York
time) on , 2001. If each such date shall in the State of New York be a
holiday or a day on which the banks are authorized to close, then the
Expiration Date shall mean 5:00 p.m. (New York time) the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close. The Company shall not be obligated to deliver any
securities pursuant to the exercise of this Warrant unless a registration
statement under the Securities Act of 1933, as amended (the "Act), with
respect to such securities is effective or an exemption thereunder is
available. The Company has covenanted and agreed that it will file a
registration statement under the Federal securities laws, use its best
efforts to cause the same to become effective, use its best efforts to keep
such registration statement current, if required under the Act, while any
of the Warrants are outstanding, and deliver a prospectus which complies
with Section 10(a)(3) of the Act to the Registered Holder exercising this
Warrant. This Warrant shall not be exercisable by a Registered Holder in
any state where such exercise would be unlawful. This Warrant Certificate
is exchangeable, upon the surrender hereof by the Registered Holder at the
corporate office of the Warrant Agent, for a new Warrant Certificate or
Warrant Certificates of like tenor representing an equal aggregate number
of Warrants, each of such new Warrant Certificates to represent such number
of Warrants as shall be designated by such Registered Holder at the time of
such surrender. Upon due presentment and payment of any tax or other charge
imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant
Certificate of Warrant Certificates representing an equal aggregate number
of Warrants will be issued to the transferee in exchange therefor, subject
to the limitations provided in the Warrant Agreement. Prior to the exercise
of any Warrant represented hereby, the Registered Holder shall not be
entitled to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.10 per
Warrant, at any time commencing six (6) months after the Initial Warrant
Exercise Date, provided that (i) the closing bid price for the Common Stock
is reported by The Nasdaq Stock Market, Inc. ("Nasdaq"), if the Common
Stock is then traded in the over-the-counter market or (ii) the closing
sale price, if the Common Stock is then traded on Nasdaq/NM or a national
securities exchange, shall have equalled or exceeded for any twenty (20)
trading days within a period of thirty (30) consecutive trading days ending
on the fifth (5th) day prior to the Notice of Redemption, as defined below,
$7.25 per share (subject to adjustment in the event of any stock splits or
other similar events). Notice of redemption (the "Notice of Redemption")
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the
40
Warrant Agreement. On and after the date fixed for redemption, the
Registered Holder shall have no rights with respect to the Warrants except
to receive the $.10 per Warrant upon surrender of this Warrant Certificate.
Under certain circumstances, R.D. White & Co., Inc. collectively shall be
entitled to receive an aggregate of four percent (4%) of the Purchase Price
of the Warrants represented hereby. Prior to due presentment for
registration of transfer hereof, the Company and the Warrant Agent may deem
and treat the Registered Holder as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of ownership or
writing hereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by
any notice to the contrary, except as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to conflicts
of laws. This Warrant Certificate is not valid unless countersigned by the
Warrant Agent. IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile by two of its
officers thereunto duly authorized and a facsimile of its corporate seal to
be imprinted hereon. Dated: ________________, 1996 [SEAL] GENISYS
RESERVATION SYSTEMS, INC. By: _________________________Joseph Cutrona,
President By: _____________________________ John Wasko, Secretary
COUNTERSIGNED: CONTINENTAL STOCK TRANSFER AND TRUST COMPANY as Warrant
Agent By: _____________________ Name: _____________________ Title:
____________________
41
<PAGE>
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in name of PLEASE INSERT
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER (please print or type name and
address) and be delivered to (please print or type name and address) and if
such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered
Holder at the address stated below.
42
<PAGE>
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1. The exercise of this Warrant was
solicited by R.D. White & Co., Inc.
2. The exercise of this Warrant was not
solicited.
Dated: X
Address Social Security or Taxpayer Identification Number Signature
Guaranteed
43
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, _________________________ hereby sells, assigns and
transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
(please print or type name and address) ___________________________ of the
Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints ____________________ Attorney to transfer this
Warrant Certificate on the of the Company, with full power of substitution
in the premises. Dated: X Signature Guaranteed THE SIGNATURE TO THE
ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN
UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE GUARANTEED
BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE CONTINENTAL
STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST STOCK EXCHANGE OR BOSTON
STOCK EXCHANGE.
44
<PAGE>
Exhibit 4.3
GENISYS RESERVATION SYSTEMS, INC.
AND
R.D. WHITE & CO., INC.
UNDERWRITER'S
WARRANT AGREEMENT
Dated as of , 1996
<PAGE>
UNDERWRITER'S WARRANT AGREEMENT dated as of , 1996 between GENISYS RESERVATION
SYSTEMS, INC., a New Jersey corporation (the "Company") and R.D. WHITE & CO.,
INC., its successors, designees and assigns (hereinafter referred to as the
"Underwriter"). W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriter warrants ("Warrants")
to purchase up to an aggregate of 80,000 shares of common stock, $.0001 par
value, of the Company's ("Common Stock") and/or up to 210,000 warrants
consisting of 130,000 Class A Warrants and 80,000 Class B Warrants ("Underlying
Warrants"), each Underlying Warrant entitling the holder to purchase one share
of Common Stock. (One share of Common Stock and one Underlying Warrant are each
hereinafter referred to as a "Warrant Security" and more than one collectively
referred to as the "Warrant Securities"); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting agreement (the
"Underwriting Agreement") dated as of the date hereof among the Underwriter and
the Company to act as the Underwriter in connection with the Company's proposed
public offering of up to 800,000 shares of Common Stock and 2,100,000 redeemable
warrants consisting of 1,300,000 Class A Warrants and 800,000 Class B Warrants
(collectively the "Redeemable Warrants") at a public offering price of $5.00 per
share of Common Stock and $.20 per Class A Redeemable Warrant and $.10 per Class
B Redeemable Warrant (the "Public Offering"); and WHEREAS, the Warrants to be
issued pursuant to this Agreement will be issued on the Closing Date (as such
term is defined in the Underwriting Agreement) by the Company to the Underwriter
in consideration for, and as part of the Underwriter's compensation in
connection with, the Underwriter acting as the Underwriter pursuant to the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the Underwriter
1
<PAGE>
to the Company of an aggregate twenty-one dollars ($21.00), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows: 1. Grant The Underwriter is hereby granted the right to purchase, at
any time from , 1997 until 5:00 P.M., New York time, on , 2001, up to an
aggregate of 80,000 shares of Common Stock (the "Shares") and/or 210,000
Underlying Warrants at an initial exercise price (subject to adjustment as
provided in Section 8 hereof) of $6.00 per Share and $.24 per Class A Warrant
and $.12 per Class B Warrant, subject to the terms and conditions of this
Agreement. Each Underlying Warrant is exercisable to purchase one additional
share of Common Stock at an initial exercise price of $6.90 per Class A Warrant
from , 1997 until 5:00 P.M. New York time on , 2001 at which time the Class A
Underlying Warrants will expire and $ 8.10 per Class B Warrant from , 1997 until
5:00 P.M. New York time on , 2001 at which time the Class B Underlying Warrants
will expire. Except as set forth herein, the Underlying Warrants issuable upon
exercise of the Warrants are in all respects identical to the Redeemable
Warrants being purchased by the Underwriter for resale to the public pursuant to
the terms and provisions of the Underwriting Agreement and the Redeemable
Warrant Agreement dated 1996 between the Company and Continental Stock Transfer
& Trust Company ("Redeemable Warrant Agreement"). Except as set forth herein,
the shares issuable upon exercise of the Warrants are in all respects identical
to the shares of Common Stock being purchased by the Underwriter for resale to
the public pursuant to the terms and provisions of the Underwriting Agreement
writer for resale to the public pursuant to the
terms and provisions of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant Certificates")
delivered and to be delivered pursuant to this Agreement shall be (i) in the
form set forth in Exhibit A, with respect to Class A Warrants to purchase
Shares; (ii) in the form set forth in Exhibit B, with respect to Class B
Warrants to purchase Shares; (iii) in the form set forth in Exhibit C with
respect to Class A Warrants to purchase Underlying Warrants; and (iv) in the
form set forth in Exhibit D with respect to Class B Warrants to purchase
Underlying Warrants, each attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations as 2
<PAGE>
required or permitted by this Agreement. 3. Exercise of Warrant. 3.1 Method of
Exercise. The Warrants initially are exercisable at the initial exercise prices
(subject to adjustment as provided in Section 8 hereof) per Share and per
Underlying Warrant as set forth in Section 6 hereof payable by certified or
official bank check in New York Clearing House funds, subject to adjustment as
provided in Section 8 hereof. Upon surrender of a Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Warrant Securities purchased at
the Company's principal offices (presently located at
_______________________________________________) the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased and/or a
certificate or certificates for the Underlying Warrants so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holders thereof, in whole or part (but not as to fractional shares
of the Common Stock and/or Underlying Warrants). In the case of the purchase of
less than all Warrant Securities purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Warrant Securities purchasable thereunder. 3.2 Exercise by
Surrender of Warrant. In addition to the method of payment set forth in Section
3.1 and in lieu of any cash payment required thereunder, the Holder(s) of the
Warrants shall have the right at any time and from time to time to exercise the
Warrants in full or in part by surrendering the applicable Warrant Certificates
in the manner specified in Section 3.1. The number of shares of Common Stock to
be issued pursuant to this Section 3.2 shall be equal to the difference between
(a) the number of shares of Common Stock in respect of which the Warrants are
exercised and (b) a fraction, the numerator of which shall be the number of
shares of Common Stock in respect of which the Warrants are exercised multiplied
by the Exercise Price (as hereinafter defined) and the denominator of which
shall be the Market Price. The number of Underlying Warrants to be issued
pursuant to this Section 3.2 shall be equal to the difference between (a) the
number of Underlying Warrants in respect of which the Warrants are exercised and
(b) a fraction, the numerator of which 3
<PAGE>
shall be the number of Underlying
Warrants in respect of which the Warrants are exercised shall be the number of
Underlying Warrants in respect of which the Warrants are exercised multiplied by
the Exercise Price (as hereinafter defined) and the denominator of which shall
be the Market Price. 3.3 Definition of Market Price. As used herein, the phrase
"Market Price" at any date shall be deemed to be (i) when referring to the
Common Stock, the last reported sale price, or, in case no such reported sale
takes place on such day, the average of the last reported sale prices for the
last three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or by the Nasdaq National Market ("NNM"), or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or quoted by
NNM, the average closing bid price as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through Nasdaq or similar organization if
Nasdaq is no longer reporting such information, or if the Common Stock is not
quoted on Nasdaq, or such similar organization as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it or (ii) when referring to an Underlying Warrant, the
last reported sale price, or, in the case no such reported sale takes place on
such day, the average of the last reported sale prices for the last three (3)
trading days, in either case as officially reported by the principal securities
exchange on which the Underlying Warrants are listed or admitted to trading or
by NNM, or, if the Underlying Warrants are not listed or admitted to trading on
any national securities exchange or quoted by NNM, the average closing bid price
as furnished by the NASD through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Underlying Warrant is not quoted on
Nasdaq or such similar organization, the Market Price of an Underlying Warrant
shall equal the difference between the Market Price of the Common Stock and the
Exercise Price (as hereinafter defined) of the Underlying Warrant.
Notwithstanding the foregoing, for purposes of Section 8, the Market Price of a
share of Common Stock or an Underlying Warrant shall be determined by reference
to the relevant information set forth above during the thirty (30) trading days
immediately preceding the date of the event requiring the determination of the
Market Price (except that, in the event of a public offering of shares of Common
Stock, the Market Price of a share of Common Stock or an Underlying Warrant
shall be determined by reference to the trading day immediately preceding the
effective date of the public offering and not such thirty (30) 4
<PAGE>
trading day
period). 4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and Underlying Warrants
and/or other securities, properties or rights underlying such Warrants and, upon
the exercise of the Underlying Warrants, the issuance of certificates for shares
of Common Stock and/or other securities, properties or rights underlying such
Underlying Warrants, shall be made forthwith (and in any event within five (5)
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Sections 5
and 7 hereof) be issued in the name of, or in such names as may be directed by,
the Holder thereof; provided, however, that the Company shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. The
Warrant Certificates and the certificates representing the Shares, Underlying
Warrants and the shares of Common Stock underlying such Underlying Warrants
(and/or other securities, property or rights issuable upon the exercise of the
Warrants or the Underlying Warrants) shall be executed on behalf of the Company
by the manual or facsimile signature of the then present Chairman or Vice
Chairman of the Board of Directors or President or Vice President of the Company
under its corporate seal reproduced thereon, attested to by the manual or
facsimile signature of the then present Secretary or Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer. 5.
Restriction On Transfer of Warrants. The Holder of a Warrant Certificate, by its
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof; that the Warrants
may not be sold, transferred,
<PAGE>
assigned, hypothecated or otherwise disposed
of, in whole or in part, for a period of one (1) year from the date hereof,
except to officers of the Underwriter. 6. Exercise Price. 6.1 Initial and
Adjusted Exercise Price. Except as otherwise provided in Section 8 hereof, the
initial exercise price of each Class A Warrant to purchase Common Stock shall be
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided in Section
8 hereof, the initial exercise price of each Class A Warrant to purchase Common
Stock shall be $6.90 per share of Common Stock and each Class B Warrant to
purchase Common Stock shall be $8.10 per share of Common Stock and the initial
exercise price of each Warrant to purchase Underlying Warrants shall be $.24 per
Class A Underlying Warrant and $.12 per Class B Underlying Warrant. The adjusted
exercise price shall be the price which shall result from time to time from any
and all adjustments of the initial exercise price in accordance with the
provisions of Section 8 hereof and/or in accordance with a reduction by the
Company, in its sole discretion, of the exercise price of each Warrant to
purchase Common Stock. 6.2 Exercise Price. The term "Exercise Price" herein
shall mean the applicable initial exercise price or with respect to Warrants to
purchase Common Stock the adjusted exercise price, depending upon the context.
7. Registration Rights. 7.1 Current Registration Under the Securities Act of
1933. The Warrants, the Shares, the Underlying Warrants issuable upon exercise
of the applicable Warrants and the shares of Common Stock issuable upon exercise
of such Underlying Warrants have been registered under the Securities Act of
1933, as amended (the "Act"), pursuant to the Company's Registration Statement
on Form SB-2 (Registration No.333- ) (the "Registration Statement"). The Company
covenants and agrees to use its best efforts to maintain the effectiveness of
the Registration Statement for a period of five (5) years from its effective
date. 7.2 Contingent Registration Rights. In the event that, for any reason
whatsoever, the Company shall fail to maintain the effectiveness of the
Registration Statement for a period of five (5) years from its effective date
and, in any event, from and after the fifth (5th) anniversary of the effective
date of the Registration Statement, the Underwriter shall have commencing the
date of any
<PAGE>
such occasion, the contingent registration rights ("Registration
Rights") set forth in Sections 7.3 and 7.4 hereof. 7.3 Piggyback Registration.
(a) If, at any time commencing after the effective date of the Registration
Rights and expiring on the seventh (7th) anniversary of the effective date of
the Registration Statement, the Company proposes to register any of its
securities under the Act, either for its own account or the account of any other
security holder or holders of the Company possessing registration rights ("Other
Stockholders") (other than pursuant to Form S-4, Form S-8 or comparable
registration statement), it shall give written notice, at least thirty (30) days
prior to the filing of each such registration statement, to the Underwriter and
to all other Holders of Warrants, Shares, Underlying Warrants and/or shares of
Common Stock issuable upon exercise of the Underlying Warrants (collectively,
"Registrable Securities") of its intention to do so. If the Underwriter or other
Holders of Registrable Securities notify the Company within twenty-one (21) days
after the receipt of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford the
Underwriter and such other Holders of such securities the opportunity to have
any such securities registered under such registration statement. (b) If the
registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Underwriter
and such other Holders as part of the written notice given pursuant to Section
7.3(a) hereof. The right of the Underwriter or any such other Holder to
registration pursuant to this Section 7.3 shall be conditioned upon their
participation in such underwriting and the inclusion of their Registrable
Securities in the underwriting to the extent hereinafter provided. The
Underwriter and all other Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any officer,
directors or Other Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected by the Company. Notwithstanding any other
provision of this Section 7.3, if the underwriter or underwriters advises the
Company in writing that marketing factors require a limitation or elimination of
the number of shares of Common Stock or other securities to be underwritten, the
Underwriter may limit the number of shares of Common Stock or other securities
to be included in
7
<PAGE>
the registration and underwriting. The Company shall so advise the Underwriter
and all other Holders of Registrable Securities requesting registration, and the
number of shares of Common Stock or other securities that are entitled to be
included in the registration and underwriting shall be allocated among the
Underwriter and other Holders requesting registration, in each case, in
proportion, as nearly as practicable, to the respective amounts of securities
which they had requested to be included in such registration at the time of
filing the registration statement. (c) Notwithstanding the provisions of this
Section 7.3, the Company shall have the right at any time after it shall have
given written notice pursuant to Section 7.3(a) hereof (irrespective of whether
a written request for inclusion of any such securities shall have been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after the filing but prior to the effective date thereof. 7.4 Demand
Registration. (a) At any time commencing after the effective date of the
Registration Rights and ending on the fifth (5th) anniversary of the effective
date of the Registration Statement, the Underwriter and Holders of Registrable
Securities representing a "Majority" (as hereinafter defined) of such securities
(assuming the exercise of all of the Warrants and Underlying Warrants) (the
"Initiating Holders") shall have the right (which right is in addition to the
registration rights under Section 7.3 hereof), exercisable by written notice to
the Company, to have the Company prepare and file with the Commission, on one
occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Registrable
Securities for up to two hundred and seventy (270) days by such Holders and any
other Holders of Registrable Securities, as well as any other security holders
possessing similar registration rights, who notify the Company within twenty-one
(21) days after receiving notice from the Company of such request. (b) The
Company covenants and agrees to give written notice of any registration request
under this Section 7.4 by any Holder or Holders to all other registered Holders
of Registrable Securities, as well as any other security holders possessing
similar registration rights, within ten (10) days after the date of the receipt
of any such registration request.
<PAGE>
(c) If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 7.4(a) hereof. The right of any Holder to registration
pursuant to this Section 7.4 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent and subject to the
limitations provided herein. A Holder may elect to include in such underwriting
all or a part of the Registrable Securities it holds. (d) The Company shall
(together with all Holders, officers, directors and Other Stockholders proposing
to distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the Underwriter of the underwriter
of underwriters selected for such underwriting by the Initiating Holders, which
underwriter(s) shall be reasonably acceptable to the Underwriter.
Notwithstanding any other provision of this Section 7.4, if the Underwriter
advises the Initiating Holders in writing that marketing factors require a
limitation or elimination of the number of shares of Common Stock or other
securities to be underwritten, the Underwriter may limit the number of shares of
Common Stock or other securities to be included in the registration and
underwriting. The Company shall so advise the Underwriter and all Holders of
Registrable Securities requesting registration, and the number of shares of
Common Stock or other securities that are entitled to be included in the
registration and underwriting shall be allocated among the Underwriter and other
Holders requesting registration, in each case, in proportion, as nearly as
practicable, to the respective amounts of securities which they had requested to
be included in such registration at the time of filing the registration
statement. If the Company or any Holder of Registrable Securities who has
requested inclusion in such registration as provided above disapproves of the
terms of any such underwriting, such person may elect to withdraw its securities
therefrom by written notice to the Company, the underwriter and the Initiating
Holders. Any securities so excluded shall be withdrawn from such registration.
No securities excluded from such registration by reason of such underwriters'
marketing limitations shall be included in suchom such
registration by reason of such underwriters' marketing limitations shall be
included in such registration. To facilitate the allocation of shares in
accordance with this Section 7.4(d), the Company or underwriter or underwriters
selected as provided above may round the number of securities of any holder
which may be included in such registration to the nearest 100 shares.
<PAGE>
(e) In
the event that the Initiating Holders are unable to sell all of the Registrable
Securities for which they have requested registration due to the provisions of
Section 7.4(d) hereof and if, at that time, the Initiating Holders are not
permitted to sell Registrable Securities under Rule 144(k), the Initiating
Holders shall be entitled to require the Company to afford the Initiating
Holders an opportunity to effect one additional demand registration under this
Section 7.4. (f) In addition to the registration rights under Section 7.3 and
subsection (a) of Section 7.4 hereof, at any time commencing on the date hereof
and expiring five (5) years thereafter any Holder of Registrable Securities
shall have the right, exercisable by written request to the Company, to have the
Company prepare and file, on one occasion, with the Commission a registration
statement so as to permit a public offering and sale for 270 days by any such
Holder of its Registrable Securities provided, however, that the provisions of
Section 7.5(b) hereof, shall not apply to any such registration request and
registration and all costs incident thereto shall be at the expense of the
Holder or Holder's making such request. (g) Notwithstanding anything to the
contrary contained herein, if the Company shall not have filed a registration
statement for the Registrable Securities of the Initiating Holders or the
Holder(s) referred to in Section 7.5(f) above (the "Paying Holders"), within the
time period specified in Section 7.5(a) below, the Company shall upon the
written notice of election of the Initiating Holders or the Paying Holders, as
the case may be, repurchase (i) any and all Shares and/or Underlying Warrants at
the higher of the Market Price per share of Common Stock or per Underlying
Warrant, as the case may be, on (x) the date of the notice sent to the Company
under Section 7.4(a) or (f), as the case may be, or (y) the expiration of the
period specified in Section 7.5(a) and (ii) any and all Warrants at such Market
Price less the Exercise Price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within five (5) business days after
the expiration of the period specified in Section 7.5(a). 7.5 Covenants of the
Company With Respect to Registration. In connection with any registration under
Sections 7.3 and 7.4 hereof, the Company covenants and agrees as follows: (a)
The Company shall use its best efforts to file a registration statement within
thirty (30) days of receipt of any demand therefor, shall use its best efforts
to have any registration
<PAGE>
statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Registrable
Securities such number of prospectuses as shall reasonably be requested. (b) The
Company shall pay all costs (excluding fees and expenses of Holder(s)' counsel
and any underwriting or selling commissions), fees and expenses in connection
with all registration statements filed pursuant to Sections 7.3 and 7.4 hereof
including, without limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. If the Company shall fail to comply with
the provisions of Section 7.5(a), the Company shall, in addition to any other
equitable or other relief available to the Holder(s), extend the exercise period
of the Warrants by such number of days as shall equal the delay caused by the
Company's failure. addition to any other equitable or other relief available to
the Holder(s), extend the exercise period of the Warrants by such number of days
as shall equal the delay caused by the Company's failure. (c) The Company will
take all necessary action which may be required in qualifying or registering the
Registrable Securities included in a registration statement for offering and
sale under the securities or blue sky laws of such states as reasonably are
requested by the Holder(s); provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction. (d)
The Company shall indemnify the Holder(s) of the Registrable Securities to be
sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement but only to the same
extent and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify each of the Underwriters contained in Section 7 of the
Underwriting Agreement.
(e) The Holder(s) of the Registrable Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or
<PAGE>
defending against any claim whatsoever) to which they may
become subject under the Act, the exchange Act or otherwise, arising from
information furnished by or on behalf of such Holders, or their successors or
assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 7 of the
Underwriting Agreement pursuant to which the Underwriters have agreed to
indemnify the Company. (f) For a period of one hundred eighty (180) days after
the effectiveness of any registration statement filed pursuant to Section 7.4
hereof, the Company shall not permit any other registration statement (other
than (1) a registration statement relating to the securities for which the
Company has granted demand registration rights, as described in the Prospectus
included in the Registration Statement, (2) a registration statement relating to
the shares of Common Stock issuable upon exercise of the Redeemable Warrants
issued to the public pursuant to the Registration Statement, (3) a registration
statement relating to the securities for which the Company has granted piggyback
registration rights, as described in the Prospectus included in the Registration
Statement and (4) a registration statement filed on Forms S-4 or S-8) to be or
remain effective during the effectiveness of a registration statement filed
pursuant to Section 7.4 hereof, without the prior written consent of the Holders
of the Registrable Securities representing a Majority of such securities. (g)
The Company shall furnish to each Holder participating in the offering and to
each underwriter, if any, a signed counterpart, addressed to such Holder or
underwriter, of (i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing under the
underwriting agreement) signed by the independent public accountants who have
issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
<PAGE>
underwriters in underwritten public offerings of securities.
(h) The
Company shall as soon as practicable after the effective date of any
registration statement filed pursuant to Sections 7.3 and 7.4 hereof, and in any
event within 15 months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the act and covering
a period of at least 12 consecutive months beginning after the effective date of
the registration statement. (i) The Company shall deliver promptly to each
Holder participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all written
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement and permit each Holder and underwriters to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
NASD. Such investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder or underwriter shall reasonably request. (j)
With respect to any registration under Section 7.4 hereof, the Company shall
enter into an underwriting agreement with the managing underwriter selected for
such underwriting by the Initiating Holders or the Paying Holders, as the case
may be, which may be the Underwriter. Such agreement shall be satisfactory in
form and substance to the Company, each Holder and such managing underwriters,
and shall contain such representations, warranties and covenants by the Company
and such other terms as are customarily contained in agreements of that type
used by the managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their Registrable
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters, except as they may relate to
such Holders and their intended methods of distribution.
<PAGE>
(k) For purposes
of this Agreement, the term "Majority" in reference to the Holders of
Registrable Securities, shall mean in excess of fifty percent (50%) of the then
outstanding Warrants, Shares, Underlying Warrants and/or shares of Common Stock
issued upon exercise of the Underlying Warrants that (i) are not held by the
Company, an affiliate, officer, creditor, employee or agent thereof or any of
their respective affiliates, members of their family, persons acting as nominees
or in conjunction therewith and (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Act. (l) Nothing
contained in this Agreement shall be construed as requiring the Holder(s) to
exercise their Warrants or Underlying Warrants prior to the initial filing of
any registration statement or the effectiveness thereof. (m) In addition to the
Registrable Securities, upon the written request therefor, bych registration
statement, including without limitation restricted shares of Common Stock,
options, warrants or any other securities convertible into shares of Common
Stock. 7.6 Restrictive Legends. In the event that the Company fails to maintain
the effectiveness of the Registration Statement, such that the exercise, in part
or in whole, of the Warrants and/or the Underlying Warrants are not, at the time
of such exercise, registered under the Act, any certificates representing the
Shares underlying the Warrants, the Underlying Warrants underlying the Warrants
and/or the shares of Common Stock underlying the Underlying Warrants, and any of
the other securities issuable upon exercise of the Warrants shall bear the
following restrictive legend: The securities represented by this certificate
have not been registered under the Securities Act of 1933, as amended ("Act"),
and may not be offered or sold except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144 under the Act
(or any similar rule under such Act relating to the disposition of securities),
or (iii) an opinion of counsel, if such opinion shall be reasonably satisfactory
to counsel to the issuer, that an exemption from registration under such Act is
available.
<PAGE>
8. Adjustments to Exercise Price and Number of Securities. 8.1
Computation of Adjusted Exercise Price. Except as hereinafter provided, in the
event the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances or sales referred to in Section
8.7 hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the Market Price in effect
immediately prior to the issuance or sale of such shares, or without
consideration, then forthwith upon such issuance or sale, the Exercise Price
shall (until another such issuance or sale) be reduced to the price (calculated
to the nearest full cent) equal to the quotient derived by dividing (i) an
amount equal to the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to the issuance or sale of such shares, multiplied
by the Exercise Price in effect immediately prior to such issuance or sale, and
(b) the aggregate of the amount of all consideration, if any, received by the
Company upon such issuance or sale, by (ii) the total number of shares of Common
Stock outstanding immediately after such issuance or sale; provided, however,
that in no event shall the Exercise Price be adjusted pursuant to this
computation to an amount in excess of the Exercise Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock, as provided by Section 8.3 hereof. For the purposes of
this Section 8 the term Exercise Price shall mean the Exercise Price per share
of Common Stock set forth in Section 6 hereof, as adjusted from time to time
pursuant to the provisions of this Section 8. For the purposes of any
computation to be made in accordance with this Section 8.1, the following
provisions shall be applicable: (i) In case of the issuance or sale of shares of
Common Stock for a consideration part or all of which shall be cash, the amount
of the cash consideration therefor shall be deemed to be the amount of cash
received by the Company for such shares (or, if shares of Common Stock are
offered by the Company for subscription, the subscription price, or, if either
of such securities shall be sold to underwriters or dealers for public offering
without a subscription offering, the initial
<PAGE>
public offering price) before
deducting therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or other performing
similar services, or any expenses incurred in connection therewith. (ii) In case
of the issuance or sale (other than as a dividend or other distribution on any
stock of the Company) of shares of Common Stock for a consideration part or all
of which shall be other than cash, the amount of the consideration therefor
other than cash shall be deemed to be the value of such consideration as
determined in good faith by the Board of Directors of the Company and shall
include any amounts payable to security holders or any affiliates thereof,
including without limitation, pursuant to any employment agreement, royalty,
consulting agreement, covenant not to compete, earnout or contingent payment
right or similar arrangement, agreement or understanding, whether oral or
written; all such amounts being valued for the purposes hereof at the aggregate
amount payable thereunder, whether such payments are absolute or contingent, and
irrespective of the period or uncertainty of payment, the rate of interest, if
any, or the contingent nature thereof; provided, however, that if any Holder(s)
does not agree with such evaluation, a mutually acceptable independent appraiser
shall make such evaluation, the cost of which shall be borne by the Company.
(iii) Shares of Common Stock issuable by way of dividend or other distribution
on any stock of the Company shall be deemed to have been issued immediately
after the opening of business on the day following the record date for the
determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration. (iv)
The reclassification of securities of the Company other than shares of Common
Stock into securities including shares of Common Stock shall be deemed to
involve the issuance of such shares of Common Stock for a consideration other
than cash immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (ii) of this Section 8.1. (v) The number of
shares of Common Stock at any one time outstanding shall include the aggregate
number of shares issued or issuable (subject to readjustment upon the actual
<PAGE>
issuance thereof) upon the exercise of options, rights, warrants and upon the
conversion or exchange of convertible or exchangeable securities. 8.2 Options,
Rights, Warrants and Convertible and Exchangeable Securities. In case the
Company shall at any time after the date hereof issue options, rights or
warrants to subscribe for shares of Common Stock, or issue any securities
convertible into or exchangeable for shares of Common Stock, for a consideration
per share less than the Market Price in effect immediately prior to the issuance
of such options, rights or warrants, or such convertible or exchangeable
securities, or without consideration, the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of Section
8.1 hereof, provided that: (a) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under such options, rights or warrants shall
be deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum purchase
price per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as consideration
received on the issue or sale of shares in accordance with the terms of the
Warrants), if any, received by the Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof. (c) If any change shall occur in the
price per share provided for in any of the options, rights or warrants referred
to in subsection (a) of this Section 8.2, or in the price per share at which the
securities referred to in subsection (b) of this Section 8.2 are convertible or
exchangeable, such options, rights or warrants or conversion or exchange rights,
as the case may be,
<PAGE>
shall be deemed to have expired or terminated on the
date when such price change became effective in respect of shares not
theretofore issued pursuant to the exercise or conversion or exchange thereof,
and the Company shall be deemed to have issued upon such date new options,
rights or warrants or convertible or exchangeable securities at the new price in
respect of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible or
exchangeable securities. 8.3 Subdivision and Combination. In case the Company
shall at any time subdivide or combine the outstanding shares of Common Stock,
the Exercise Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination. 8.4 Adjustment in Number of
Securities. Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 8, the number of Warrant Securities issuable upon the
exercise at the adjusted exercise price of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Securities
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price. 8.5 Definition
of Common Stock. For the purpose of this Agreement, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the Certificate
of Incorporation of the Company as amended as of the date hereof, or (ii) any
other class of stock resulting from successive changes or reclassifications of
such Common Stock consisting solely of changes in par value, or from par value
to no par value, or from no par value to par value. The Company covenants that
so long as any of the Warrants are outstanding, the Company shall not without
the prior written consent of the Underwriter issue any securities whatsoever
other than Common Stock. In the event that the Company shall, upon the consent
of the Underwriter, after the date hereof issue securities with greater or
superior voting rights than the shares of Common Stock outstanding as of the
date hereof, the Holder, at its option, may receive upon exercise of any Warrant
either shares of Common Stock or a like number of such securities with greater
or superior voting rights. 8.6 Merger or Consolidation. In case of any
consolidation of the Company with, or merger of the Company with, or merger of
the Company into, another corporation (other than a
<PAGE>
consolidation or merger
which does not result in any reclassification or change of the outstanding
Common Stock), the corporation formed by such consolidation or merger shall
execute and deliver to the Holder a supplemental warrant
<PAGE>
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such consolidation
or merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 8. The above provision of this subsection shall
similarly apply to successive consolidations or mergers. 8.7 No Adjustment of
Exercise Price in Certain Cases. No adjustment of the Exercise Price shall be
made: (a) Upon the issuance or sale of the Warrants, Underlying Warrants,
Redeemable Warrants or the shares of Common Stock issuable upon the exercise of
(i) the Warrants, (ii) the Underlying Warrants, or (iii) the Redeemable
Warrants; or (b) If the amount of said adjustment shall be less than two (2)
cents per Warrant Security, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
two (2) cents per Warrant Security. 8.8 Dividends and Other Distributions. In
the event that the Company shall at any time prior to the exercise of all
Warrants declare a dividend (other than a dividend consisting solely of shares
of Common Stock) or otherwise distribute to its stockholders any assets,
property, rights, evidences of indebtedness, securities (other than shares of
Common Stock), whether issued by the Company or by another, or any other thing
of value, the Holders of the unexercised Warrants shall thereafter be entitled,
in addition to the shares of Common Stock or other securities and property
receivable upon the exercise thereof, to receive, upon the exercise of such
Warrants, the same property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such dividend or distribution as if the
19
<PAGE>
Warrants had been exercised immediately prior to such dividend or distribution.
At the time of any such dividend or distribution, the Company shall make
appropriate reserves to ensure the timely performance of the provisions of this
subsection 8.8. 9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holder at the principal executive office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designed by the Holder thereof at the time of such surrender. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated, the
Company will make and deliver a new Warrant Certificate of like tenor, in lieu
thereof. 10. Elimination of Fractional Interests. The Company shall not be
required to issue fractional shares of Common Stock or Underlying Warrants upon
the exercise of Warrants. Warrants may only be exercised in such multiples as
are required to permit the issuance by the Company of one or more whole shares
of Common Stock and/or Underlying Warrants. If one or more Warrants shall be
presented for exercise in full at the same time by the same Holder, the number
of whole shares of Common Stock or Underlying Warrants which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares of Common Stock and/or Underlying Warrants purchasable on
exercise of the Warrants so presented. If any fraction of a share of Common
Stock or Underlying Warrants would, except for the provisions provided herein,
be issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to such fraction multiplied by the
then current market value of a share of Common Stock or Underlying Warrants,
determined as follows: (1) If the Common Stock or Underlying Warrant, as the
case may be, is listed,
<PAGE>
or admitted to unlisted trading privileges on the
New York Stock Exchange ("NYSE") or the American Stock Exchange ("AMEX"), or is
traded on the NNM, the current market value of a share of Common Stock or
Underlying Warrant, as the case may be, shall be the closing sale price of the
Common Stock or the Underlying Warrant, as the case may be, at the end of the
regular trading session on the last business day prior to the date of exercise
of the Warrants on whichever of such exchanges or NNM had the highest average
daily trading volume for the Common Stock or the Underlying Warrant, as the case
may be, on such day; or (2) If the Common Stock or the Underlying Warrant, as
the case may be, is not listed or admitted to unlisted trading privileges, on
either the NYSE or the AMEX and is not traded on NNM, but is quoted or reported
on Nasdaq, the current market value of a share of Common Stock or the Underlying
Warrant, as the case may be, shall be the average of the Underwriter closing bid
and asked prices (or the last sale price, if then reported by Nasdaq) of the
Common Stock or the Underlying Warrant, as the case may be, at the end of the
regular trading session on the last business day prior to the date of exercise
of the Warrants as quoted or reported on Nasdaq, as the case may be; or (3) If
the Common Stock or the Underlying Warrant, as the case may be, is not listed,
or admitted to unlisted trading privileges, on either of the NYSE or the AMEX,
and is not traded on NNM or quoted or reported on Nasdaq, but is listed or
admitted to unlisted trading privileges on the BSE or another national
securities exchange (other than the NYSE or the AMEX), the current market value
of a share of Common Stock or Underlying Warrant, as the case may be, shall be
the closing sale price of the Common Stock or the Underlying Warrant, as the
case may be, at the end of the regular trading session on the last business day
prior to the date of exercise of the Warrants on whichever of such exchanges has
the highest average daily trading volume for the Common Stock or the Underlying
Warrant, as the case may be, on such day; or (4) If the Common Stock or the
Underlying Warrant, as the case may be, is not listed or admitted to unlisted
trading privileges on any national securities exchange, or listed for trading on
NNM or quoted or reported on Nasdaq, but is traded in the over-the-counter
market, the current market value of a share of Common Stock or the Underlying
Warrant, as the case may be, shall be the average of the last reported bid and
asked prices of the Common Stock or the Underlying
<PAGE>
Warrant, as the case may
be, reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of exercise of the Warrants; or (5) If the Common Stock or the
Underlying Warrant, as the case may be, is not listed, admitted to unlisted
trading privileges on any national securities exchange, or listed for trading on
NNM or quoted or reported on Nasdaq, and bid and asked prices of the Common
Stock or the Underlying Warrant, as the case may be, are not reported by the
National Quotation Bureau, Inc., the current market value of a share of Common
Stock or the Underlying Warrant, as the case may be, shall be an amount, not
less than the book value thereof as of the end of the most recently completed
fiscal quarter of the Company ending prior to the date of exercise, determined
in accordance with generally acceptable accounting principles, consistently
applied. 11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants and the
Underlying Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all shares of Common Stock and other Securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. The
Company further covenants and agrees that upon exercise of the Underlying
Warrants underlying the Warrants and payment of the respective Underlying
Warrant exercise price therefor, all shares of Common Stock and other securities
issuable upon such exercises shall be duly and validly issued, fully paid, non-
assessable and not subject to the preemptive rights of any stockholder. As long
as the Warrants shall be outstanding, the Company shall use its best efforts to
cause all shares of Common Stock issuable upon the exercise of the Warrants and
Underlying Warrants and all Underlying Warrants underlying the Warrants to be
listed (subject to official notice of issuance) on all securities exchanges on
which the Common Stock or the Underlying Warrants issued to the public in
connection herewith may then be listed and/or quoted on NNM. 12. Notices to
Warrant Holders. Nothing contained in this Agreement shall be
<PAGE>
construed as
conferring upon the Holders the right to vote or to consent or to receive notice
as a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur: (a)
the Company shall take a record of the holders of its shares of Common Stock for
the purpose of entitling them to receive a dividend or distribution payable
other than in cash, or a cash dividend or distribution payable other than out of
current or retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or (b) the Company shall
offer to all the holders of its Common Stock any additional shares of capital
stock of the Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant to subscribe
therefor; or (c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer book, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale. 13. Underlying Warrants. The form of the
certificates representing Class A and Class B Underlying Warrants (and the form
of election to purchase shares of Common Stock upon the exercise of Underlying
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibits "A" and "B" to the Redeemable Warrant
Agreement provided, however, that the Underlying
<PAGE>
Warrants will be subject
to redemption only after the Warrants have been exercised and the Underlying
Warrants are outstanding. Each Class A Underlying Warrant shall entitle the
Holder to purchase one fully paid and non-assessable share of Common Stock at an
initial purchase price of $6.90 from , 1997 until 5:00 P.M. New York time on ,
2001 at which time the Class A Underlying Warrants shall expire. Each Class B
Underlying Warrant shall entitle the Holder to purchase one fully paid and
non-assessable share of Common Stock at an initial purchase price of $8.10 from
, 1997 until 5:00 P.M. New York time on , 2001 at which time the Class B
Underlying Warrants shall expire. The exercise price of the Underlying Warrants
and the number of shares of Common Stock issuable upon the exercise of the
Underlying Warrants are subject to adjustment, whether or not the Warrants have
been exercised and the Underlying Warrants have been issued, in the manner and
upon the occurrence of the events set forth in Section 8 of the Redeemable
Warrant Agreement, which is hereby incorporated herein by reference and made a
part hereof as if set forth in its entirety herein. Subject to the provisions of
this Agreement and upon issuance of the Underlying Warrants, each registered
holder of such Underlying Warrant shall have the right to purchase from the
Company (and the Company shall issue to such registered holders) up to the
number of fully paid and non-assessable shares of Common Stock (subject to
adjustment as provided herein and in the Redeemable Warrant Agreement), free and
clear of all preemptive rights of stockholders, provided that such registered
holder complies with the terms governing exercise of the Underlying Warrant set
forth in the Redeemable Warrant Agreement, and pays the applicable exercise
price, determined in accordance with the terms of the Redeemable Warrant
Agreement. Upon exercise of the Underlying Warrants, the Company shall forthwith
issue to the registered holder of any such Underlying Warrant in his name or in
such name as may be directed by him, certificates for the number of shares of
Common Stock so purchased. Except as otherwise provided herein and in Section
6.1 hereof, the Underlying Warrants shall be governed in all respects by the
terms of the Redeemable Warrant Agreement except that any notice of redemption
that the Company may issue with respect to the Redeemable Warrants shall not be
applicable to the Underlying Warrants. The Underlying Warrants shall be
transferable in the manner provided in the Redeemable Warrant Agreement, and
upon any such transfer, a new Underlying Warrant Certificate shall be issued
promptly to the transferee. The Company covenants to, and agrees with, the
Holder(s) that
<PAGE>
without the prior written consent of the Holder(s), which
will not be unreasonably withheld, the Redeemable Warrant Agreement will not be
modified, amended, canceled, altered or superseded, and that the company will
send to each Holder, irrespective of whether or not the Warrants have been
exercised, any and all notices required by the Redeemable Warrant Agreement to
be sent to holders of Underlying Warrants. 14. Notices. All notices, requests,
consents and other communications hereunder shall be in writing and shall be
deemed to have been duly made and sent when delivered, or mailed by registered
or certified mail, return receipt requested: (a) If to the registered Holder of
the Warrants, to the address of such Holder as shown on the books of the
Company; or (b) If to the Company, to the address set forth in Section 3 hereof
or to such other address as the Company may designate by notice to the Holders.
15. Supplements and Amendments. The Company and the Underwriter may from time to
time supplement or amend this Agreement without the approval of any Holders of
Warrant Certificates in order to cure any ambiguity, to correct or supplement
any provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem shall not
adversely affect the interests of the Holders of Warrant Certificates. 16.
Successors. All the covenants and provisions of this Agreement shall be binding
upon and inure to the benefit of the Company, the Holders and their respective
successors and assigns hereunder. 17. Termination. This Agreement shall
terminate at the close of business on , 2003. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive
<PAGE>
such termination
until the close of business on , 2005. 18. Governing Law; Submission to
Jurisdiction. This Agreement and each Warrant Certificate issued hereunder shall
be deemed to be a contract made under the laws of the State of New York and for
all purposes shall be construed in accordance with the laws of said State
without giving effect to the rules of said State governing the conflicts of
laws. The Company, the Underwriter and any other registered Holders hereby agree
that any action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Underwriter and any other registered
Holders hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum. Any such process or summons to be served upon any of the
Company, the Underwriter and the Holders (at the option of the party bringing
such action, proceeding or claim) may be served by transmitting a copy thereof,
by registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 14 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the party
so served in any action, proceeding or claim. The Company, the Underwriter and
any other registered Holders agree that the prevailing party(ies) in any such
action or proceeding shall be entitled to recover from the other party(ies) all
of its'/their reasonable legal costs and expenses relating to such action or
proceeding and/or incurred in connection with the preparation therefor. 19.
Entire Agreement; Modification. This Agreement (including the Underwriting
Agreement and the Redeemable Warrant Agreement to the extent portions thereof
are referred to herein) contains the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought. 20. Severability. If any provision of
<PAGE>
this Agreement shall be held to be invalid or
unenforceable, such
invalidity or unenforceability shall not affect any other provision of this
Agreement. 21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give to any person or corporation other than the Company and the Underwriter and
any other registered Holder(s) of the Warrant Certificates or Warrants
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole benefit of the Company and the
Underwriter and any other registered Holders of Warrant Certificates or Warrant
Securities. 23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument. IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
GENISYS RESERVATION SYSTEMS, INC. By: Name: Title: R.D. WHITE & CO., INC. By:
Name: Title:
<PAGE>
EXHIBIT A [FORM OF CLASS A WARRANT CERTIFICATE] THE WARRANTS
REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE. THE TRANSFER OR
EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN
ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN. EXERCISABLE ON OR
BEFORE 5:00 P.M., NEW YORK TIME, , 2001 No. UW- Class A Warrants to Purchase
Shares of Common Stock CLASS A WARRANT CERTIFICATE This Warrant Certificate
certifies that , or registered assigns, is the registered holder of Warrants to
purchase initially, at any time from , 1997 until 5:00 p.m. New York time on ,
2001 ("Expiration Date"), up to fully-paid and non-assessable shares of common
stock, $.0001 par value ("Common Stock") of Genisys Reservation Systems, Inc., a
New Jersey corporation (the "Company"), at the initial exercise price, subject
to adjustment in certain events (the "Exercise Price"), of $6.90 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Underwriter's Warrant Agreement dated as
of , 1996 between the Company and R.D. WHITE & CO., INC. (the "Underwriter's
Warrant Agreement"). Payment of the Exercise Price shall be made by certified or
official bank check in New York Clearing House funds payable to the order of the
Company or by surrender of this Warrant Certificate. No Warrant may be exercised
after 5:00 p.m., New York time, on the Expiration Date, at which time all
Warrants evidenced hereby, unless exercised prior thereto, hereby shall
<PAGE>
thereafter be void.
The Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Warrants issued pursuant to the Underwriter's
Warrant Agreement, which Underwriter's Warrant Agreement is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrants.
The Underwriter's Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Underwriter's Warrant Agreement. Upon due presentment
for registration of transfer of this Warrant Certificate at an office or agency
of the Company, a new Warrant Certificate of Warrant Certificates of like tenor
and evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Underwriter's Warrant Agreement, without
any charge except for any tax or other governmental charge imposed in connection
with such transfer. Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such numbered unexercised Warrants. The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary. All terms used
in this Warrant Certificate which are defined in the Underwriter's Warrantpany
shall forthwith issue to the holder hereof a new Warrant Certificate
representing such numbered
unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s)
of this Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone), for the purpose of any exercise hereof, and of
any distribution to the holder(s) hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary. All terms used in
this Warrant Certificate which are defined in the Underwriter's Warrant
Agreement shall have the meanings assigned to them in the Underwriter's Warrant
Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal. Dated as of , 1996 Attest: GENISYS
RESERVATION SYSTEMS, INC. By: Name: Name: Title: Title:
29
<PAGE>
EXHIBIT B
[FORM OF CLASS B WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH
ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE
REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, , 2001
No. UW- Class B Warrants to Purchase
Shares of Common Stock
CLASS B WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered assigns, is the
registered holder of Warrants to purchase initially, at any time from , 1997
until 5:00 p.m. New York time on , 2001 ("Expiration Date"), up to fully-paid
and non-assessable shares of common stock, $.0001 par value ("Common Stock") of
Genisys Reservation Systems, Inc., a New Jersey corporation (the "Company"), at
the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $8.10 per share of Common Stock upon surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency of
the Company, but subject to the conditions set forth herein and in the
Underwriter's Warrant Agreement dated as of , 1996 between the Company and R.D.
WHITE & CO., INC. (the "Underwriter's Warrant Agreement"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
Warrant Certificate. No Warrant may be exercised after 5:00 p.m., New York time,
on the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
<PAGE>
The Warrants
evidenced by this Warrant Certificate are part of a duly authorized issue of
Warrants issued pursuant to the Underwriter's Warrant Agreement, which
Underwriter's Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the
rights, limitation of rights, obligations, duties and immunities thereunder of
the Company and the holders (the words "holders" or "holder" meaning the
registered holders or registered holder) of the Warrants. The Underwriter's
Warrant Agreement provides that upon the occurrence of certain events the
Exercise Price and the type and/or number of the Company's securities issuable
thereupon may, subject to certain conditions, be adjusted. In such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter, or otherwise impair, the rights of the holder as set
forth in the Underwriter's Warrant Agreement. Upon due presentment for
registration of transfer of this Warrant Certificate at an office or agency of
the Company, a new Warrant Certificate of Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Underwriter's Warrant Agreement, without
any charge except for any tax or other governmental charge imposed in connection
with such transfer. Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such numbered unexercised Warrants. The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary. All terms used
in this Warrant Certificate which are defined in the Underwriter's Warrant
Agreement shall have the meanings assigned to them in the Underwriter's Warrant
Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal. Dated as of , 1996 Attest: GENISYS
RESERVATION SYSTEMS, INC. By: Name: Name: Title: Title: 31
<PAGE>
EXHIBIT C [FORM OF
CLASS A WARRANT CERTIFICATE] THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND
THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK TIME, , 2001 No. W- Class A
Warrants to Purchase Underlying Warrants CLASS A WARRANT CERTIFICATE This
Warrant Certificate certifies that , or registered assigns, is the registered
holder of Warrants to purchase initially, at any time from , 1997 until 5:00
p.m. New York time on , 2001 ("Expiration Date"), up to warrants (each such
Underlying Warrant entitling the owner to purchase one fully-paid and
non-assessable share of common stock, $.0001 par value ("Common Stock") of
Genisys Reservation Systems, Inc., a New Jersey corporation (the "Company")), at
the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $.24 per Underlying Warrant upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the Underwriter's
Warrant Agreement dated as of , 1996 between the Company and R.D. WHITE & CO.,
INC. (the "Underwriter's Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company or by surrender of this Warrant
Certificate. No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
<PAGE>
The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants issued
pursuant to the Underwriter's Warrant Agreement, which Underwriter's Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. The Underwriter's Warrant Agreement provides
that upon the occurrence of certain events the Exercise Price and the type
and/or number of the Company's securities issuable thereupon may, subject to
certain conditions, be adjusted. In such event, the Company will, at the request
of the holder, issue a new Warrant Certificate evidencing the adjustment in the
Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Underwriter's
Warrant Agreement. Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate of Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the office or
agency of the Company, a new Warrant Certificate of Warrant Certificates of like
tenor and evidencing in the aggregate a like number of Warrants shall be issued
to the transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Underwriter's Warrant Agreement, without
any charge except for any tax or other governmental charge imposed in connection
with such transfer. Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such numbered unexercised Warrants. The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary. All terms used
in this Warrant Certificate which are defined in the Underwriter's Warrant
Agreement shall have the meanings assigned to them in the Underwriter's Warrant
Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal. Dated as of , 1996 Attest: GENISYS
RESERVATION SYSTEMS, INC. By: Name: Name: Title: Title: 33
<PAGE>
EXHIBIT D [FORM OF
CLASS A WARRANT CERTIFICATE] THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND
THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE. THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN. EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK TIME, , 2001 No. W- Class B
Warrants to Purchase Underlying Warrants CLASS B WARRANT CERTIFICATE This
Warrant Certificate certifies that , or registered assigns, is the registered
holder of Warrants to purchase initially, at any time from , 1997 until 5:00
p.m. New York time on , 2001 ("Expiration Date"), up to warrants (each such
Underlying Warrant entitling the owner to purchase one fully-paid and
non-assessable share of common stock, $.0001 par value ("Common Stock") of
Genisys Reservation Systems, Inc., a New Jersey corporation (the "Company")), at
the initial exercise price, subject to adjustment in certain events (the
"Exercise Price"), of $.12 per Underlying Warrant upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the Underwriter's
Warrant Agreement dated as of , 1996 between the Company and R.D. WHITE & CO.,
INC. (the "Underwriter's Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company or by surrender of this Warrant
Certificate. No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
<PAGE>
The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants issued
pursuant to the Underwriter's Warrant Agreement, which Underwriter's Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants. The Underwriter's Warrant Agreement provides
that upon the occurrence of certain events the Exercise Price and the type
and/or number of the Company's securities issuable thereupon may, subject to
certain conditions, be adjusted. In such event, the Company will, at the request
of the holder, issue a new Warrant Certificate evidencing the adjustment in the
Exercise Price and the number and/or type of securities issuable upon the
exercise of the Warrants; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Underwriter's
Warrant Agreement. Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate of Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Underwriter's Warrant Agreement, without any charge except for
any tax or other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants. The Company
may deem and treat the registered holder(s) hereof as the absolute owner(s) of
this Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made
The Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all other purposes, and
the Company shall not be affected by any notice to the contrary. All terms used
in this Warrant Certificate which are defined in the Underwriter's Warrant
Agreement shall have the meanings assigned to them in the Underwriter's Warrant
Agreement. IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed under its corporate seal. Dated as of , 1996 Attest: GENISYS
RESERVATION SYSTEMS, INC.
By:
Name: Name:
Title: Title:
35
<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1] The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant
Certificate, to purchase: Shares Class A Underlying Warrants Class B Underlying
Warrants and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Genisys Reservation Systems, Inc., in the amount of $ , all in accordance with
the terms of Section 3.1 of the Underwriter's Warrant Agreement dated as of ,
1996 between Genisys Reservation Systems, Inc., and R.D. White & Co., Inc. The
undersigned request that a certificate for such Securities be registered in the
name of whose address is and that such Certificate be delivered to whose address
is . Signature (Signature must conform in all respects to name of holder as
specified on the face of the Warrant Certificate.) (Insert Social Security or
Other Identifying Number of Holder)
<PAGE>
[FORM OF ASSIGNMENT] (To be executed by
the registered holder if such holder desires to transfer the Warrant
Certificate.) FOR VALUE RECEIVED hereby sells, assigns and unto (Please print
name and address of transferee) Warrant Certificate, together with all right,
title and interest therein, and does hereby reasonably constitute and appoint ,
as Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution. Date: Signature:
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate.) (Insert Social Security or Other Identifying
Number of Assignee)
<PAGE>
EXHIBIT 8 SCRIPT SERVICES AGREEMENT THIS Script Services Agreement
("Agreement') is made this 21st day of June, 1995, by and between WORLDSPAN,
L.P., a Delaware limited partnership ("WORLDSPAN", 300 Galleria Parkway, N.W.,
Atlanta, Georgia 30339 and Corporate Travel Link, Incorporated located at 18
Village Green Ct., South Orange,-NJ 07079 (Customer"). W I T N E S S E T H:
WHEREAS, WORLDSPAN is a computer reservation system ("CRS") vendor providing
access to its WORLDSPAN System to travel agencies and others in the travel
industry; WHEREAS, Customer has arranged with WORLDSPAN for the use of
WORLDSPAN's CRS, equipment and products; and WHEREAS, Customer desires to retain
WORLDSPAN to write one or more software programs (hereinafter referred to as the
'Scripts@ that may be used with WORLDSPAN's Scripting product, used by Customer
in conjunction with the WORLDSPAN CRS. NOW, THEREFORE, it is agreed: 1. Scripts
to be Provided by WORLDSPAN. WORLDSPAN shall prepare and provide to Customer the
Scripts as outlined in Exhibit A attached hereto and incorporated herein.
WORLDSPAN shall create and provide the Scripts to Customer pursuant to this
Agreement. Preparation of the Scripts by WORLDSPAN may be carried out at
WORLDSPAN's facilities or at Customer's offices, provided that the completed
Scripts shall be provided to Customer at the address set forth above. 2. Access.
Customer agrees to make available to WORLDSPAN reasonable access to Customer's
equipment and staff, and provide such other assistance as shall be reasonably
necessary to permit WORLDSPAN to provide the Scripts according to this
Agreement, including but not limited to access to a WORLDSPAN Scripting
workstation and assistance from a Customer designee familiar with the design
specifications and host functionality of the proposed Script project. 3. Fees.
In consideration of the services provided by WORLDSPAN hereunder and the license
to the Scripts, Customer shall pay WORLDSPAN a fee of three thousand dollars ($
3,000.09). Fees shall be paid by Customer within thirty (30) days of the date of
invoice.
<PAGE>
WORLDSPAN may impose a late payment fee at the rate of one
percent (I%) per month for any amount that has not been received within thirty
(30) days after the date of such-invoice. In addition to any other charges set
forth herein, Customer shall pay to WORLDSPAN or reimburse WORLDSPAN, as
appropriate, for all sales, use, excise, property, or other similar taxes now or
hereafter imposed by any federal, state or local taxing authority on amounts
paid to WORLDSPAN by Customer. Notwithstanding the foregoing, Customer shall
not, in any event, be responsible for any taxes payable on WORLDSPAN's net
income or taxes in lieu of net income taxes, or for charges imposed on WORLDSPAN
for the privilege of doing business. 4. Termination of Agreement. Either party
may terminate this Agreement in its sole discretion by providing the other party
with one day advance written notice. Should Customer terminate this Agreement,
Customer will be obligated to pay WORLDSPAN the entire fee identified in Section
3 above. Should WORLDSPAN terminate this Agreement, Customer will not be
obligated to pay WORLDSPAN any of the fee identified in Section 3 above. 5.
Confidentiality. Each of the parties shall ensure that any Confidential
Information which it may become aware of or use during the performance of this
Agreement is treated by it in strictest confidence, and is not disclosed to
third parties or used except as expressly permitted by this Agreement.
"Confidential Information" shall mean information that is proprietary and
confidential to the party disclosing such information including, but not limited
to, software, specifications, customer information, scripting code, business
plans, financial information, and other information of a sensitive or
confidential nature whether oral or written, except (a) information known to the
receiving party prior to disclosure by the disclosing party; (b) information
which is widely known to the public in the relevant industry or trade; or (C)
information which is developed by the receiving party independent of any
Confidential Information provided by the disclosing party. Each party will treat
the other party's Confidential Information with at least the same concern and
protective measures accorded any of its own trade secrets and confidential
information. 6. License. Title and full and complete ownership rights to all
WORLDSPAN owned or developed software including but not limited to the Scripts,
shall remain with WORLDSPAN. Customer understands and agrees that WORLDSPAN's
owned or developed software is WORLDSPAN's trade secret, proprietary
information, and confidential information whether any portion thereof is or may
be validly copyrighted or patented. Any software provided to Customer is
provided by license only and such license is non-exclusive, non transferable and
limited to the right to use such software. Under no circumstances may a Script
be , copied for, duplicated for, provided to, or sold to any third party
including but not limited
<PAGE>
to any member of an agency consortium.
Customer's license shall include the right for Customer to modify the Scripts as
needed. 7. Limited Warranty. WORLDSPAN makes no representation or warranty with
regard to the accuracy or completeness of the Scripts or that the Scripts shall
be suitable for Customer for all purposes. WORLDSPAN warrants that the Scripts
shall operate substantially according to the design specifications outlined in
Exhibit A for a period of thirty(30)days following delivery of the Scripts to
Customer. In the event of any breach of the foregoing warranty, Customer's sole
remedy, and WORLDSPAN's sole obligation, shall be for WORLDSPAN to correct any
defective Script so that it shall operate substantially according to the design
specifications outlined in Exhibit A. 8. Indemnification. A. Each party shall
indemnify, defend and hold harmless the other party, its directors, affiliates,
partners, officers, employees and agents, from and against all liabilities,
damages and expenses, and claims for damages, suits, proceedings, recoveries,
judgments or executions including but not limited to litigation costs, expenses,
and reasonable attorneys' fees) arising out of or in connection with any claim
that the use of the indemnifying party's system or data (including, without
limitation, software) by the other party infringes any third party patent,
copyright, trademark or other property right. B. Each party shall indemnify,
defend and hold harmless the other party, its directors, affiliates, partners,
officers, employees and agents from and against all liabilities, damages and
expenses, and claims for damages, suits, proceedings, recoveries, judgments or
executions (including but not limited to litigation costs, expenses, and
reasonable attorneys' fees) which may be suffered by' accrued against, charged
to or recoverable from the other party, its past and present directors,
affiliates, partners, officers, employees or agents by reason of or in
connection with the party's performance or failure to perform, or improper
performance of any of the party's obligations under this Agreement. 9.
Disclaimer. OTHER THAN THE WARRANTIES AND REMEDIES SET FORTH IMMEDIATELY ABOVE,
WORLDSPAN DISCLAIMS AND CUSTOMER HEREBY WAIVES ALL WARRANTIES, EXPRESSED OR
IMPLIED, ORAL OR WRITTEN, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR INTENDED USE, RELATING TO
THE SCRIPTS OR SERVICES PROVIDED BY WORLDSPAN HEREUNDER. WORLDSPAN SHALL NOT BE
LIABLE TO CUSTOMER OR TO ANYONE ELSE FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES, REGARDLESS OF WHETHER CUSTOMER'S
CLAIM IS BASED ON CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. WORLDSPAN'S
TOTAL LIABILITY TO CUSTOMER OR ANY THIRD
<PAGE>
PARTY SHALL NOT EXCEED THE
AMOUNT PAID BY CUSTOMER TO WORLDSPAN PURSUANT TO THIS AGREEMENT. 10. Notice. All
notices, requests, demands or other communications hereunder shall be in
writing, hand delivered, sent by first class mail, overnight mail, facsimile or
All notices, requests, demands or other communications hereunder shall be in
writing, hand delivered, sent by first class mail, overnight mail, facsimile or
teletype and shall be deemed to have been given when received at the following
addresses:
If to WORLDSPAN:
WORLDSPAN. L.P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Facsimile:(404) 563-7018
ATTN: Supervisor - Customer Service Programming
If to Customer:
Corporate Travel Link, Incorporated
P.O. Box 2039
Newark, NJ 07114
Facsimile: (201) 763-4612
ATTN: Joseph Cutrona
Any notice provided by facsimile or teletype which is received after 4:00 p.m.
local time shall be deemed received the following business day. A party may
change its addresses for notice on not less than ten (10) days'- prior written
notice to the other party.
ii. General Provisions.
A. Nothing in this Agreement is intended or shall be construed
to create or establish an agency, partnership, or joint
venture relationship between the parties.
B. The captions in this Agreement are for convenience only and
in no way define, limit, or enlarge the scope of this
Agreement or any of the provisions therein. Capitalized
terms shall have the meanings assigned in this Agreement.
C. No waiver by either party of any provision or any breach of this
Agreement constitutes a waiver of any other provision or breach of
this Agreement and no waiver shall be effective unless made in
writing. The right of either party to require strict performance and
observance of any obligations hereunder shall not be affected in any
way by any previous waiver, forbearance or course of dealing.
D. Except for Customer's obligation to make payments hereunder,
neither party will be deemed in default of this Agreement as a result
of a delay in performance or failure to perform its obligations
caused by acts of God or governmental authority, strikes or label,
disputes, fire, acts of war, failure of third party suppliers, or for
any other cause beyond the control of that party.
<PAGE>
E. Customer shall not sell, assign, license, sub-license, franchise
or otherwise convey in whole or in part to any third party this
Agreement or the services provided hereunder without the prior
written consent of WORLDSPAN.
F. This is a non-exclusive agreement. Similar agreements may be
entered into by either party with any other person.
G. This Agreement shall be governed by, construed, interpreted and
enforced according to the laws of the State of Georgia and of the
United States of America, without regard to principles of conflict of
laws and rules. Each party hereby consents to the non-exclusive
jurisdiction of the courts of the State of Georgia and United States
Federal Courts located in Georgia to resolve any dispute arising out
of this Agreement, and waives any objection relating to improper
venue or forum nonconveniens to the conduct of any proceeding in any
such court.
H. In the event that any material provision of this Agreement is
determined to be invalid, unenforceable or illegal, then such
provision shall be deemed to be superseded and the Agreement modified
with a provision which most nearly corresponds to the intent of the
parties and is valid, enforceable and legal.
I This Agreement constitutes the final and complete understanding and
agreement between the parties concerning the subject matter hereof.
Any prior agreements, understandings negotiations or communications
written or otherwise concerning the subject matter hereof are deemed
superseded by this Agreement. This Agreement may be modified only by
a further written agreement executed by an authorized representative
of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their under-signed duly authorized representatives as of the day and
year first written above.
CUSTOMER: WORLDSPAN, L.P.
Corporate Travel Link,
Incorporated
______________________ By:_____________________
(Customer Legal Name) Keith Anderson
Corporate Travel Link,
Incorporated
(Doing Business As)
By:______________________
(signature)
Joseph Cutrona
(Print Name)
Title: President
<PAGE>
GALILEOR INTERNATIONAL
ANCILLARY SERVICES AGREEMENT
This Ancillary Services Agreement
("Agreement") is made and entered into as of
this 28th day of August, 1995, between GALILEO
INTERNATIONAL PARTNERSHIP, a Delaware general
partnership whose principal place of business
is located at 9700 West Higgins Road,
Rosemont, Illinois 60018 U.S.A. ("Galileo")
and CORPORATE TRAVEL LINK, INC., a
______________________ corporation whose
mailing address is 35 Pershing Avenue, Newark,
New Jersey 07114 ("Customer").
W I T N E S S E T H
WHEREAS, Galileo provides computerized reservations and ticketing
services and other services ("Galileo Services") and is willing to
allow Customer to have limited access to its Galileo Services; and
WHEREAS, Customer desires to have limited access to Galileo
Services for the purpose of performing certain travel-related
functions and services.
NOW, THEREFORE, in consideration of the premises and the mutual
obligations hereinafter set forth, Galileo and Customer agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement, the following words and
terms shall have the following meanings:
A. "Ancillary Equipment" means all equipment, including
communications equipment, provided by Galileo which is
used in conjunction with Ancillary Services, such as
personal computer workstations, CRT sets, and printers.
For purposes of this Agreement, the term "Ancillary
Equipment" shall include all Software provided by Galileo
which is installed on the Ancillary Equipment.
B. "Ancillary Services" means limited access to Galileo
Services for the purpose of performing certain travel-
related functions and services, but specifically
excluding ticketing services.
C. "Charges" means all amounts payable by Customer to
Galileo under this Agreement.
D. "Confidential Information" means all trade secrets,
proprietary and confidential information of Galileo, its
<PAGE>
affiliates, subsidiaries, successors or assigns
including, without limitation, the following: (i) any
and all hardware and software; (ii) any and all
algorithms, routines, subroutines, source code, object
code, software programs, computer processing systems and
techniques employed or used by Galileo, or its
affiliates, subsidiaries, successors or assigns, and any
related items such as specifications, layouts, flow
charts, manuals, instruction books, and other like
documentation together with all data and know how,
technical or otherwise included therein; (iii) all
documents, files, reports, drawings, plans, sketches,
equipment and the like related to the business of
Galileo, or its affiliates, subsidiaries, successors or
assigns; (iv) any and all upgrades, enhancements,
improvements or modifications to the Ancillary Services
or to the foregoing; (v) all customer pricing and
marketing information of Galileo, or its affiliates,
subsidiaries, successors or assigns; and (vi) this
Agreement.
E. "Galileo Services" or "Galileo" means Galileo's
computerized reservations and ticketing service and other
services. For purposes of this Agreement, Galileo
Services may include services of Galileo, ApolloR and the
Gemini Group Limited Partnership ("Gemini") and any other
computerized reservation system or authorized agent
thereof with whom Galileo has an agreement to distribute
such services or similar service ("Related CRS"). Said
parties shall not be considered third parties under this
Agreement.
F. "Software" means all computer software licensed by
Galileo to Customer.
G. "Transaction" means a message accessing Galileo Services
that is transmitted by Customer. For purposes of this
Agreement, "Peak Period" means the hours from 7:00 a.m.
to 7:00 p.m., Mountain Time, Monday through Friday, and
"Off Peak Period" means the remaining hours.
Any term not defined herein shall have the meaning given such term
elsewhere in the Agreement.
R "Galileo" and "Apollo" are registered service marks of Galileo
International.
2. INSTALLATION
A. Galileo shall install or cause to be installed the
Ancillary Equipment, as applicable, at each location set
forth on an Attachment A to this Agreement ("Location")
and shall provide Customer connection to Ancillary
Services. Galileo shall use its best efforts to install
<PAGE>
and connect the Ancillary Equipment at the locations by
the planned installation dates set forth on each
Attachment A.
B. Each location shall be reviewed by a Galileo
representative to determine what, if any, physical
modifications shall be required to support the Ancillary
Equipment at that location. After the site review is
completed, Galileo shall issue a site survey for each
location. The site survey shall detail the layout of all
terminals, cables, and backroom support Ancillary
Equipment (e.g., transaction processing units and
modems). At its own cost and expense, Customer shall
implement, or cause to be implemented, any physical
modification required by the site survey, including,
without limitation, the furnishing of electrical power,
the installation of data cables, access to telephone
lines, and any inside wiring that may be necessary for
data line connectivity.
C. Customer shall not relocate any installed Ancillary
Equipment without first obtaining Galileo's written
consent. Any approved relocation must be accomplished by
Galileo or its designee at Customer's sole cost and
expense.
D. Customer represents and warrants that each location is
owned or controlled by Customer and that it has authority
to enter into this Agreement on behalf of each said
location.
3. TRAINING
A. Galileo shall provide Customer appropriate and sufficient
training in Customer's use of Ancillary Equipment and
Ancillary Services. Customer shall be responsible to
ensure that its employees complete all required training.
Galileo shall designate the time and location of and
shall bear the cost of providing a trainer and/or
materials used in such training program.
B. Only qualified personnel who have satisfactorily
completed Galileo's training program applicable to
Customer's use of Ancillary Equipment and Ancillary
Services (hereinafter "Designated Users"), and Customer
employees trained by Designated Users, shall be permitted
to use Ancillary Services and operate Ancillary
Equipment.
C. Galileo may provide training to Customer's Designated
Users for use of any major enhancements or modifications
to Ancillary Services or Ancillary Equipment and may
provide additional training at Customer's request. Any
such training shall be a Customer's expense and at a time
<PAGE>
and location designated by Galileo.
D. Galileo may, at its discretion, monitor or test the
proficiency level of Customer's employees in the use of
the Ancillary Equipment and Ancillary Services. If
Galileo determines that their proficiency levels are
insufficient for the proper use of the Ancillary
Equipment and Ancillary Services, then Customer must
arrange for its employees to undertake any further
training which Galileo determines necessary to bring
Customer's employees to the desired proficiency level.
Customer is responsible for all costs and expenses
associated with any such additional training.
E. If any training conducted pursuant to this Article 3 is
not performed on-site, Customer, not Galileo, shall bear
all living expenses of Customer's employees while
attending any of the above training programs.
4. SOFTWARE LICENSE - RESTRICTIONS
A. (i) Galileo hereby grants Customer a nonexclusive
license to use the software during the term of this
Agreement. The Software is the property of Galileo
and may not be used, in whole or in part, by
Customer on other than or with the Ancillary
Equipment set forth on the Attachment A(s) unless
otherwise agreed to by Galileo. This license
automatically terminates upon termination of this
Agreement.
(ii) Title and full ownership rights to the Software
remain with Galileo or such other party with whom
Galileo has a distributorship or licensing agreement
("Licensor"). The Software is the proprietary
information and trade secret of Galileo or its
licensor, whether or not any portion thereof is or
may be validly copyrighted or patented. Customer
shall maintain the confidential nature of the
Software and related materials which are provided
hereunder for its own internal use and protect them
as it does its own most valuable and strategic
assets and trade secrets.
B. (i) Except with prior written consent of Galileo, or as
set forth in Article 4.8(ii) hereof, Customer shall
not copy, reproduce, or duplicate the Software in
any way, nor shall it sell, lease, pledge, assign,
license, dispose of, or otherwise transfer or
encumber the Software.
(ii) Any Software provided by Galileo hereunder in
machine-readable form amy be copied, in whole or in
part, in printed or machine-readable form solely for
<PAGE>
Customer's internal use for backup and archival
purposes and may be used only in the event of
damage, destruction, or loss of the original
Software supplied. The original and all copies of
the Software, in whole or in part, remain the
property of Galileo or its licensor.
(iii) Except with the prior written consent of Galileo,
Customer shall not add to, modify, enhance, or alter
the Software. Customer shall not disassemble,
reverse assemble, reverse compile or otherwise
reverse engineer any portion of the Software.
(iv) Except with the prior written consent of Galileo,
Customer shall not provide or otherwise make
available the Software or any part thereof,
including, but not limited to, programs, diagrams,
flow charts, logic, and operating and training
manuals, to any person other than Customer's
employees, officers, or directors who require access
to the Software in the normal course of Customer's
business.
(v) Customer shall advise all persons who are permitted
to have access to the Software of the nondisclosure
provisions of this Article 4, and Customer shall
take all necessary precautions to ensure that these
persons comply with such provisions. Customer shall
be liable to Galileo for any violation by any such
person of said non-disclosure provisions.
C. Except with the prior written consent of Galileo,
Customer shall not use the Software for any functions
other than those set forth in the related operations
manuals. Galileo may revoke any such consent by giving
thirty (30) days prior written notice to Customer.
D. Galileo provides portions of the Software pursuant to
license agreements with various third party software
providers. Certain of these providers may require
Galileo to obtain Customer's agreement to and compliance
with software sublicenses. Customer agrees to abide by
all such sublicenses and, if required, agrees to execute
any such sublicense. Customer's failure to agree to
execute or abide by a sublicense shall constitute a
breach of this Agreement and in such event Galileo may
refuse to install, or may deinstall, the Software and any
related Ancillary Equipment and seek any other remedies
provided in this Agreement.
5. THIRD PARTY-PROVIDED PRODUCTS
A. Customer shall provide Galileo sixty (60) days prior
written notice of its intent to utilize a non-Galileo
provided software application which sends Transactions to
or interfaces with Galileo Services except where the
application (i) is created using a product provided by
Galileo; or (ii) has been previously designated by
Galileo as not being incompatible with Galileo.
B. Galileo may require that customer provide Galileo
information regarding the applications, configuration,
and operation of any hardware or software that is not
provided by Galileo which interfaces either directly or
indirectly with Ancillary Services or in connected to
Ancillary Equipment ("Third Party Hardware" or "Third
Party Software"; collectively "Third Party Products") and
may require that the Third Party Product be tested or
certified by Galileo, at Customer's expense.
Furthermore, Galileo may determine that certain terms and
conditions pertaining to Customer's use of the Third
Party Products must be agreed to by Customer as a
condition of Customer's permissible use.
C. Customer shall bear sole responsibility to ensure that
all Third Party Products meet the requirements and
guidelines established by galileo and contained in the
product documentation as it may be changed from time to
time.
D. Customer is strictly prohibited from disassembling
Ancillary Equipment for any reason, including, but not
limited to, the purpose of installing Third Party
Hardware within Ancillary Equipment.
E. Galileo shall have no liability for any costs associated
with Customer's procurement or use of Third Party
Products and shall have no responsibility for installing
Third Party Products. In addition Galileo shall have no
liability whatsoever for and Customer releases Galileo
from any responsibility for (i) testing, certifying, or
assisting with the functional suitability, operation, or
compatibility of Third Party Products (unless the parties
have executed Galileo's standard product testing
agreement under which Customer agrees to pay Galileo's
then-current fees for such testing); (ii) enhancement or
modifications of Galileo Services rendering Third Party
Products incompatible with Galileo Services; (iii) any
defects, malfunctions, failure to perform, loss,
interruption, and errors of any kind by Third Party
Products; or (iv) provision of support or maintenance
services of any kind for Third Party Products. In the
event of system failure following the installation or use
of Third Party Products, at Customer's expense, Galileo
shall attempt to restore or reinstall Galileo-provided
Software so long as Customer has attempted and has been
unable to restore same. Galileo shall have no obligation
to restore or reinstall any of Customer's data files or
<PAGE>
Third Party Products.
F. Customer shall (i) be liable to Galileo for any loss or
damage to Galileo Services, Ancillary Services or
Ancillary Equipment that is caused by the Third Party
Product's performance or failure to perform or by
Customer's installation, deinstallation or use of a Third
Party Product, including all costs incurred by Galileo
inn connection with the service and repair required to
restore Customer's connection to Galileo Services or
Ancillary Services; and (ii) indemnify and hold harmless
Galileo, its owners, officers, directors, agents, and
employees against and from any and all liabilities,
damages, losses, expenses, claims, demands, suits, fines
or judgments, including, but not limited to, attorneys'
fees, costs and expenses incident thereto, which may be
suffered by, accrue against, be charged to, or be
recovered from Galileo, its owners, officers, directors,
agents, or employees, by reason of any loss of, damage
to, or destruction of property, including loss of the use
thereof, or economic loss arising out of or in connection
with (a) any act, error or omission of Customer, its
officers, directors, agents, or employees in the
installation, deinstallation, or operation of a Third
Party Product; (b) any act, error, or omission of the
provider of a Third Party Product or any other third
party in the installation and operation of a Third Party
Product; and (c) any defect, malfunction, failure to
perform, and error of any kind caused or contributed to
by a Third Party Product.
G. In the event that Customer elects to utilize Third Party
Software which provides automatic transaction
capabilities, including, but not limited to, update,
query, retrieval, and download, Customer must install a
throttling mechanism to control the frequency of
Transactions transmitted through Galileo. Customer's
throttling mechanism must control such frequency to no
more than three (3) Transactions per second per line
interchange address (notwithstanding, Galileo makes no
representation that Galileo accepts a specified quantity
of Transactions for a given time period). Galileo may
further require that Customer maintain, at Customer's
expense, a telecommunication line for such application
separate and distinct from any other telecommunication
line used in conjunction with services provided by
Galileo.
H. In the event that any Galileo-provided Software is
installed on Third Party Hardware, Customer shall
promptly remove all liens and pay all assessments,
license fees, or other charges when levied or assessed on
or against the Third Party Hardware or the ownership or
use thereof.
<PAGE>
I. Notwithstanding anything to the contrary herein, in order
to protect or maximize the operability of Galileo
Services, Galileo may direct Customer to (i) temporarily
or permanently discontinue its use of a Third Party
Product or (ii) prohibit direct or indirect access to
Ancillary Services by such Third Party Product, and
Customer must comply with such direction.
6. OPERATION OF ANCILLARY EQUIPMENT
A. To maintain an effective connection between Ancillary
Services and Ancillary Equipment and to prevent misuse of
Ancillary Services and Ancillary Equipment, Customer
agrees that Ancillary Services and Ancillary Equipment
shall be used and operated in strict accordance with
operating instructions provided by Galileo. Prohibited
uses include, but are not limited to, nonbusiness uses,
personal messages, providing services unauthorized by
this Agreement to third parties, training others in the
use of Ancillary Services, or other uses designated by
Galileo in writing as prohibited.
B. Customer may provide the Ancillary Services display only
to Customer's employees and may not provide Ancillary
Services to any other person or entity without the
written consent of Galileo. Customer expressly
acknowledges and agrees that, notwithstanding anything to
the contrary herein, all PNR, passenger and other data
and information entered into Galileo Services is owned by
Galileo.
C. Customer shall take all precautions necessary to prevent
unauthorized operation or use of Ancillary Services and
the Ancillary Equipment. Customer is liable and
responsible for any Transactions by Customer and its
employees using Ancillary Services and must ensure that
each agrees to use Ancillary Services and Ancillary
Equipment in accordance with the provisions set forth
herein. Galileo reserves the right to deny access to
Ancillary Services at an y time to any individual that
fails to comply with the provisions of this Agreement.
7. INDEMNIFICATION
A. Customer hereby agrees to indemnify and hold harmless
Galileo, its owners, officers, directors, agents, and
employees against and from any and all liabilities,
damages, losses, expenses, claims, demands, suits, fines
or judgments, including, but not limited to, reasonable
attorneys' fees, costs and expenses incident thereto,
which may be suffered by, accrue against, be charged to,
or be recovered from Galileo, its owners, officers,
directors, agents, or employees, by reason of any
injuries to or deaths of persons or the loss or, damage
<PAGE>
to, or destruction of property, including loss of the use
thereof or any other loss or claim whatsoever, whether in
contract or tort, law or equity, arising out of or in
connection with any act, failure to act, error or
omission of Customer, its officers, directors, agents, or
employees in the performance or failure of performance of
Customer's obligations under this Agreement.
B. To the extent of Galileo's representations and warranties
under Article 12.A, Galileo hereby agrees to indemnify
and hold harmless Customer, its officers, directors,
agents, and employees against and from any and all
liabilities, damages, losses, expenses, claims, demands,
suits, fines or judgments, including, but not limited to,
reasonable attorneys' fees, costs and expenses incident
thereto, which may be suffered by, accrue against, be
charged to, or be recovered from Customer, its officers,
directors, agents, or employees, by reason of any
injuries to or deaths of persons or the loss of, damage,
to, or destruction of property, including loss of the use
thereof, arising out of or in connection with any act,
error or omission of Galileo, its owners, officers,
directors, agents, or employees in the performance or
failure of performance of Galileo's obligations under
this Agreement.
8. INSURANCE AND SECURITY INTEREST
A. Customer shall take all necessary precautions to protect
the Ancillary Equipment owned by Galileo and installed on
Customer's premises.
B. Customer hereby grants to Galileo a purchase money
security interest in any purchased Ancillary Equipment to
secure payment of the purchase price therefor, and agrees
that a copy of this Agreement may be filed as a financing
statement to protect Galileo's security interest in such
Ancillary Equipment in all jurisdictions where the
Ancillary Equipment or Customer may be located. Upon
payment in full of the purchase price for such purchased
Ancillary Equipment, Galileo shall, upon Customer's
request, take all steps necessary to terminate its
security interest in such Ancillary Equipment.
C. (i) At its own cost, Customer shall procure and maintain
insurance, from an insurer nationally recognized and
acceptable to Galileo and on terms and conditions
acceptable to Galileo, insuring the Ancillary
Equipment against all risk of loss or damage,
including, without limitation, the risks of fire,
theft and such other risks as are customarily
insured in a standard all-risk policy. Such
insurance shall also provide the following:
<PAGE>
(a) Full replacement value coverage for the Ancillary
Equipment, which value is stipulated to be not less
than the Insurance Value as specified on the
relevant Attachment A;
(b) An endorsement naming Galileo as a coinsured and as
a loss payee to the extent of its interest in the
Ancillary Equipment; and
(c) An endorsement requiring the insurer to give Galileo
at least thirty (30) days prior written notice of
any intended cancellation, nonrenewal, or material
change of coverage or any default in the payment of
a premium.
(ii) Prior to the installation of the Ancillary
Equipment, Customer shall cause the insurer to
provide Galileo with certificates of insurance
evidencing the insurance and endorsements specified
in Article 8.C(i) hereof.
(iii)If Customer fails to maintain or pay the premium on
the insurance required in Article 8.C(i) hereof,
then Galileo may secure equivalent insurance
coverage or pay an delinquent premium. If Galileo
elects to do so, then Galileo may, at its option,
demand that Customer immediately reimburse Galileo
to the extent of Galileo's cost of such equivalent
insurance or delinquent premium payment plus
interest at the rate of eighteen percent 918%) per
annum or the maximum interest rate allowed by law,
whichever is less, from the date of Galileo's
expenditure until the date of reimbursement to
Galileo and Customer shall immediately pay all such
amounts to Galileo.
D. (i) Notwithstanding anything stated herein to the
contrary, Customer shall be liable to Galileo for
any loss or damage to the Ancillary Equipment,
regardless of the cause thereof, occurring while
leased to Customer or while in the possession,
custody, or control of Customer.
(ii) If any Ancillary Equipment is lost, totally
destroyed, damaged beyond repair, or so damaged to
constitute a constructive total loss, then, within
sixty (60) days after such loss or damage, Customer
shall pay to Galileo an amount equal to the
replacement value of such equipment on the date of
such loss or damage less any insurance proceeds paid
to Galileo in accordance with Article 8.C hereof.
9. ENTRY AND INSPECTION
Galileo or its designee shall have the right, upon reasonable
<PAGE>
notice, to enter upon any location during Customer's business
hours for the purpose of monitoring Customer's operation of
the Ancillary Equipment or Ancillary Services, inspecting the
Ancillary Equipment, performing such repairs or maintenance of
support services as may be necessary, or removing the
Ancillary Equipment; provided, however, that Galileo shall not
during the course of such monitoring, inspection, repair, or
removal unreasonably interfere with Customer's business.
10. REPAIR AND MAINTENANCE
A. Galileo s hall provide or cause to be provided to
Customer support, repair and maintenance services
required for the Ancillary Equipment and Ancillary
Services. The support, repair and maintenance services
shall be provided during Galileo's normal business hours
and through a service organization designated by Galileo.
B. To maintain an effective connection between the Ancillary
Equipment and Ancillary Services and to preserve the
functional integrity of the ancillary Equipment, neither
Customer nor any third party, other than a third party
designated by Galileo, shall perform or attempt to
perform maintenance, repair work, alterations,
modifications, support services or programming of any
nature whatsoever, to the Ancillary Equipment or
Ancillary Services. To obtain maintenance, repair, or
support services, Customer shall contact the Help
Desk/Galileo Technical Support Center. Customer may, in
the event of interruption in Ancillary Services, call the
Help Desk/Galileo Technical Support Center.
C. Galileo or its designated agent shall perform
maintenance, repair, and support services for any damage
resulting from (i) accident, transportation, neglect, or
misuse; (ii) failure or variation of electrical power;
(iii) failure to properly maintain the installation site,
air conditioning, or humidity control; (iv) causes other
than ordinary use; or (v) maintenance, repair, servicing,
or modification of the Ancillary Equipment or Ancillary
Services performed or provided by anyone other than
Galileo or its designated agent. Unless the aforesaid
damages are a result of the fault or negligence of
Galileo or its designated agent, Customer shall be
responsible for all costs and expenses associated with
such maintenance, repair, and support services.
D. Notwithstanding the provisions of this Article 10,
Galileo shall have no responsibility for support, repair,
and maintenance services relating to Galileo-provided
Software functionality and use thereof not directly
related to performing travel-related functions.
E. Customer shall be responsible for the support, repair,
<PAGE>
and maintenance of Third Party Products. if repair and
maintenance is requested by Customer for Ancillary
Services or Ancillary Equipment, and Galileo or its
designated agent deems the problem to be attributed to a
Third Party Product, Galileo shall have no obligation to
perform the necessary repair and, further, Customer may
incur a service call fee.
11. ENHANCEMENTS OR MODIFICATIONS
A. Galileo retains the right to enhance or modify Ancillary
Services or Ancillary Equipment at Galileo's discretion
at any time during the term of this Agreement. Any such
enhancement or modification may be provided at Galileo's
sole discretion, subject to Galileo's charges, terms and
conditions. If Customer commences use of any such
enhancement or modification, Customer's use shall
constitute an agreement by Customer (i) to pay Galileo
the prevailing charges, if any, for such enhancement or
modification, (ii) to follow the written procedures and
instructions provided by Galileo for such enhancement or
modification; and (iii) that upon Customer's use of such
enhancement or modification this Agreement shall be
deemed to be supplemented thereby and all the terms and
provisions of this Agreement shall apply to Customer's
use of such enhancement or modification.
B. Notwithstanding anything to the contrary set forth in
Article 11.A hereof, Galileo may, at its sole discretion,
determine that certain enhancements or modifications to
Ancillary Services or Ancillary Equipment must be
accepted by Customer as a condition of Customer's
continued use of same. There shall be no additional
charge to Customer for such required modification or
enhancement. If Customer fails to accept such required
enhancement or modification in accordance with Galileo's
terms and conditions, Galileo shall have the option of
deinstalling the Ancillary Equipment or disconnecting the
Ancillary Service requiring the enhancement or
modification at the applicable locations and providing
Customer with an alternative that does not require such
required enhancement or modification, if one exists. If
such alternative does not exist, Customer must accept
such required modification or enhancement or shall be
deemed in breach of this Agreement.
12. REPRESENTATIONS AND WARRANTY
A. GALILEO REPRESENTS AND WARRANTS THAT:
(i) IT IS THE OWNER OR LICENSEE OF THE SOFTWARE PROVIDED
UNDER THIS AGREEMENT;
(ii) IT HAS THE RIGHT TO PROVIDE ANCILLARY SERVICES SET
<PAGE>
FORTH HEREIN TO THE CUSTOMER; AND
(iii)IT SHALL USE ITS BEST EFFORTS TO MAXIMIZE THE UPTIME
OF THE ANCILLARY EQUIPMENT.
B. CUSTOMER'S REMEDIES FOR BREACH OF THE WARRANTIES SET
FORTH IN ARTICLE 12.A HEREOF SHALL BE SOLELY LIMITED TO
REPAIR OR REPLACEMENT OF THE SOFTWARE, ANCILLARY
EQUIPMENT OR ANCILLARY SERVICES CAUSING THE BREACH AND
INDEMNIFICATION UNDER ARTICLE 7.5 HEREOF.
C. THE WARRANTIES AND REMEDIES SET FORTH IN ARTICLE 12.A AND
12.B HEREOF ARE EXCLUSIVE AND GALILEO MAKES NO OTHER
WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE
SOFTWARE, ANCILLARY EQUIPMENT OR ANCILLARY SERVICES.
D. EXCEPT FOR A BREACH OF THE EXCLUSIVE WARRANTIES SPECIFIED
IN ARTICLE 12.A HEREOF AND EXCEPT FOR THE RIGHT TO
RECEIVE THE EXCLUSIVE REMEDIES SPECIFIED IN ARTICLE 12.B
HEREOF, CUSTOMER HEREBY WAIVES AND RELEASES GALILEO, ITS
OWNERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FROM
ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES AND ALL
RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST GALILEO,
ITS OWNERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO
ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR ERRORS
(INCLUDING, WITHOUT LIMITATION, ANY ERRORS IN
RESERVATIONS AVAILABILITY RECORDS) OR MALFUNCTIONS BY
SOFTWARE, ANCILLARY EQUIPMENT, OR ANCILLARY SERVICES,
INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR
REMEDY IN TORT, AND INCLUDING ALL LIABILITY, OBLIGATION,
RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR
ANY OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES.
13. FORCE MAJEURE
Except for any payment obligations, neither party shall be
deemed to be in default or liable for any delays in the event
and to the extent that performance thereof is delayed or
prevented by acts of God, public, enemy, war, civil disorder,
fire, flood, explosion, riot, labor disputes, work stoppage or
strike, unavailability of equipment, any act or order of any
governmental authority, or any other cause, whether similar or
dissimilar, beyond its control.
14. CHARGES
A. Customer shall pay to Galileo license, lease, purchase,
installation, and service fees; taxes; and other fees as
set forth in this Agreement, Attachment A, and all other
applicable attachments to this Agreement, without setoff
<PAGE>
or counterclaim. Monthly fees commence upon the
Ancillary Services being operational.
B. For each location as of the effective date of the
Agreement and any location added thereafter in accordance
with the Agreement, Customer shall pay Galileo the
Charges as follows:
(i) Customer shall pay Galileo an Installation Charge as
set forth on Attachment A.
(ii) Customer shall pay to Galileo monthly, in advance,
a Monthly Fixed Charge for the Ancillary Equipment,
interconnection to Ancillary Services, and
associated maintenance, repair, and support
services, as set forth on Attachment A.
C. Customer acknowledges that a change in Customer's
hardware or software configuration may result in an
adjustment to the Charges. Except for such increases as
specified in Article 14.H hereof, such adjustments shall
be by written supplement hereto.
D. Customer shall be charged in accordance with each
Attachment A hereto for: (i) the installation or
deinstallation of hardware or software; (ii) relocation
of hardware or software within the location; (iii) each
location disconnect or relocation to different premises;
(iv) hardware or software modifications, upgrades, or
enhancements; (v) excess cable required for installation;
(vi) installation or peripheral devices requested by
Customer; and (vii) similar installation and
deinstallation related expenses.
E. When applicable, Customer shall pay all SITA (Societe
International Telecommunications Aeronautiques) charges
incurred in connection with Customer's use of Ancillary
Services under this Agreement.
F. Customer further agrees to pay an overtime premium for
maintenance or repair services provided outside of normal
business hours at Customer's request. Normal business
hours are 8:00 a.m. to 5:00 p.m., local time, Monday
through Friday, except holidays observed by Galileo.
G. Invoices shall be sent to each location address, as
specified on Attachment A, unless alternate written
instructions are provided by Customer to Galileo. All
amounts payable hereunder are due within ten 910) days
after the date of invoice and shall be paid in U.S.
dollars on a U.S. bank. Any past due amounts shall
accrue interest at a rate not to exceed one and one-half
percent (1-1 1/2%) per month compounded or the maximum rate
permitted by law, whichever is less. The accrual of such
<PAGE>
interest shall not affect any of Galileo's rights or
remedies under this Agreement.
H. All Charges are subject to increase by Galileo upon
thirty (30) days prior written notice, except that
Galileo may not increase such Charges by more than twelve
(12) percent in any one calendar year. Notwithstanding
the foregoing, the communications cost elements of any of
the above Charges shall be subject to increase, at any
time and without limitation, to cover any increase in the
cost thereof incurred by Galileo.
15. TAXES AND FEES
Customer covenants and agrees to pay when due or reimburse and
indemnify and hold Galileo and its owners harmless from and
against all taxes, fees and other charges of every nature
whatsoever (together with any related interest or penalties
not arising from fault on the part of Galileo), now or
hereafter imposed or assessed against Galileo, its owners or
Customer by any Federal, state, county, or local governmental
authority, upon or with respect to this Agreement or upon or
with respect to the ordering, purchase, sale, ownership,
delivery, leasing, possession, use, operation, return or other
disposition of property and services thereof or upon the
rents, receipts or earnings arising therefrom (excepting only
Federal, state and local taxes based on or measured by the net
income of Galileo). Notwithstanding the foregoing, unless
otherwise specified, Galileo shall be responsible for the
filing of all personal property tax returns and shall pay all
taxes indicated thereon, Customer shall reimburse Galileo for
all such taxes, fees and charges within ten (10) days of
receipt of Galileo's invoice therefor.
16. TERM
A. The term of this Agreement shall commence on 9/15/95 and
shall continue until terminated by either party upon
thirty (30) days prior written notice.
B. Upon termination of this Agreement, for any reason
whatsoever, Customer shall allow Galileo onto its
premises to remove, at Customer's expense, all leased or
licensed Ancillary Equipment and Galileo Software, and
Customer shall return to Galileo all Confidential
Information, including, but not limited to, all manuals,
guides, and written materials provided to Customer and
all copies of such materials, whether in written or
computer readable form.
C. Those provisions of the Agreement which by their nature
and intent should survive expiration or termination of
the Agreement, including, but not limited to,
confidentiality and Software license restrictions, shall
<PAGE>
so survive.
17. TERMINATION FOR CAUSE
A. If either party (the "Defaulting Party") becomes
insolvent; if the other party (the "Insecure Party") has
evidence that the Defaulting Party is not paying its
bills when due without just cause; if a receiver of the
Defaulting Party's assets is appointed; if the Defaulting
Party takes any step leading to its cessation as a going
concern; or if the Defaulting Party either ceases or
suspends operations for reasons other than a strike, then
the Insecure Party may immediately terminate this
Agreement on written notice to the Defaulting Party
unless the Defaulting Party immediately gives adequate
assurance of the future performance of this Agreement by
establishing an irrevocable letter of credit -- issued by
a U.S. bank acceptable to the insecure Party, on terms
and conditions acceptable to the insecure Party, and in
1an amount sufficient to cover all a mounts potentially
due from the Defaulting party under this Agreement --
amount sufficient to cover all amounts potentially due
from the Defaulting Party under this Agreement -- that
may be drawn upon by the Insecure Party if the Defaulting
Party does not fulfill its obligations under this
Agreement in a timely manner. If bankruptcy proceedings
are commenced with respect to the Defaulting Party and if
this Agreement has not otherwise terminated, then the
Insecure Party may suspend all further performance of
this Agreement until the Defaulting Party assumes or
rejects this Agreement pursuant to Section 365 of the
Bankruptcy Code or any similar or successor provision.
Any such suspension of further performance by the
Insecure Party pending the Defaulting Party's assumption
or rejection shall not be a breach of this Agreement and
shall not affect the Insecure Party's right to pursue or
enforce any of its rights under this Agreement or
otherwise.
B. If either party (the "Defaulting Party") refuses,
neglects, or fails to perform, observe or keep an of the
covenants, agreements, terms or conditions contained
herein on its part to be performed, observed and kept,
and such refusal, neglect or failure continues for a
period of thirty (30) days after written notice (except
in the case of any payments due where the period to cure
such nonpayment shall be five (5) days after notice) to
the Defaulting Party thereof, then without prejudice to
any other rights or remedies of the other party, this
Agreement shall, at the option of the non-defaulting
party, terminate as of the expiration of the notice
period. Notwithstanding anything to the contrary herein,
in the event Customer is the Defaulting Party, the
Galileo may, at its sole option and without prejudice to
<PAGE>
any other of its rights or remedies, reduce or restrict
provision or services provided under the Agreement
without termination of the Agreement.
C. The right of either party to require strict performance
and observance of any obligations under this Agreement
shall not be affected in any way by any previous waiver,
forbearance or course of dealing. Exercise by either
party of its right to terminate under this Agreement
shall not affect or impair its right to bring suit for
any default or breach of this Agreement. All obligations
of each party that have accrued before termination or
that are of a continuing nature shall survive
termination.
D. If this Agreement includes more than one location and if
Customer's default or breach relates to fewer than all
locations, then Galileo may, at its sole option, exercise
its rights under this Article to terminate this entire
Agreement or only with respect to the location(s)
involved.
18. ASSIGNMENT, MERGER, AND SALE
A. Customer shall not assign, transfer, or sublease this
Agreement or any right or obligation hereunder unless the
assignee, transferee or sublessee expressly assumes all
of the liabilities and obligations of Customer hereunder
and Customer has obtained the prior written consent of
Galileo, which shall not be unreasonably withheld. Any
purported assignments,, transfers or subleases made
without such assumption and consent shall, at Galileo's
option, be null and void ab initio.
B. If Galileo consents to the assignment, transfer or
sublease, Customer may be required to pay Galileo a one-
time transfer fee and any sublicense distribution costs
that are incurred by Galileo in connection with the
assignment of Customer's use of Software. Customer's
failure to pay these fees shall result in the assignment
being rendered null and void ab initio.
C. In the event Customer acquires or gains control of
another entity or merges with or is acquired or becomes
controlled by any person or entity not presently owning
a controlling interest in Customer, then Galileo, at its
sole option, may immediately terminate this Agreement
without any obligation or liability to Customer, other
than past due amounts.
19. PUBLICITY, ADVERTISING AND PROMOTION
A. Except in any proceeding to enforce the provisions of
this Agreement or except as otherwise required by law,
<PAGE>
neither party shall publicize or disclose to any third
party the provisions of this Agreement or any of the
Charges, terms, or conditions herein without the prior
written consent of the other party.
B. Neither party shall use the name or logo of the other in
publicity releases or advertising regarding or related to
this Agreement without securing the prior written
approval of the other party. Request for approval shall
be directed to the respective addresses set forth in
Article 22 hereof.
20. CONFIDENTIALITY
A. All Confidential Information, including all applicable
rights to patents, copyrights, trademarks, and trade
secrets inherent therein or related thereto, is and shall
remain the sole and exclusive property of Galileo or its
Licensor (as applicable).
B. Customer shall maintain the confidentiality of the
Confidential Information using the highest degree of
care. Customer shall not use, sell, transfer, publish,
disclose, display, or otherwise make available to others,
except as authorized in this Agreement, the Confidential
Information or any other material relating to the
Confidential Information at any time before or after the
termination of this Agreement nor shall Customer permit
its officers, directors, employees, agents, or
contractors to divulge the Confidential Information or
use the Confidential Information other than as authorized
in this Agreement without the prior written consent of
Galileo.
C. Customer shall ensure that each of its employees,
officers, directors, agents or contractors who has access
to the Confidential Information provided under this
Agreement is aware of this confidentiality requirement
and agrees to be bound by it. Customer shall be liable
to Galileo for any violation by any such person of any of
the provisions of this Article 20.
21. ANCILLARY EQUIPMENT
A. It is understood that: (i) all Ancillary Equipment shall
remain the sole property of Galileo; (ii) Customer shall
not remove any identifying marks from any such Ancillary
Equipment; (iii) Customer shall not subject the Ancillary
Equipment to any lien or encumbrance; and (iv) Galileo
may enter Customer's premises to remove the Ancillary
Equipment immediately upon termination of this Agreement.
B. Customer agrees to make, execute, acknowledge and
deliver, any time or from time to time, all documents,
<PAGE>
instruments, and assurances, including, without
limitation, financing statements under the Uniform
Commercial Code, as may be requested by Galileo to
preserve Galileo's ownership rights and title in and to
the Ancillary Equipment, and hereby authorizes Galileo,
where permitted b law, to file financing statements and
amendments thereto relating tot he Ancillary Equipment
without Customer's signature where desirable in Galileo's
judgment to preserve Galileo's ownership rights and title
in and to the Ancillary Equipment. Upon deinstallation
of the Ancillary Equipment, Galileo shall, upon
Customer's request, take all steps necessary to terminate
any Uniform Commercial Code filing made with respect
thereto.
22. NOTICES
Notices given or required hereunder shall be deemed sufficient
if sent by first class mail, postage prepaid, or any more
expedient written means to the address of Customer as
specified in the preamble of this Agreement; notices to
Galileo should be sent to:
GALILEO INTERNATIONAL
9700 WEST HIGGINS ROAD
ROSEMONT, IL 60018
ATTN: COVZL - CONTRACT NOTICES
Notices sent via electronic means (e.g., telex, facsimile)
shall be effective immediately if received on a business day
prior to 5:00 p.m. local time of the recipient. All other
notices shall be effective the first business day after
receipt.
23. GOVERNING LAW
This Agreement and any dispute arising under or in connection
with this Agreement, including any action in tort, shall be
governed by the internal laws of the State of Illinois,
without regard to its conflict of laws principles. All
actions brought to enforce or arising out of this Agreement
shall be brought in federal or state courts located within the
County of Cook, State of Illinois, the parties hereby
consenting to personal jurisdiction and venue therein.
24. SEVERABILITY
If any provision of this Agreement is held invalid or
otherwise unenforceable, the unenforceability of the remaining
provisions shall not be impaired thereby.
25. CAPTIONS
The captions appearing in this Agreement have been inserted as
a matter of convenience and in no wa define, limit or enlarge
the scope of this Agreement or any of the provisions of this
Agreement.
26. INDEPENDENT CONTRACTORS
This Agreement is not intended to and shall not be construed
to create or establish an agency, partnership, or joint
venture relationship between the parties hereto.
27. ADDITIONAL COVENANTS
The individual signing this Agreement or any amendments to
this Agreement, on behalf of the Customer, or if more than
one, each of them, represents and warrants that: (i) he or
she is duly authorized to execute this Agreement on behalf of
Customer; (ii) he or she has full power and authority to bind
Customer to t he terms and conditions hereof; (iii) no
representations or warranties of Customer or the undersigned,
nor any statements written or oral, made or furnished to
Galileo either herein or with respect tot he organization or
business of Customer, contains any untrue statement of a
material fact or omits a material fact necessary to make the
representation, warranty, or statement not misleading; and
(iv) this Agreement constitutes a legal, valid, and binding
agreement of Customer, enforceable in accordance with its
terms. Customer shall be liable for and agrees to reimburse
Galileo for all attorneys' fees and court costs incurred by
Galileo to enforce this Agreement or to seek remedies for
breach of this Agreement by Customer.
28. ENTIRE AGREEMENT
A. The following Attachments are part of this Agreement: A.
This Agreement constitutes the entire agreement and
understanding of the parties on the subject matter hereof
and, as of the effective date, supersedes all prior
agreement, whether written or oral, between the parties
hereto concerning the subject matter hereof, excluding
amounts due Galileo which may have accrued under a prior
agreement between the parties. Any such prior amounts
due shall be deemed an obligation of this Agreement for
which all provisions herein shall apply.
B. This Agreement may be modified only by further written
amendment or supplement signed by all parties to this
Agreement.
C. If any non-English interpretive version of the Agreement
is created, then, in the event of a conflict between the
English version and any non-English version, the English
version shall control.
<PAGE>
IN WITNESS WHEREOF, Customer and Galileo have executed this
Agreement as of the day and year first above written.
CUSTOMER GALILEO INTERNATIONAL PARTNERSHIP
By By
Name JOSEPH CUTRONA Name Michael G. Foliot
Title President Title Sr. Vice President
Date August 4, 1995 Date August 28, 1995
<PAGE>
Exhibit 10.1 EMPLOYMENT CONTRACT
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made this 17th day of October, 1996, between GENISYS
RESERVATION SYSTEMS, INC., 2401 Morris Avenue, Union, New Jersey 07083 (the
"Employer"), and JOSEPH CUTRONA, residing at 82 Kendall Drive, Parlin, New
Jersey 08859 (the "Employee"). In consideration of the mutual covenants and
agreements set forth below, the parties agree as follows: ARTICLE I EMPLOYMENT
AND TERM OF AGREEMENT 1.01. The Employer hereby employs the Employee and the
Employee hereby accepts employment with the Employer upon the terms and
conditions hereinafter set forth. 1.02. The term of this Agreement shall
commence on the date first set forth above and shall continue indefinitely until
this Agreement is terminated in accordance with the terms and provisions hereof.
<PAGE>
ARTICLE II DUTIES OF EMPLOYEE 2.01. The duties to be
performed by the Employee shall be determined from time to time by the Board of
Directors of the Employer. Nothing in this Agreement, however, shall be
construed to obligate the Employee to furnish ground transportation to or for
the benefit of the Employer. 2.02. The Employer shall have the right at any time
during the term of this Agreement to assign the Employee to perform duties which
are different from the duties originally assigned to the Employee pursuant to
Section 2.01 hereof. 2.03. If at any time during the term of this Agreement the
Employee should be unable because of personal injury, illness, or any other
cause to perform his duties under this Agreement, the Employer may assign the
Employee to other duties, and the compensation to be paid to the Employee for
performing those other duties shall be determined by the Employer in its sole
discretion. If the Employee is unwilling to accept the modification in duties
and compensation made by the Employer, this Agreement shall terminate
immediately. ARTICLE III COMPENSATION AND INCENTIVE BONUS 3.01. As compensation
for services rendered pursuant to this Agreement, the Employee shall be entitled
to receive from the Employer a salary of (i) $75,000 per annum commencing on the
date first set forth above and continuing through and including December 31,
1996, and (ii) $100,000 per annum commencing on January 1, 1997. Thereafter, the
Board of Directors of the Employer shall review the Employee's salary at least
annually with a view to increasing it if, in the sole judgment of the Board of
Directors, the earnings of the Employer or the services of the Employee merit
such an increase. Said salary shall be payable in equal weekly installments,
pro-rated for any partial employment period. There shall be no additional
compensation for overtime work. 3.02. As additional compensation for services
rendered under this Agreement, the Employee may receive from the Employer, in
any year in which the Employer has net profits an incentive bonus to be
determined in the sole discretion of the Board of Directors of the Employer. In
determining the amount, if any, of the incentive bonus for the Employee, the
Employer shall take into account the following factors: a. The Employee's gross
salary, b. The salaries of comparable employees in other similar businesses, c.
The Employer's gross sales, d. The Employer's gross profits, e. Whether the
Employer has or will pay dividends on its common stock, f. The Employee's
experience in his job, g. The Employee's abilities, h. The time which the
Employee has devoted to providing services pursuant to this Agreement, and i.
Any other similar factors pertinent to the amount and size of the incentive
bonus. If the Employer will be paying an incentive bonus to the Employee
pursuant to this Section 3.02, the Employer shall pay such bonus to the Employee
within ten days after the receipt by the Employer of the annual audit conducted
by its accountants of the preceding fiscal year of the Employer. The Employee
understands that the Employer will allocate no more than 20% of the audited
pre-income tax profits for the payment of all bonuses for all employees and
consultants, and that bonuses will be paid only out of available funds without
impairing the ability of the Employer to meet all other obligations, including
the payment of bonds, notes, loans and other obligations. For any fiscal year in
which the Employee has not worked for a full twelve (12) months, the Employer
may, at the Employer's discretion, adjust accordingly the incentive bonus to be
paid in accordance with this Section 3.02. As used herein, net profits shall be
determined as the net income from operations after expenses but before taxes as
determined according to generally accepted accounting principles and in
conformity with the prior accounting practices of the Employer. ARTICLE IV
EMPLOYEE BENEFITS AND BONUSES 4.01. The Employer agrees to immediately include
the Employee in the hospital, surgical, and medical benefit plan adopted by the
Employer on or about March 1, 1995, so long as the Employee continues to be
eligible for such coverage in accordance with the rules and regulations adopted
by the insurance company. 4.02. The Employee shall be entitled to an annual
vacation leave of four weeks per year at full pay. The vacation period may be
increased or decreased by the Employer from time to time. The time for vacation
shall be selected by the Employee and approved by the Employer. Any unused
vacation time may be accrued and carried forward from year to year. In lieu of
the vacation leave specified above, the Employee may elect to received payment
for the whole or portion of the vacation to which he is entitled, the vacation
time to be valued at the amount of salary earned by the Employee during an
equivalent period of time. 4.03. The Employee shall be entitled to the following
holidays with full pay: January 1 (New Year's Day), third Monday in February
(President's Day), Last Monday in May (Memorial Day), July 4 (Independence Day),
first Monday in September (Labor Day), fourth Thursday in November (Thanksgiving
Day), December 25 (Christmas). 4.04. The Employee shall be entitled to five days
per year as sick leave with full pay. Such sick leave may not be accumulated and
may not be carried forward from year to year. ARTICLE V REIMBURSEMENT OF
EXPENSES 5.01. Subject to the provisions of Section 5.02 hereof, the Employer
shall reimburse the Employee for ordinary and necessary business expenses
incurred in the performance of his duties pursuant to this Agreement. 5.02. The
Employer is authorized to incur reasonable business expenses for promoting the
business of the Employer, including expenditures for entertainment and travel.
The Employer will reimburse the Employee from time to time for all business
expenses provided that the Employee presents to the Employer documentary
evidence (such as receipts or paid bills), stating sufficient information to
establish the amount, date, place, essential character and deductibility for
each expenditure. 5.03. In the event that the Employee is transferred by the
Employer to a new principal place of work during the term of this Agreement, the
Employer shall reimburse the Employee for all reasonable moving and traveling
expenses incurred by the Employee as a result of such transfer. 701667
<PAGE>
ARTICLE VI PROPERTY RIGHTS 6.01. During the term of this
Agreement, the Employee will have access to and become familiar with various
trade secrets consisting of, among other things, business plans and practices,
patents, devices, secret processes, compilations of information, records, and
specifications that are owned by the Employer and that are regularly used in the
operation of the business of the Employer. The Employee shall not disclose any
of these trade secrets, directly or indirectly, or use them in anyway, unless
authorized by the Board of Directors of the Employer. All files, records,
documents, drawings, specifications, equipment, and similar items relating to
the business of the Employer, whether prepared by the Employee or otherwise
coming into his possession, shall remain the exclusive property of the Employer
and shall not be removed from the premises of the Employer under any
circumstances whatsoever without the prior written consent of the Employer.
6.02. During the term of this Agreement, the Employee shall not, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Employer. During
the term of this Agreement and for the period of one year after the termination
of this Agreement, the Employee shall not, directly or indirectly, solicit for
employment or employ any employee of the Employer regardless of whether the
employee is employed on the date of this Agreement or at any other time during
the term of this Agreement. 6.03. The Employee hereby acknowledges and agrees
that it is important to the Employer that its goodwill be protected, maintained
and increased. Accordingly, the Employee covenants and agrees as follows: Upon
the termination of this Agreement, whether for cause or otherwise, the Employee
shall not directly or indirectly enter into or engage generally in competition
with the Employer, whether as an individual on his own or as a partner or joint
venturer, or as an employee or agent for any person, or as an officer, director,
or shareholder or otherwise, for period of one year after the date of
termination of this Agreement. This covenant on the part of the Employee shall
be construed as an agreement independent of any other provision of this
Agreement; and the existence of any claim or cause of action of the Employee
against the Employer, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Employer of this covenant.
6.04. The Employee acknowledges that he has read and understood the provisions
of this Article, and that its provisions will not impose an undue hardship upon
him. The Employee further acknowledges that due to the fact that the Employer's
operations are or will be worldwide in scope, the post-termination restraints
set forth herein will apply worldwide.
<PAGE>
ARTICLE VII
TERMINATION 7.01. If the Employee willfully breaches or habitually neglects his
duties under this Agreement, the Employer may, at its option, elect to terminate
this Agreement by causing a notice to be mailed to the Employee at his last
known address stating the cause or causes of the termination and giving the
Employee a period of fifteen days to cure the default resulting from such cause
or causes. If at the end of the aforesaid fifteen day period the Employee has
not cured the default resulting from such cause or causes, the Employer may
terminate this Agreement immediately by mailing written notice to such effect to
the Employee at his last known address and thereupon this Agreement shall
immediately terminate, become null and void and be of no further force or
effect. The remedy set forth in this Section 7.01 shall be without prejudice to
any other remedy to which the Employer may be entitled at law, in equity, or
under this Agreement. 7.02. This Agreement may be terminated at any time by
either party at its option upon the giving of thirty days' prior written notice
of termination to the other party. Termination of this Agreement pursuant to
this Section 7.02 shall not prejudice any other remedy that the Employer may
have at law, in equity or under this Agreement. 7.03. This Agreement may be
terminated immediately by either party at its option and without prejudice to
any other remedy available at law, in equity, or under this Agreement by giving
written notice of termination to the other party if the Employer: (1) has a
receiver of its assets or property appointed because of insolvency; or (2) makes
a general assignment for the benefit of creditors; or (3) files a petition for
bankruptcy under any chapter of the United States Bankruptcy Code. 7.04. In the
event of the termination of this Agreement, the Employee shall be entitled to
the compensation earned prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including the date of termination of this
Agreement. 7.05. In the event of a breach of this Agreement by either the
Employer or the Employee resulting in damages to the other party, the
non-breaching party may recover from the party breaching the Agreement any and
all damages that may be sustained. ARTICLE VIII GENERAL PROVISIONS 8.01. Any
notices to be given under this Agreement by either party to the other may be
effected by personal delivery in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses appearing in the introductory paragraph of this
Agreement, but each party may adopt a new address by notifying the other party
in writing. Notices posted by mail shall be deemed received as of three days
after mailing. 8.02. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties with respect to the employment of
the Employee by the Employer and this Agreement contains all of the covenants
and agreements between the parties with respect to the subject matter hereof.
8.03. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey. 8.04. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief that may be proper. 8.05. If the
Employee dies prior to the termination of this Agreement, any moneys that may be
due him from the Employer under this Agreement as of the date of the death shall
be paid to the executor, administrator, or other personal representative of the
Employee's estate.
GENISYS RESERVATION SYSTEMS, INC.
By:____________________________________
Title:
_______________________________________
JOSEPH CUTRONA
<PAGE>
EXHIBIT 10.2
CONSULTING AGREEMENT
THIS CONSULTING
AGREEMENT made this 18th of October, 1996, between GENISYS RESERVATION
SYSTEMS, INC., 2401 Morris Avenue, Union, New Jersey 07083 ("Genisys"), and MARK
A. KENNY, residing at 10 Lisa Drive, Chatham, New Jersey 07928 ("Consultant").
In consideration of the mutual covenants and agreements set forth below, the
parties agree as follows: ARTICLE I SCOPE OF ENGAGEMENT 1.01. During the term of
this Agreement, Genisys agrees to engage the Consultant to provide, and the
Consultant agrees to provide to Genisys, certain advisory and consulting
services on a non-exclusive basis. The advisory and consulting services to be
provided by Consultant shall include, but shall not be limited to, analysis of
the business, operations and financial condition of Genisys, developing a
strategy and operational plan for expanding the business of Genisys, identify
new markets for the products produced by Genisys and the services offered by
Genisys and providing such other advisory and consulting services as may
reasonably be requested by Genisys in connection with the development and
marketing of Genisys' products and services. Such
<PAGE>
advisory and consulting services shall be rendered to the extent reasonably
practicable and
<PAGE>
at times and places mutually agreeable
to Genisys and the Consultant. Consultant agrees that he will use his best
efforts to handle promptly and effectively all matters with respect to which
Genisys requests that he render advisory and consulting services and, through
his advice and consulting services, to advance the business goals and objectives
of Genisys. During the term of this Agreement, Consultant shall have the right
to perform services for other companies and businesses, subject to the terms and
provisions of this Agreement. Genisys acknowledges and agrees that the
cooperation of Genisys and its employees and agents with the Consultant is a
necessary condition to Consultant rendering services under this Agreement and,
accordingly, Genisys agrees to cooperate with, work in good faith with, and
provide all reasonable assistance to, Consultant (and cause its employees and
agents to do the same) in connection with Consultant rendering his services
hereunder. Genisys will make available to the Consultant sufficient space in its
premises and a desk, phone, fax machine, photocopying machine and other similar
equipment and support reasonably necessary to permit the Consultant to render
his advisory and consulting services pursuant to this Agreement. ARTICLE II TERM
OF AGREEMENT 2.01. The term of this Agreement shall commence on the date first
set forth above and shall continue indefinitely until this Agreement is
<PAGE>
terminated in accordance with the terms and provisions hereof.
ARTICLE III COMPENSATION AND INCENTIVE BONUS 3.01. As
compensation for services rendered under this Agreement, the Consultant shall be
entitled to receive from Genisys a monthly fee of $6,500.00 during the period
from the date of the Agreement through and including February 28, 1997, and a
monthly fee of $8,400.00 from and after March 1, 1997, in each case payable in
arrears on the last day of each month during the term of this Agreement. 3.02.
As additional compensation for services rendered under this Agreement, the
Consultant may receive from Genisys, in any year in which Genisys has net
profits an incentive bonus to be determined in the sole discretion of Genisys.
In determining the amount, if any, of the incentive bonus for the Consultant,
Genisys shall take into account the following factors: a. Genisys's gross sales,
b. Genisys's gross profits, c. Whether Genisys has or will pay dividends on its
common stock, d. The Consultant's experience in his job, e. The Consultant's
abilities, and f. The time which the Consultant has devoted to providing
advisory and consulting services pursuant to this Agreement. If Genisys will be
paying an incentive bonus to Consultant pursuant to this Section 3.02, Genisys
shall pay such bonus to Consultant within ten days after the receipt by Genisys
of the annual audit conducted by its accountants of the preceding fiscal year
<PAGE>
of Genisys. The Consultant understands that Genisys
will allocate no more than 20% of the audited pre-income tax profits for the
payment of all bonuses for all employees and consultants, and that bonuses will
be paid only out of available funds without impairing the ability of Genisys to
meet all other obligations, including the payment of bonds, notes, loans and
other obligations. For any fiscal year in which the Consultant has not provided
advisory and consulting services to Genisys for a full twelve (12) months,
Genisys may, at Genisys's discretion, adjust accordingly the incentive bonus to
be paid in accordance with this Section 3.02. As used herein, net profits shall
be determined as the net income from operations after expenses but before taxes
as determined according to generally accepted accounting principles and in
conformity with the prior accounting practices of Genisys. ARTICLE IV
REIMBURSEMENT OF EXPENSES 4.01. Subject to the terms and provisions of Section
4.02 hereof, Genisys shall reimburse the Consultant for ordinary and necessary
business expenses incurred in the performance of his services rendered pursuant
to this Agreement. 4.02. The Consultant is authorized to incur reasonable
business expenses for promoting the business of Genisys, including expenditures
for entertainment and travel in connection with rendering his services pursuant
to this Agreement. Genisys will reimburse the Consultant from time to time for
all business expenses provided that the Consultant presents to Genisys
documentary evidence (such as receipts or paid bills),
<PAGE>
stating sufficient information to establish the amount, date, place, essential
character and deductibility for each expenditure. ARTICLE V INDEPENDENT
CONTRACTOR STATUS 5.01. This Agreement is intended to secure the advisory and
consulting services of Consultant as an independent contractor and nothing
herein shall be construed as creating an employer/employee relationship, a
partnership, joint venture or other joint interest between Genisys and the
Consultant. Except as expressly provided herein, the Consultant has no right or
authority to act for or on behalf of Genisys or to assume or to create any
obligation or responsibility, express or implied, on behalf of or in the name of
Genisys, or to bind Genisys in any manner whatsoever without the prior written
approval of Genisys. Consultant shall be solely liable for the payment of any
federal or state self- employment, income or other taxes imposed or arising out
of the payment of fees and other compensation to the Consultant by Genisys as
set forth in this Agreement and there shall be no responsibility for withholding
of taxes or other participation by Genisys. Consultant understands that he will
not be treated as an employee with respect to its advisory and consulting
<PAGE>
services under this Agreement for any purposes whatsoever.
ARTICLE VI PROPERTY RIGHTS 6.01. During the term of this Agreement, the
Consultant will have access to and become familiar with various trade secrets
consisting of, among other things, business plans and practices, patents,
devices, secret processes, compilations of information, records, and
specifications that are owned by Genisys and that are regularly used in the
operation of the business of Genisys. The Consultant shall not disclose any of
these trade secrets, directly or indirectly, or use them in anyway, unless
authorized by the Board of Directors of Genisys. All files, records, documents,
drawings, specifications, equipment, and similar items relating to the business
of Genisys, whether prepared by the Consultant or otherwise coming into his
possession, shall remain the exclusive property of Genisys and shall not be
removed from the premises of Genisys under any circumstances whatsoever without
the prior written consent of Genisys. 6.02. During the term of this Agreement,
the Consultant shall not, directly or indirectly, either as an employee,
employer, consultant, agent, principal, partner, stockholder, corporate officer,
director, or in any other individual or representative capacity, engage or
participate in any business that is in competition in any manner whatsoever with
the business of Genisys. During the term of this Agreement and for the period of
one year after the termination of this Agreement, the Consultant shall not,
directly or indirectly, solicit for employment or employ any employee of Genisys
regardless of whether the employee is employed on the date of this Agreement or
at any other time during the term of this Agreement.
<PAGE>
6.03. The Consultant hereby acknowledges and agrees that it is important to
Genisys that its goodwill be protected, maintained and increased. Accordingly,
the Consultant covenants and agrees as follows: Upon the termination of this
Agreement, whether for cause or otherwise, the Consultant shall not directly or
indirectly enter into or engage generally in competition with Genisys, whether
as an individual on his own or as a partner or joint venturer, or as an employee
or agent for any person, or as an officer, director, or shareholder or
otherwise, for period of one year after the date of termination of this
Agreement. This covenant on the part of the Consultant shall be construed as an
agreement independent of any other provision of this Agreement; and the
existence of any claim or cause of action of the Consultant against Genisys,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by Genisys of this covenant. 6.04. The Consultant
acknowledges that he has read and understood the provisions of this Article, and
that its provisions will not impose an undue hardship upon him. The Consultant
further acknowledges that due to the fact that Genisys's operations are or will
be worldwide in scope, the post-termination restraints set forth herein will
apply worldwide.
<PAGE>
ARTICLE VII TERMINATION 7.01. If the
Consultant willfully and materially breaches or habitually neglects his duties
under this Agreement, Genisys may, at its option, elect to terminate this
Agreement by causing a notice to be mailed to the Consultant at his last known
address stating the cause or causes of the termination and giving the Consultant
a period of thirty days to cure the default resulting from such cause or causes.
If at the end of the aforesaid thirty day period the Consultant has not cured
the default resulting from such cause or causes, Genisys may terminate this
Agreement immediately by mailing written notice to such effect to the Consultant
at his last known address and thereupon this Agreement shall immediately
terminate, become null and void and be of no further force or effect. The remedy
set forth in this Section 7.01 shall be without prejudice to any other remedy to
which Genisys may be entitled at law, in equity, or under this Agreement. 7.02.
This Agreement may be terminated at any time by either party at its option upon
the giving of thirty days' prior written notice of termination to the other
party. Termination of this Agreement pursuant to this Section 7.02 shall not
prejudice any other remedy that Genisys may have at law, in equity or under this
Agreement. 7.03. This Agreement may be terminated immediately by either party at
its option and without prejudice to any other remedy available at law, in
equity, or under this Agreement by giving written notice of termination to the
other party if Genisys: (1) has a receiver of its assets or property appointed
because of insolvency; or
<PAGE>
(2) makes a general
assignment for the benefit of creditors; or (3) files a petition for bankruptcy
under any chapter of the United States Bankruptcy Code. 7.04. In the event of
the termination of this Agreement, the Consultant shall be entitled to the
compensation earned prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including the date of termination of this
Agreement. 7.05. In the event of a breach of this Agreement by either Genisys or
the Consultant resulting in damages to the other party, the non-breaching party
may recover from the party breaching the Agreement any and all damages that may
be sustained. ARTICLE VIII GENERAL PROVISIONS 8.01. Any notices to be given
under this Agreement by either party to the other may be effected by personal
delivery in writing or by mail, registered or certified, postage prepaid with
return receipt requested. Mailed notices shall be addressed to the parties at
the addresses appearing in the introductory paragraph of this Agreement, but
each party may adopt a new address by notifying the other party in writing.
Notices posted by mail shall be deemed received as of three days after mailing.
8.02. This Agreement supersedes any and all other agreements, either oral or in
writing, between the parties with respect to the employment or engagement of the
<PAGE>
Consultant by Genisys and this Agreement contains all
of the covenants and agreements between the parties with respect to the subject
matter hereof. 8.03. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey. 8.04. If any action at law
or in equity is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys' fees, costs, and
necessary disbursements in addition to any other relief that may be proper.
8.05. If the Consultant dies prior to the termination of this Agreement, any
moneys that may be due him from Genisys under this Agreement as of the date of
the death shall be paid to the executor, administrator, or other personal
representative of the Consultant's estate.
GENISYS RESERVATION SYSTEMS, INC.
By: JOSEPH CUTRONA
President
Mark A. Kenny
<PAGE>
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made this 17th of October, 1996, between GENISYS
RESERVATION SYSTEMS, INC., 2401 Morris Avenue, Union, New Jersey 07083 (the
"Employer"), and JOHN H. WASKO, residing at 132 Elmwood Drive, Elmwood Park, New
Jersey 07407 (the "Employee"). In consideration of the mutual covenants and
agreements set forth below, the parties agree as follows: ARTICLE I EMPLOYMENT
AND TERM OF AGREEMENT 1.01. The Employer hereby employs the Employee and the
Employee hereby accepts employment with the Employer upon the terms and
conditions hereinafter set forth. 1.02. The term of this Agreement shall
commence on the date first set forth above and shall continue indefinitely until
this Agreement is terminated in accordance with the terms and provisions hereof.
<PAGE>
ARTICLE II DUTIES OF EMPLOYEE 2.01. The duties to be
performed by the Employee shall be determined from time to time by the Board of
Directors of the Employer. Nothing in this Agreement, however, shall be
construed to obligate the Employee to furnish ground transportation to or for
the benefit of the Employer. 2.02. The Employer shall have the right at any time
during the term of this Agreement to assign the Employee to perform duties which
are different from the duties originally assigned to the Employee pursuant to
Section 2.01 hereof. 2.03. If at any time during the term of this Agreement the
Employee should be unable because of personal injury, illness, or any other
cause to perform his duties under this Agreement, the Employer may assign the
Employee to other duties, and the compensation to be paid to the Employee for
performing those other duties shall be determined by the Employer in its sole
discretion. If the Employee is unwilling to accept the modification in duties
and compensation made by the Employer, this Agreement shall terminate
immediately. ARTICLE III COMPENSATION AND INCENTIVE BONUS 3.01. As compensation
for services rendered pursuant to this Agreement, the Employee shall be entitled
to receive from the Employer a salary of (i) $50,000 per annum commencing on the
date first set forth above and continuing through and including December 31,
1996, and (ii) $80,000 per annum commencing on January 1, 1997. Thereafter, the
Board of Directors of the Employer shall review the Employee's salary at least
annually with a view to increasing it if, in the sole judgment of the Board of
Directors, the earnings of the Employer or the services of the Employee merit
such an increase. Said salary shall be payable in equal weekly installments,
pro-rated for any partial employment period. There shall be no additional
compensation for overtime work. 3.02. As additional compensation for services
rendered under this Agreement, the Employee may receive from the Employer, in
any year in which the Employer has net profits an incentive bonus to be
determined in the sole discretion of the Board of Directors of the Employer. In
determining the amount, if any, of the incentive bonus for the Employee, the
Employer shall take into account the following factors: a. The Employee's gross
salary, b. The salaries of comparable employees in other similar businesses, c.
The Employer's gross sales, d. The Employer's gross profits, e. Whether the
Employer has or will pay dividends on its common stock, f. The Employee's
experience in his job, g. The Employee's abilities, h. The time which the
Employee has devoted to providing services pursuant to this Agreement, and i.
Any other similar factors pertinent to the amount and size of the incentive
bonus. If the Employer will be paying an incentive bonus to the Employee
pursuant to this Section 3.02, the Employer shall pay such bonus to the Employee
within ten days after the receipt by the Employer of the annual audit conducted
by its accountants of the preceding fiscal year of the Employer. The Employee
understands that the Employer will allocate no more than 20% of the audited
pre-income tax profits for the payment of all bonuses for all employees and
consultants, and that bonuses will be paid only out of available funds without
impairing the ability of the Employer to meet all other obligations, including
the payment of bonds, notes, loans and other obligations. For any fiscal year in
which the Employee has not worked for a full twelve (12) months, the Employer
may, at the Employer's discretion, adjust accordingly the incentive bonus to be
paid in accordance with this Section 3.02. As used herein, net profits shall be
determined as the net income from operations after expenses but before taxes as
determined according to generally accepted accounting principles and in
conformity with the prior accounting practices of the Employer. ARTICLE IV
EMPLOYEE BENEFITS AND BONUSES 4.01. The Employer agrees to immediately include
the Employee in the hospital, surgical, and medical benefit plan adopted by the
Employer on or about March 1, 1995, so long as the Employee continues to be
eligible for such coverage in accordance with the rules and regulations adopted
by the insurance company. 4.02. The Employee shall be entitled to an annual
vacation leave of four weeks per year at full pay. The vacation period may be
increased or decreased by the Employer from time to time. The time for vacation
shall be selected by the Employee and approved by the Employer. Any unused
vacation time may be accrued and carried forward from year to year. In lieu of
the vacation leave specified above, the Employee may elect to received payment
for the whole or portion of the vacation to which he is entitled, the vacation
time to be valued at the amount of salary earned by the Employee during an
equivalent period of time. 4.03. The Employee shall be entitled to the following
holidays with full pay: January 1 (New Year's Day), third Monday in February
(President's Day), Last Monday in May (Memorial Day), July 4 (Independence Day),
first Monday in September (Labor Day), fourth Thursday in November (Thanksgiving
Day), December 25 (Christmas). 4.04. The Employee shall be entitled to five days
per year as sick leave with full pay. Such sick leave may not be accumulated and
may not be carried forward from year to year. ARTICLE V REIMBURSEMENT OF
EXPENSES 5.01. Subject to the provisions of Section 5.02 hereof, the Employer
shall reimburse the Employee for ordinary and necessary business expenses
incurred in the performance of his duties pursuant to this Agreement. 5.02. The
Employer is authorized to incur reasonable business expenses for promoting the
business of the Employer, including expenditures for entertainment and travel.
The Employer will reimburse the Employee from time to time for all business
expenses provided that the Employee presents to the Employer documentary
evidence (such as receipts or paid bills), stating sufficient information to
establish the amount, date, place, essential character and deductibility for
each expenditure. 5.03. In the event that the Employee is transferred by the
Employer to a new principal place of work during the term of this Agreement, the
Employer shall reimburse the Employee for all reasonable moving and traveling
<PAGE>
expenses incurred by the Employee as a result of such transfer.
ARTICLE VI PROPERTY RIGHTS 6.01. During the term of this
Agreement, the Employee will have access to and become familiar with various
trade secrets consisting of, among other things, business plans and practices,
patents, devices, secret processes, compilations of information, records, and
specifications that are owned by the Employer and that are regularly used in the
operation of the business of the Employer. The Employee shall not disclose any
of these trade secrets, directly or indirectly, or use them in anyway, unless
authorized by the Board of Directors of the Employer. All files, records,
documents, drawings, specifications, equipment, and similar items relating to
the business of the Employer, whether prepared by the Employee or otherwise
coming into his possession, shall remain the exclusive property of the Employer
and shall not be removed from the premises of the Employer under any
circumstances whatsoever without the prior written consent of the Employer.
6.02. During the term of this Agreement, the Employee shall not, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer, director, or in any other individual or
representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of the Employer. During
the term of this Agreement and for the period of one year after the termination
of this Agreement, the Employee shall not, directly or indirectly, solicit for
employment or employ any employee of the Employer regardless of whether the
employee is employed on the date of this Agreement or at any other time during
the term of this Agreement. 6.03. The Employee hereby acknowledges and agrees
that it is important to the Employer that its goodwill be protected, maintained
and increased. Accordingly, the Employee covenants and agrees as follows: Upon
the termination of this Agreement, whether for cause or otherwise, the Employee
shall not directly or indirectly enter into or engage generally in competition
with the Employer, whether as an individual on his own or as a partner or joint
venturer, or as an employee or agent for any person, or as an officer, director,
or shareholder or otherwise, for period of one year after the date of
termination of this Agreement. This covenant on the part of the Employee shall
be construed as an agreement independent of any other provision of this
Agreement; and the existence of any claim or cause of action of the Employee
against the Employer, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Employer of this covenant.
6.04. The Employee acknowledges that he has read and understood the provisions
of this Article, and that its provisions will not impose an undue hardship upon
him. The Employee further acknowledges that due to the fact that the Employer's
operations are or will be worldwide in scope, the post-termination restraints
set forth herein will apply worldwide.
<PAGE>
ARTICLE VII
TERMINATION 7.01. If the Employee willfully breaches or habitually neglects his
duties under this Agreement, the Employer may, at its option, elect to terminate
this Agreement by causing a notice to be mailed to the Employee at his last
known address stating the cause or causes of the termination and giving the
Employee a period of fifteen days to cure the default resulting from such cause
or causes. If at the end of the aforesaid fifteen day period the Employee has
not cured the default resulting from such cause or causes, the Employer may
terminate this Agreement immediately by mailing written notice to such effect to
the Employee at his last known address and thereupon this Agreement shall
immediately terminate, become null and void and be of no further force or
effect. The remedy set forth in this Section 7.01 shall be without prejudice to
any other remedy to which the Employer may be entitled at law, in equity, or
under this Agreement. 7.02. This Agreement may be terminated at any time by
either party at its option upon the giving of thirty days' prior written notice
of termination to the other party. Termination of this Agreement pursuant to
this Section 7.02 shall not prejudice any other remedy that the Employer may
have at law, in equity or under this Agreement. 7.03. This Agreement may be
terminated immediately by either party at its option and without prejudice to
any other remedy available at law, in equity, or under this Agreement by giving
written notice of termination to the other party if the Employer: (1) has a
receiver of its assets or property appointed because of insolvency; or (2) makes
a general assignment for the benefit of creditors; or (3) files a petition for
bankruptcy under any chapter of the United States Bankruptcy Code. 7.04. In the
event of the termination of this Agreement, the Employee shall be entitled to
the compensation earned prior to the date of termination as provided for in this
Agreement, computed pro rata up to and including the date of termination of this
Agreement. 7.05. In the event of a breach of this Agreement by either the
Employer or the Employee resulting in damages to the other party, the
non-breaching party may recover from the party breaching the Agreement any and
all damages that may be sustained. ARTICLE VIII GENERAL PROVISIONS 8.01. Any
notices to be given under this Agreement by either party to the other may be
effected by personal delivery in writing or by mail, registered or certified,
postage prepaid with return receipt requested. Mailed notices shall be addressed
to the parties at the addresses appearing in the introductory paragraph of this
Agreement, but each party may adopt a new address by notifying the other party
in writing. Notices posted by mail shall be deemed received as of three days
after mailing. 8.02. This Agreement supersedes any and all other agreements,
either oral or in writing, between the parties with respect to the employment of
the Employee by the Employer and this Agreement contains all of the covenants
and agreements between the parties with respect to the subject matter hereof.
8.03. This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey. 8.04. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs, and necessary
disbursements in addition to any other relief that may be proper. 8.05. If the
Employee dies prior to the termination of this Agreement, any moneys that may be
due him from the Employer under this Agreement as of the date of the death shall
be paid to the executor, administrator, or other personal representative of the
Employee's estate.
GENISYS RESERVATION SYSTEMS, INC.
By:____________________________________
Title:
_______________________________________
JOHN H. WASKO
<PAGE>
EXHIBIT 10.4
LEASE, dated November 1, 1995, between UNICON INVESTMENTS, a New
Jersey General Partnership, c/o Alfieri Property Management, having
its principal office located at 399 Thornall Street, P.O. Box 2911,
Edison, New Jersey 08818-2911, ("Landlord"), and CORPORATE TRAVEL
LINK, INC., a New Jersey Corporation, having its principal office
located at 2401 Morris Avenue, Union, New Jersey 07083, ("Tenant").
WITNESSETH:
ARTICLE I
DEMISED PREMISES, TERM, RENT
1.01. Landlord hereby leases to Tenant, and Tenant hereby
hires from Landlord, the premises hereinafter described, in the
building located at 2401 Morris Avenue, Union, New Jersey,
("Building") on the parcel of land more particularly described in
Exhibit A ("Land"), for the term hereinafter stated, for the rents
hereinafter reserved and upon and subject to the conditions
(including limitations, restrictions and reservations) and
covenants hereinafter provided. Each party hereby expressly
covenants and agrees to observe and perform all of the conditions
and covenants herein contained on its part to be observed and
performed.
1.02. The premises hereby leased to Tenant is a portion of
the third (3rd) floor, East, of the Building, as shown on the floor
plans annexed hereto as Exhibit B, having a rentable area of 1,500
square feel measured outside wall to outside wall, together with
Tenant's share of the common area. Said premises, together with
all fixtures and equipment which at the commencement, or during the
term of this Lease are thereto attached (except items not deemed to
be included therein and r movable by Tenant as provided in Article
13) constitute the "Demised Premises." Tenant shall submit any
dispute over the square footage to arbitration within fifteen (15)
days from the date hereof or otherwise shall be deemed to have
accepted the foregoing calculation of square footage.
1.03. The term of this Lease, for which the Demised Premises
are hereby leased, shall commence on a date ("Commencement Date")
which shall be (i) the day on which the Demised Premises are ready
for occupancy (as defined in Article 4) or (ii) the day Tenant, or
anyone claiming under or through Tenant, first occupies the Demised
Premises for business, whichever occurs earlier, and shall end at
noon on the last day of the calendar month in which occurs the day
preceding the fifth (5th) ann versary of the Commencement Date,
which ending date is hereinafter called the "Expiration Date", or
shall end on such earlier date upon which said term may expire or
be canceled or terminated pursuant to any of the conditions or
covenants of this Lease or pursuant to law. Promptly following the
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Commencement Date, the Landlord shall notify Tenant in writing of
the Commencement Date and the Expiration Date as determined in
accordance with this Section.
1.04. The rents reserved under this Lease, for the term
thereof, shall be and consist of
(a) Fixed rent of $25,000.00 per year, (calculated on
the basis of $17.00/sq. t. for 1,500 sq. ft. of rentable area)
which shall be payable in equal monthly installments of $2,125.00
in advance on the first day of each and every calendar month during
the term of this Lease, (except Tenant shall pay, upon execution
and delivery of this Lease by Tenant, the sum of $2,125.00 to be
applied against the first monthly installment or installments of
fixed rent becoming due under this Lease) and
(b) Additional rent consisting of all such other sums
of money as shall become due from and payable by Tenant to Landlord
hereunder (for default in payment of which Lan lord shall have the
same remedies as for a default in payment of fixed rent), all to be
paid to Landlord at its office, or such other place, or to such
agent at such place, as Landlord may designate by notice to Tenant,
in lawful money of the United States of America.
1.05. Tenant shall pay the fixed rent and additional rent
herein reserved promptly as and when the same shall become due and
payable, without demand therefor and without any abatement,
deduction or set off whatsoever except as expressly provided in
this Lease.
1.06. If the Commencement Date occurs on a day other than
the first day of a calendar month, the fixed rent for such calendar
month shall be prorated and the balance of the first month's fixed
rent theretofore paid shall be credited against the next monthly
installment of fixed rent.
1.07. Late payments of any payment of rent, including
monthly rent, which is not received within five (5) days after it
is due, will be subject to a late charge equal to five percent (5%)
of the unpaid payment, or $ 00.00, whichever is greater. This
amount is in compensation of Landlord's additional cost of
processing late payments. In addition, any rent which is not paid
when due, including monthly rent, will accrue interest at a late
rate charge of the Chase Manhattan Bank, N.A. Prime Rate plus three
percent (3%) per annum, as said rate is reasonably determined by
Landlord from published reports, (but in no event in an amount in
excess of the maximum rate allowed by applicable law) from the date
on which it was due until the date on which it is paid in full with
accrued interest. If Tenant is in default of the Lease for failure
to pay rent, in addition to the late charges and interest set forth
above, Tenant shall be charged with all attorney fees in connection
with the collection of all sums due Landlord.
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ARTICLE 2
USE
2.01. Tenant shall use and occupy the Demised Premises for
executive and general offices for the transaction of Tenant's
business and for no other purpose
2.02. The use of the Demised Premises for the purposes
specified in Section 2.01 shall not include, and Tenant shall not
use or permit the use of the Demised Premises or any part thereof,
for:
(a) A school of any kind other than for the training of Tenant's
employees;
(b) An emp oyment agency; or
(c) An office for any governmental or quasi governmental
bureau, department, agency, foreign or domestic, including any
autonomous governmental corporation or diplomatic or trade mission.
2.03. If any governmental license or permit, other than a
Certificate of Occupancy, shall be required for the proper and
lawful conduct of Tenant's business in the Demised Premises, or any
part thereof, and if failure to secure such license or permit would
in any way affect Landlord, Tenant, at its expense, shall submit
the same to inspection by Landlord. Tena t shall at all times
comply with the terms and conditions of each such license or
permit.
2.04. Tenant shall not at any time use or occupy, or do or
permit anything to be done in the Demised Premises, in violation of
the Certificate of Occupancy (or other similar municipal ordinance)
governing the use and occupation of the Demised Premises or for the
Building.
ARTICLE 3
PREPARATION OF THE DEMISED PREMISES
3.01. The Tenant agrees to take the Demised Premises in "As-
Is" condition except Landlord, at its own cost and expense, shall
provide and install building standard carpet thro ghout the Demised
Premises and paint the Demised Premises using building standard
paint ("Landlord's Work") all as more fully set forth in Exhibit C.
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ARTICLE 4
WHEN DEMISED PREMISES READY FOR OCCUPANCY
4.01. The Demised Premises shall be deemed ready for
occupancy on the earliest date on which all of the following
conditions have been met:
(a) A Certificate of Occupancy (temporary or final) has
been issued by the applicable governmental authorities, permitting
Tenant's use of the Demised Premises fo the purposes for which the
same have been leased,
(b) Landlord's Work i the Demised Premises have been
substantially completed and same shall be so deemed notwithstanding
the fact that minor or insubstantial details of Landlord's Work
remain to be performed, the non-completion of which does not
materially interfere with Tenant's use of the Demised Premises.
(c) Reasonable means of access and facilities necessary
to Tenant's use and occupancy of the Demised Premises, including
corridors, elevators and stairways, and heating, vent lating, air
conditioning, sanitary, water, and electrical facilities, have been
installed and are in reasonably good operating order and available
to Tenant.
4.02. If and when Tenant shall take actual possession of the
Demised Premises, i shall be conclusively presumed that the same
were in satisfactory condition (except for latent defects) as of
the date of such taking of possession, unless within ninety (90)
days after such date Tenant shall give Landlord notice specifying
the respects in which the Demised Premises were not in satisfactory
condition.
ARTICLE 5
ADDITIONAL RENT
5.01 For the purpose of Sections 5.01 through 5.03
(a) "Taxes" shall mean real estate taxes, special and
extraordinary assessments and governmental levies against the Land
and Building of which the Demised Premises (but excluding therefrom
that portion of the real estate taxes directly attributable to
improvements made by other tenants in the Building beyond
Landlord's allowances) are a part provided, however, if t any time
during the term of this Lease the method of taxation prevailing at
the date of this Lease shall be altered so that in lieu of, or as
an addition to, or as a substitute for any or all of the above
there shall be assessed, levied or imposed (i) a tax, assessment,
levy, imposition or charge based on the income or rents received
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therefrom whether or not wholly or partially as a capital levy or
otherwise; or (ii) a tax, assessment, levy, imposition or charge
measured by or based in whole or in part upon all or any part of
the Land and/or Building and imposed upon Landlord; or (iii) a
license fee measured by the rents; or (iv) any other tax,
assessment, levy, imposition, charge or license fee however
described or imposed, then all such taxes, assessments, levies,
impositions, charges or license fees or the part thereof so
measured or based shall be included in the definition of "Taxes."
Tenant shall pay to Landlord directly that portion of any real
estate taxes directly attributable to improvements made by Tenant
beyond Landlord's allowances (hereinafter referred to as "Tenant's
Direct Tax Payment").
(b) "Base Taxes" shall mean the assessed valuation of
the Land and Building as finally determined following completion of
construction and issuance of an initial Certificate of Occupancy
for any portion of the Building (or such equivalent certification
if Certificates of Occupancy are not to be used), multiplied by the
tax rate for the Tax Year 1996.
(c) "Tax Year" shall mean each calendar year for which
Taxes are levied by any governmental authority.
(d) "Operational Year" shall mean each calendar year
commencing with calendar year 1997.
(e) "Tenant's Proportionate Share of Increase" shall mean
3.3% multiplied by the increase in Taxes in any Operational Ye r in
excess of the Base Taxes. Tenant's Proportionate Share of Increase
for the first Operational Year shall be prorated to reflect the
actual occupancy by Tenant for said Operational Year.
(f) "Tenant's Projected Share of Increase" shall mean
Tenant's Proportionate Share of Increase in Taxes for the projected
Operational Year divided by twelve (12) and payable monthly by
Tenant to Landlord as additional rent.
5.02. Commencing with the first Operational Year an
thereafter, Tenant shall pay to Landlord as additional rent for the
then Operational Year, Tenant's PIncrease in Taxes in
equal monthly installments.
5.03. After the expiration of each Operational Year,
Landlord shall fu nish to Tenant a written statement of the Taxes
incurred for such Operational Year as well as Tenant's
Proportionate Share of Increase, if any. If the statement
furnished by Landlord to Tenant pursuant to this Section at the end
of the then Operational Year shall indicate that Tenant's Projected
Share of Increase exceeded Tenant's Proportionate Share of
Increase, Landlord shall either forthwith pay the amount of excess
directly to Tenant concurrently with the statement or credit same
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against Tenant's next monthly installment of rent. If such
statement furnished by Landlord to Tenant shall indicate that the
Tenant's Proportionate Share of Increase exceeded Tenant's
Projected Share of Increase for the then Operational Year, Tenant
shall forthwith pay the amount of such excess to Landlord.
Commencing with the first Operational Year, Tenant shall pay
to Landlord in equal monthly installments together with its payment
of fixed rent one-twelfth (1/12) of Tenant's Direct Tax Payment.
5.04. As used in Sections 5.04 through 5 06:
(a) "Operating Expenses" shall mean ny or all expenses incurred
by Landlord in connection with the operation of the Land and
Building of which the Demised Premises are a part, including all
expenses incurred as a result of Landlord's compliance with any of
its obligations hereunder other than Landlord's Work and such
expenses shall include: (i) salaries, wages, medical, surgical and
general welfare benefits, (including group life insurance) and
pension payments of employees of Landlord engaged in the operation
and maintenance of the Building; (ii) social security,
unemployment, and payroll taxes, workers' compensation, disability
coverage, uniforms, and dry cleaning for the employees referred to
in Subsection (i);(iii) the cost of all charges for oil, gas,
electricity (including but not limited to fuel cost adjustments),
steam, heat, ventilation, air-conditioning, heating, and water
(including common areas thereof) including any taxes on any such
utilities, but excluding therefrom the cost, including taxes
thereon, of electric energy furnished other than for heating and
air-conditioning to the Demised Premises (which costs shall be
borne by Tenant pursuant to the provisions of Article 15 hereof);
(iv) the cost of all premiums and charges for the following
insurance rent, casualty, liability, fidelity and war risk (if
obtainable from the United States Government); (v) the cost of all
building and cleaning supplies for the common areas of the Building
and charges for telephone for the Building; (vi) the cost of all
charges for management, window cleaning, security services, if any,
and janitorial services, and any independent contractor performing
work included within the definition of operating expenses; (vii)
legal and accounting services and other professional fees and
disbursements incurred in connection with the operation and
management of the Land and Building (other than as related to new
leases, enforcing Landlord's rights under existing leases, or sales
of the Building); (viii) general maintenance of the Building and
the cost of maintaining and replacing the landscaping; (ix)
maintenance of the common area; (x) any escalations in the ground
rent payments in excess of the base ground rent required to be paid
by Landlord to the Ground Lessor under the Ground Lease; (xi)
capital expenditures, including the purchase of any item of capital
equipment which have the effect of reducing the expenses which
would otherwise be included in Operating Expenses, the costs of
which shall be included in Operating Expenses for the Operational
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Year in which the costs are incurred and subsequent Operational
Years on a straight-line basis, to the extent that such items are
amortized over such period of time as Landlord reasonably
estimates, with an interest factor equal to the interest rate at
the time of Landlord's having made said expenditure. If Landlord
shall lease any items of capital equipment designed to result in
savings or reductions in expenses which would otherwise be included
in Operating Expenses, then the rentals and other costs paid
pursuant to such leasing shall be included in Operating Expenses
for the Operational Year in which they were incurred; and (xii)
that portion of the cost of any capital expenditures incurred in
connection with the operation of the Land and Building amortized on
a straight line basis, to the extent that such items are amortized
over an appropriate period, but not more than ten years, with an
interest factor equal to the interest rate, at the time of
landlord's having made said expenditure.
If during all or part of any Operational Year, Landlord
shall not furnish any particular item(s) of work or service (which
would otherwise constitute an Operating Expense hereunder) to
portions of the Building due to the fact that (i) such portions are
not occupied or leased; (ii) such items of work or service is not
required or desired by the tenant of such portion; (iii) such
tenant is itself obtaining and providing such item of work or
service; or (iv) for other reasons, then, for the purposes of
computing Operating Expenses, the amount for such item and for such
period shall be deemed to be increased by an amount equal to the
additional costs and expenses which would reasonably have been
incurred during such period by Landlord if it had at its own
expense finished such item of work or services to such portion of
the Building or such tenant.
Notwithstanding the foregoing, the following costs and expenses
shall not be included in Operating Expenses:
(1) Executives' salaries above the grade of building
manager;
(2) Amounts received by Landlord through proceeds of
insurance except to the extent they are compensation for sums
previously included in Operating Expenses hereunder;
(3) Cost of repai s or replacements incurred by reason of
fire or other casualty or condemnation to the extent Landlord is
compensated therefor;
(4) Advertising and promotion expenditures;
(5) Costs incurred in performing work or furnishing
services or any tenant (including Tenant), whether at such
tenant's or Landlord's expense, to the extent that such work or
service is in excess of any work or service that Landlord is
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obligated to furnish to tenant at Landlord's expense;
(6) Depreciation, except as provided above;
(7) Broke age commissions;
(8) Taxes ( s hereinbefore defined);
(9) The cost of electricity (for other than heating and
airconditioning) furnished to the Demised Premises or any other
space leased to tenants as reasonably estimated by Landlord; and
(10) Refinancing costs and mortgage interest and
amortization payments.
(b) "Operational Year" shall mean each calendar year
commencing with calend r year 1997.
(c) "Base Year" shall mean calendar year 1996.
(d) "Tenant's Proportionate Share of Increase" shall mean 3.3%
multiplied by the increase in Operating Expenses for the
Operational Year over Operating Expenses for the Base Year. For
purposes hereof, the Tenant's Proportionate Share of Increase has
been computed based upon a total square footage of Building equal
to 45,000 square feet, and a total square footage of the Demised
Premises equ l to 1,500 square feet.
(e) "Tenant's Projected Share of Increase" shall mean
Tenant's Proportionate Share of Increase for the projected
Operational Year divided by twelve (12) and payable monthly by
Tenant to Landlord as additional rent.
5.05. Commencing with the first Operational Year after
Landlord shall be entitled to eceive Tenant's Proportionate Share
of Increase, Tenant shall pay to Landlord as additional rent for
the then Operational Year, Tenant's Projected Share of Increase.
5.06. After the expiration of the first Operational Year and
for each Operational Year thereafter, Landlord shall furnish to
Tenant a written detailed statement of the Operating Expenses
(certified to be true and correct by Landlord) incurred for such
Operational Year which statement shall set forth Tenant's
Proportionate Share of Increase, if any. If the statement
furnished by Landlord to Tenant, pursuant to this Section, at the
end of the then Operationa Year shall indicate that Tenant's
Projected Share of Increase exceeded Tenant's Proportionate Share
of Increase, Landlord shall either forthwith pay the amount of
excess directly to Tenant concurrently with the statement or credit
same against Tenant's next monthly installment of rent. If such
statement furnished by Landlord to Tenant hereunder shall indicate
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that the Tenant's Proportionate Share of Increase exceeded Tenant's
Projected Share of Increase for the then Operational Year, Tenant
shall forthwith pay the amount of such excess to Landlord.
5.07. Every statement given by Landlord pursuant to Sections
5.03 and 5.06 shall be conclusive and binding upon Tenant unless
(i) within ninety (90) days after the receipt of such statement
Tenant shall notify Landlord that it disputes the correctness of
the statement, specifying the particular respects in which the
statement is claimed to be incorrect; and (ii) if such dispute
shall not have been settled by agreement, shall submit the dispute
to arbitration within one hundred and twenty (120) days aft r
receipt of the statement. Pending the determination of such
dispute by agreement or arbitration as aforesaid, Tenant shall,
within thirty (30) days after receipt of such statement, pay
additional rent in accordance with Landlord's statement and such
payment shall be without prejudice to Tenant's position. If the
dispute shall be determined in Tenant's favor, Landlord shall
forthwith pay Tenant the amount of Tenant's overpayment of rents
resulting from compliance with Landlord's statement.
ARTICLE 6
SUBORDINATION, NOTICE TO LESSORS AND MORTGAGEES
6.01. This Lease, and all rights of Tenant hereunder are and
shall be subject and subordinate in all respects to a l ground
leases, overriding leases and underlying leases of the Land and/or
the Building now or hereafter existing and to all mortgages which
may now or hereafter affect the Land and/or the Building and/or any
of such leases, whether or not such mortgages shall also cover
other lands and/or buildings, to each and every advance made or
hereafter to be made under such mortgages, and to all renewals,
modifications, replacements, and extensions of such leases and such
mortgages and spreaders and consolidations of such mortgages. This
Section shall be self-operative and no further instrument of
subordination shall be required. In confirmation of such
subordination, Tenant shall promptly execute and deliver an
instrument that Landlord, the lessor of any such lease or the
holder of any such mortgage or any of their respective successors
in interest may reasonably request to evidence such subordination.
The respective successors in interest may reasonably request to
evidence such subordination. The leases to which this Lease is, at
the time referred to, subject and subordinate pursuant to this
Article are hereinafter sometimes called "superior leases" and the
mortgages to which this Lease is,, at the time referred to, subject
and subordinate are hereinafter sometimes called "superior
mortgages", the lessor of a superior lease or its successor in
interest at the time referred to is sometimes hereinafter called a
"lessor", and the holder of a superior mortgage or its successor in
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interest at the time referred to is sometimes hereinafter called a
"superior mortgagee."
ARTICLE 7
QUIET ENJOYMENT
7.01. So long as Tenant pays all of the fixed rent and
additional rent due hereunder and p rforms all of Tenant's other
obligations hereunder, tenant shall peaceable and quietly have,
hold, and enjoy the Demised Premises subject, nevertheless, to the
obligations of this Lease and, as provided in Article 6, to the to
the superior leases and the superior mortgages.
ARTICLE 8
ASSIGNMENT, MORTGAGING, SUBLETTING
8.01. Neither this Lease, nor the term and estate hereby
granted, nor any part hereof or thereof, nor the interest of Tenant
in any sublease, or the rentals thereunder, shall be assigned,
mortgaged, pledged, encumbered or otherwise transferred by Tenant,
and neither the Demised Premises, nor any part thereof shall be
encumbered in any manne by reason of any act or omission on the
part of Tenant or anyone claiming under or through the Tenant or
shall be sublet, or offered or advertised for subletting, or be
used or occupied or permitted to be used or occupied, or utilized
for desk space or for mailing privileges, by anyone other than
Tenant or for any purpose other than as permitted by this Lease,
without the prior written consent of Landlord in every case, except
as expressly otherwise provided in this Article.
8.02. If this Lease be assigned, whether or not in violation
of the provisions of this Lease, Landlord may collect rent from the
assignee. If the emised Premises or any part thereof be sublet
or be used or occupied by anybody other than Tenant, whether or not
in violation of this Lease, Landlord may, after default by Tenant
and expiration of Tenant's time to cure such default, collect rent
from the undertenant or occupant. In either event, Landlord may
apply the net amount collected to the rents herein reserved, but no
such assignment, underletting, occupancy or collection shall be
deemed a waiver of any of the provisions of Section 8.01, or the
acceptance of the assignee, undertenant or occupants as Tenant, or
a release of Tenant from the further performance by Tenant of
tenant's obligations under this Lease. The consent by Landlord to
assignment, mortgaging, underletting or use or occupancy by others
shall not in any wise be considered to relieve Tenant from
obtaining the express written consent of Landlord to.any other or
further assignment, mortgaging or underletting or use or occupancy
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by others not expressly permitted by this Article.
8.03. The following provisions shall govern in connection
with the subletting of all or a portion of the Demised Premises:
(a) Tenant shall submit in writing to Landlord (i) the name
of the proposed subtenant; (11) the nature and character of the
proposed subtenant's business, and the intended use o be made of
the Demised Premises by the proposed subtenant; (iii) the terms and
conditions of the proposed sublease; and (iv) such reasonable
financial information as Landlord may request regarding the
proposed subtenant.
(b) Within thirty (30) days of Landlord's receipt of the
information described in (a) above, Landlord, at Landlord's
election may (i) elect to sublease the Demised Premises directly
from Tenant either upon (x) the same terms and conditions offered
to the proposed subtenant or, (y) upon the same terms and
conditions as set forth in this Lease; or ii) cancel this Lease as
to that portion of the Demised Premises which Tenant desires to
sublease, in which event Tenant agrees to surrender all of its
right, title, and interest hereunder and Landlord may thereafter
enter into a direct Lease with the proposed subtenant or with any
other persons as Landlord may desire; or (iii) consent to the
subletting on such terms and conditions as established by Landlord,
including Landlord's participation in any rentals received by
Tenant.
(c) As a condition to Landlord's consent, if given under (b)
above, Landlord shall have obtained consent to such proposed
subletting by an superior lessor and/or superior mortgagee,
provided such superior lessor and/or superior mortgagee requires
consent to the subletting.
(d) In connection with any subletting, Tenant shall not offer
the Demised Premises, or any part thereof, to any other tenant in
the Building or their subsidiaries or affiliates at a rental rate
less than the current rental rate for office buildings in the
surrounding area.
8.04. Tenant shall remain fully liable for the performance of
all Tenant's obligations hereunder notwithstanding any subletting
provided for herein (except to Landlord), and without limiting the
generality of the foregoing, shall remain fully responsible and
liable to Landlord for all acts and omissions of any subtenant or
anyone claiming under or through any subtenant which shall be in
violation of any of the obligations of this Lease and any such
violation shall be deemed to be a violation by Tenant.
8.05. Tenant shall not, without the prior written consent f
Landlord, assign this Lease, and the provisions of Section
8.03 with respect to subletting shall equally apply to any
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assignment of this Lease. Tenant herein named, or any immediate or
remote successor in interest of Tenant herein named, shall remain
liable jointly and severally (as a primary obligor) with its
assignee and all subsequent assignees for the performance of
Tenant's obligations hereunder. In the event that Tenant hereunder
is a corporation (other than one whose shares, now or in the
future, are regularly and publicly traded on a recognized stock
exchange, including over the counter, or is a public company or
merges with a public company), then any substantial change in the
ownership of and/or power to vote the majority of the outstanding-
capital stock of Tenant, other than by inheritance or operation of
law, shall be deemed an assignment of this Lease and the provisions
with respect to assignment shall be applicable.
8.06. Notwithstanding anything to the contrary contained in
this Article with respect to assignment or subletting, Landlord's
consent to any assignment and/or subletting (i) to any parent,
affiliate or wholly-owned subsidiary of Tenant (as defined in rule
240.12b-2 under the Sec rities Exchange Act of 1934) or (ii) to any
corporation or other entity which succeeds to all or substantially
all of the assets and business of Tenant, shall be be unreasonably
withheld.
8.07. Tenant further agrees that it shall not place any signs
on the windows located in the Demised Premises ind cating that all
or any portion of the Demised Premises are available for subleasing
or assignment.
ARTICLE 9
COMPLIANCE WITH LAWS AND REQUIREMENTS OF PUBLIC AUTHORITIES
9.01. Tenant shall give prompt notice to Landlord of any
notice it receives of the v olation of any law or requirement of
public authority, and at its expense shall comply with all laws and
requirements of public authorities which shall, with respect to the
Demised Premises or the use and occupation thereof, or the
abatement of any nuisance, impose any violation, order or duty on
Landlord or Tenant, arising from (i) Tenant's use of the Demised
Premises; (ii) the manner of conduct of Tenant's business or
operation of its installation, equipment or other property therein;
(iii) any cause or condition created by or at the instance of
Tenant, other than by Landlord's performance of any work for or on
behalf of Tenant; or (iv) the breach of any of Tenant's obligations
hereunder. Furthermore, Tenant need not comply with any such law
or requirement of public authority so long as Tenant shall be
contesting the validity thereof, or the applicability thereof to
the Demised Premises, in accordance with Section 9.02.
Nothing contained herein shall be construed to require Tenant to
make structural alterations to the Building ex ept to the extent
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that same are required by reason of Tenant's specific use (other
than general office).
9.02. Tenant may, at its expense (and if necessary, in the
name of but without expense to Landlord) contest, by appropriate
proceedings prosecuted diligently and in good faith, the validity,
or applicability to the Demised Premises, of any law or requirement
of public authority, and Landlord shall cooperate with Tenant in
such proceedings provided that:
(a) Tenant shall defend, indemnify, and hold harmless
Landlord against all liability, loss or damage which Landlord shall
suffer by reason of such non-compliance or contest, including
reasonable attorney's fees and other expenses reasonably incurred
by Landlord;
(b) Such non-compliance or contest shall not constitute
or result in any violation of any superior lease or superior
mortgage, or, if such superior lease and/or superior ortgage shall
permit such non-compliance or contest on condition of the taking of
action or furnishing of security by Landlord, such action shall be
taken and such security shall be furnished at the expense of
tenant; and
(c) Tenant shall keep Landlord advised as to the status of such
proceedings.
ARTICLE 10
INSURANCE
10.01. Tenant shall not violate, or permit the violation of,
any condition imposed by the all-risk casualty policy i sued for
the Building and shall not do anything, or permit anything to be
kept, in the Demised Premises which would increase the fire or
other casualty insurance rate on the Building or the property
therein over the rate which would otherwise then be in effect,
(unless Tenant pays the resulting increased amount of premium as
provided in Section 10,02) or which would result in insurance
compares of good standing refusing to insure the Building or any of
such property in amounts and at normal rates reasonably
satisfactory to Landlord. However, Tenant shall not be subject to
any liability or obligation under this Article by reason of the
proper use of the Demised Premises for the purposes permitted by
Article 2.
10.02. If, by reason of any act or omission on the part of
Tenant, the rate f fire insurance with extended all-risk coverage
on the Building or equipment or other property of Landlord or other
tenants shall be higher than it otherwise would be, Tenant shall
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reimburse Landlord, on demand, for that part of the premiums for
fire insurance and extended all-risk coverage paid by Landlord
because of such act or omission on the part of Tenant, which sum
shall be deemed to be additional rent and collectible as such.
10.03. In the event that any dispute should arise between
Landlord and Tenant concerning insurance rates, a schedule or make
up" of rates of the Building or the Demised Premises, as the case
may be, issued by the Fire Insurance Rating Organization of New
Jersey or other similar body making rat s for fire insurance and
extended coverage for the premises concerned, shall be presumptive
evidence of the facts therein stated and of the several items and
charges in the fire insurance rates with extended coverage then
applicable to such premises.
10.04. Tenant shall obtain and keep in full force and effect
during the term of this Lease, at its own cost and expense,
Comprehensive General Liability Insurance, such insurance to afford
protection in an amount of not less than S 1,000,000 for njury or
death to any one person, $3,000,000 for injury or death arising out
of any one occurrence, and $ 1,000,000 for damage to property,
protecting and naming the Landlord and the Tenant as insured
against any and all claims for personal injury, death or property
damage occurring in, upon, adjacent, or connected with the Demised
Premises and any part thereof Tenant shall pay all premiums and
charges therefor and upon failure to do so Landlord may, but shall
not be obligated to, make payments, and in such latter event the
Tenant agrees to pay the amount thereof to Landlord on demand and
said sum shall be deemed to be additional rent, and in each
instance collectible on the first day of any month following the
date of notice to Tenant in the same manner as though it were rent
originally reserved hereunder, together with interest thereon at
the rate of three points in excess of Prime Rate of the Chase
Manhattan Bank N.A. Tenant will use its best efforts to include in
such Comprehensive General Liability Insurance policy a provision
to the effect that same will be non-cancelable, except upon
reasonable advance written notice to Landlord. The original
insurance policies or appropriate certificates shall be deposited
with Landlord together with any renewals, replacements or
endorsements to the end that said insurance shall be in full force
and effect for the benefit of the Landlord during the term of this
Lease. In the event Tenant shall fail to procure and place such
insurance, the Landlord may, but shall not be obligated to, procure
and place same, in which event the amount of the premium paid shall
be refunded by Tenant to Landlord upon demand and shall in each
instance be collectible on the first day of the month or any
subsequent month following the date of payment by Landlord, in the
same manner as though said sums were additional rent reserved
hereunder together with interest thereon at the rate of three
points in excess of the Prime Rate of the Chase Manhattan Bank N.A.
10.05. Landlord and Tenant agree to use their best efforts
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to include in each of its insurance policies a waiver of the
insurer's right of subrogation against the other party or if such
waiver shall be unobtainable or unenforceable (a) an express
agreement that such policy shall not be i validated if the insured
waives or has waived before the casualty, the right of recovery
against any party responsible for a casualty covered by the policy
or (b) any other form of permission for the release of the other
party. If such waiver, agreement, or permission shall not be or
shall cease to be obtainable without additional charge, or at all,
the insured party shall so notify the other party after learning
thereof. In such a case, if the other party shall agree in notify
the other party after learning, thereof. In such a case, if the
other party shall agree in writing to pay the insurer's additional
charge therefor, such waiver agreement or permission shall, if
obtainable, be included in the policy.
10.06. Each party hereby releases the other party with
respect to any claim (including a claim for negligence) which it
might otherwise have against the other party for loss, damage, or
destruction with respect to its property (including rental value or
business interruption) occurri g during the term of this Lease to
the extent to which it is insured under a policy or policies
containing a waiver of subrogation or permission to release
liability or naming the other party as an additional insured, as
provided in Sections 10.04 and 10.05. If notwithstanding the
recovery of insurance proceeds by either party for loss, damage or
destruction of its property (or rental value or business
interruption) the other party is liable to the first party with
respect thereto or is obligated under this Lease to make
replacement, repair, or restoration or payment, then provided that
the first party's right of fall recovery under its insurance
policies is not thereby prejudiced or otherwise adversely affected,
the amount of the net proceeds of the first party's insurance
against such loss, damage or destruction shall be offset against
the second party's liability to the first party thereof, or shall
be made available to the second party to pay for replacement,
repair, or restoration, as the case may be.
10.07 The waiver of subrogation or permission for release
referred to in Section 10.05 shall extend to the agents of each
party and their employees and, in the case of Tenant, shall also
extend to all other persons and entities occupying, using or
visiting the Demised Premises in accordance with the terms of this
Lease, but only if and to the extent that such waiver or permission
can be obtained without additional charge (unless such party shall
pay such charge). The releases provided for in Section 10.06 shall
likewise extend to such agents, employees and other persons and
entities, if and to the extent that such waiver or permission is
effective as to them. Nothing contained in Section 10.06 shall be
deemed to relieve either party of any duty imposed elsewhere in
this Lease to repair, restore or rebuild or to nullify any
abatement of rents provided for elsewhere in this Lease. Except as
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otherwise provided in Section 10.04, nothing contained in Sections
10.01 and 10.06 shall be deemed to impose upon either party any
duty to procure or maintain any of the kinds of insurance referred
to therein or any particular amounts or limits of any such kinds of
insurance. However, each party shall advise the other, upon
request, from time to time (but not more often than once a year) of
all of the policies of insurance it is carrying of any of the kinds
referred to in Sections 10.01 and 10.04, and if it shall
discontinue any such policy or allow it to lapse, shall notify the
other party thereof with reasonable promptness. The insurance
policies referred to in Sections 10.05 and 10.06 shall be deemed to
include policies procured and maintained by a party for the benefit
of its lessor, mortgagee, or pledgee.
ARTICLE 11
RULES AND REGULATIONS
11.01. Tenant and its employees and agent shall faithfully
observe and comply with the Rules and Regulations annexed hereto as
Exhibit E, and such reasonable changes therein (whether by
modification, elimination, or addition) as Landlord at any time or
times hereafter may make and communicate in writing to Tenant,
which do not unreasonably affect the conduct of Tenant's business
in the Demised Premises, provided, however, that in case of any
conflict or inconsistency between the provisions of this Lease and
any of the Rules and Regulations as originally promulgated or as
changed, the provisions of this Lease shall control.
11.02. Nothing contained in this Lease shall be construed to
impose upon Landlord any duty or obligation to Tenant to enforce
the Rules and Regulations or the terms, covenants, or conditions in
any other lease, as against any other tenant and Landlord shall not
be liable to Tenant for violation of the same by any other tenant
or its employees, agents or visitors. However, Landlord shall not
enforce any of the Rules and Regulations in such manner as to
discriminate against Tenant or anyone claiming und r or through
Tenant.
ARTICLE 12
TENANT'S CHANGES
12.01. Tenant shall make no changes, alterations, additions,
installations, substitutions, or improvements (hereinafter
Collectively called "changes", and, as applied to changes Provided
for in this Article, "Tenant's Changes") in and to the Demised
Premises without the express prior written consent of landlord.
All proposed Tenant's Changes shall be submitted to Landlord
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for written consent at least sixty (60) days prior to the date
Tenant intends to commence such changes, such submission to include
all plans and specifications for the work o be done, proposed
scheduling, and the estimated cost of completion of Tenant's
Changes. If Landlord consents to Tenant's Changes, Tenant may
commence and diligently prosecute to completion Tenant's Changes,
under the direct supervision of landlord.
Tenant shall pay to Landlord a supervision fee (which shall
include the cost of review of the proposed Tenant's Changes) equal
to ten percent (10%) of the certified cost of completion of
Tenant's Changes. Prior to the commencement of Tenant's Changes,
Tenant shall pay to Landlord ten percent (10%) of the estimated
cost of completion (the "Estimated Payment") as additional rent.
Within fifteen (15) days after completion of Tenant's Changes,
Tenant shall furnish Landlord with a statement, certified by an
officer or a principal of Tenant to be accurate and true, of the
total cost of completion of Tenant's Changes (the "Total Cost").
If such certified statement furnished by Tenant shall indicate that
the Estimated Payment exceeded ten percent (1O%) of the Total Cost,
Landlord shall forthwith either (i) pay the amount of excess
directly to Tenant concurrently with the delivery of the certified
statement or (ii) permit Tenant to credit the amount of such excess
against the subsequent payment of rent due hereunder. If such
certified statement furnished by Tenant shall indicate that ten
percent (1O%) of the Total Cost exceeded Tenant's Estimated
Payment, Tenant shall, simultaneously with the delivery to Landlord
of the certified statement, pay the amount of such excess to
Landlord as additional rent.
12.02. Notwithstanding the provisions of Section 12.01, all
proposed Tenant's Changes which shall affect or alter:
(a) The outside appearance or the strength of the Building or of
any of its s ructural parts; or
(b) Any part of the Building outside of the Demised Premises, or
(c) The mechanical, electrical, sanitary and other service systems
of the Building, or increase the usage of such systems shall be
performed only by the Landlord, at a cost to be mutually agreed
upon between Landlord and Tenant.
12.03. Tenant, at its expense, shall obtain all necessary
governmental permits and certifica es for the commencement and
prosecution of Tenant's Changes and for final approval thereof upon
completion, and shall cause Tenant's Changes to be performed in
compliance therewith and with all applicable laws and requirements
of public authorities, and with all applicable requirements of
insurance bodies, and in good and workmanlike manner, using new
materials and equipment at least equal in quality and class to the
original installations in the Building. Tenant's Changes shall be
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performed in such manner as not to unreasonably interfere with or
delay and (unless Tenant shall indemnify Landlord therefor to the
latter's reasonable satisfaction) as not to impose any additional
expense upon Landlord in the construction, maintenance or operation
of the Building. Throughout the performance of Tenant's Changes,
Tenant, at its expense, shall carry, or cause to be carried,
workmen's compensation insurance in statutory limits and general
liability insurance for any occurrence in or about the Building, in
which Landlord and its agents shall be named as parties insured in
such Emits as Landlord may reasonably prescribe, with insurers
reasonably satisfactory to Landlord. Tenant shall furnish Landlord
with reasonably satisfactory evidence that such insurance is in
effect at or before the commencement of Tenant's Changes and, on
request, at reasonable intervals thereafter during the continuance
of Tenant's Changes. If any of Tenant's Changes shall involve the
removal of any fixtures, equipment or other property in the Demised
Premises which are not Tenant's Property (as defined in Article
13), such fixtures, equipment or other property shall be promptly
replaced, at Tenant's expense, with new fixtures, equipment or
other property (as the case may be) of like utility and at least
equal value. In addition, unless Landlord shall otherwise
expressly consent in writing, the Tenant shall deliver such removed
fixtures to Landlord.
12.04. Tenant, at its expense, and with diligence and
dispatch, shall procure the cancellation or discharge of all
notices of violation ar sing from or otherwise connected with
Tenant's Changes which shall be issued by any public authority
having or asserting jurisdiction. Tenant shall defend, indemnify
and save harmless Landlord against any and all mechanic's and other
liens filed in connection with Tenant's Changes, including the
liens of any security interest in, conditional sales of, or chattel
mortgages upon, any material, fixtures or articles so installed in
and constituting part of the Demised Premises and, against all
costs, expenses and liabilities incurred in connection with any
such lien, security interest, conditional sale or chattel mortgage
or any action or proceeding brought thereon. Tenant, at its
expense, shall procure the satisfaction or discharge of all such
liens within fifteen (15) days after Landlord makes written demand
therefor. However, nothing herein contained shall prevent Tenant
from contesting, in good faith and at its own expense, any such
notice of violation, provided that Tenant shall comply with the
provisions of Section 9.02.
12.05. Tenant agrees that the ex rcise of its rights
pursuant to the provisions of this Article 12 shall not be done in
a manner which would create any work stoppage, picketing, labor
disruption or dispute or violate Landlord's union contracts
affecting the Land and Building, nor interference with the business
of Landlord or any tenant or occupant of the Building.
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ARTICLE 13
TENANT'S PROPERTY
13.01. All fixtures, equipment, improvements, and
appurtenances attached to or built into the Demised Premises at the
commencement of or during the term of this Lease, whether r not by
or at the expense of Tenant, shall be and remain a part of the
Demised Premises, shall be deemed the property of landlord and
shall not be removed by Tenant, except as hereinafter in this
Article expressly provided.
13.02. All business and trade fixtures, machinery and
equipment, communications equipment and office equipment, whether
or not attached to or built into the Demised Premises, which are
installed in the Demised Premises by or for the account of Tenant,
without expense to Landlord, and can be removed without permanent
structural damage to the Building, and al furniture, furnishings
and other articles of movable personal property owned by Tenant and
located in the Demised Premises (all of which are sometimes called
"Tenant's Property"), shall be and shall remain the property of
Tenant and may be removed by it at any time during the term of this
Lease; provided that if any of Tenant's Property is removed, Tenant
shall repair or pay the cost of repairing any damage to the Demised
Premises or to the Building resulting from such removal. Any
equipment or other property for which Landlord shall have granted
any allowance or credit to Tenant shall not be deemed to have been
installed by or for the account of tenant, without expense to
Landlord, and shall not be considered Tenant's Property.
13.03. At or before the Expiration Date, or the date of an
earlier termination of this Lease, or as promptly as practicable
after such an earlier termination date, Tenant at its expense,
shall remove from the Demised Premises all of Tenant's Property
except such items thereof as Tenant shall have expressly agreed in
writing with Landlord were to remain and to become the property of
Landlord, and, if requested by Landlord, all items of work done by
or on behalf of Tenant after the Commencement Date shall be removed
by Tenant and Tenant shall repair any damage to the Demised
Premises or the Building resulting from such removal.
13.04. Any other items of Tenant's Property (except money,
securities, and other like valuables) which shall remain in the
Demised Premises after the Expiration Date or after a period of
fifteen (15) days following an earlier termination date, may, at
the option of the Landlord, be deemed to have been ab ndoned, and
in such case either may be retained by Landlord as its property or
may be disposed of, without accountability, in such manner as
Landlord may see fit, at Tenant's expense.
ARTICLE 14
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REPAIRS AND MAINTENANCE
14.01. Tenant shall take good care of the Demised Premises.
Tenant, at its expense, shall promptly make all repairs, ordinary
or extraordinary, interior or exterior, structural or otherwise in
and about the Demised Premises and the Building, as shall be
required by reason of (i) t e performance of Tenant's Changes; (ii)
the installation, use or operation of Tenant's Property in the
Demised Premises by Tenant, its agents or employees; (iii) the
moving of Tenant's Property in or out of the Building; or (iv) the
misuse or neglect of Tenant or any of its employees, agents,
contractors or invitees; but Tenant shall not be responsible, and
Landlord shall be responsible, for any of such repairs as are
required by reason of Landlord's neglect or other fault in the
manner of performing any of Tenant's Changes which may be
undertaken by Landlord for Tenant's account or are otherwise
required by reason of neglect or other fault of Landlord or its
employees, agents, or contractors. Except if required by the
neglect or other fault of Landlord or its employees, agents, or
contractors, Tenant, at its expense, shall replace all scratched,
damaged or broken doors or other glass in or about the Demised
Premises and shall be responsible for all repairs, maintenance, and
replacement of wall and floor coverings in the Demised Premises
and, for the repair and maintenance of all lighting fixtures
therein.
14.02. Landlord, subject to the provisions of Section 5.04,
shall keep and maintain the Building and its fixtures,
appurtenances, systems and facilities serving the Demised Premises,
in good working order, condition, and repair and shall make with
all due diligence all repairs, structural and otherwise, interior
and exterior, as and when needed in or about the Demised Premises,
except for those repairs for which Tenant is responsible pursuant
to any other provisions of this Leas .
14.03. Landlord shall have no liability to Tenant by reason
of any inc nvenience, annoyance, interruption, or injury to
Tenant's business arising from Landlord's making any repairs or
changes which Landlord is required or permitted by this Lease or
required by law, to make in or to any portion of the Building or
the Demised Premises, or in or to the fixtures, equipment of
appurtenances of the Building or the Demised Premises, provided
that Landlord shall use due diligence with respect thereto and
shall perform such work, except in case of emergency, at a time
reasonably convenient to Tenant and otherwise in such a manner as
will not materially interfere with Tenant's use of the Demised
Premises.
ARTICLE 15
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ELECTRICITY
15.01 Landlord shall furnish the electric energy that Tenant
shall require in the Demised Premises. Tenant shall pay to
Landlord, as additional rent, the costs and charges for all
electric energy furnished to Tenant at the Demised Premises.
Additional rent for such electric energy shall be calculated and
payable in the manner hereinafter et forth.
15.02. Within a reasonable time after the commence ent of the
term of this Lease, subsequent to Tenant's having taken occupancy
of the Demised Premises and having installed and commenced the use
of Tenant's electrical equipment, Landlord, at Tenant's sole
expense, shall cause a survey to be made by a reputable independent
electrical engineer or similar agency of the estimated use of
electric energy (other than for heat and air conditioning to the
Demised Premises, and shall compute the cost thereof for the
quantity so determined at prevailing retail rates. Tenant shall
pay Landlord the cost of such electric energy, as so calculated, on
a monthly basis, as additional rent, together with its payment of
fixed rent.
Until such time as Landlord shall complete the
aforedescribed survey, Tenant shall pay to Landlord, each and every
month, as additional rent, for and on account of Tenant's
electrical consumption, the sum of $156.25 to be applied against
Tenant's obligations hereunder. Upon completion of the survey,
there shall be an adjustment for the period from the Commencement
Date through the date that the results of the survey shal be
effectuated as shall be required. Landlord shall have the right,
at any time, during the term of this Lease, to cause the Demised
Premises to be resurveyed. In the event that such resurvey shall
indicate increased electrical consumption by Tenant at the Demised
Premises, there shall be an adjustment in the amount paid by Tenant
to Landlord for Tenant's electrical consumption in accordance with
the resurvey as well as an adjustment retroactive to the date
Landlord establishes Tenant's increase in electrical consumption in
excess of the consumption established by the prior survey.
Landlord shall submit to Tenant the results of any
electrical survey and the same shall be deemed binding upon Tenant
unless Tenant shall object to same within ninety (90) days of the
date that Landlord shall furnish Tenant with the results of the
survey. In the event that Landlord and Tenant cannot agree upon
the results of a survey the same shall be submitted to arbitration
in accordance with Article 33, provided, however, until such time
as the arbitration shall have been concluded, the res lts of
Landlord's survey shall be utilized for the purposes of determining
Tenant's electrical consumption with an appropriate adjustment to
be made based upon the results of the arbitration.
15.03. Landlord shall not be liable in any way to Tenant for
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any failure or defect in the supply or character of electric energy
furnished to the Demised Premises by reason of any requirement,
act, or omission of the public utility serving the Building with
electricity or for any other reason. Landlord shall furnish and
install all replacement lighting tubes, ramps, bulbs, and ballasts
required in the Demised Premises at Tenant's expense
15.04. Tenant's use of electric energy in the Demised
Premises shall not at any time exceed the capacity of any of the
electrical conductors and equipment in or otherwise serving the
Demised Premises. In order to insure that such capacity is not
exceeded and to avert possible adverse effect upon the Building
electric service, Tenant shall not, without Landlord's prior,
written consent in each instance (which shall n t be unreasonably
withheld), connect any additional fixtures, appliances, or
equipment to the Building electrical distribution system or make
any alteration or addition to the electric system of the Demised
Premises existing on the Commencement Date. Should Landlord grant
such consent, all additional risers or other equipment required
therefor shall be provided by Landlord and the cost thereof shall
be paid by Tenant upon Landlord's demand. As a condition to
granting such consent, Landlord, at Tenant's sole expense, may
cause a new survey to be made of the use of electric energy (other
than for heating and air-conditioning) in order to calculate the
potential additional electric energy to be made available to Tenant
based upon the estimated additional capacity of such additional
risers or other equipment. When the amount of such increase is so
determined, and the estimated cost thereof is calculated, the
amount of monthly additional rent payable pursuant to Section 15.02
here of shall be adjusted to reflect the additional cost, and shall
be payable as therein provided.
15.05. If the public utility rate schedule for the supply of
electric current to the Building shall be increased during the term
of this Lease, the additional rent payable pursuant to Section
15.02 hereof shall be quitably adjusted to reflect the resulting
increase in Landlord's cost of furnishing electric service to the
Demised Premises effective as of the date of any increase.
Landlord and Tenant agree that the rate charged to Tenant for
electricity shall not be greater than the rate Tenant would have
paid had the Demised Premises been separately metered.
15.06. Tenant agrees within three (3) months from the
Commencement Date to submit to Landlord a list of fixtures and
equipment utilizing electric current including, but not limited to,
copying machines, computers and word processing quipment and
equipment of a similar nature. On the first day of each calendar
quarter thereafter, Tenant shall submit to Landlord a statement
indicating any substantial changes in the list previously supplied
as same may be updated by the required quarterly statements.
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ARTICLE 16
HEATING, VENTILATION AND AIR-CONDITIONING
16.01. Landlord, subject to the provisions of Section 5.04,
shall maintain and operate the heating, ventilating, and air-
conditioning systems (hereinafter called "the systems") and shall
furnish heat ventilating, and air conditioning (hereinafter
collectively called "air conditioning service") in the Demised
Premises through the systems, in compliance with the performance
specifications set forth in Exhibit C, as may be required for
comfortable occupancy of the Demised Premises from 8:00 A.M. to
6:00 P.M. Monday through Friday except days observed by the Federal
or the state government as legal holidays ("Regular Hours")
throughout the year. If Tenant shall require air-conditioning
service at any other time (hereinafter called "after hours"),
Landlord shall furnish such after hours air-conditioning service
upon reasonable advance notice from Tenant, and Tenant shall pay
Landlord's then established charges therefor on Landlord's demand.
16.02. Use of the Demised Premises, or any part thereof, in
a manner exceeding the design conditions (including occupancy and
connec ed electrical load) specified in Exhibit C for air-
conditioning service in the Demised Premises, or rearrangement of
partitioning which interferes with normal operation of the air-
conditioning in the Demised Premises, may require changes in the
air-conditioning system servicing the Demised Premises. Such
changes, so occasioned, shall be made by Landlord, at Tenant's
expense, as Tenant's Changes pursuant to Article 12.
ARTICLE 17
LANDLORD'S OTHER SERVICES
17.01. Landlord, subject to the provisions of Section 5.04,
shall provide public elevator servi e, passenger and service, by
elevators serving the floor on which the Demised Premises are
situated during Regular Hours, and shall have at least one
passenger elevator subject to call at all other times.
17.02. Landlord, subject to the provisions of Section 5.04,
shall cause the Demised Premises, including the exterior and the
interior of the windows thereof, to be cleaned. Tenant shall pay
to Landlord on demand the costs incur-red by Landlord for (a) extra
cleaning work in the Demised Premises required because of (i)
misuse or neglect on the part of Tenant or its employees o
visitors; (ii) use of portions of the Demised Premises for
preparation, serving or consumption of food or beverages, data
processing, or reproducing operations, private lavatories or
toilets or other special purpose areas requiring greater or more
difficult cleaning work than office areas; (iii) unusual quantity
23
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of interior glass surfaces; (iv) non-building standard materials or
finishes installed by Tenant or at its request; and (b) removal
from the Demised Premises and the Building of so much of any refuse
and rubbish of Tenant as shall exceed that ordinarily accumulated
daily in the routine of business office occupancy. Landlord, its
cleaning contractor, and their employees shall have after-hours
access to the Demised Premises and the free use of light, power,
and water in the Demised Premises as reasonably required for the
purpose of cleaning the Demised Premises in accordance with
Landlord's obligations hereunder.
17.03. Landlord, subject to the provisions of Section 5.04,
shall furnish adequate hot and cold water to each floor of the
Buildi g for drinking, lavatory, and cleaning purposes, together
with soap, towels, and toilet tissue for each lavatory. If Tenant
uses water for any other purpose, Landlord, at Tenant's expense,
shall install meters to measure Tenant's consumption of cold water
and/or hot water for such other purposes and/or steam, as the case
may be. Tenant shall pay for the quantities of cold water and hot
water shown on such meters, at Landlord's cost thereof, on the
rendition of landlord's bills therefor.
17.04. Landlord, at its expense, and at Tenant's request,
shall insert initial listings on the Building director of the names
of Tenant, and the names of any of their officers and employees,
provided that the names so listed shall not take up more than
Tenant's proportionate share of the space on the uilding
directory. All Building directory changes made at Tenant's request
after the Tenant's initial listings have been placed on the
Building directory shall be made by Landlord at the expense of
Tenant, and Tenant agrees to promptly pay to Landlord as additional
rent the cost of such changes within ten (10) days after Landlord
has submitted an invoice therefor.
17.05. Landlord reserves the right, without any liability to
Tenant, to stop service of any of the heating, ventilating, air
conditioning, electric, sanitary, elevator, or other Building
systems serving the Demised P emises, or the rendition of any of
the other services required of Landlord under this Lease, whenever
and for so long as may be necessary, by reason of accidents,
emergencies, strikes, or the making of repairs or changes which
Landlord is required by this Lease or by law to make or in good
faith deems necessary, by reason of difficulty in securing proper
supplies of fuel, steam, water, electricity, labor or supplies, or
by reason of any other cause beyond Landlord's reasonable control.
17.06. Landlord shall make available for Tenant's use in
common with other tenants of the Bui ding the parking area adjacent
to the Building.
17.07. The Building and the Demised Premises shall be
cleaned in accordance with the Cleaning and Maintenance Schedule
24
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set forth on
Exhibit D annexed hereto and made a part hereof.
ARTICLE 18
ACCESS, CHANGES IN BUILDING FACILITIES, NAME
18.01. All walls, windows, and doors bounding the Demised
Premises (including exterior Building walls, core corridor walls
and doors, and any core corridor entrance), except the inside
surfaces thereof, any terraces or roofs adjacent to the Demised
Premises, and any space in or adjacent to the Demised Premises used
for shafts, stacks, pipes, conduits, fan room, ducts, electric or
other utiliti s, sinks or other Building facilities, and the use
thereof, as well as access thereto through the Demised Premises for
the purposes of operation, maintenance, decoration, and repair are
reserved to Landlord.
18.02. Tenant shall permit Landlord to install, use, and
ma ntain pipes, ducts, and conduits within the demising walls,
bearing columns, and ceiling of the Demised Premises.
18.03. Landlord or Landlord's agent shall have the right
upon request (except in emergency under clause (ii) hereof) to
enter and/or pass through the Demised Premises or any part
thereof, at reasonable times during reasonable hours, (i) to
examine the Demised Premises and to show them to the fee owners,
lessors of superior leases, holders of superior mortgag s, or
prospective purchasers, mortgagees, or lessees of the Building as
an entirety; and (11) for the purpose of making such repairs or
changes or doing such repainting in or to the Demised Premises or
its facilities, as may be provided for by this Lease or as may be
mutually agreed upon by the parties or as Landlord may be required
to make by law or in order to repair and maintain said structure or
its fixtures or facilities. Landlord shall be allowed to take all
materials into and upon the Demised Premises that may be required
for such repairs, changes, repainting, or maintenance, without
liability to Tenant but Landlord shall not unreasonably interfere
with Tenant's use of the Demised Premises. Landlord shall also
have the right to enter on and/or pass through the Demised
Premises, or any part thereof, at such times as such entry shall be
required by circumstances of emergency affecting the Demised
Premises or the Building.
18.04. During the period of six (6) months prior to the
Expiration Date, Landlord may exhibit the Demised Premises to of
prospective tenants.
18.05. Landlord reserves the right, at any time after
completion of the Building, without incurring any liability to
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Tenant therefor, to ake such changes in or to the Building and the
fixtures and equipment thereof, as well as in or to the street
entrances, halls, passages, elevators, escalators, and stairways
thereof, as it may deem necessary or desirable, provided, however,
that such changes shall not reduce the size of the Demised
Premises.
18.06. Landlord may adopt any name for the Building.
Landlord reserves the right to change the name or address of the
Building at any time.
ARTICLE 19
NOTICE OF ACCIDENTS
19.01. Tenant shall give notice to Landlord, promptly after
Tenant learns thereof (i) any accident in or about the Demised
Premises for which Lan lord might be liable; (ii) all fires in the
Demised Premises; (iii) all damage to or defects in the Demised
Premises, including the fixtures, equipment, and appurtenances
thereof, for the repair of which Landlord might be responsible; and
(iv) all damage to or defects in any parts or appurtenances of the
Building's sanitary, electrical, heating, ventilating, air-
conditioning, elevator, and other systems located in or passing
through the Demised Premises or any part thereof.
ARTICLE 20
NON-LIABILITY AND INDEMNIFICATION
20. 1. Neither Landlord nor any agent or employee of
Landlord shall be liable to Tenant for any injury or damage to
Tenant or to any other person or for any damage to, or loss (by
theft or otherwise) of, any property of Tenant or of any other
person, irrespective of the cause of such injury, damage, or loss,
unless caused by or due to the negligence of Landlord, its agents,
or employees without contributory negligence on the part of Tenant.
20.02. Tenant shall indemnify and save harmless Landlord and
its agents against and from (a) any and all claims (i) arising from
(x) the conduct or management of the Demised Premises or of any
business therein, or (y) any work or thing whatsoever done, or any
condition created (other than by Landlord for Landlord's or
Tenant's account) in or about the Demised Premises during the term
of this Lease or during the period of time, if any, prior to the
Commencement Date that Tenant may have been given access to the
Demised Premises, or (ii) arising from any negligent or otherwise
wrongful act or omission of Tenant or any of its subtenants,
invitees or licensees or its or their employees, agents, or
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contractors, and (b) all costs, expenses, and liabilities incurred
in or in connection with each such claim or action or proceeding
brought thereon. In case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice
from Landlord, shall resist and defend such action or proceeding.
20.03. Except as otherwise expressly provided in this Lease,
this Lease and he obligations of Tenant hereunder shall be in no
wise affected, impaired or excused because Landlord is unable to
fulfill, or is delayed in fulfilling, any of its obligations under
this Lease by reason of strike, other labor trouble, governmental
pre-emption or priorities or other controls in connection with a
national or other public emergency or shortages of fuel supplies or
labor resulting therefrom, or other like cause beyond Landlord's
reasonable control.
ARTICLE 21
DESTRUCTION OR DAMAGE
21.01. If the Building or the Demised Premises shall be
artially or totally damaged or destroyed by fire or other cause,
then whether or not the damage or destruction shall have resulted
from the fault or neglect of Tenant, or its employees, agents or
visitors (and if this Lease shall not have been terminated as in
this Article hereinafter provided), Landlord shall repair the
damage and restore and rebuild the Building and/or the Demised
Premises, at its expense, with reasonable dispatch after notice to
it of the damage or destruction; provided, however, that Landlord
shall not be required to repair or replace any of the Tenant's
Property.
21.02. If the Building or the Demised Premises shall be
partially damaged or partially destroyed by fire or other cause not
attributable to the fault or negligence of Tenant, its agents, or
employees, the rents payable hereunder shall be abated to the
extent that the Demised Premises shall have been rendered
untenantable and for the period from the date of such damage or
destruction to the date the damage shall be repaired or restored;
provided, however, f the damage shall be attributable to the fault
or negligence of tenant, its agents or employees, then rent shall
continue but shall be reduced by any amounts received by Landlord
pursuant to Landlord's coverage for business interruption and/or
rent insurance attributable to the Demised Premises. If the
Demised Premises or a major part thereof shall be totally (which
shall be deemed to include substantially totally) damaged or
destroyed or rendered completely (which shall be deemed to include
substantially completely) untenantable on account of fire or other
cause, the rents shall abate as of the date of the damage or
destruction and until Landlord shall repair, restore, and rebuild
the Building and the Demised Premises, provided, however, that
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should Tenant reoccupy a portion of the Demised Premises during the
period of restoration work is taking place and prior to the date
that the same are made completely tenantable, rents allocable to
such portion shall be payable by Tenant from the date of such
occupancy.
21.03. If the Building, or the Demised Premises shall be
totally damaged or destroyed by fire or other cause (whether or not
the Demised Premises are damaged or destroyed) as to require a
reasonably estimated expenditure of more than twenty-five percent
(15%) of the full insurable value of the Building immediately prior
to the casualty then in either such case Landlord may terminate
this Lease by giving Tenant notice to such effect within one
hundred eighty (180) days after the date of the casualty. In case
of any damage or destruction mentioned in this Article, Tenant may
terminate the Lease by notice to Landlord, if landlord has not
completed the making of the required repairs and restored and
rebuilt the Building and the Demised Premises within twelve (12)
months from the date of such damage or destruction, or within such
period after such date (not exceeding six (6) months) as shall
equal the aggregate period Landlord may have been delayed in doing
so by adjustment of insurance, labor trouble, governmental
controls, act of God, or any other cause beyond Landlord's
reasonable control.
21.04. No damages, compensation, or claim shall be payable by
Landlord for inconvenience, loss of business, or annoyance arising
from any repair or restoration of any portion of the Demised
Pr mises or of the Building, pursuant to this Article. Landlord
shall use its best efforts to effect such repair or restoration
promptly and in such manner as not unreasonably to interfere with
Tenant's use and occupancy during such time that Tenant is able to
use the Demised Premises during Landlord's restoration.
21.05. Not-withstanding any of the foregoing provisions of
this Article, if Landlord or the lessor of any superior lease or
the holder of any superior mortgage shall be unable to collect all
of the in urance proceeds (including rent insurance proceeds)
applicable to damage or destruction of the Demised Premises or the
Building by fire or other cause, by reason of some action or
inaction on the part of Tenant or any of its employees, agents or
contractors in connection with the processing of any claim, then,
without prejudice to any other remedies which may be available
against Tenant, there shall be no abatement of Tenant's rents.
21.06. Landlord will not carry insurance of any kind on
Tenant's Property, and, except as provided by law or by reason of
its fault or its breach f any of its obligations hereunder, shall
not be obligated to repair any damage thereto or replace the same;
to the extent that Tenant shall maintain insurance on Tenant's
Property, Landlord shall not be obligated to repair any damage
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thereto or replace the same.
21.07. The provisions of this article shall be considered an
express agreement governing any case of damage or destruction of
the Demised Premises by fire or other casualty, and any law of the
State of New Jersey providing for such a contingency in the absence
of an express agreement, an any other law of like import, now of
hereafter in force, shall have no application in such case.
21.08. If the Demised Premises and/or access thereto become
partially or totally damaged or destroyed by any casualty not
insured against, then Landlord shall have the right to terminate
this Lease upon giving the Tenant thirty (30) days notice and upon
the expiration of said thirty (30) day notice period this Lease
shall terminate as if such termination date were the Expiration
Date.
ARTICLE 22
EMINENT DOMAIN
22.01. If the whole of the Building shall be lawfully taken
by condemnation or in any other manner for a y public or quasi-
public use of purpose, this Lease and the term and estate hereby
granted shall forthwith terminate as of the date of vesting of
title on such taking (which date is herein after also referred to
as the "date of the taking"), and the rents shall be prorated and
adjusted as of such date.
22.02. If any part of the Building shall be so taken, this
Lease shall be unaffected by such taking, except that Tenant may
elect to terminate this Lease in the event of a partial taking, if
the area of the Demised Premises shall not be reasonably sufficient
for Tenant to continu feasible operation of its business. Tenant
shall give notice of such election to Landlord not later than
thirty (30) days after the date of such taking. Upon the giving up
of such notice to Landlord, this Lease shall terminate on the date
of service of notice and the rents apportioned to the part of the
Demised Premises so taken shall be prorated and adjusted as of the
date of the taking and the rents apportioned to the remainder of
the Demised Premises shall be prorated and adjusted as of such
termination date. Upon such partial taking and this Lease
continuing in force as to any part of the Demised Premises, the
rents apportioned to the part taken shall be prorated and adjusted
as of the date of taking and from such date the fixed rent shall be
reduced to the amount apportioned to the remainder of the Demised
Premises and additional rent shall be payable pursuant to Article
5 according to the rentable area remainingg.
22.03. Except as specifically set forth in Section 22.04.
hereof, Landlord shall be entitled to receive the entire award in
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any proceeding with respect to any taking provided for in this
Article without deduction therefrom for any estate vested in Tenant
by this Lease, and Tenant shall receive no part of such award.
Tenant hereby expressly assigns to Landlord all of its right,
title, and interest in or to every such award.
22.04. If the temporary use or occupancy of all or any part
of the Demised Premises shall be lawfully taken by condemnation or
in any other manner for any public or quasi-public use or purpose
during the term of this Lease, Tenant shall be entitled, except as
hereinafter set orth, to receive any award which does not serve to
diminish Landlord's award in any respect and, if so awarded, for
the taking of Tenant's Property and for moving expenses, and
Landlord shall be entitled to receive that portion which represents
reimbursement for the cost of restoration of the Demised Premises.
This Lease shall be and remain unaffected by such taking and Tenant
shall remain responsible for all of its obligations hereunder
insofar as such obligations are not affected by such taking and
shall continue to pay in full the fixed rent and additional rent
when due. If the period of temporary use or occupancy of the
Demised Premises (or a part thereof) shall be divided between
Landlord and Tenant so that Tenant shall receive so much thereof as
represents the period prior to the Expiration Date and Landlord
shall receive so much thereof as represents the period subsequent
to the Expiration Date. All moneys received by Tenant as, or as
part of, an award for temporary use and occupancy for a period
beyond the date to which the rents hereunder have been paid by
Tenant shall be received, held, and applied by Tenant as a trust
fund for payment of the rents falling due hereunder.
22.05. In the event of any taking of less than the whole of
the Building which does not result in a termination of this Lease,
or in the event of a taking for a temporary use or occupancy of al
or any part of the Demised Premises which does not extend beyond
the Expiration Date, Landlord, at its expense, shall proceed with
reasonable diligence to repair, alter, and restore the remaining
parts of the Building and the Demised Premises to substantially
their former condition to the extent that the same may be feasible
and so as to constitute a complete and tenantable Building and
Demised Premises provided that Landlord's liability under this
Section 22.05 shall be limited to the net amount (after deducting
all costs and expenses, including, but not limited to, legal
expenses incurred in connection with the eminent domain proceeding)
received by Landlord as an award arising out of such taking. If
such taking occurs within the last three (3) years of the term of
this Lease, Landlord shall have the right to terminate this Lease
by giving the Tenant written notice to such effect within ninety
(90) days after such taking, and this Lease shall then expire on
that effective date stated in the notice as if that were the
Expiration Date, but the fixed rent and the additional rent shall
be prorated and adjusted as of the date of such taking.
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22.06. Should any part of the Demised Premises be taken to
effect compliance with any law or requirement or public authority
other than in the manner hereinabove provided in this Article then,
(i) if such compliance is the obligation of Tenant under this
Lease, Tenant shall not be entitled to any diminution or abatement
of rent or other compensation from Landlord therefor, but (ii) if
such compliance is the obligation of Landlord under this Lease, the
fixed rent hereunder shall be reduced and additional rents under
Article 5 shall be adjusted in the same manner as is provided in
Section 22.02 according to the reduction in rentable area of the
Demised Premises resulting from such taking.
22.07. Any dispute which may arise between the parties with
respect to the meaning of any of the provisions of this Article
shall be determined by arbitration in the manner provided in
Article 33.
y
therefrom except as otherwise expressly provided in this Lease.
Landlord reserves the right to require Tenant to remove all items
installed by, for or on behalf of Tenant in excess of the Building
standard items ("Landlord's Work").
ARTICLE 24
CONDITIONS OF LIMITATION
24.01. This Lease and the term and estate hereby granted are
subject to the limitation that whenever Tenant shall make an
assignment of the property of Tenant for the benefit of creditors,
or shall file a voluntary petition under any bankruptcy or
insolvency law, or an involuntary petition alleging an act of
bankruptcy or insolvency shall be filed against Tenant under any
bankruptcy or insolvency law, or whenever a petition shall be filed
by or against Tenant under the reorganization provisions of the
United States Bankruptcy Act or under the provisions of any law of
like imports or whenever a petition shall be filed by Tenant under
the arrangement provisions of any law of like import, whenever a
permanent receiver of Tenant or of or for the property of Tenant
shall be appointed, then Landlord, (a) at any time of receipt of
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notice of the occurrence of any such event, or (b) if such event
occurs without the acquiescence of Tenant, at any time after the
event continues for thirty (30) days, Landlord may give Tenant a
notice of intention to end the term of this Lease at the expiration
of five (5) days from the date of service of such notice of
intention, and upon the expiration of said five (5) day period this
Lease and the term and estate hereby granted, whether or not the
term shall theretofore have commenced, shall terminate with the
same effect as if that day were the Expiration Date, but Tenant
shall remain liable for damages as provided in Article 26.
24.02. This Lease and the term and estate hereby granted
are subject to the further limitation that:
(a) Whenever Tenant shall default in the payment of installment of
fixed rent, or in the payment of any additional rent or any other
charge payable by Tenant to Landlord, or any day upon which the
same ought to be paid, and such default shall contin e for five (5)
days after written notice thereof; or
(b) Whenever Tenant shall do or permit anything to be done,
whether by action or inaction, contrary to any of Tenant's
obligations hereunder, and if such situation shall continue, and
shall not be remedied by Tenant within thirty ( 0) days after
Landlord shall have given to Tenant a written notice specifying the
same, or, in the case of a happening or default which cannot with
due diligence be cured within a period of thirty (30) days and the
continuance of which for the period required for cure will not
subject Landlord to risk of criminal liability or termination of
any superior Lease or foreclosure of any superior mortgage if
Tenant shall not, (i) within said thirty (30) day period advise
Landlord of Tenant's intention to duly institute all steps
necessary to remedy such situation; (ii) duly institute within said
thirty (30) day period, and thereafter diligently prosecute to
completion all steps necessary to remedy the same; (iii) complete
such remedy within such time after the date of giving of said
notice to Landlord as shall reasonably be necessary; or
(c) Whenever any event shall occur or any contingency shall
arise whereby this Lease or the estate hereby granted or the
unexpired balance of the term hereof would, by operation of law or
otherwise, devolve u on or pass to any person, firm, or coporation
other than Tenant, except as expressly permitted by Article 8; or
(d) Whenever Tenant shall abandon the Demised Premises
(unless as a result of a casualty), or
(e) If Tenant shall default in the timely payment of rent or
additional rent and any such default shall continue to be repeated
for two (2) consecutive months or for a total of four (4) months in
any period of twelve (12) months, or more than three (3) times in
any six (6) month period, then, notwithstanding that such defaults
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shall have each been cured within the applicable period, any
similar default shall be deemed to be deliberate and Landlord may
thereafter serve a notice of termination upon Tenant without
affording to Tenant opportunity to cure such default; then, and in
any of the foregoing cases, this Lease and the term and estate
hereby granted, whether or not the term shall theretofore have
commenced, shall, if the Landlord so elects, terminate upon ten
(10) days written notice by Landlord to Tenant of Landlord's
election to terminate the Lease and the term hereof shall expire
and come end on the date fixed in such notice, with the same effect
as if that day were the Expiration Date, but Tenant shall remain
liable for the rent and additional rent which subsequently accrues
and for damages as provided in Article 26.
ARTICLE 25
RE-ENTRY BY LANDLORD
25.01. If Tenant shall default in the payment of any
installment of fixed rent, or of any installment of additional
rent, on any date upon which the same ought to be paid and if such
default shall continue for five (5) days after written notice
thereof, or if this Lease shall expire as provided in Article 24,
Landlord or Landlord's agents and employees may immediately or at
any time thereafter re-enter the Demised Premises, or any part
thereof, in t e name of the whole, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or by
force or otherwise, without being liable to indictment, prosecution
or damages therefor, and may repossess the same, and may remove any
persons therefrom, to the end that Landlord may have, hold, and
enjoy the Demised Premises again as and of its first estate and
interest therein. The word "re-enter", as herein used, is not
restricted to its technical legal meaning. In the event of any
termination of this Lease under the provisions of Article 24 or if
Landlord shall re-enter the Demised Premises under the provisions
of this Article or in the event of the termination of this Lease,
or of re-entry, by or under any summary dispossess or other
proceeding or action or any provision of law by reason of default
hereunder on the part of Tenant, Tenant shall thereupon pay to
Landlord the fixed rent and additional rent payable by Tenant to
Landlord up to the time of such termination of this Lease, or of
such recovery of possession or the Demised Premises by Landlord, as
the case may be, and shall also pay to Landlord damages as provided
in Article 26.
25.02. In the event of a breach or threatened breach by
Landlord or Tenant of any of their respective obligations under
this Lease, ither Landlord or Tenant, as the case may be, shall
also have the right of injunction. The special remedies hereunder
are cumulative and are not intended to be exclusive of any
other remedies or means of redress to which the parties may
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lawfully be entitled at any time.
25.03. If this Lease shall terminate under the provisions of
Article 24, or if Landlord shall re-enter the Demised Premises
under the provisions of this Article, or in the event of any
termination of this Lease, or of re-entry, by or under any summary
dispossess or other proceeding or action or any provision of law by
reason of default hereunder on the part of Tenant, Landlord shall
be entitled to retain all moneys, if any, paid by Tenant to
Landlord, whether as advance rent, security, or otherwise, but such
moneys shall be credited by Landlord against any fixed rent or
additional rent due from Tenant at the time of such termination or
re-entry or, at Landlord's option, against any damages payable by
Tenant under Article 26 or pursuant to law.
ARTICLE 26
DAMAGES
26.01. If this Lease is terminated under the provisions of
Article 24, or if Landlord shall re-enter the Demised Premises
under the provisions of Article 25, or in the event of the
termination of this Lease, or of reentry, by or unde any summary
dispossess or other proceeding or action of any provision of law by
reason of default hereunder on the part of Tenant, Tenant shall pay
to Landlord as damages, at the election of landlord, either
(a) A sum which at the time of such termination of this
Lease or at the time of any such re-entry by Landlord, as the case
may be, represents the then value of the excess, if any, of (i) the
aggregate of the fixed rent and the additional rent payable
hereunder which would have been payable by Tenant (conclusively
presuming the additional rent to be the same as was payable or the
year immediately preceding such termination) for the period
commencing with such earlier termination of this Lease or the date
of any such re-entry, as the case may be, and ending with the
Expiration Date, had this Lease not so terminated or had Landlord
not so reentered the Demised Premises, over (ii) the aggregate
rental value of the Demised Premises for the same period, or
(b) Sums equal to the fixed rent and the additional rent
(as above presumed) payable hereunder which would have been payable
by Tenant had this Lease not so terminated, or had Landlord not so
re-en ered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-
entry and until the Expiration Date, provided, however, that if
Landlord shall relet the Demised Premises during said period,
Landlord shall credit Tenant with the net rents received by
Landlord from such reletting, such net rents to be determined by
first deducting from the gross rents as and when received by
Landlord from such reletting, the expenses incurred or paid by
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Landlord in terminating this Lease or in reentering the Demised
Premises and in securing possession thereof, as well as the
expenses of reletting, including altering and preparing the Demised
Premises for new tenants, brokers' commissions, and all other
expenses properly chargeable against the Demised Premises and the
rental therefrom; it being understood that any such reletting may
be for a period shorter or longer than the remaining term of this
Lease; but in no event shall Tenant be entitled to receive any
excess of such net rents over the sums payable by Tenant to
Landlord hereunder, nor shall Tenant be entitled in any suit for
the collection of damages pursuant to this Subsection to a credit
in respect of any net rents from a reletting, except to the extent
that such net rents are actually received by Landlord. If the
Demised Premises or any part thereof should be relet in combination
with other space, then proper apportionment on a square foot basis
shall be made of the rent received from such reletting and of the
expenses of reletting.
If the Demised Premises or any part thereof to be relet by
Landlord for the unexpired portion of the term of this Lease, or
any part thereof, before presentation of proof of such damages to
any court, commission or tribunal, the amount of rent reserved upon
such reletting shall, prima facie, be the fair and reasonable
rental value for the Demised Premises, or part thereof, so relet
during the term of the reletting.
26.02. Suit or suits for the recovery of such damages, or
any installments thereof, may be brought by Landlord from time to
time at its election, and nothing contained herein shall be deeme
to require Landlord to postpone suit until the date when the term
of this Lease would have expired if it had not been so terminated
under the provisions of Article 24, or under any provision of law,
or had Landlord not re-entered the Demised Premises. Nothing
herein contained shall be construed to limit or preclude recovery
by Landlord against Tenant of any sums or damages to which, in
addition to the damages particularly provided above, Landlord may
lawfully be entitled by reason of any default hereunder on the part
of Tenant. Nothing herein contained shall be construed to limit or
prejudice the right of Landlord to seek and obtain as liquidated
damages by reason of the termination of this Lease or re-entry on
the Demised Premises for the default of Tenant under this Lease, an
amount equal to the maximum allowed by any statute or rule of law
in effect at the time when, and governing the proceedings in which,
such damages are to be proved whether or not such amount be
greater, equal to, or less than any of the sums referred to in
Section 26.01.
26.03. In addition to the forego ng and without regard to
whether this Lease is terminated, Tenant shall pay to Landlord upon
demand, all costs and expenses incurred by Landlord, including
reasonable attorney's fees, with respect to any lawsuit instituted
or defended or any action taken by Landlord to enforce all or any
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of the provisions of this Lease.
ARTICLE 27
WAIVERS
27.01. Tenant, for Tenant, and on behalf of any and all
persons claiming through or under Tenant, including creditors of
all kinds, does hereby waive and surrender al right and privilege
which they or any of them might have under or by reason of any
present or future law, to redeem the Demised Premises or to have a
continuance of this Lease for the term hereby demised after being
dispossessed or ejected therefrom by process of law or under the
terms of this Lease or after the termination of this Lease as
herein provided.
27.02. In the event that Tenant is in arrears in payment of
fixed rent or additional rent hereunder, Tenant waives Tenant's
right, if any, to designate the items against which any payments
made by Tenant are to be credited, and Tenant agrees that Landlord
may apply any payments made by Tenant to any items it sees fit,
irrespective of and notwithstanding any designation or request by
Tenant as to the items against which any such payments shall be
credited.
27.03. Landlord and Tenant hereby waive trial by jury in any
action, proceeding or counterclaim brought by either against the
other on a y matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant,
Tenant's use or occupancy of the Demised Premises, including any
claim of injury or damage, or any emergency or other statutory
remedy with respect thereto.
27.04. The provisions in Articles 16 and 17 shall be
considered express agreements governing the services to be
furnished by Landlord, and Tenant agrees that any laws and/or
requirements of public authorities, now or hereafter in force,
shall have no application in connection with any enlargement of
landlord' obligations with respect to such services.
ARTICLE 28
NO OTHER WAIVERS OR MODIFICATIONS
28.01. The failure of either party to insist in any one or
more instances upon the strict performance of any one or more of
the obligations of this Lease, or to exercise any election herein
contained, shall not be construed as a waiver or relinquishment for
the future of the performance of such one or more obligations of
this Lease or of the fight to exercise such election, but the same
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shall co tinue and remain in full force and effect with respect to
any subsequent breach, act, or omission. No executory agreement
hereafter made between Landlord and Tenant shall be effective to
change, modify, waive, release, discharge, terminate or effect an
abandonment of this Lease, in whole or in part, unless such
executory agreement is in writing, refers expressly to this Lease
and is signed by the party against whom enforcement of the change,
modification, waiver, release, discharge, or termination of
effectuation of the abandonment is sought.
28.02. Without limiting Section 28.01, the following
provisions shall also apply:
(a) No agreement to accept a surrender of all or any part of
the Demised Premises shall be valid unless in writing and signed by
Landlord. The delivery of keys to an employee of Landlord or of
its agent shall not operate as a termination of this Lease or a
surrender of the Demised Premises. If Tenant shall t any time
request Landlord to sublet the Demised Premises for Tenant's
account, Landlord or its agent is authorized to receive said keys
for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord
from any liability for loss or damage to an y of Tenant's property
in connection with such subletting.
(b) The receipt by Landlord of rent with knowledge of breach
of any obligation of this Lease shall not be deemed a waiver of
such breach.
(c) No payment by Tenant or receipt y Landlord of a lesser
amount than the correct fixed rent or additional rent due hereunder
shall be deemed to be other than a payment on account, nor shall
any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance or pursue any
other remedy in this Lease or at law provided.
ARTICLE 29
CURING TENANT'S DEFAULTS
29.01. If Tenant shall default in the performance of any of
Tenant's obligations under this Lease, Landlord, without thereby
waiving such default, may (but shall not be obligated to) perform
the same for the account and at the expense of Tenant, without
notice, in a case of emergency, and in any other case, only if such
default continues after the expiration of (i) ten (1O) days from
the date Landlord gives Tenant notice of intention so to do, or
(ii) the applicable grace period provided in Section 24.02 or
elsewhere in this Lease for cure of such default, whichever occurs
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later.
29.02. Bills, invo ces and purchase orders for any and all
costs, charges, and expenses incurred by Landlord in connection
with any such performance by it for the account of Tenant,
including reasonable counsel fees, involved in collecting or
endeavoring to collect the fixed rent or additional rent or any
part thereof, or enforcing or endeavoring to enforce any rights
against Tenant, under or in connection with this Lease, or pursuant
to law, including any such cost, expense, and disbursement involved
in instituting and prosecuting summary proceedings, may be sent by
Landlord to Tenant monthly, or immediately, at Landlord's option,
and, shall be due and payable in accordance with the terms of such
bills.
ARTICLE 30
BROKER
30.01. Tenant covenants, warrants, and represents that there
was no broker except WEICHERT COMMERCIAL, ("Broker") instrumental
in consummating this Lease and that no conversations or
negotiations were had with any broker except Broker concerning the
renting of the Demised Premises. Tenant agrees to hold Landlord
harmless against any claims for a broke age commission arising out
of any conversations or negotiations had by Tenant with any broker
except Broker. Landlord agrees to pay Broker pursuant to a
separate agreement.
ARTICLE 31
NOTICES
31.01. Any notice, statement, demand, or oth r
communications required or permitted to be given, rendered, or made
by either party to the other, pursuant to this Lease or pursuant to
any applicable law or requirement of public authority, shall be in
writing (whether or not so stated elsewhere in this Lease) and
shall be deemed to have been properly given, rendered or made, if
sent by registered or certified mail, return receipt requested,
addressed to the other party at the address hereinafter set forth
(except that after the Commencement Date, Tenant's address, unless
Tenant shall give notice to the contrary, shall be the Building)
and shall be deemed to have been given, rendered, or made on the
date following the date of mailing. Either party may, by notice as
aforesaid, designate a different address or addresses for notices,
statements, demands, or other communications intended for it. In
the event of the cessation of any mail delivery for any reason,
personal delivery shall be substituted for the aforedescribed
method of serving notices.
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ARTICLE 32
ESTOPPEL CERTIFICATE
32.01. Tenant agrees, when requested by Landlord, to execute
and deliver to Landlord a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as
modified and stating the modifications), certifying the dates to
which the fixed ren and additional rent have been paid, whether
any dispute exists with respect thereto and stating whether or not,
to Tenant's best knowledge, Landlord is in default in performance
of any of its obligations under this Lease, and, if so, specifying
each such default of which Tenant may have knowledge, it being
intended that any such statement delivered pursuant hereto may be
relied upon by others. Such statement shall be served upon
Landlord by Tenant within ten (10) days of Landlord's request. If
Tenant fails to deliver such notice, Landlord shall be deemed
appointed as Tenant's attorney-in-fact to prepare and deliver such
notice on behalf of Tenant, and Tenant shall be deemed bound
thereby upon Landlord's furnishing a copy of the notice to Tenant.
ARTICLE 33
ARBITRATION
33.01. The parties hereto shall not be deemed to have agreed
to determination of any dispute arising out of this Lease by
arbitration unless determination in such manner shall have been
specifically provided for in this Lease.
33.02. The party desiring arbitration shall give notice to
that effect to the other party and shall in such notice appoint a
person as arbitrator on its behalf. Within ten (10) days, the
other party by notice to the original party shall appoint a second
person as arbitrator on its behalf. The arbitrators thus appointed
shall appoint a third person, and such three arbitrators shall s
promptly as possible determine such matter, provided, however that:
(a) If the second arbitrator shall not have been
appointed as aforesaid, the first arbitrator shall proceed to
determine such matter; and
(b) If the two arbitrators appointed by the parties shall
be unable to agree, within ten (1O) days after the appointment of
the second arbitrator, up n the appointment of a third arbitrator,
they shall give written notice to the parties of such failure to
agree, and, if the parties fail to agree upon the selection of such
third arbitrator within ten (1O) days after the arbitrators
appointed by the parties give notice as aforesaid, then within five
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(5) days thereafter either of the parties upon notice to the other
party may request such appointment by the American Arbitration
Association (or any organization successor thereto), or in its
absence, refusal, failure or inability to act, may apply for a
court appointment of such arbitrator.
33.03. Each arbitrator shall be a fit and impartial person
who shall have had at least five years experience in a calling
connected with the matter of dispute.
33.04. The arbitration shall be conducted, to the extent
consistent with this Article, in accordance with the then
prevailing rules of the American Arbitration Association (or any
organization successor thereto). The arbitrators shall render
their decision and award, upon the concurrence of at least two of
their number, within thirty (30) days after the appointment of the
third arbitrator. Such decision and award shall be in writing and
shall be final and conclusive on the paraties, and counterpart
copies thereof shall be delivered to each of the parties. In
rendering such decision and award, the arbitrators shall not add
to, subtract from, or otherwise modify the provisions of this
Lease. Judgment may be had on the decision and aware of the
arbitrator(s) so rendered in any court of competent jurisdiction.
33.05. Each party shall pay the fees and expenses of the one
of the two original arbitrators appointed by or for such party and
the fees and expenses of the third arb trator and all other
expenses of the arbitration (other than the fees and disbursement
of attorneys or witnesses for each party) shall be borne by the
parties equally.
33.06. Notwithstanding the provisions of this Article, if any
delay in complying with any requirements of this Lease by Tenant
might subject Landlord to any fine or penalty, or to prosecution
for a crime, or if it would constitute a default by Landlord under
any mortgage, Landlord may exercise its right under Article 29, to
remedy such default and in such event the sole question to be
determined by the arbitrators under this Article, shall be whether
Tenant is liable for Landlord's cost and expenses of curing such
default.
ARTICLE 34
NO OTHER REPRESENTATIONS, CONSTRUCTION, GOVERNING LAW
34.01. Tenant expressly acknowledges and agrees that
Landlord has not made and is not making, and Tenant, in executing
delivering this Lease, is not relying upon, any warranties,
representations, promises or statements, except to the extent that
the same are expressly set forth in this Lease. It is understood
and agreed that all understandings and agreements heretofore had
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between the parties are merged in the Lease, which alone fully and
completely express their agreements and that athe same are entered
into after full investigation, neither party relying upon any
statement or representation not embodied in the Lease made by the
other.
34.02. If any of the provision of this Lease, or the
application thereof to any person or circumstances, shall, to any
extent, be invalid or unenforceable, the remainder of this Lease,
or the application of such provision or provisions to persons or
circumstances other than those as to whom it is held invalid or
unenforceable, shall be affected thereby, and every provision of
this Lease shall be valid and enforceable to the fullest extent
permitted by law.
34.03. This Lease shall be governed in all respects by the
laws of the State of New Jersey.
ARTICLE 35
SECURITY
35.01. Tenant shall deposit with Landlord the sum of
$4,250.00 upon the execution of this Lease. Said deposit
(sometimes referred to as the "Security Deposit") shall be held by
Landlord as security for the faithful performance by Tenant of all
the terms of the Lease by said Tenant to be observed and performed.
The Security Deposit shall not and may not be mortgaged, assigned,
transferred, or encumbered by Tenant, without the wri ten consent
of Landlord, and any such act on the part of Tenant shall be
without force and effect and shall not be payable by Tenant to
Landlord shall be overdue and unpaid, or if Landlord makes payment
on behalf of Tenant, or if Tenant shall fail to perform any of the
terms, covenants, and conditions of the Lease, then Landlord may,
at its option and without prejudice to a ny other remedy which
Landlord may have on account thereof, appropriate and apply the
entire Security Deposit or so much thereof as may be necessary to
compensate Landlord toward the payment of fixed or additional rent
and any loss or damage sustained by Landlord due to such breach on
the part of Tenant, plus expenses; and Tenant shall forthwith upon
demand restore the Security Deposit to the original sum deposited.
The issuance of a warrant and/or the re-entering of the Demised
Premises by Landlord for any default on the part of Tenant or for
any other reason prior to the expiration of the term shall not be
deemed such a termination of the Lease as to entitle Tenant to the
recovery of the Security Deposit. If Tenant complies with all of
the terms, covenants, and conditions of the Lease and pays all of
the fixed and additional rent and all other sums payable by Tenant
to Landlord as they fall due, the Security Deposit shall be
promptly returned in full to Tenant after the expiration of the
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term of the Lease and Tenant's satisfaction of all its obligations
accruing prior to the Lease expiration date. In the event of
bankruptcy or other creditor-debtor proceedings against Tenant, the
Security Deposit and all other securities shall be deemed to be
applied first to the payment of fixed and additional rent and other
charges due Landlord for all periods prior to the filing of such
proceedings. In the event of sale by Landlord of the Building,
landlord may deliver the then balance of the Security Deposit to
the transferee of Landlord's interest in the Demised Premises ad
Landlord shall thereupon be discharged from any further liability
with respect to the Security Deposit ad this provision shall also
apply to any subsequent transferees. No holder of a superior
mortgage or a lessor's interest in a superior lease to which the
Lease is subordinate shall be responsible in connection with the
Security Deposit, by way of credit or payment of any fixed or
additional rent, or otherwise, unless such mortgagee or lessor
actually shall have received the entire Security Deposit.
ARTICLE 36
PARTIES BOUND
36.01. The obligation of this Lease shall bind and benefit
the successors and assigns of the parties with the same effect as
if mentioned in each instance where a party is named or referred
to, except that no violation of the pr visions of Article 8 shall
operate to vest any rights in any successor or assignee of Tenant
and that the provisions of this Article shall not be construed as
modifying the conditions of limitation contained in Article 24.
However, the obligations of Landlord under this Lease shall not be
binding upon Landlord herein named with respect to any period
subsequent to the transfer of its interest in the Building as owner
or lessee thereof and in event of such transfer said obligations
shall thereafter be binding upon each transferee of the interest of
Landlord herein named as such owner or lessee of the Building, but
only with respect to the period ending with a subsequent transfer
within the meaning of this Article.
36.02. If Landlord shall be an individual, joint venture,
tenancy in common, partnership, unincorporated association, or
other unincorporated aggregate of individuals and/or entities or a
corporation, Tenant shall look only to such Landlord's estate and
property in the Building (or the proceeds thereof) and, where
expressly so provided in this Lease, to offset against th rents
payable under this Lease for the collection of a judgment (or other
judicial process) which requires the payment of money by Landlord
in the event of any default by Landlord hereunder. No other
property or assets of such Landlord shall be subject to levy,
execution or other enforcement procedure for the satisfaction of
Tenant's remedies under or with respect to this Lease, the
relationship of Landlord and Tenant hereunder or Tenant's use or
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occupancy of the Demised Premises. Further, Tenant agrees that
Landlord shall not be liable to Tenant for any special, indirect,
or consequential damages arising out of landlord's breach of this
Lease.
ARTICLE 37
CONSENTS
37.01. Wherever it is specifically provided in this Lease
that a party's consent is not to be unreasonably withheld, a
response to a request for such consent shall also not be
unreasonably delayed. If either Landlord or Tenant considers that
the other had unreasonably withheld or delayed a consent, it shall
so notify the other party within ten (10) days after receipt of
notice of denial of the requested consent or, in case notice of
denial is not received, within twenty (20) days after making its
request for the consent.
37.02. Tenant hereby waives any claim against Landlord which
it may have based upon any assertion that Landlord has unreasonably
withheld or unreasonably delayed any such consent, and Tenant
agrees that its sole remedy shall be an action or proceeding to
enforce any such provision or for specific performance, injunction
or declaratory judgment. In the event of such determination, the
requested consent shall be deemed to have been granted, however,
Landlord shall have no liability to Tenant for its refusal or
failure to give such consent. The sole remedy for Landlord's
unreasonably withholding or delaying of consent shall be as
provided in this Article.
ARTICLE 38
MORTGAGE FINANCING - TENANT COOPERATION
38.01. In the event that Landlord desires to seek mortgage
financing secured by the Demised Premises, Tenant agrees to
cooperate with Landlord in the making of any application(s) by
Landlord or such financing including the delivery to Landlord's
mortgage broker or mortgagee, of such information as they shall
require with respect to enant's occupancy of the Demised Premises,
including, but not limited to the current financial statement of
Tenant, but Tenant shall not be required to deliver such
information directly to Landlord, all of the above to be at no cost
and expense of Tenant. In the event that Landlord's mortgagee
shall request changes to the within Lease in order to make same
acceptable to Landlord's mortgagee, Tenant agrees to consent to
such changes, provided such changes shall not affect the term of
this Lease nor the financial obligations of tenant hereunder.
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ARTICLE 39
ENVIRONMENTAL COMPLIANCE
39.01. Tenant shall, at Tenant's sole cost and expense, comply
with the New Jersey Industrial Site Recovery Act and the
regulations promulgated thereunder (referred to as ISRA") as same
relate to Tenant's occupancy of the Demised Premises, as well as
all other state, federal or local environmental law, ordinance,
rule, or regulation either in existence as of the date hereof or
enacted or promulgated after the date of this Lease, that concern
the management, control, discharge, treatment and/or removal of
hazardous discharges or otherwise affecting or affected by Tenant's
use and occupancy of the Demised Premises. Tenant represents that
Tenant's SIC number is 7873, and does not subject it to ISRA.
Tenant shall, at Tenant's own expense, make all submissions to,
provide all information to, and comply with all requirements of the
Bureau of Industrial Site Evaluation (the "Bureau") of the New
Jersey Department of Environmental Protection ("NJDEP"). Should
the Bureau or any other division of NJDEP, pursuant to any other
environmental law, rule, or regulation, determine that a cleanup
plan be prepared and that a cleanup be undertaken because of any
spills or discharge of hazardous substances or wastes at the
Demised Premises which occur during the term of this Lease and were
caused by Tenant or its assents or contractors, then Tenant shall,
at Tenant's own expense prepare and submit the required plans and
financial assurances, and carry out the approved plans. In the
event that Landlord shall have to comply with ISRA by reason of
Landlord's actions, Tenant shall promptly provide all information
requested by Landlord for preparation of non-applicability
affidavits or a Negative Declaration and shall promptly sign such
affidavits when requested by Landlord. Tenant shall indemnify,
defend, and save harmless Landlord from all fines, suits,
procedures, claims, and actions of any kind arising out of or in
any way connected with any spills or discharges of hazardous
substances or wastes at the Demised Premises which occur during the
term of this Lease and were caused by Tenant or its agents or
contractors, and from all fines, suits, procedures, claims, and
actions of any kind arising out of Tenant's failure to provide all
information, make all submission and take all actions required by
the Bureau or any other division of NJDEP. Tenant's obligations and
liabilities under this Paragraph shall continue so long as Landlord
remains responsible for any spills or discharges of hazardous
substances or wastes at the Demised Premises which occur during the
term of this Lease and were caused by Tenant or its agents or
contractors. Tenant's failure to abide by the terms of this
paragraph shall be restrainable by injunction. Tenant shall have
no responsibility to obtain a "Negative Declaration" or "Letter of
Non-Applicability" from the NJIDEP if the sole reason for obtaining
same is in connection with a sale or other disposition of the real
estate by Landlord but Tenant agrees to cooperate with Landlord in
Landlord's effort to obtain same and shall perform at Tenant's
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expense any clean up required by reason of Tenant's use and
occupancy of the Demised Premises.
ARTICLE 40
HOLDING OVER
40.01 Tenant will have no right to remain in possession of
all or part of the Demised Premises after the expiration of the
term. If Tenant remains in possession of all or any part of the
Demised Premises after the expiration of the Lease, without the
express consent of Landlord: (a) such tenancy will be deemed to be
a periodic tenancy from month-to-month only; (b) such tenancy will
not constitute a renewal or extension of this Lease for any further
term; (c) such tenancy may be terminated by Landlord upon the
earlier of (i) thirty (30) days prior written notice, or (ii) the
earliest date permitted by law. In such event, monthly rent will
be increased to an amount equal to two hundred percent (200%) of
the monthly rent payable during the last month of the term, and any
other sums due under this Lease will be payable in the amount and
at the times specified in this Lease. Such month-to-month tenancy
will be subject to every other term, condition, and covenant
contained in this Lease. The provisions of this Section shall not
be construed to relieve Tenant from liability to Landlord for
damages resulting from any such holding over, or preclude Landlord
from implementing summary dispossess proceedings.
ARTICLE 41
CERTAIN DEFINITIONS AND CONSTRUCTIONS
41.01. For the purpose of this Lease and all agreements
supplemental to this Lease, unless the context otherwise requires,
the definitions set forth in Exhibit F annexed hereto shall be
utilized.
41.02. The various terms which are italicized and defined in
other Articles of this Lease or are defined in Exhibits annexed
hereto, shall have the meanings specified in such other Articles
and such Exhibits for all purposes of this Lease and all agreement
supplemental thereto, unless the context shall otherwise require.
41.03. The submission of this Lease for examination does not
constitute a reservation of, or option for, the Demised Premises,
and this Lease becomes effective as a Lease only upon execution and
delivery thereof by Landlord and Tenant.
41.04. The Article headings in this Lease and the Inde
prefixed to this Lease are inserted only as a matter of convenience
in reference and are not to be given any effect whatsoever in
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construing this Lease.
ARTICLE 42
RELOCATION OF TENANT
42.01. Landlord at its sole expense, on at least sixty (60)
days prior written notice, may require Tenant to move from the
Demised Premises to another location of comparable size and decor
in the Building in order to permit Landlord to consolidate the
Demised Premises with other space in the Building for future
occupancy (provided, however, that in event of receipt of any such
notice, Tenant by written notice to Landlord may elect not to move
to the other space and in lieu thereof may terminate this Lease).
In the event of any such relocation, Landlord shall be responsible
for the expenses of preparing and decorating the relocated premises
so that they will be substantially similar to the Demised Premises.
Notwithstanding the foregoing Landlord shall be entitled to rescind
its notice of relocation within forty-five (45) days of its having
forwarded to Tenant the notice of relocation or within forty-eight
(48) hours of Tenant having properly elected to terminate this
Lease. In the event Landlord rescinds the notice as aforesaid,
this Lease shall continue in full force and effect.
ARTICLE 43
OPTION TO RENEW
43.01. Provided that Tenant is not then in default of the
terms, covenants, and provisions of this Lease, Landlord hereby
grants to Tenant the right to renew the term of this Lease for one
(1) additional period of five (5) years (the "Renewal Period")
commencing on the day after the initial Expiration Date upon the
same terms and conditions as set forth in this Lease other than the
fixed annual rental which shall be the Fair Market Rental of the
Demised Premises at the time of the commenc ment of the Renewal
Period, adjusting as necessary for the lapse of time between the
date of Tenant's notification of intent to exercise its option to
renew and the date on which the Renewal Period is scheduled to
commence but in no event shall be less than the fixed rent during
the initial term. Said fixed annual rental shall be payable in
equal monthly installments in advance on the first day of each and
every month of the Renewal Period. The base year for calculation
of additional rent for increase in taxes and operating expenses for
the Renewal period shall be as initially established in this Lease.
Tenant shall exercise the within Option by giving written notice to
Landlord not later than nine (9) months prior to the initial
Expiration Date, TIME BEING OF THE ESSENCE. If Tenant fails to
give such notice, Tenant will be deemed to have waived such Renewal
Option and the provisions of this Section shall be null and void.
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Fair Market Value shall mean the rents obtainable for comparable
space in the Union, New Jersey market area.
IN WITNESS WHE EOF, Landlord and Tenant have duly executed
this Lease as of the day and year first above written.
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WITNESS: LANDLORD:
UNICORN INVESTMENTS,
a New Jersey General
Partnership
______________________ _____________________________
By: Dominick Alfieri
Title General Partner
ATTEST: TENANT:
CORPORATE TRAVEL LINK, INC.
a New Jersey Corporation
______________________ _____________________________
By:
Title: Vice President
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EXHIBIT 10.5
SABRE Extension Program
Associate Distribution and Services Agreement
This Agreement is made as of the date set forth below between
AMERICAN AIRLINES, INC., a Delaware Corporation, having its principal
place of business at P.O. Box 619616, DFW Airport, Texas 75261-9616
("American") and the provider of goods or services identified on the
signature page of this Agreement ('Vendor').
RECITALS
A. American provides, through its SABRE Travel Information Network
Division ("S.T.I.N."), computerized reservations services with
related data processing activities;
B. Vendor provides the services and/or products defined on the
attached Schedule(s) ("Product"); and
C. The parties desire to enter into a co-marketing agreement mutually
beneficial to both parties, and provide for the optional sale of
the Vendors Product through the SABRE System.
NOW THEREFORE, in consideration of the mutual covenants set forth
below, the parties agree as follows:
Article 1
DEFINITIONS
For the purposes of this Agreement, the following words shall have
the meanings set forth below.
1.1 "AGREEMENT' shall mean this SABRE Extension Program Associate
Distribution and Services Agreement.
1.2 "APD" shall mean Asia Pacific Distribution, LTD., a SABRE
Licensee authorized to sell and service the SABRE System in
various areas of IATA Traffic Conference 3.
1.3 "ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT' shall mean an
agreement entered into by Vendor with American for use of SABRE
Equipment.
1.4 "BOOKING,, means, for each reservation, purchase or other
transaction that is created in or processed through SABRE, the
quantity of items or units of service specified in such
transaction, less cancellations made prior to the Activity Date.
1-5 "CANCELLATION" shall mean only those reservations, purchases or
<PAGE>
other transactions that are canceled or processed through SABRE.
1.6 "CARIBBEAN" is defined as Puerto Rico, the US Virgin Islands,
and the Caribbean
Islands that compose the sub-area of IATA Tariff Conference 1 -
1.7 "COMMERCIAL SABRE" shall mean a user-friendly version of the
SABRE System primarily marketed to corporations.
1.8 "DRS" shall mean the Direct Reference System, which is a static
display contained in the SABRE System which Vendor uses to
communicate information to SABRE Users.
1.9 "EAASY SABRE" shall mean a user-friendly version of the SABRE
System, primarily marketed to individual travelers through
public data networks.
1.10 "EUROPE" is the sub-area as defined within IATA Tariff
Conference 2.
1.11 "FALCON" shall mean the name used by Gulf Air, a SABRE
Licensee, to describe the version of the SABRE System
distributed by Gulf Air in various sub-areas of IATA Tariff
Conference 2
1.12 "FANTASIA" shall mean the name used by APD to describe the
version of the SABRE System distributed by APD in various sub-
areas of IATA Tariff Conference 3.
1.13 "GDS RULES" shall mean rules and regulations established by
governmental entities for the operation of GDSs, including those
in effect in the United States, Canada, and the European
Community.
1.14 "GDS" shall mean a global distribution system (commonly
referred to as a computerized reservation system [CRS]). A GDS
collects, stores, processes, displays and distributes
information through computer terminals concerning air and ground
transportation, lodging and other travel related products and
services offered by travel suppliers and which enables users to:
(I) reserve or otherwise confirm the use of, or make
inquiries or obtain information in relation to, such products
and services; and/or
(ii) issue documents for the acquisition or use of such
products and services.
1. 15 "IATA:'shall be the International Air Transport Association,
Montreal, Canada.
1.16 "MARKET' shall mean the total locations within the defined
Territory which utilize the services of a GDS.
1.17 "NET' is defined as gross dollar sales without local
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government or sales tax
1.18 "NON-STANDARD DEVICE" shall mean any computer hardware
equipment which Vendor desires to connect to the SABRE System
but for which American does not make maintenance services
available.
1.19 "NORTH AMERICA shall be defined as the following countries:
Bermuda, Canada, the United States of America, and the Caribbean
as defined within the Agreement
1.20 "OPTIONAL SERVICES" shall mean any service offered by American
other than the specific services referred to in this Agreement.
American may make available additional optional Services at any
time. Vendor may elect to purchase an Optional Service by
executing an addendum to this Agreement.
1.21 "PNR" shall mean a passenger name record created in the SABRE
System.
1.22 "PROFESSIONAL SABRE" shall mean a version of the SABRE System
primarily marketed to travel agencies and used by personnel of
American through the course of their employment.
1.23 "SABRE DATABASE" shall mean the information stored, displayed
and distributed through the SABRE System as maintained by S.T.I.N.
1.24 "SABRE EQUIPMENT' shall mean any computer hardware connected
to the SABRE System, and furnished to Vendor by American.
1.25 "SABRE LICENSEE" shall mean a person or entity licensed to
market the SABRE System in a designated area of the world.
1.26 "SABRE NETWORK' shall mean the telecommunications network
utilized by SABRE Users to transmit data or information.
1.27 "SABRE SYSTEM "shall mean American's GDS which has electronic
facilities able to provide, store, communicate, distribute,
process and document such information as is from time to time
stored in the SABRE Database.
1.28 "SABRE USER" shall mean a person or entity that utilizes the
SABRE System to make reservations. The term "SABRE Use@' shall
include any person or entity making reservations through one of
the versions of SABRE, including, but not limited to, Professional
SABRE, Fantasia, Falcon, EAASY SABRE, Commercial SABRE, Multi-Host
partition or any other version of SABRE marketed by a SABRE
Licensee. ,
1.29 "TERRITORY' shall mean the assigned geographic region where
the Vendor distributes the Product.
1.30 "THIRD PARTY HARDWARE" shall mean hardware other than that
furnished by American pursuant to an Associate SABRE Equipment
<PAGE>
Lease Agreement.
1.31 "TOTAL ACCESS" shall mean a group of Optional Services
providing premium connectivity between SABRE and the Vendors
system, including ANSWERBACK Direct Access, Multi Access and
Direct Connect (as defined in the Total Access addendum).
1.32 "TOUR RESERVATION" shall mean a reservation which may include
air, ground transportation, overnight accommodations, and other
travel features, for one or more nights, whether single or multi-
location, which is part of the ground portion of a tour package.
1.33 "UNIVERSAL STAR" shall mean a static informational display
within the SABRE System capable of storing up to one hundred
ninety (190) lines of information with each line capable of
storing up to fifty-seven (57) characters.
Article 2
OBJECTIVE
2.1 It is the intention of the parties to jointly market the
Product(s) to SABRE Users through the means set forth herein.
Article 3
EQUIPMENT
3.1 If Vendor is not on the date hereof a party to an agreement with
either American or a suitable third party, pursuant to which it can
receive data from and transmit data to the SABRE System, Vendor may
enter into such agreement in order to enable it to receive the
benefits of the SABRE System.
3.2 Vendor may elect to operate SABRE Equipment thereby affording
Vendor access to the SABRE System. In that event, Vendor may enter
into a separate Associate SABRE Equipment Lease Agreement with
American. American agrees that the SABRE Equipment and
access to the SABRE System will be afforded Vendor at American's
prevailing rates and charges. Vendor agrees that its use of the
SABRE Equipment and Its access to the SABRE System will be governed
by the terms and conditions defined in the Associate SABRE
Equipment Lease Agreement and that the SABRE Equipment will not be
used for developmental or testing purposes.
3.3 Vendor agrees to access the SABRE System only via SABRE
Equipment or devices and applications which have been certified or
approved by American. Vendor agrees to notify American in advance
of its intent to utilize any American certified device and
application.
3.4 Vendor may furnish its own computer hardware, provided that it
is approved in advance by American for use with the SABRE System.
Vendor acknowledges that any computer hardware it purchases from
another source may be subject to an existing security interest or
other ownership rights of American.
<PAGE>
3.5 In the event Vendor desires to connect third party hardware to
the SABRE System, Vendor shall ascertain American's procedures and
fees for connecting such third party hardware. Any such third
party hardware used for connection to the SABRE System shall be
subject to Vendors execution of American's written agreement
covering such third party hardware.
3.6 Notwithstanding anything to the contrary contained either in
this Agreement or in the SABRE Associate Equipment Lease Agreement,
should either American or Vendor terminate this Agreement for any
reason, then the SABRE Associate Equipment Lease Agreement will be
deemed to have been terminated simultaneously.
Article 4
THE SABRE SYSTEM
4.1 American makes no representations or warranties as to the number
or identity of the parties having access to the SABRE System.
Vendor agrees that any SABRE User shall be entitled to use, reserve
or purchase Vendors travel services or products via the SABRE
System. Vendor authorizes the release of all data input into the
SABRE System to all SABRE Users for their information and use.
Vendor acknowledges that American has, and shall continue to have
the right, at any time, to contract with parties to constitute them
as SABRE Users, to terminate agreements with SABRE Users, and to
contract to provide the SABRE System to other parties, including
competitors of Vendor.
4.2 The SABRE System shall:
4.2.1 provide both Vendor and other SABRE Users with a
display of
descriptive data pertaining to Vendor and its Products;
4.2.2 transmit upon request from a SABRE User, a list of
Products
together with price and other relevant data; and
4.2.3 effect orders and cancellations of orders previously
made,
upon input by SABRE Users, and to transmit such orders or
cancellations to Vendor.
The list above is not exhaustive.
4.3 American retains the right, in its sole discretion, to modify or
alter the operation of the SABRE System at any time it deems such
modification or alteration to be desirable; provided, however, that
American shall use reasonable effort to give Vendor sixty (60) days
prior written notice of such modifications or alterations, other
than those corrective in nature, which would materially affect the
services provided to Vendor under this Agreement. Any and all
costs incurred by Vendor or any third party in connection with or
as a result of such alterations or modifications shall be borne by
Vendor or such other party as the case may be, provided that Vendor
elects to participate in such alterations or modifications.
<PAGE>
Article 5
START-UP
5.1 Upon completion of all programming and performance of such
verifications and tests as American deems necessary, American shall
give Vendor notice that the SABRE System is operational for the
purposes of this Agreement.
Article 6
CONFIDENTIALITY
6.1 Each Party acknowledges that some material that the other deems
confidential or proprietary may come into its possession in
connection with this Agreement, the disclosure of which
confidential or proprietary information to third parties will be
damaging. Each party agrees, therefore, to hold such information
that the other deems
confidential or proprietary in strict confidence and agrees that it
will not disclose it to any third party or make use of it other
than for the performance of this Agreement. Any information or
data shall be considered confidential or proprietary if R is not
generally known regardless of whether such information or data is
or may be copyrighted or characterized as trade secret. The
obligations set forth herein shall not apply, however, to I)
information that is or becomes, through no fault of the receiving
party, publicly available; ii) information that is already or
becomes known by the receiving party; iii) information that is
furnished to either party hereto by a third party without the
breach of any obligation of confidentiality or the theft or
misappropriation or any trade secret; or iv) information that is
developed separately by the recipient without breach of this
Agreement, as can be established through documentation.
6.2 In the event confidential or proprietary information is validly
subpoenaed or otherwise requested or demanded by any court or
governmental authority, the party to which such subpoena, request,
or demand is directed shall give the other party prompt notice
prior to responding and shall exercise its best efforts, in
cooperation with the other party, to quash or limit such subpoena,
request, or demand. Upon the termination of this
Agreement, each party shall promptly deliver to the other party any
confidential or proprietary materials or information provided by
the other party pursuant to this Agreement. The terms of this
paragraph shall survive the termination of this Agreement
Article 7
RESPONSIBILITY OF AMERICAN
7.1 American will use its reasonable efforts to assist Vendor in
promoting and marketing the Product. American, using such means as
it determines in its sole discretion, will inform SABRE Users that
may be affected or that may find the Product useful of the
<PAGE>
availability of the Product from Vendor. American may choose to
make known the availability of the Product by promoting the SABRE
Extension Program through the following means, which list is not
exhaustive:
7.1.1 direct contact by representatives of American;
7.1-2 information made available through SABRE Subscriber
Conferences including the ability to participate in trade
show activities based upon availability of space and subject
to payment of registration fees at SABRE Subscriber
Conferences and regional SABRE Subscriber Conferences that
American may sponsor,
7.1.3 direct mailing to SABRE Users; and
7.1.4 D.R.S. via the SABRE System.
7.1.4.1 American shall enter the text of Vendors D.R.S.
into the SABRE System, as provided by Vendor. American
will not be required to verify the accuracy of the text of
the D.R.S., as submitted by Vendor to American. However,
American agrees to incorporate accurately the text of the
D.R.S., as submitted by Vendor, into the SABRE System;
provided however that American's sole liability for
failure to incorporate Vendor's text accurately shall be
to correct any
inaccuracy as soon as reasonably possible after written
notice from
Vendor stating the necessary correction.
7.1.4.2 Vendor acknowledges and agrees that
American will
not undertake to perform any verification of any sort of
the text submitted to American by Vendor for input into
the SABRE System and that American's function hereunder is
solely to perform the services set forth within this
Agreement. American makes no representation whatsoever to
Vendor or any third party as to the accuracy of the text
submitted by Vendor for input by American into the SABRE
System.
7.1.4.3 Notwithstanding section 7.1.4.2 above,
American
retains the right to review the text pertaining to the
Product and Vendor agrees to provide American, on request,
all data pertaining to the Product that supports the
accuracy or veracity of the text regarding the Product
American may, in its sole discretion, after review of the
data, approve or disapprove the input of such data into
the SABRE System.
7.1.4.4 American shall provide one free update to the
D.R.S. upon participation in the program. In addition,
American will continue to provide one free update each
<PAGE>
annual renewal for the length of the contract. The charge
for updates to Vendor's D.R.S. in excess of the one free
update every year shall be American's prevailing charge at
the time of the update.
7.2 American makes no warranty or representation as to the number or
identity of SABRE
Users that will be informed of the Product via the D.R.S.
7.3 In promoting and marketing the product, American will, at a
minimum, perform the
following:
7.3.1 provide Vendor with sales leads of which American becomes
aware;
7.3.2 distribute Vendor's product information material to all
S.T.I.N. Divisional offices in the United States.
7.3.3 inform S.T.I.N. sales and account representatives of the
availability of the Product using the means American normally
uses for dissemination of information to its S.T. I. N. sales
and account representatives;
7.3.4 provide periodic electronic messages to SABRE Users advising
them of the SABRE Extension Program and directing them to view
the SABRE Extension Program D. R. S. information, the frequency
of which messages and the number and identity of such SABRE
Users to be determined by American in its sole discretion; and
7.3.5 provide promotional material and a letter informing of
Vendors participation in the SABRE Extension Program for a
direct mailing to SABRE Users the number and identity of which
to be determined by American in its sole discretion; provided
however that Vendor shall be responsible for all costs of the
promotional materials and all mailing and postage expenses.
7.4 If appropriate, American shall supply Vendor with a single
vendor code under this Agreement to be used to represent Vendor.
Any additional vendor code requests will require an amendment to
this Agreement, and Vendor shall be responsible for any and all
costs associated with such additional code at American's prevailing
rate at the time of the request.
7.5 If Vendors executes an Associate SABRE Equipment Lease
Agreement, American shall provide access to the DRS to Vendor for
use in describing the Products that are the subject of this
Agreement. American may, at any time and in its sole discretion,
require Vendor to remove any part of its DRS text that American
believes is inappropriate for display to SABRE Users, in American's
sole discretion. American reserves the right to limit the number
of DRS pages available to Vendor.
7.6 American shall provide the Vendor with training for one
<PAGE>
individual and/or one set of training materials as may be required
to implement and access D.R.S.
7.7 American shall provide to Vendor initial training required to
operate the SABRE Equipment and maintain data provided by Vendor
for its Product. Additional training at Vendors request above and
beyond American's normal and customary training, as determined by
American in its sole -discretion, will be charged to the Vendor at
American's prevailing rate.
7.8 American shall provide Vendor with written copies of its
procedures and changes thereto pertaining to the operation of the
SABRE System by an Associate, and Vendor shall fully comply with
such procedures.
7.9 American shall maintain a help desk facility for the purpose of
answering Vendors questions regarding the operation of the SABRE
System and data within the SABRE System.
Article 8
RESPONSIBILITIES OF VENDOR
8.1 Vendor will not discriminate in any manner, whatsoever, against
any SABRE User on account of the SABRE Users selection,
possession, or use of the SABRE System.
8.2 Vendor agrees to guarantee to SABRE Users and clients of SABRE
Users the accuracy of Vendors policies, rates, and availability
data as displayed in the SABRE System. Vendor will be responsible
directly to SABRE Users and clients of SABRE Users for providing
Vendors services as displayed in the SABRE System. Vendor shall,
on request, certify the accuracy of all data pertaining to it or
its operations which has been supplied to American for input into
the SABRE System or been otherwise distributed pursuant to or in
connection with this Agreement.
8.3 Vendor will use reasonable effort to provide through the SABRE
System all rates which are offered by the Vendor. In no event
shall Vendor make available rates through any other GDS that are
not made available through the SABRE System.
8.4 Vendor represents that there are no restrictions or
limitations imposed on the availability of the Product.
8.5 Vendor agrees to return confirmation to, or respond to all
requests received from, the SABRE User within 24 hours or next
day of business from the time of such request
8.6 The Product shall be consistent with American's quality, as
determined by American, in its sole discretion.
8.7 Vendor agrees to pay American as per the terms identified on the
attached schedules(s)[including the definition of Marketing Fee].
<PAGE>
8.8 Vendor agrees to provide customer support services as outlined on
the attached schedules(s).
8.9 Vendor agrees to minimum payments per the attached schedules(s).
8.10 If the number of telephone calls by Product users exceeds 250
calls to the SABRE Help Desk (American's SABRE Users' help line)
during the 6-month period commencing with the effective date of
this Agreement or during the successive 6-month periods
thereafter, Vendor shall pay American $3 per call for each call in
excess of 250. Vendor shall pay American the amount due hereunder
within fifteen (1 5) days of American's notice to Vendor of any
amount due.
8.11 Vendor shall maintain complete and accurate records of its
sales of the Product to SABRE Users. Vendor will make available
to American monthly reports of the sales of the Product to SABRE
Users. During the term of this Agreement and for one year
following its termination for any reason, at American's request,
Vendor will make available to American or its designated
representative Vendor's books and records such that American or
its designated representative may conduct an audit, at American's
own expense, to determine that it has received all Marketing Fees
to which it is entitled. Any adjustments necessary as a result of
the audit will occur within fifteen (15) days after notice has
been given of the necessity for an adjustment.
8.12 The Vendor shall be responsible for the contents of all text
given to American Airlines for input into the SABRE System, and
shall prepare and maintain the text in accordance
with American's guidelines for data format, layout and
organization. Failure to comply with these guidelines will result
in the immediate removal of the information from the
SABRE System.
8.13 The Vendor shall ensure that the content of the information
and the description and
offering of the Product therein shall be in compliance with all
local, state/province, and
federal laws.
8.14 The rights and benefits hereunder shall not extend to any
product or service not listed on the attached schedules(s)
hereto unless Vendor has obtained the prior written consent of
American.
8.15 Vendor agrees to cooperate with American during the term of
this Agreement to continue to perfect the SABRE System's
operation, and to further extend the benefits of automation to
the field of travel service reservations.
8.16 American retains the right to change the Vendor code
assigned to a Vendor due to operational necessities. American
may withdraw Vendors right to use either or both its two-letter
<PAGE>
or three-letter alpha code upon ten (1 0) days' prior written -
notice to Vendor. Vendor agrees that American shall not be
liable to Vendor for any costs or expenses incurred by Vendor as
a result of the change in such alpha codes.
Article 9
PROMOTION
9.1 The promotion of the Product(s) to the SABRE Users is solely the
responsibility of the Vendor except as specifically set forth
herein.
9.2 At its own cost and expense, Vendor may communicate with the
SABRE Users in such manner as it deems appropriate to draw
attention to the availability of the Product(s).
9.3 At its own cost, expense, and discretion, American may
communicate with the SABRE Users, to draw attention to the
availability of the Product, to encourage the SABRE Users to refer
to the SABRE System regarding Product information, and generally to
promote the Product through the SABRE System.
9.4 Vendor shall obtain prior approval from American with respect to
any promotional communications that use any of American's
registered service marks or trademarks or that undertake to
instruct the SABRE Users on the use of the SABRE System.
Similarly, American shall obtain the prior approval from Vendor to
use any of the Vendors registered service marks or trademarks in
any promotional communications undertaken by American. Such
approval shall not be unreasonably withheld or delayed by either
party.
9.5 Failure to obtain prior approval from American shall result in
a $5,000 penalty payable by vendor to American within 15 days of
receipt of notification for each occurrence.
9.6 In the event that the Vendor shall publish any promotional
announcement and literature generally describing GDS services, such
general announcements and literature shall include references to
the SABRE System, and Vendor shall at all times comply with section
9.4 herein.
Article 1 0
OPTIONAL SERVICES
10.1 Vendor may elect at anytime to participate in any Optional
Service(s) offered by American. Unless otherwise specified in an
Addendum hereto, all terms and conditions
of this Agreement will apply to the Optional Services selected by
Vendor. Fees for Optional Services are subject to change upon thirty
(30) days' prior written notice from American. If Vendor does not
agree to pay any such revised fee, it may terminate the Optional
Services Addendum(s) by giving written notice to American at least
<PAGE>
five (5) days prior to the effective date of the price change.
American reserves the right to change Optional Service offerings from
time to time.
Article 1 1
TERM
1 1. 1 Except as otherwise stated herein, the initial term of-this
Agreement shall be for 2 years, commencing on the execution of
this Agreement ("Initial Term"). This Agreement shall
automatically renew for successive 1 year periods unless
otherwise terminated pursuant to the terms of this Agreement.
Article 12
PAYMENT
12.1 Vendor shall pay American the following fees and charges
without any right to set-off or deduction except as specifically
provided herein:
12.1.1 Deposit Fee. The sum of $3,000.00 USD payable by way of
a certified check accompanying this Agreement, which fee
shall be held by American. American may, at its option,
apply any portion or all of this fee towards any balance due
American by Vendor for fees as set forth herein or for SABRE
Equipment
monthly lease fees. This deposit does not eliminate Vendors
payment obligation as set forth herein. American agrees to
return the $3,000.00 USD deposit, or balance, if any, without
interest, to Vendor upon termination of this agreement
provided that Vendors payments and monthly SABRE Equipment
fees have been current for the duration of this agreement.
12.1.2 Implementation Fee. Vendor agrees to pay to American a
non-refundable fee of $1,000.00 USD. This fee shall be paid
upon execution of this Agreement by way of a certified check.
12.1.3 Processing (Product Specific) Fee/s. Vendor shall pay to
American a base processing (Product Specific) Fee/s or Annual
Minimums as defined on the attached schedule/s, whichever is
greater.
12.2 American may increase the Processing Fees and/or the Annual
Minimums at any time after the first 12 months of this Agreement.
Such increases will be effective upon thirty
(30) days' written notice to Vendor and will not exceed or fifteen
percent (15%), in any twelve (1 2) month period.
12.3 Vendor shall send to American on a monthly basis, within thirty
(30) days of the end of each month, a single report for billing
purposes, setting forth sales for all of Vendors Products for the
month, computed in accordance with this Agreement.
12.4 Vendor shall remit to American payments required pursuant to
<PAGE>
this Agreement on a monthly basis within thirty (30) days after
receipt of invoice. Any disputes arising from such invoice shall
not delay payment as described hereto. Time being of the essence,
such payments should be forwarded directly to:
American Airlines, Inc.
Associate Receivables
P.O. Box 845249
Dallas, TX 75284-5249
12.5 All fees not paid when due shall-accrue interest at the rate
of ten percent (10.0%) per annum or the highest amount permitted
by law, whichever is less, commencing on the 31st day after
Vendors receipt of invoice.
12.6 Upon termination of this Agreement for any reason whatsoever,
all unpaid charges owed by Vendor shall become immediately due and
payable, and Vendor shall forthwith remit payment thereof with no
right of set off or deduction whatsoever.
Article 13
NOTICES
13.1 Any notices or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been given
when delivered personally, when received via messenger or by express
delivery service, or when deposited in a regularly maintained
receptacle for the United States Postal Service, postage prepaid, and
addressed as follows or as the parties may from time to time designate
in writing:
If to American: If to Vendor:
American Airlines, Inc.
Corporate Travel Link, Inc.
SABRE Travel Information Network
P.O. Box 2039
P.O. Box 619616 MD 3125
Newark, New Jersey 07114
DFW Airport, TX 75261-9616
USA
USA
Teletype: HDQAJAA
Teletype:
Facsimile: 817-963-4658
Facsimile: 201-763-4612
Delivery: 4200 American Boulevard
Delivery: 18 Village Green Ct
Ft. Worth TX 76155
S. Orange NJ 07079
USA USA
ATTN: Vice President ATTN: Joseph Cutrona
<PAGE>
Associate & Strategic Distribution
President
Article 14
TAXES
14.1 Vendor shall pay all taxes (including without limitation,
sales, use, and personal property taxes) fees, licenses, and
assessments imposed by any federal, state, or local authority and
required to be paid by either American or Vendor as a result of
the services or products to be provided pursuant to this
Agreement, except for taxes based upon or measured by American's
net income.
Article 15
INDEMNITY
15.1 Vendor agrees to defend, indemnify, and hold American
harmless against all liabilities, damages, losses, claims,
fines, penalties, and judgments, including all costs and
expenses incidental thereto, which may be charged to or
recoverable from American by reason of any loss, damage, or
injury, directly or indirectly, arising out of or in connection
with the Product or Vendors failure to perform its obligations
pursuant to this Agreement. In the event of Vendor's failure to
defend under this provision, American may, at its own option,
defend as it sees fit in either Vendor's or American's name as
appropriate, and American may settle any claim or take any such
action as may be necessary or advisable and any expense of
defense or negotiation of such settlement, including but not
limited to the amount of any judgment, fines, costs, interests,
bond, or other expense shall be payable by Vendor. The
settlement sum and reasonable attorneys' fees shall be added to
the amount owing American and shall be payable by Vendor on
American's demand. This provision shall survive the termination
of-this Agreement.
Article 16
PATENT INFRINGEMENT CLAIMS
16.1 American will defend, at its own expense, any action brought
against Vendor to the extent that it is based on-,a claim that the
SABRE System or associated hardware or software provided to Vendor
by American infringes a patent, trademark, or copyright of the
United State only, and American will pay those costs and damages
finally awarded against Vendor in any such action that are
attributable to any such claim, provided however, such defense and
payment are conditioned on all of the following:
16.1.1 that American will be notified promptly in writing by
Vendor of any notice of such claim;
16.1.2 that American will have control of the defense in any
<PAGE>
action on such claim and all negotiations for its settlement
or compromise;
16.1.3 that no unauthorized changes of any kind whatsoever have
been made to the SABRE System or associated hardware or
software; and
16.1.4 should the SABRE System or associated hardware or
software become or, in American's opinion, be likely to
become the subject of a claim of infringement of a United
States patent, Vendor permits American to replace or modify
the same
so that it become non-infringing or make other arrangements, as
American deems fit in its sole discretion, to allow for
continued use of the SABRE System or associated hardware or
software.
16.2 Vendor will defend at its own expense any action brought
against American to the extent that it is based on a claim that
Vendors Product, system or associated hardware or software
provided by Vendor infringes a patent, trademark, or copyright of
the United States only, and Vendor will pay those costs and
damages finally awarded against American in any such action which
are attributable to any such claim, provided however, such defense
and payment are conditioned on all of the following:
16.2.1 the Vendor will be notified promptly in writing by
American of any notice of such
claim;
16.2.2 that Vendor will have control of the defense in any
action on such claim and all negotiations for its settlement
and compromise;
16.2.3 that American has made no unauthorized changes of any
kind whatsoever to Vendor's Product, System, or associated
hardware or software; and
16.2.4 should Vendors system or associated hardware or software
become or, in Vendors opinion, be likely to become the
subject of a claim of infringement of a United States
patent, American permits Vendor to replace or modify the
same so that it becomes not infringing or make other
arrangements, as Vendor deems fit, to allow for continued
use of Vendors Product, system or associated hardware or
software.
Article 17
FAILURE OR DELAY OF SERVICE
17.1 Except for Vendors obligations to make payments hereunder,
neither party shall be deemed in default under the Agreement as a
result of a failure to perform its obligations under this
<PAGE>
Agreement if such failure is caused by acts of God, war or the
public enemy, strike, labor stoppage, fire, flood, weather,
mechanical difficulty, power shortage, or any other cause beyond
the reasonable control of that party. The party unable to perform
for such reason shall notify the other party without delay.
Article 18
DISCLAIMER
18.1 AMERICAN DISCLAIMS AND VENDOR HEREBY WAIVES ALL WARRANTIES
EXPRESSED OR IMPLIED, INCLUDING BUT NOT LIMITED TO, ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR A PARTICULAR
PURPOSE OF ANY EQUIPMENT, DATA, OR SERVICES FURNISHED HEREUNDER OR
ANY LIABILITY IN CONTRACT, TORT, OR STRICT LIABILITY (EXCEPT FOR
GROSS NEGLIGENCE OR WILFUL MISCONDUCT) WITH RESPECT TO THE
EQUIPMENT, DATA OR SERVICES FURNISHED HEREUNDER. AMERICAN'S
LIABILITY HEREUNDER FOR BREACH OF CONTRACT, TORT, OR UNDER ANY
THEORY WHATSOEVER SHALL BE LIMITED TO THE COMPENSATION AMERICAN
HAS RECEIVED PURSUANT TO THIS AGREEMENT DURING THE THREE YEARS
IMMEDIATELY PRECEDING THE EVENT OR CIRCUMSTANCES GIVING RISE TO
AMERICAN'S LIABILITY.
VENDOR AGREES THAT AMERICAN SHALL NOT BE LIABLE TO IT FOR ANY
SPECIAL, EXEMPLARY, INDIRECT, OR CONSEQUENTIAL DAMAGES UNDER ANY
CIRCUMSTANCES WHETHER IN CONTRACT, TORT, OR UNDER ANY OTHER THEORY
OF RECOVERY.
Article 19
TITLE
19.1 Title and full and complete ownership rights to all American-
owned or developed software used in the performance of this
Agreement shall remain with American. Vendor acknowledges and
agrees that the SABRE System is American's proprietary information
and trade secret, whether or not any portion thereof is or may be
validly copyrighted or patented. Any manuals and other
documentation in any form and any and all copies thereof, and any
and all parts or abstracts thereof, are for the exclusive use of
American, and are subject to the confidentiality provisions set
out herein.
Article 20
ASSIGNMENT
20.1 Neither party shall transfer or assign this Agreement, or any
right or obligation under it, by operation of law or otherwise,
without the prior written consent of the other party, except that
American may assign this Agreement to any affiliate or to any
other entity which succeeds to all or part ownership or operation
of the SABRE System without such consent.
Article 21
<PAGE>
- EXCLUSIVITY AND RIGHTS REGARDING OTHER PRODUCTS
21.1 This is a non-exclusive Agreement and similar agreements may
be entered into by American or Vendor with any other party.
21.2 Vendor agrees that during the term of this Agreement it will
not enter into a co-marketing agreement for the Product with any
other GDS that is more favorable to the GDS than
that offered to American. In the event Vendor enters into such a
co-marketing agreement with another GDS on more favorable terms,
Vendor will immediately make available to American such more favorable terms,
effective as of the date of the agreement with the other GDS.
Article 22
TERMINATION
22.1 American shall be entitled to terminate this Agreement
immediately upon any of the following events:
22.1.1 In the event Vendor becomes insolvent; makes any
assignment for the benefit of creditors; calls a meeting of
creditors; offers a composition or extension to creditors;
suspends payment; consents to or suffers the appointment of
a receiver, a trustee, a committee of creditors, or a
liquidation agent; files or has filed against it a petition
in bankruptcy seeking reorganization, arrangement, or
readjustment of its debts, or its dissolution, or
liquidation; or requests any other relief under any
bankruptcy or insolvency law; or
22.1.2 In the event Vendor has entered against it any judgment
or decree for its dissolution which remains undismissed or
undischarged or unbonded for a period of thirty (30) days; or
22.1.3 Vendor fails to make any payment required by this
Agreement when due and Vendor fails to cure such breach
within fifteen (1 5) days after receipt of written notice
thereof from American.
22.2 Vendor shall be entitled to immediately terminate this
Agreement upon any of the following events:
22.2.1 American breaches any term of this Agreement, which
breach continues uncured for fifteen (1 5) days after receipt
of written notice thereof from Vendor,
22.2.2 American becomes insolvent, makes any assignment for the
benefit of the creditors; calls a meeting of creditors;
offers a composition or extension to creditors; suspends
payments; consents to or suffers the appointment of a
receiver, a trustee, a committee of creditors or a
<PAGE>
liquidating agent; files or has filed against it a petition
in bankruptcy seeking reorganization, arrangement, or
readjustment of its debts, or its dissolution or liquidation,
or for any other relief under any bankruptcy or insolvency
law or has entered against it any judgement or decree for its
dissolution which remains undismissed, undischarged or
unbonded for a period of thirty (30) days; then Vendor may
cancel this Agreement effective on five (5) days written
notice.
22.3 If any portion of this Agreement is declared or found to be
illegal, unlawful, unenforceable or void under any statute,
regulation, or executive order of the federal government or any
state or local authority, both parties shall be relieved of all
obligations arising out of such provision; but, if capable of
performance, the remainder of this Agreement shall not be
affected.
22.4 American and Vendor each shall have the right to terminate
this Agreement at any time with or without cause after the initial
term of this Agreement upon not less than thirty
(30) days written notification, and the parties shall have no
further obligations hereunder except as stated in Articles 6,
15, 16, 18, and 19 herein and as otherwise provided herein.
22.5 Notwithstanding any other provision of this Agreement, if the
quality of the Product or Vendors services fall below American's
standards of quality, as determined by American in its sole
discretion, and Vendor fails to meet or exceed American's
standards of quality within fifteen (1 5) days notice thereof from
American, American may terminate this Agreement immediately, with
no liability to Vendor.
22.6 Notwithstanding any other provision herein, upon termination
for any reason whatsoever of this Agreement, Vendor shall remain
liable for the payment of any fees then payable or that become
payable in the future pursuant to Article 8 herein for the
Product that is sold prior to the termination of this Agreement,
regardless of whether or not the fee for such Product is
collected prior to the termination of this Agreement, and Vendor
shall be liable for a pro rata share of any Minimum Payment due
pursuant to Article 8 herein.
Article 23
INDEPENDENT CONTRACTORS
23.1 American and Vendor acknowledge that each party is an
independent contractor. Nothing in this Agreement is intended nor
shall be construed to create an agency, partnership, or joint
venture relationship between the two parties.
23.2 American shall have the right to market the Product as one
provided by a third-party company, and American may include such
<PAGE>
disclaimers as it deems necessary, in its sole discretion,
Including without limitation, the following:
This product is provided by a third-party company, and is
intended to enhance the services you offer your clients.
Support and service of the product is the sole responsibility
of the third-party company. American Airlines, Inc. makes no
representations or warranties, expressed or implied, about such
product.
Article 24
GOVERNING LAW
24.1 This Agreement and any disputes arising hereunder shall be
governed by the laws of the United States and the State of Texas
without regard to its conflict of laws rules. Each party hereby
consents to the non-exclusive jurisdiction of the courts of the
State of Texas and the United States District Court for the
Northern District of Texas in any
dispute arising out of this Agreement. The United Nations
Convention on the International Sales of Goods is specifically
excluded from this Agreement.
Article 25
WAIVER
25.1 No waiver of any breach of any provision of this Agreement by
either party shall constitute a waiver of any subsequent breach of
the same or any other provision hereof and no waiver shall be
effective unless made in writing.
Article 26
GDS RULES
26.1 In the event the terms of this Agreement become inconsistent
with any applicable GDS Rules, at American's option, this
Agreement shall either, I) terminate upon written notice
from American, or ii) be modified to be consistent with the GDS
Rules, provided that such modification does not materially
diminish Vendors rights and hereunder.
Article 27
ATTORNEYS FEES
27.1 In the event that any legal proceeding at law or in equity
arises hereunder or in connection herewith (including any
appellate proceedings or bankruptcy proceedings), the prevailing
party shall be awarded costs, reasonable expert witness fees, and
reasonable attorneys' fees incurred in connection with such legal
proceedings.
Article 28
HEADINGS
<PAGE>
28.1 The headings to this Agreement are for convenience only and
shall not affect the meaning or constructions of any paragraphs.
Article 29
ENTIRE AGREEMENT
29.1 This Agreement is the entire Agreement of the parties and
shall supersede any previously executed agreements or oral
understandings between the parties which relate to the subject
matter of this Agreement. This Agreement may not be amended or
modified except in writing and signed by the parties.
In consideration of the foregoing, both parties agree to the terms and
conditions of this
Agreement on the date set forth below.
I --
The parties have executed this Agreement as of this 22nd day of June,
19995.
Corporate Travel Link, Inc. American Airlines, Inc.
By:____________________ By:____________________
(Signature) (Signature)
Joseph Cutrona Bruce R. Wood
President Manager,
Leisure & Third Party
Distribution
June 22, 1995
(Date) (Date)
<PAGE>
SCHEDULE A
to SABRE Extension Program, Associate Distribution and Service
Agreement between Vendor and American (the 'Agreement.')
1. VENDOR'S NAME'. Corporate Travel Link, Inc.
II. FEES:
A. implementation Fee - $1,000.00
B. Annual Minimum Fee - $24,000.00
- Payment of
$6,000.00 each qtr
C. Processing Fee for $2.00
each Product Sold
D. Deposit Fee - $3,000.00
E. Equipment Fees
Monthly fee for
two SABRE TAs @
$75.00 each $150.00
Monthly SABRE
Data Line $420.00
Ill. Territory: Distribution is available
to all SABRE Users
IV. Product or Service: Provider of automated limousine
reservations to SABRE Subscribers.
V. Support Services:
A. Hours of Operation: 24 Hours
EXHIBIT 10.6
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT
THIS AGREEMENT is made by and between AMERICAN AIRLINES,
INC., a Delaware corporation having its principal address at P. 0.
Box 619616, Mail Drop 3557, Dallas Fort Worth Airport, Texas
75261-9616, U.S.A. ('American') and the undersigned (the
"Operator'), as defined in Schedule A of this Agreement.
American has developed a computer system ("the SABRE
System') the airline industry's first fully automated reservations
system, with electronic facilities able to provide, store,
communicate, distribute, process and document such information as
is from time to time stored in the data base created and
maintained for the SABRE System.
Operator has requested American and American has agreed to
lease to Operator certain computerized reservations equipment in
order to receive data from and transmit data to the SABRE data
base as detailed in the Associate Agreement between American and
Operator and to provide Operator with certain functions of the
SABRE System through such equipment on the following terms and
conditions:
1 - Lease of Equipment, American hereby leases to Operator the
items of data processing equipment described in the attached
Schedule A ("Equipment').
2. Installation. (a) American shall install the Equipment or
cause the Equipment to be installed at Operator's place of
business set forth in Schedule A, and shall use its best efforts
to accomplish such installation on or about the installation date
set forth in Schedule A. Operator shall be responsible for
preparing a space acceptable to American for each item of
Equipment as well as for meeting all electrical requirements set
by American, the manufacturer of the Equipment and the
telecommunications provider furnishing communications facilities.
Operator shall also be responsible for ensuring that all required
system cables are placed in accordance with American's
specifications and comply with all local building and electrical
code requirements.
(b) Once installed, Equipment may only be moved with
American's prior written consent, and must be moved by American or
a party designated by American. Operator agrees to pay American's
then prevailing charges for any movement of Equipment.
3. Repairs and Maintenance, (a) The Equipment will be repaired
and maintained by American or by a service organization designated
by American. Operator will not attempt to perform repairs or
<PAGE>
maintenance of any kind.
(b) Operator shall promptly inform American of any breakdown
of the Equipment by contacting SABRE Central at the available
toll-free numbers. Operator shall maintain a record of all
occasions upon which repair or maintenance service is required and
make such records available to American for inspection upon
request.
(c) There shall be no additional charge to Operator for
repair and maintenance services during normal business hours, such
charges being included in the charges described in paragraph 8.
For purposes of this paragraph, normal business hours shall be
9:00 a.m. to 6:00 p.m., Monday through Friday, excluding legal
holidays. For repair and maintenance services outside normal
business hours, if at Operator's request, Operator agrees to
reimburse American for reasonable costs that may be incurred by
American.
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 2
4. Inspect American and/or a service organization or vendor
designated by American shall have the right to inspect the
Equipment and to monitor Operator's operation thereof at all
reasonable times provided, however, that such activities shall not
unreasonably interfere with the Operator's business operations.
5. Training. -(a) American shall provide (I) training in the
operation of the Equipment and the functions of the SABRE System
for two (2) Operator employees for each video agent set leased;
(ii) instruction for one (1) Operator employee for each place of
business set forth in Schedule A in methods and techniques of
instructing others to operate the Equipment; and (iii) access, via
the Equipment, to a computerized instruction function, to assist
Operator in performing recurrent training and training of new
employees. If during the training American determines any
Operator employee to be unsatisfactory, the employee shall be
removed from training and shall not be permitted to operate the
Equipment.
(b) The training described in subparagraphs 5 (a) (I) and
(ii) above shall be performed at a location to be designated by
American.
(c) At Operator's request, and subject to American's
existing commitments, American shall provide Operator additional
training services at American's then prevailing charges.
(d) Operator is responsible at its own expense for
maintaining and insuring the training level of all of its
employees utilizing the Equipment. American may, at its
discretion, monitor or test Operator's employees' training levels.
If American determines the training level of any one or more of
<PAGE>
Operator's employees to be insufficient, then Operator will
institute such additional training at its own expense (including,
if necessary, additional training by American at American's then
prevailing charges), as may be necessary to bring Operator's
employees to the level of training required by American.
6. Use of Equipment and Data (a) As long as it is connected to
SABRE, the Equipment will be used by Operator solely for the
purposes and functions detailed in the Associates Agreement
between American and Operator and in strict accordance with
operating procedures and rules furnished by American to Operator.
(b) Operator shall take all precautions necessary to prevent
unauthorized operation of the Equipment. Intentional misuse of
SABRE, including, but not limited to, speculative booking or
reservation of space in anticipation of demand or improper record
or access shall be considered a material breach of this Agreement,
and American shall have the right to deny Operator access to SABRE
immediately without notice or liability to Operator.
(c) Operator shall not use any data transmitted under this
Agreement to develop or publish any reservation, ticketing, sales,
cargo or tariff guide. Operator shall use such data solely for
the purpose of implementing the services detailed in the Associate
Agreement. Operator shall not publish, disclose or otherwise make
available to any third party the compilations of air carrier
service data obtained from the SABRE System.
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 3
7. Performances Disclaimer of Warranties, (a) American agrees to
use its best efforts to maintain the availability of the SABRE
System and the Equipment, but shall have no liability for
interruptions in the operation of the System or the Equipment. In
the event that the Equipment is not operable at least 95% of the
total normal business hours each month, excluding periods for
maintenance of Equipment or other scheduled down-time, American
will consider a reduction in the monthly charge for the month in
which the System was not operable at least 95% of the time. For
purposes of this paragraph, normal business hours shall be 9:00
a.m. to 6:00 p.m., Monday through Saturday.
Equipment shall be considered inoperable @ Operator is
unable, after calling SABRE Central as set forth in paragraph
3(b), to implement services as outlined in the Associates
Agreement as a result of the failure of the Equipment or a failure
attributable to the SABRE System.
For any month in which the Equipment is not operable at
least 95% of the total normal business hours, Operator may submit
a written record to American and request an adjustment in the
monthly charges. Operator's written records must, however, be
submitted in a timely manner and include, as a minimum, the date
<PAGE>
on which the outage occurred; the time the system went down; the
time the outage was reported to SABRE Central; the time the system
was restored (within normal business hours as defined above); and
the type of outage.
(b) Operator acknowledges that neither American nor Official
Airline Guide, Inc. ("OAG'), the supplier of certain data provided
under the agreement, warrants the accuracy, merchantability or
fitness for particular purposes of any data or Equipment provided
under the Agreement. Neither American nor OAG shall be liable to
Operator for any injury, loss, claim or damage caused in whole or
in part by the negligence of American or OAG or by contingencies
beyond their respective control in procuring, collecting,
compiling, abstracting, interpreting, communicating, processing or
delivering any such data. However, if any errors in data
transmitted are due to circumstances under American's direct
control, American shall use its best efforts to correct such
errors in a timely manner.
(c) AMERICAN DISCLAIMS AND OPERATOR HEREBY WAIVES ANY
WARRANTIES EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OF THE
EQUIPMENT, DATA OR SERVICES FURNISHED HEREUNDER OR ANY LIABILITY
IN NEGLIGENCE OR TORT WITH RESPECT TO THE EQUIPMENT, DATA OR
SERVICES FURNISHED HEREUNDER. OPERATOR AGREES THAT AMERICAN SHALL
NOT BE LIABLE TO IT FOR CONSEQUENTIAL DAMAGES, (INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF PROFIT OR USE) UNDER ANY
CIRCUMSTANCES.
8. Charges, (a) Operator agrees to pay the charges listed in the
attached Schedules for the lease of the Equipment and for the
services and functions listed therein, within ten (1 0) days
following receipt of American's monthly invoice. In addition,
Operator shall pay American a removal fee if the Equipment is
removed for any reason. The removal fee shall be at American's
then prevailing rate.
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 3
7. Performance* Disclaimer of Warranties, (a) American agrees to
use its best efforts to maintain the availability of the SABRE
System and the Equipment, but shall have no liability for
interruptions in the operation of the System or the Equipment. In
the event that the Equipment is not operable at least 95% of the
total normal business hours each month, excluding periods for
maintenance of Equipment or other scheduled down-time, American
will consider a reduction in the monthly charge for the month in
which the System was not operable at least 95% of the time. For
purposes of this paragraph, normal business hours shall be 9:00
a.m. to 6:00 p.m., Monday through Saturday.
Equipment shall be considered inoperable if Operator is
unable, after calling SABRE Central as set forth in paragraph
<PAGE>
3(b), to implement services as outlined in the Associates
Agreement as a result of the failure of the Equipment or a failure
attributable to the SABRE System.
For any month in which the Equipment is not operable at
least 95% of the total normal business hours, Operator may submit
a written record to American and request an adjustment in the
monthly charges. Operator's written records must, however, be
submitted in a timely manner and include, as a minimum, the date
on which the outage occurred; the time the system went down; the
time the outage was reported to SABRE Central; the time the system
was restored (within normal business hours as defined above); and
the type of outage.
(b) Operator acknowledges that neither American nor Official
Airline Guide, Inc. ("OAG'), the supplier of certain data provided
under the agreement, warrants the accuracy, merchantability or
fitness for particular purposes of any data or Equipment provided
under the Agreement. Neither American nor OAG shall be liable to
Operator for any injury, loss, claim or damage caused in whole or
in part by the negligence of American or OAG or by contingencies
beyond their respective control in procuring, collecting,
compiling, abstracting, interpreting, communicating, processing or
delivering any such data. However, if any errors in data
transmitted are due to circumstances under American's direct
control, American shall use its best efforts to correct such
errors in a timely manner.
(c) AMERICAN DISCLAIMS AND OPERATOR HEREBY WAIVES ANY
WARRANTIES EXPRESS OR IMPLIED INCLUDING BUT NOT LIMITED TO ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OF THE
EQUIPMENT, DATA OR SERVICES FURNISHED HEREUNDER OR ANY LIABILITY
IN NEGLIGENCE OR TORT WITH RESPECT TO THE EQUIPMENT, DATA OR
SERVICES FURNISHED HEREUNDER. OPERATOR AGREES THAT AMERICAN SHALL
NOT BE LIABLE TO IT FOR CONSEQUENTIAL DAMAGES, (INCLUDING, WITHOUT
LIMITATION, DAMAGES FOR LOSS OF PROFIT OR USE) UNDER ANY
CIRCUMSTANCES.
8. Charges, (a) Operator agrees to pay the charges listed in the
attached Schedules for the lease of the Equipment and for the
services and functions listed therein, within ten (1 0) days
following receipt of American's monthly invoice. In addition,
Operator shall pay American a removal fee if the Equipment is
removed for any reason. The removal fee shall be at American's
then prevailing rate.
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 5
13. Events of Default Cancellation, (a) In the event:
(I) Operator performs or permits any unauthorized repairs,
modifications, relocation or use of the Equipment or data
<PAGE>
provided hereunder, fails to keep or disclose maintenance
records, or fails to pay any charges due hereunder;
(ii) Operator breaches any other term of this Agreement,
or any other Agreement between Operator and American Airlines,
Inc. or its corporate affiliates, which breach continues
uncured for fifteen (1 5) days after written notice by
American;
(iii) Operator becomes insolvent, makes any assignment for
the benefit of creditors; calls a meeting of creditors; offers
a composition or extension to creditors; suspends payments;
consents to or suffers the appointment of a receiver, a
trustee, a committee of creditors or a liquidating agent; files
or has filed against ft a petition in bankruptcy or seeking
reorganization, arrangement or readjustment of its debts or its
dissolution or liquidation or for any other relief under any
bankruptcy or insolvency law or has entered against it any
judgment or decree for its dissolution which remains
undismissed or undischarged or unbonded for a period of thirty
(30) days;
(iv) Operator breaches any term of the Associates Agreement;
Then American may terminate this Agreement of five (5) days
written notice and all charges set forth in the attached Schedules
for the unexpired term of this Agreement shall become immediately
due and payable, without demand or invoice and Operator shall
promptly pay such amount to American. Operator shall also be
obligated to promptly pay all damages which American may sustain
by reason of the default, including, without limitation, all legal
fees and other expenses incurred by American.
(b) In the event:
(I) American breaches any term of this Agreement;
(ii) American becomes insolvent, makes any assignment for
the benefit of
creditors; calls a meeting of creditors; offers a composition
or extension to creditors; suspends payments; consents to or
suffers the appointment of a receiver, a trustee, a committee
of creditors or a liquidating agent; files or has filed against
it a petition in bankruptcy or seeking reorganization,
arrangement or readjustment of its debts or its dissolution or
liquidation or for any other relief under any bankruptcy or
insolvency law; or has entered against it any judgment or
decree for its dissolution which remains undismissed or
undischarged or unbonded for a period of thirty (30) days;
(iii) American breaches any term of the Associates Agreement;
then Operator may cancel this Agreement effective on five (5)
<PAGE>
days written notice.
14. Additional and Replacement Functions, Services or Equipment,
(a) American retains
the right to modify the Equipment, the SABRE System functions or
services or any related
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 6
equipment at its discretion at any time during the term of this
Agreement. However, such modifications will not materially after
the services provided under this Agreement.
(b) Additional and replacement functions and services may be
offered by
American or requested by Operator in writing at any time after
acceptance of this Agreement.
Any additional or replacement functions or services will be
provided, as available, at
American's then prevailing charges, terms and conditions for such
functions and services.
Use by Operator of any such additional function or service
constitutes Agreement to pay
American's then prevailing charge for such use.
15. Return of Equipment, Upon termination or cancellation of this
Agreement, Operator shall be responsible for returning the
Equipment to American, at such place as American shall direct, in
the same condition as when delivered to Operator, except for
reasonable wear and tear. In the event Operator wishes to return
one or more (but not all) items of Equipment upon expiration of
the initial term, Operator shall submit a written request to
American at least thirty (30) days prior to the anticipated date
of return and such return shall be done in a manner described in
the preceding sentence.
16. -Risk of Los@ Risk of loss of the Equipment shall be borne
by Operator from receipt of
the Equipment at the location set forth in Schedule A until this
Agreement is terminated and
the Equipment returned to American.
17. Assignment.-Operator shall not transfer or assign this
Agreement, or any right or
obligation under it, by operation of law or otherwise, without the
prior written consent of American.
18. Applicable Law, This Agreement shall be governed by the laws
of the State of Texas
and the United States of America. Without limiting in any way
the jurisdiction of the courts of
<PAGE>
any state, nation, or province or American's right to invoke the
Jurisdiction of such courts,
Operator hereby submits and consents to the jurisdiction of the
courts of the United States of America and the State of Texas in
any dispute arising out of this Agreement and agrees that service
of process shall be sufficient if made on the Secretary of State
of the State of Texas with a copy to be sent, registered mail to
Operator at the address set forth above or such other address as
Operator may later specify by written notice to American.
19. Consents, Any consent required under this Agreement shall not
be unreasonably withheld.
20. Entire Agreement This Agreement is the entire agreement of
the parties with respect to Equipment and shall supersede any
previously executed agreements between the parties relating to the
subject matter. Any amendment to this Agreement must be in
writing and signed by the authorized representatives of both
parties. Without limiting the generality of the foregoing,
Operator expressly agrees and acknowledges that any terms or
conditions proposed by Operator in a purchase order or other
document are hereby rejected by American.
ASSOCIATE SABRE EQUIPMENT LEASE AGREEMENT - Page 7
21. Notices. Notices given or required under this Agreement
shall be deemed delivered sent by United States mail, postage
prepaid, to the respective address of American or Operator set
forth at the beginning of this Agreement.
22. Waiver. A failure or delay of American to require strict
performance or to enforce a provision of this Agreement or a
previous waiver or forbearance by American shall in no way be
construed as a waiver or continuing waiver of any provision of
this Agreement.
American and Operator have executed this Agreement as of the 30th
day of June, 1995.
CORPORATE TRAVEL LINK, INC. AMERICAN AIRLINES, INC.
BY:______________________ BY:___________________
JOSEPH CUTRONA J.K. LINES
President Vice President, Finance
SABRE Travel Information Network
<PAGE>
SCHEDULE A
Operator Name: Corporate Travel Link : V6E3
and Location: 18 Village Green Court
Newark, NJ 07079
Billing
Customer
Monthly Service Charaes
Pricing
1 Data Line $420.00
Equipment to
Be Installed: Same As Above
Total Service Charges
$420.00 per month
(Federal, State, Local or other governmental taxes, duties, fees,
licenses and Assessments are not included)
Subiect to Paragraph 10 of the
Agreement, Installation
Date On Or About: Upon Installation
Equipment Replacement-Value: $ N/A
<PAGE>
SCHEDULE B
Other Charges
1. Installation Charges: $1,000.00
2. During the term of this Agreement, an additional charge will
be made for the installation and/or removal of individual pieces
of Equipment; for Equipment relocation within Operator's
premises; for each complete office disconnect and/or relocation
to different premises; and for an interface installation.
These charges will be at American's prevailing rate.
3. American retains the right to charge Operator for
communication costs actually incurred in excess of the first ten
messages transmitted per month per Video Agent Set incurred
through the use of the SABRE System.
<PAGE>
Schedule C
Standard Functions
The following are standard functions, the cost of which are
included in the charges set forth in Schedule A;
SABRE Assisted Instruction
Optional Functions
Optional functions may be offered by American from time to
time. If ordered by Operator in writing, such optional function
shall be billed to operator at American's then prevailing charge.
It is hereby acknowledged by Operator that using any such optional
function constitutes agreement to pay American's then prevailing
charge for such function.
If Operator utilizes any optional function, ft is hereby agreed
that Operator shall follow the written procedures and instructions
provided by American for such function.
Failure to pay on a timely basis for any optional function may
at American's sole election result in an event of default under
this Agreement and/or termination of such function.
<PAGE>
Exhibit 10.7
NON-STANDARD SYSTEM AMENDMENT TO ASSOCIATE SABRE EQUIPMENT LEASE
AGREEMENT
This Amendment to the certain Associate SABRE Equipment Lease
Agreement made and entered into this 30th day of June, 1995 between
American Airlines, Inc. ("American") and Corporate Travel Link, Inc.
("Operator").
RECITALS
WHEREAS, American and Operator have entered into that certain
Associate SABRE Equipment Lease Agreement, dated as of June 30, 1995
(the "Agreement");
WHEREAS, it is in the best interest of the parties to modify
certain provisions of the Agreement.
WHEREAS, this Amendment specifies the terms and conditions under
which Operator shall be permitted to connect to American's
computerized reservations system ("SABRE") any Non-Standard System
("NSS") that complies with the standards and specifications to be
provided by American to Operator upon execution of this Amendment or
heretofore.
WHEREAS, Operator has requested and American has agreed to allow,
subject to the terms of this Amendment, the connection to SABRE of
the NSS, with the NSS to be placed at the location specified on
Schedule A of the Agreement.
Definitions.
1.1 Non-Standard SYSTEM means any computer hardware, including
printers, software or firmware acquired, leased or owned by the
operator, including but not limited to third party hardware,
software or data bases that meet American's specifications and/or
are certified by American for use with SABRE, but are not supplied,
sold, or maintained by American.
1.2 SABRE Component means all memory, disk storage space, ports and
any other element of the Standard Equipment.
2. Use of NSS
(a) operator represents and warrants to American that the NSS
has not been altered or modified. All devices communicating
directly with the System or the System network must be certified by
American.
<PAGE>
(b) operator agrees that it shall accomplish the connection of
the NSS to SABRE in all compliance with American's standards and
specifications.
(c) operator shall remove all NSS placed on or within the
Standard Equipment prior to American's removing such Standard
Equipment from Operator's location. American disclaims, and
operator hereby waives, any responsibility or liability on the part
of American, under any theory whatsoever, for any NSS that Operator
has failed to remove from the Standard Equipment prior to American's
removing such Standard Equipment from Operator's location.
(d) Operator will allow American, on demand, the opportunity
to oversee the installation of the NSS at Operator's location.
(e) Operator shall not use NSS in conjunction with SABRE for
any function not specifically outlined in the Agreement and any use
or attempted use of any other function shall constitute a material
breach under this Amendment and the Agreement.
(f) operator shall also ensure that American has ingress to
operator's location on demand for conducting on-site inspections,
and testing of the NSS. Operator is responsible for ensuring that
any Standard Equipment at Operator's location has access to a
gateway or stand alone device supplied by American and using System
Software for the purposes of performing testing and diagnostics on
such Standard Equipment by American's designated agent. if American
determines, in its sole discretion, that the NSS is causing, or
contributing to, a problem with the System, SABRE or another SABRE
subscriber's access to or operation of SABRE, then American has the
right to terminate this Amendment immediately and/or immediately
restrict access to SABRE upon notice to Operator as provided for in
the Agreement and American shall have no liability to Operator for
such termination or restriction.
(g) Operator agrees that its continued right to maintain the
connection between the NSS and SABRE and to use the NSS in
connection with the Standard Equipment shall be dependent upon
operator's full cooperation with requests by American to repair,
alter, modify, or where necessary, deinstall the NSS if American
reasonably determines, that the NSS, or a component thereof, is
impairing the System or another SABRE subscriber's access to or
operation of SABRE.
(h) Operator shall pay American's then prevailing rate for all
employee resources expended by American for, but not limited to,
American's monitoring of the installation of the NSS and/or expended
in connection with on-site inspection and/or testing of the NSS
after installation, and service calls as well as any travel and
incidental expenses incurred by American's personnel or vendors for
the conduct of such monitoring, inspecting, testing or service
calls; provided, however, that after the initial installation of the
NSS, American will make such on-site inspections or test only where
it reasonably believes that the NSS is impairing the System, SABRE
or another SABRE subscriber's access to or operation of SABRE.
<PAGE>
(I) Operator agrees that American has first and complete
access to the SABRE Component. If, as a result of Operator's use
of NSS, an upgrade of the SABRE Component is required, Operator
shall comply with the applicable provisions of the Agreement.
3. Release. American hereby releases Operator from any and all
claims American may have relating to the use of the NSS, including
upline transmissions in excess of permitted volumes arising on or
before the date of this Amendment.
4. Training. For the NSS hereunder, American may offer to
Operator training, subject to availability, at American's then
prevailing rate.
5. Maintenance. American shall continue to maintain the Standard
Equipment pursuant to the Agreement. All maintenance of the NSS
shall be the sole responsibility of the Operator. American will
accept calls to SABRE Operator Services regarding a malfunction of
the NSS if American determines that the malfunction is not
attributable to the NSS. Operator shall pay American's then
prevailing maintenance charges for any maintenance calls for SABRE
if American determines that the problems with SABRE were caused by
or attributable to the NSS.
6. SABRE Warranty. THE SABRE WARRANTY, AS DESCRIBED IN THE
AGREEMENT, SHALL BE INAPPLICABLE AS TO ANY STANDARD EQUIPMENT USED
IN CONNECTION WITH THE NSS, EITHER DIRECTLY OR INDIRECTLY, AND AS TO
SUCH STANDARD EQUIPMENT AMERICAN DISCLAIMS AND CUSTOMER, IN
CONSIDERATION OF AMERICAN'S ALLOWANCE OF THE CONNECTION OF THE NSS,
HEREBY WAIVES ANY AND ALL WARRANTIES EXPRESS OR IMPLIED INCLUDING
BUT NOT LIMITED TO THE WARRANTY OF MERCHANTABILITY OR FITNESS FOR
INTENDED USE OF SUCH STANDARD EQUIPMENT, AS WELL AS THE DATA OR
SERVICES FURNISHED IN CONNECTION WITH SUCH STANDARD EQUIPMENT, OR
ANY LIABILITY IN NEGLIGENCE OR TORT WITH RESPECT TO SUCH EQUIPMENT,
DATA OR SERVICES.
7. Amendment to SABRE Protocol.. American expressly reserves the
right to amend the SABRE protocol for communications ("SABRE
Protocol") , and operator agrees that its continued right to connect
the NSS to SABRE, or to use the NSS in connection with SABRE, shall
be contingent upon operator having made the NSS compatible with the
revised SABRE Protocol no later than ninety days after Operator's
receipt of the notice of amendment of the protocol. Additionally,
American reserves the right to modify any SABRE application, even if
such modification requires changes in Operator's NSS software.
American will make reasonable efforts to notify Operator in advance
of such application changes, but undertakes no obligation to provide
such notice. Any expenses incurred in modifying Operator's NSS
software to conform to the SABRE application modifications shall be
the exclusive responsibility of Operator.
8. Defined Terms. The defined terms in this Amendment shall have
the same meaning assigned to such terms in the Agreement.
<PAGE>
9. Agreement. Except as otherwise provided herein, all other
terms of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year written above.
CORPORATE TRAVEL LINK, INC.
AMERICAN AIRLINES, INC.
By: By:
Name: Name:
Title:
Title:
PCC:
<PAGE>
EXHIBIT 10.8
SCRIPT CONSULTING AGREEMENT
THIS Script Consulting Agreement ("Agreement) is made this 21st
day of June, 1995, by and between WORLDSPAN, L.P., a Delaware
limited partnership ('WORLDSPAN"), 300 Galleria Parkway, N.W.
Atlanta, Georgia 30339 and Corporate Travel Link, Incorporated
located at 18 Village Green Ct., South Orange. NJ 07079
(Customer).
W I T N E S S E T H:
WHEREAS, WORLDSPAN is a computer reservation system (CRS")
vendor, providing access to its WORLDSPAN System to travel
agencies and others in the travel industry;
WHEREAS, Customer has arranged with WORLDSPAN for the use of
WORLDSPAN's CRS, equipment and products;
WHEREAS, Customer desires to retain WORLDSPAN to provide
consulting services with respect to the writing of one or more
software programs (hereinafter referred to as the 'Scripts') on
the terms and conditions specified herein; and
WHEREAS, WORLDSPAN desires to perform the services in the
capacity as an independent contractor as specified herein.
NOW, THEREFORE, it is agreed:
1 . Services to be Performed by WORLDSPAN.
WORLDSPAN shall render those services to Customer which are set
forth in Exhibit A attached hereto
and incorporated herein (hereinafter referred to as the
'Services). The Services shall be performed either at WORLDSPAN's
facilities or Customers offices, as agreed by the parties.
Customer acknowledges and agrees that WORLDSPAN and its employees
are independent contractors rather than employees or agents of
Customer.
2. - Access.
Customer agrees to make available to WORLDSPAN reasonable access
to Customers equipment and staff, and provide such other
assistance as shall be reasonably necessary to permit WORLDSPAN to
provide the Services according to this Agreement, including but
not limited to access to a WORLDSPAN Scripting workstation and
assistance from a Customer designee who is familiar with the
design specifications and host functionality of the proposed
Script project.
<PAGE>
3. Fees.
A. In consideration of the Services provided by WORLDSPAN
hereunder, Customer shall pay WORLDSPAN for the Services
provided at a rate of $ 65.00 per hour, $ 495.00 per day and
$ 2,300.00 per week until all Services are provided or the
Agreement is terminated pursuant to the terms herein. All
Services quoted will be provided during normal business
hours, 8:00 a.m. to 5:00 p.m. local time, Monday through
Friday, except holidays, except that Customer may request
that WORLDSPAN provide the Services at Customers additional
expense outside of normal business hours. WORLDSPAN shall,
in its sole discretion, decide whether to provide Services
to Customer outside of normal business hours at its then
prevailing rates, terms and conditions.
B. Customer must provide at least twenty-four (24) hours prior
written notice to WORLDSPAN to cancel an appointment for an
on-site visit. Failure to give proper notice will cost the
Customer Four Hundred Ninety-Five Dollars ($495.00) as a one
day minimum charge.
C. Fees shall be paid by Customer within thirty (30) days of
the date of invoice.
WORLDSPAN may impose a late payment fee at the rate of one
percent (1 %) per month for any amount that has not been
received within thirty (30) days after the date of such
invoice. In addition to any other charges set forth herein,
Customer shall pay to WORLDSPAN or reimburse WORLDSPAN, as
appropriate, for all sales, use, excise, property, or other
similar taxes now or hereafter imposed by any federal, state
or local taxing authority on amounts paid to WORLDSPAN by
Customer. Notwithstanding the foregoing, Customer shall not,
in any event, be responsible for any taxes payable on
WORLDSPAN's net income or taxes in lieu of net income taxes,
or for charges imposed on WORLDSPAN for the privilege of doing
business.
4. Termination of Agreement.
Either party may terminate this Agreement in its sole discretion
by providing the other party with one day advance written notice.
Should Customer terminate this Agreement, Customer will have no
further obligation to WORLDSPAN under this Agreement except for
payment for work already performed.
5. Confidentiality.
Each of the parties shall ensure that any Confidential Information
which it may become aware of or use during the performance of this
Agreement is treated by it in strictest confidence, and is not
disclosed to third parties or used except as expressly permitted
by this Agreement. 'Confidential Information" shall mean
information that is proprietary and confidential to the party
disclosing such information including, but not limited to,
software, specifications, customer information, scripting code,
<PAGE>
business plans, financial information, and other information of a
sensitive or confidential nature whether oral or written, except
(a) information known to the receiving party prior to disclosure
by the disclosing party; (b) information which is widely known to
the public in the relevant industry or trade; or (c) information
which is developed by the receiving party independent of any
Confidential Information provided by the disclosing party. Each
party will treat the other party's Confidential Information with
at least the same concern and protective measures accorded any of
its own trade secrets and confidential information.
6. License.
Title and full and complete ownership rights to all WORLDSPAN
owned or developed software including but not limited to the
Scripts, shall remain with WORLDSPAN. Customer understands and
agrees that WORLDSPAN's owned or developed software is WORLDSPAN's
trade secret, proprietary information, and confidential
information whether any portion thereof is or may be validly
copyrighted or patented. Any software provided to Customer is
provided by license only and such license is non-exclusive, non
transferable and limited to the right to use such software. Under
no circumstances may a Script be copied for, duplicated for,
provided to, or sold to a third party including but not limited to
any member of an agency consortium. Customers license shall
include the right for Customer to modify the Scripts as needed.
7. Indemnification.
A. Each party shall indemnify, defend and hold harmless the
other party, its directors, affiliates, partners, officers,
employees and agents, from and against all liabilities,
damages and expenses, and claims for damages, suits,
proceedings, recoveries, judgments or executions (including
but not limited to litigation costs, expenses, and
reasonable attorneys' fees) arising out of or in connection
with any claim that the use of the indemnifying party's
system or data (including, without limitation, software) by
the other party infringes any third party patent, copyright,
trademark or other property right.
B. Each party shall indemnify, defend and hold harmless the
other party, its directors, affiliates, partners, officers,
employees and agents from and against all liabilities,
damages and expenses, and claims for damages, suits,
proceedings, recoveries, judgments or executions (including
but not limited to litigation costs, expenses, and
reasonable attorneys' fees) which may be suffered by,
accrued against, charged to or recoverable from the other
party, its past and present directors, affiliates,
partners, -officers, employees or agents by reason of or in
connection with the party's performance or failure to
perform, or improper performance of any of the party's
obligations under this Agreement.
3. Disclaimer of Warranties.
<PAGE>
THIS IS A SERVICE AGREEMENT. THERE ARE NO WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
9. Notice
All notices, requests, demands or other communications hereunder
shall be in writing, hand delivered, sent by first class mail,
overnight mail, facsimile or teletype and shall be deemed to have
been given when received at the following addresses:
If to WORLDSPAN:
WORLDSPAN, L.P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Facsimile: (404) 563-7018
ATTN: Supervisor - Customer Service Programming
If to Customer:
Corporate Travel Link_ Incorporated
P.O. Box 2039
Newark. NJ 07114
Facsimile: (201) 763-4612
ATTN: Joseph Cutrona
Any notice provided by facsimile or teletype which is received
after 4:00 p.m. local time shall be deemed received the following
business day. A party may change its addresses for notice on not
less than ten (1 0) days' prior written notice to the other party.
10. General Provisions.
A. Nothing in this Agreement @is intended or shall be construed
to create or establish an agency, partnership, or joint
venture relationship between the parties.
B. The captions in this Agreement are for convenience only and
in no way define, limit, or enlarge the scope of this
Agreement or any of the provisions therein. Capitalized
terms shall have the meanings assigned in this Agreement.
C. No waiver by either party of any provision or any breach of
this Agreement constitutes a waiver of any other provision
or breach of this Agreement and no waiver shall be effective
unless made in writing. The right of either party to
require strict performance and observance of any obligations
hereunder shall not be affected in any way by any previous
waiver, forbearance or course of dealing.
D. Except for Customer's obligation to make payments
hereunder, neither party will be deemed in default of this
Agreement as a result of a delay in performance or failure
to perform its obligations caused by acts of God or
<PAGE>
governmental authority, strikes or labor disputes, fire,
acts of war, failure of third party suppliers, or for any
other cause beyond the control of that party.
E. Customer shall not sell, assign, license, sub-license,
franchise or otherwise convey in whole or in part to any
third party this Agreement or the services provided
hereunder without the prior written consent of WORLDSPAN.
F. This is a non-exclusive agreement. Similar agreements may
be entered into by either party with any other person.
G. This Agreement shall be governed by, construed, interpreted
and enforced according to the laws of the State of Georgia
and of the United States of America, without regard to
principles of conflict of laws and rules. Each party
hereby consents to the non-exclusive jurisdiction of the
courts of the State of Georgia and United States Federal
Courts located in Georgia to resolve any dispute arising
out of this Agreement, and waives any objection relating to
improper venue or forum nonconveniens to the conduct of any
proceeding in any such court.
H. In the event that any material provision of this Agreement
is determined to be invalid, unenforceable or illegal, then
such provision shall be deemed to be superseded and the
Agreement modified with a provision which most nearly
corresponds to the intent of the parties and is valid,
enforceable and legal.
1. This Agreement constitutes the final and complete
understanding and agreement between the parties concerning
the subject matter hereof. Any prior agreements,
understandings negotiations or communications written or
otherwise concerning the subject matter hereof are deemed
superseded by this Agreement. This Agreement may be
modified only by a further written agreement executed by an
authorized representative of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed their undersigned duly authorized
representations of the day and year first written above.
CUSTOMER: WORLDSPAN, L.P.
Corporate Travel Link,
Incorporated
(Company Legal Name) By:___________________
Keith Anderson
Corporate Travel Link, Director - Training and
Incorporated Accounting
(Doing Business As) Products Support
By: Joseph Cutrona
President
<PAGE>
EXHIBIT A
DESCRIPTION OF CONSULTING SERVICES
Consulting Services to be provided:
New Script Writer Training
Current Scripting Code Review
Refresher Workshop on
x Pre-Script Writing Services Consultation
General Consultation on
Maintenance on a Customized Script
Additional Comments:
Scripting consultation is necessary to obtain specifications
from Customer required to write the Direct Sell Booking
Script. The time estimated to obtain this information and
write the script is two weeks. The script fee being charged
is based on a two week project. Scripting Consultation
covered under this Agreement includes Scripting Consultation
required to write said script that extends the script
development time beyond two weeks.
<PAGE>
EXHIBIT 10.9
SCRIPT SERVICES AGREEMENT
THIS Script Services Agreement ("Agreement") is made this 21st day of
June, 1995, by and
between WORLDSPAN, L.P., a Delaware limited partnership ("WORLDSPAN"),
300 Galleria
Parkway, N.W., Atlanta, Georgia 30339 and Corporate Travel Link, Incorporated
located at 18
Village Green Ct., South Orange, NJ 07079 ("Customer").
W I T N E S S E T H:
WHEREAS, WORLDSPAN is a computer reservation system ("CRS") vendor
providing
access to its WORLDSPAN System to travel agencies and others in the travel
industry;
WHEREAS, Customer has arranged with WORLDSPAN for the use of
WORLDSPAN's
CRS, equipment and products; and
WHEREAS, Customer desires to retain WORLDSPAN to write one or more
software
programs (hereinafter referred to as the "Scripts") that may be used with
WORLDSPAN's Scripting
product, used by Customer in conjunction with the WORLDSPAN CRS.
NOW, THEREFORE, it is agreed:
1. Scripts to be provided by WORLDSPAN.
WORLDSPAN shall prepare and provide to Customer the Scripts as outlined in
Exhibit A attached
hereto and incorporated herein. WORLDSPAN shall create and provide the
Scripts to Customer
pursuant to this Agreement. Preparation of the Scripts by WORLDSPAN may be
carried out at
WORLDSPAN's facilities or at Customer's offices, provided that the completed
Scripts shall be
provided to Customer at the address set forth above.
2. Access.
Customer agrees to make available to WORLDSPAN reasonable access to Customer's
equipment
and staff, and provide such other assistance as shall be reasonably necessary
to permit
WORLDSPAN to provide the Scripts according to this Agreement, including but
not limited to
access to a WORLDSPAN Scripting workstation and assistance from a Customer
designee familiar
with the design specifications and host functionality of the proposed Script
project.
3. Fees.
In consideration of the services provided by WORLDSPAN hereunder and the
license to the Scripts,
Customer shall pay WORLDSPAN a fee of three thousand dollars ($3,000.00).
Fees shall be paid
by Customer within thirty (30) days of the date of invoice. WORLDSPAN may
impose a late
payment fee at the rate of one percent (1%) per month for any amount that has
not been received
-1-
<PAGE>
within thirty (30) days after the date of such invoice. In addition to any
other charges set forth
herein, Customer shall pay to WORLDSPAN or reimburse WORLDSPAN, as appropriate,
for all
sales, use, excise, property, or other similar taxes now or hereafter imposed by
any federal, state or
local taxing authority on amounts paid to WORLDSPAN by Customer.
Notwithstanding the
foregoing, Customer shall not, in any event, be responsible for any taxes
payable on
WORLDSPAN's net income or taxes in lieu of net income taxes, or for charges
imposed on
WORLDSPAN for the privilege of doing business.
4. Termination of Agreement.
Either party may terminate this Agreement in its sole discretion by providing
the other party with
one day advance written notice. Should Customer terminate this Agreement,
Customer will be
obligated to pay WORLDSPAN the entire fee identified in Section 3 above.
Should WORLDSPAN
terminate this Agreement, Customer will not be obligated to pay WORLDSPAN
any of the fee
identified in Section 3 above.
5. Confidentiality.
Each of the parties shall ensure that any Confidential Information which it
may become aware of or
use during the performance of this Agreement is treated by it in strictest
confidence, and is not
disclosed to third parties or used except as expressly permitted by this
Agreement. "Confidential
Information" shall mean information that is proprietary and confidential to
the party disclosing such
information including, but not limited to, software, specifications, customer
information, scripting
code, business plans, financial information, and other information of a
sensitive or confidential
nature whether oral or written, except (a) information known to the receiving
party prior to
disclosure by the disclosing party; (b) information which is widely known to
the public in the
relevant industry or trade; or (c) information which is developed by the
receiving party independent
of any Confidential Information provided by the disclosing party. Each party
will treat the other
party's Confidential Information with at least the same concern and protective
measures accorded
any of its own trade secrets and confidential information.
6. License.
Title and full and complete ownership rights to all WORLDSPAN owned or
developed
software
including but not limited to the Scripts, shall remain with WORLDSPAN.
Customer understands
and agrees that WORLDSPAN's owned or developed software is WORLDSPAN's trade
secret,
proprietary information, and confidential information whether any portion
thereof is or may be
validly copyrighted or patented. Any software provided to Customer is provided
by license only and
such license is non-exclusive, non-transferable and limited to the right to use
such software. Under
no circumstances may a Script be copied for, duplicated for, provided to, or
sold to any third party
including but not limited to any member of an agency consortium. Customer's
license shall include
the right for Customer to modify the Scripts as needed.
7. Limited Warranty.
WORLDSPAN makes no representation or warranty with regard to the accuracy or
completeness
of the Scripts or that the Scripts shall be suitable for Customer for all
purposes. WORLDSPAN
-2-
<PAGE>
warrants that the Scripts shall operate substantially according to the
design specifications outlined
in Exhibit A for a period of thirty (30) days following delivery of the
Scripts to Customer. In the
event of any breach of the foregoing warranty, Customer's sole remedy, and
WORLDSPAN's sole
obligation, shall be for WORLDSPAN to correct any defective Script so that
it shall operate
substantially according to the design specifications outlined in Exhibit A.
8. Indemnification.
A. Each party shall indemnify, defend and hold harmless the
other party, its directors,
affiliates, partners, officers, employees and agents, from
and against all liabilities,
damages and expenses, and claims for damages, suits,
proceedings, recoveries,
judgments or executions (including but not limited to
litigation costs, expenses, and
reasonable attorneys' fees) arising out of or in conjunction
with any claim that the use
of the indemnifying party's system or data (including,
without
limitation, software)
by the other party infringes any third party patent,
copyright, trademark or other
property right.
B. Each party shall indemnify, defend and hold harmless the
other party, its directors,
affiliates, partners, officers, employees and agents from
and against all liabilities,
damages and expenses, and claims for damages, suits,
proceedings, recoveries,
judgments or executions (including but not limited to
litigation costs, expenses, and
reasonable attorneys' fees) which may be suffered by,
accrued against, charged to or
recoverable from the other party, its past and present
directors, affiliates, partners,
officers, employees or agents by reason of or in
connection with the party's
performance or failure to perform, or improper
performance of any of the party's
obligations under this Agreement.
9. Disclaimer.
OTHER THAN THE WARRANTIES AND REMEDIES SET FORTH IMMEDIATELY ABOVE,
WORLDSPAN DISCLAIMS AND CUSTOMER HEREBY WAIVES ALL WARRANTIES,
EXPRESSED OR IMPLIED, ORAL OR WRITTEN, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
OR INTENDED USE, RELATING TO THE SCRIPTS OR SERVICES PROVIDED BY
WORLDSPAN HEREUNDER. WORLDSPAN SHALL NOT BE LIABLE TO CUSTOMER OR
TO ANYONE ELSE FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
SPECIAL DAMAGES, REGARDLESS OF WHETHER CUSTOMER'S CLAIM IS BASED ON
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE. WORLDSPAN'S TOTAL
LIABILITY TO CUSTOMER OR ANY THIRD PARTY SHALL NOT EXCEED THE AMOUNT
PAID BY CUSTOMER TO WORLDSPAN PURSUANT TO THIS AGREEMENT.
10. Notice.
All notices, requests, demands or other communications hereunder shall be in
writing, hand
delivered, sent by first class mail, overnight mail, facsimile or teletype and
shall be deemed to have
been given when received at the following addresses:
-3-
<PAGE>
If to WORLDSPAN:
WORLDSPAN, L.P.
300 Galleria Parkway, N.W.
Atlanta, Georgia 30339
U.S.A.
Facsimile: (404) 563-7018
ATTN: Supervisor - Customer Service Programming
If to Customer:
Corporate Travel Link, Incorporated
P.O. Box 2039
Newark, NJ 07114
Facsimile: (201) 763-4612
ATTN: Joseph Cutrona
Any notice provided by facsimile or teletype which is received after 4:00 p.m.
local time shall be
deemed received the following business day. A party may change its addresses
for notice on not less
than ten (10) days' prior written notice to the other party.
11. General Provisions.
A. Nothing in this Agreement is intended or shall be construed to
create or establish an
agency, partnership, or joint venture relationship between the
parties.
B. The captions in this Agreement are for convenience only and
in no way define, limit,
or enlarge the scope of this Agreement or any of the
provisions therein. Capitalized
terms shall have the meanings assigned in this Agreement.
C. No waiver by either party of any provision or any breach of
this Agreement
constitutes a waiver of any other provision or breach of this
Agreement and no
waiver shall be effective unless made in writing. The right
of either party to require
strict performance and observance of any obligations hereunder
shall not be affected
in any way by any previous waiver, forbearance or course of
dealing.
D. Except for customer's obligation to make payments hereunder,
neither party will be
deemed in default of this Agreement as a result of a delay in
performance or failure
to perform its obligations caused by acts of God or
governmental authority, strikes
or labor disputes, fire, acts of war, failure of third
party suppliers, or for any other
cause beyond the control of that party.
E. Customer shall not sell, assign, license, sub-license,
franchise or otherwise convey
in whole or in part to any third party this Agreement or
the services provided
hereunder without the prior written consent of WORLDSPAN.
-4-
<PAGE>
F. This is a non-exclusive agreement. Similar agreements may be
entered into by either
party with any other person.
G. This Agreement shall be governed by, construed, interpreted
and enforced according
to the laws of the State of Georgia and of the United States
of America, without
regard to principles of conflict of laws and rules. Each
party hereby consents to the
non-exclusive jurisdiction of the courts of the State of
Georgia and United States
Federal Courts located in Georgia to resolve any dispute
arising out of this
Agreement, and waives any objection relating to improper
venue or forum
nonconveniens to the conduct of any proceeding in any such
court.
H. In the event that any material provision of this Agreement
is determined to be
invalid, unenforceable or illegal, then such provision shall
be deemed to be
superseded and the Agreement modified with a provision which
most nearly
corresponds to the intent of the parties and is valid,
enforceable and legal.
I. This Agreement constitutes the final and complete
understanding and agreement
between the parties concerning the subject matter hereof.
Any prior arrangements,
understanding negotiations or communications written or
otherwise concerning the
subject matter hereof are deemed superseded by this
Agreement.
this Agreement
may be modified only by a further written agreement executed
by an authorized
representative of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by
their undersigned duly authorized representatives as of the day and year first
written above.
CUSTOMER: WORLDSPAN, L.P.
Corporate Travel Link, Incorporated
(Customer Legal Name) By:
Keith Anderson
Corporate Travel Link, Incorporated Director - Training and Accounting
(Doing Business As) Products Support
By:
(Signature)
Joseph Cutrona
(Print Name)
Title: President
-5-
<PAGE>
-6-
<PAGE>
EXHIBIT 10.10
GALILEO CONTRACT NO. 33566
GALILEOR SERVICES DISPLAY
AND RESERVATIONS AGREEMENT
This Agreement made and entered into as of
this 28th day of August, 1995, between GALILEO
INTERNATIONAL PARTNERSHIP, a Delaware general
partnership, whose principal place of business
is located at 9700 West Higgins Road,
Rosemont, Illinois 60018 U.S.A. ("Galileo")
and CORPORATE TRAVEL LINK, INC., a __________
corporation whose mailing address is 35
Pershing Avenue, Newark, New Jersey 07114
("Vendor").
W I T N E S S E T H:
WHEREAS, Galileo owns and markets its computerized reservations and
ticketing and other services ("Galileo Services"); and
WHEREAS, Vendor desires to participate in Galileo Services for
purposes of facilitating the reservations for Vendor's limousine
services through Galileo Services, to selected GTPs who have
contracted with Vendor to book Vendor's limousine services;
NOW, THEREFORE, in consideration of the premises and the mutual
obligations hereinafter set forth, Galileo and Vendor hereby agree
as follows:
1. DEFINITIONS
For the purpose of this Agreement and its attachments, the
following words and terms shall have the following meanings:
A. "Ancillary Services" means limited access to Galileo
Services by Vendor solely for the purposes of (i)
facilitating the reservations and confirmations for,
Vendor's travel-related services, and (ii) maintaining
the Data Base regarding Vendor's travel-related services.
B. "Confirmation Number" means the Vendor-assigned TIS
reservation number for an individual TIS reservation.
C. "Data Base" means the collection if TIS information stored
in Galileo Services necessary to facilitate Vendor's
travel-related services.
<PAGE>
D. "Direct Link" means an Galileo Services communications
capability which, when a transaction is being made for
Vendor's TIS services by a GTP through Galileo Services,
simultaneously transmits the transaction data to Vendor's
Reservation Center with confirmation or response by
Vendor required within the time period specified on
Attachment A hereto.
E. "Galileo Services" or "Galileo" means Galileo's
computerized reservations and ticketing service and other
services. For purposes of this Agreement, Galileo
Services may include services of Galileo, ApolloR and any
other computerized reservation system or authorized agent
thereof with whom Galileo has an agreement to distribute
such services or similar service ("Related CRS"). Said
parties shall not be considered third parties under this
Agreement.
F. "Galileo Travel Professional" or "GTP" means any
authorized user of Galileo Services or any portion
thereof.
G. "Gross Reservations" means all Vendor TIS transactions
booked through Galileo Services by GTPs which are
accepted and confirmed by Vendor.
H. "Net Reservations" mean Gross Reservations, including no-
shows and cancellations outside of Galileo Services,
minus duplications and cancellations processed through
Galileo Services.
I. "Reservation Center" means the facility being currently
operated by Vendor from which Vendor transmits its
services information and confirms reservations for its
services through Galileo Services, or such other
centralized facility as shall be designated by Vendor
from time to time during the term of this Agreement.
J. "Travel-related information Services" or "TIS" means
Vendor's services of compiling and describing the
existence of, and accepting with confirmation
reservations for, travel-related amenities, as set forth
on Attachment A hereto, the Data Base for which is
provided to selected GTPs through Galileo Services by
Vendor.
2. RESPONSIBILITIES OF VENDOR
A. Vendor's use of Ancillary Services shall be limited to
transmitting the reservations to the Reservation Center
and transmitting confirmations of bookings to GTPs
through Galileo Services.
B. (i) Vendor shall arrange for processing of all GTPs'
reservations message activity hereunder and shall
assign a Confirmation Number to each reservation
message as soon as the reservation is accepted.
After receipt, Vendor shall accept or reject each
reservation for TIS services within the time period
specified on Attachment A, excluding non-business
days. If Vendor shows product available, then
Vendor's failure to accept or reject within such
period shall create a confirmed reservation.
(ii) In the event a GTP reservation is accepted and
subsequently, for whatever reason, Vendor cannot
accommodate the customer or customers of the GTP,
Vendor agrees to secure a suitable alternate or make
other arrangements, but in no case at additional
cost to Galileo or any customer.
C. Vendor shall be responsible for all of its costs
associated with the advertising, promotion and marketing
of the availability of its TIS service to others,
including GTPs. Vendor may use the Galileo service marks
"Galileo" and "Apollo" in promotional materials, provided
that Galileo's written approval for each such use is
first obtained and Vendor complies with any and all
conditions Galileo may impose to protect the use of
Galileo's service marks. Vendor must state in all such
materials that "'Galileo' and 'Apollo'" are registered
trademarks or service marks of Galileo International.
D. Vendor is solely responsible for processing and
responding to questions and correspondence from GTPs,
consumers and others regarding Vendor's services provided
pursuant to this Agreement.
E. Vendor shall make available to Galileo the same
improvements, enhancements or additions to its TIS
services offered by Vendor to other end users of other
computerized reservations systems.
F. If Vendor participates in two or more computerized
reservations systems by offering its TIS services, then
Vendor agrees not to recommend to others any other
systems over Galileo Services and it shall not disparage
Galileo Services in any way.
3. RESPONSIBILITIES OF GALILEO
A. During the term of and in accordance with this Agreement,
Galileo shall store Vendor's TIS Data Base in Galileo
Services and transmit to the Reservation Center GTPs
bookings for TIS.
B. Galileo shall communicate procedures to GTPs which allow
them to process requests for Vendor's services through
Galileo Services. When a GTP inputs a booking message
into Galileo Services for Vendor's TIS services, Galileo
shall promptly transmit such messages to the Reservation
Center through Direct Link.
<PAGE>
C. Galileo shall inform GTPs of Vendor's services available
under this Agreement; however; Galileo shall have no
liability of any kind whatsoever to any party as a result
of or in any way associated with the contents or accuracy
of the Data Base provided by Vendor through Galileo
Services.
D. Galileo reserves the right to discontinue booking and
display of information for individual Vendor services
which, in Galileo's reasonable judgment, fail to conform
to acceptable standards of practice and service or to the
terms of this Agreement; provided, however, Galileo shall
give Vendor thirty (30) days prior written notice of
Galileo's intention to discontinue booking and display of
data applicable to such services in order that Vendor may
remedy such defects in said standards. notwithstanding
the provisions of the previous sentence, Galileo reserves
the right, upon notifying Vendor, to delete immediately
any subject matter which it reasonably considers to be
inappropriate, misleading of defamatory.
E. Except for those duties expressly assumed herein, Galileo
assumes no responsibility for any other duties in
connection with Vendor's services, including without
limitation, providing written confirmations of
reservations, confirmation number call-backs, answering
complaints or any other form of customer follow-up or
contact.
F. Galileo may make available to Vendor the same
improvements or additions to Ancillary Services offered
in writing by Galileo to other Vendors of those services
set forth on Attachment A, provided the term and
conditions are mutually acceptable to Galileo and Vendor.
4. FEES AND PAYMENTS
A. Vendor agrees to pay for services covered by this
Agreement as shown under the fee schedule specified in
Attachment A.
B. Galileo reserves the right to increase or decrease the
charge for any service provided pursuant to this
Agreement upon thirty (30) days prior written notice to
Vendor. Among other things, this includes the right to
introduce charges for existing or new services provided
pursuant to this Agreement and the right to charge the
method by which charges are calculated or assessed.
5. TERM
This Agreement shall commence on 9-15-95 (the "Commencement
Date") and, subject to the provisions of this Article, shall
continue in full force and effect for an initial period of
twenty-four (24) months from the Commencement Date.
Thereafter, this Agreement shall continue in full force and
effect, unless and until terminated by any party by written
notice to the other party at least thirty (30) days in advance
of termination. Such a termination may take effect no earlier
than twenty-four (24) months from the Commencement Date.
6. PROMOTION, ADVERTISING AND PUBLICITY
Galileo and Vendor, from time to time, may promote and
advertise the TIS services provided for under this Agreement
in accordance with programs developed in cooperation with each
other. Promotions under this Agreement relating to Vendor and
its services, which include, but are not limited to, the use
of Vendor's trademarks, service marks, or logos, shall be
subject to prior written approval of vendor. Promotions under
this Agreement relating to Galileo and its services, which
include, but are not limited to, the use of Galileo's
trademarks, service marks, or logos, shall be made only upon
written approval of Galileo.
7. SUBSCRIBER LISTING
Vendor agrees that any GTP listing which may be provided to
Vendor, at Galileo's discretion and upon the payment of its
prevailing rates, is proprietary to and is the trade secret of
Galileo, and Vendor shall treat such listing as confidential.
Any such listing is deemed to be confidential information
subject to the provisions of Article 14. Vendor shall permit
only those of its officers, directors, agents and employees
with a need to know to have access to the listing in the
performance of their duties under this Agreement, and to take
all reasonable measures necessary to ensure that its officers,
directors, agents and employees are informed of and comply
with these confidentiality requirements.
8. ENHANCEMENTS OR MODIFICATIONS OF SERVICES OF GALILEO SERVICES
OR FUNCTIONS
A. Galileo retains the right to enhance or modify Galileo
Services at Galileo's discretion during the term of this
Agreement. Any enhancement or modification of Galileo
Services may have offered by Galileo to Vendor at any
time after acceptance of this Agreement. Any such
enhancement or modification may be provided at Galileo's
sole discretion as available, pursuant to a written
supplement to this Agreement and subject to charges,
terms and conditions mutually acceptable to Galileo and
Vendor.
B. At any time during the term of this Agreement, Galileo
may at its discretion offer to Vendor computerized
functions in addition to Galileo Services. Any such
additional function may be provided at Galileo's sole
discretion as available, pursuant to a written Agreement
and subject to charges, terms and conditions mutually
acceptable to Galileo and Vendor.
9. TAXES AND FEES
A. In addition to any other charges or sums payable to
Galileo under this Agreement, Vendor shall pay when due,
or, at Galileo's election, reimburse and indemnify and
hold Galileo and its owners harmless from and against,
all sales, use, excise, franchise, withholding, real
property, and other taxes and any and all domestic and
foreign duties or import, export or license fees,
howsoever designated (together with any related interest
or penalties not arising from fault on the part of
Galileo), now or hereafter imposed by any local or
foreign taxing authority, or governmental agency or other
similar bodies arising out of or in connection with this
Agreement. Vendor shall reimburse Galileo for all such
taxes, fees and charges within thirty (30) days of
receipt of Galileo's invoice therefor. Notwithstanding
the foregoing, Vendor shall not be responsible for any
taxes payable or based on Galileo's net income.
B. Notwithstanding Article 9.A above, unless otherwise
agreed in writing in advance by the parties hereto,
Galileo shall be responsible for the filing of all
personal property tax returns and shall pay all taxes
indicated thereon. Vendor shall reimburse Galileo for
all such taxes, fees and charges within thirty (30) days
of receipt of Galileo's invoice therefor.
C. Upon the request of Galileo, Vendor shall provide
reasonable assistance to Galileo in the filing of any
documents or the making of any statement in connection
with the recovery of any taxes referred to in this
Article.
D. Vendor shall reimburse Galileo upon demand for all
expenses (including without limitation all costs,
expenses, losses, legal and accountant's fees and
disbursements, penalties and interest) incurred by
Galileo in making payment, protesting payment or
endeavoring to obtain refund of any such taxes, fees or
other charges.
10. TITLE
A. Title and full and complete ownership rights to all
Galileo-owned or developed software contained in Galileo
Services used in the performance of this Agreement shall
remain with Galileo. Vendor understands and agrees that
such software constitutes trade secrets and Galileo's
proprietary information whether any portion thereof is or
<PAGE>
may be validly copyrighted or patented. In addition,
any data processing documentation, supplied to Vendor in
any form by Galileo, with respect to the operation of
Galileo Services, and any and all copies thereof, are for
the exclusive use of Vendor and shall not be disclosed or
made available to any other person, firm, corporation or
governmental entity in any form or manner whatsoever,
except as provided in Article 14. Vendor expressly
acknowledges and agrees that, notwithstanding anything to
the contrary herein, all PNR, passenger, TIS information,
and other data and information entered into Galileo
Services and the Data Base is owned by Galileo and
Galileo has sole discretion concerning such information.
B. Title and full and complete ownership rights to all
Vendor-owned information provided to Galileo by Vendor
hereunder shall remain with Vendor. Such information may
be disclosed or made available to GTPs, other travel
agents and the general public solely to facilitate the
display of Vendor's services as provided hereunder, and
may not be disclosed or made available, in any other form
or manner whatsoever, to any other person, firm,
corporation or governmental agency.
11. NON-EXCLUSIVITY
Vendor and Galileo understand and agree that this is a non-
exclusive Agreement and that similar agreements may be entered
into by either party with any other person or entity.
12. ASSIGNMENT
Neither party may assign or otherwise transfer any of tis
rights or obligations under this Agreement to any third party
without the prior written consent of the other party, except
that Galileo may assign this Agreement without Vendor's
consent to a corporate affiliate or successor of it. Any
violation of this provision shall be cause for immediate
termination of this Agreement or, at the option of the
non- assigning party, the non-assigning party may declare the
assignment of an y of the rights or obligations under the
Agreement null and void ab initio.
13. CHANGE IN OWNERSHIP
Galileo may terminate this Agreement immediately, without
liability, upon written notice, if, after the date of this
Agreement: (a) Vendor merges with or acquires control of or
a controlling interest in any third party; or (b) any third
party acquires control of or a controlling interest in Vendor.
14. CONFIDENTIALITY
A. Except in any proceeding to enforce any of the provisions
<PAGE>
of this Agreement, neither party (the "User") shall,
without the prior written consent of the other party (the
"Owner"), publicize or disclose to any third party,
either directly or indirectly.
(i) this Agreement or any of the terms or conditions of
this Agreement; or
(ii) any confidential or proprietary information or data,
either oral or written, received from and designated
as such by the Owner.
(hereinafter collectively "Confidential Information")
B. If either party is served with a subpoena or other legal
process requiring the production or disclosure of any
Confidential Information, then that party, before
complying, shall immediately notify the Owner and shall
use its best efforts to permit the Owner a reasonable
period of time to intervene and contest disclosure or
production.
C. If the User breaches this Article 14, then the owner may
terminate this Agreement immediately, upon written notice
to the User.
D. Upon termination of this Agreement, each party must
return any and all Confidential Information received from
the other party. The provisions of this Article shall
continue in force in accordance with their terms,
notwithstanding the termination of this Agreement for any
reason.
15. FORCE MAJEURE
Except for any payment obligations, neither party shall be
deemed to be in default or liable for any delays in the event
and to the extent that performance thereof is delayed or
prevented by acts of God, public enemy, war, civil disorder,
fire, flood, explosion, riot, labor disputes, work stoppage or
strike, unavailability of equipment, any act of any
governmental authority, or any other cause, whether similar or
dissimilar, beyond its control.
16. INDEPENDENT CONTRACTORS
This Agreement is not intended to and shall not be construed
to create or establish any agency, partnership or joint
venture relationship between the parties hereto.
17. TERMINATION FOR CAUSE
A. If either party (the "Defaulting Party") becomes
insolvent; if the other party (the "Insecure Party") has
evidence that the Defaulting Party is not paying its
bills when due without just cause; if the Defaulting
Party takes any step leading to its cessation as a going
concern; or if the Defaulting Party either ceases or
suspends operations for reasons other than a strike, then
the Insecure Party may immediately terminate this
Agreement on notice to the Defaulting Party unless the
Defaulting Party immediately gives adequate assurance of
the future performance of this Agreement by establishing
an irrevocable letter of credit--issued by a U.S. bank
acceptable to the insecure Party, on terms and conditions
acceptable to the Insecure Party, and in an amount
sufficient to cover all amounts potentially due from the
Defaulting Party under this Agreement--that may be drawn
upon by the Insecure Party if the Defaulting Party under
this Agreement--that may be drawn upon by the Insecure
Party if the Defaulting Party does not fulfill its
obligations under this Agreement in a timely manner.
B. If bankruptcy proceedings are commenced with respect to
either party (the "Bankrupt") and if this Agreement has
not otherwise terminated, then the other party (the
"Other Party') may suspend all further performance of
this Agreement until the Bankrupt assumes or rejects this
Agreement pursuant to Section 365 of the Bankruptcy Code
or any similar or successor provision. Any such
suspension of further performance by the Other Party
pending the Bankrupt's assumption or rejection shall not
be a breach of this Agreement and shall not affect the
Other Party's right to pursue or enforce any of its
rights under this Agreement or otherwise.
C. If either party (the "Defaulting Party") fails to observe
or perform any of its obligations under this Agreement,
and such failure continues for a period of thirty (30)
days after written notice to t he Defaulting Party by the
other party thereof (except in the case of any payments
due, where the period to cure such nonpayment shall be
five (5) days after notice), then, without prejudice to
any other rights or remedies the other party may have,
this Agreement shall terminate without further notice as
of the expiration date of such notice period.
Notwithstanding anything to the contrary herein, in the
event Vendor is the Defaulting Party, the Galileo may, at
its sole option and without prejudice to any other of its
rights or remedies, reduce or restrict provision of
services provided under the Agreement without termination
of the Agreement.
18. NON-WAIVER, POST-TERMINATION RIGHTS
The right of either party to require strict performance and
observance of any obligations under this Agreement shall not
be affected in any way by any previous waiver, forbearance or
course of dealing. Exercise by either party of its right to
terminate under this Agreement shall not affect or impair its
right to bring suit for any default or breach of this
Agreement. All obligations of each party that have accrued
before termination or that are of a continuing nature shall
survive termination.
19. INVALIDITY, SEVERABILITY
In the event that any material provision in this Agreement is
or is about to be prohibited or declared unenforceable in any
jurisdiction, or becomes impractical or uneconomical to
perform as a result of any impending or actual change in any
applicable law, Galileo shall, at its option, have the right
to terminate this Agreement, or to amend, supersede, or delete
the prohibited, unenforceable, impracticable or uneconomical
provision or provisions, upon written notice to Vendor. If
any provision of this Agreement is held invalid or otherwise
unenforceable, the enforceability of the remaining provisions
shall not be impaired thereby.
20. INDEMNIFICATION
A. Vendor shall indemnify and hold harmless Galileo, its
owners officers, directors, employees, and agents from
all liabilities, damages, losses, claims, suits,
judgments, costs, and expenses, including costs and
reasonable attorneys' fees, directly or indirectly
incurred by Galileo from any claims by third parties
arising out of or in connection with Vendor's failure of
performance of its obligations under this Agreement.
B. To the extent of its obligations under Article 21,
Galileo shall indemnify and hold harmless Vendor, its
officers, directors, employees and agents from and
against any and all liabilities, damages, loses, claims,
suits, judgments, costs, and expenses, including costs
and reasonable attorneys fees, directly or indirectly
incurred by Vendor from any claims by third parties
arising out of or in connection with Galileo's failure or
performance of its obligations under this Agreement.
C. Vendor shall indemnify and hold harmless Galileo, its
owners, officers, directors, employees, and agents from
all liabilities, damages, losses, claims, suits,
judgments, costs and expenses, including costs and
reasonable attorneys' fees, directly or indirectly
incurred by galileo from any claims by third parties
arising out of or in connection with Galileo Travel
Professionals' acts or omissions in selling the services
or products of Vendor.
D. Each party shall indemnify and hold harmless the other
party, its officers, directors, employees, and agents
from all liabilities, damages, losses, claims, suits,
judgments, costs, and expenses, including costs and
reasonable attorneys' fees, directly or indirectly
incurred by the other party's products or services
supplied in connection with this Agreement.
E. If, pursuant to this Agreement, either party (the
"Provider") provides computer services to the other party
(the "User") or permits the User to use its logo, service
marks, or trademarks, then the Provider s hall indemnify
and hold harmless the User from all liabilities, damages,
losses, claims, suits, judgments, costs, and expenses,
including costs and reasonable attorneys' fees, directly
or indirectly incurred by the User arising out of or in
connection with any claim that the use of the provider's
computer services, logo, service marks, or trademarks
infringes any existing patent, copyright, trademark, or
property right.
21. REPRESENTATIONS AND WARRANTY
A. GALILEO REPRESENTS AND WARRANTS THAT:
(i) IT IS THE OWNER OR LICENSEE OF THE SOFTWARE USED IN
GALILEO SERVICES; AND
(ii) IT HAS THE RIGHT TO PROVIDE GALILEO SERVICES TO
VENDOR.
B. VENDOR'S REMEDIES FOR BREACH OF THE WARRANTIES SET FORTH
IN PARAGRAPH 21.A OF THIS AGREEMENT SHALL BE SOLELY
LIMITED TO REPLACEMENT OF THE SOFTWARE CAUSING THE BREACH
OF WARRANTY.
C. EACH PARTY HERETO REPRESENTS THAT:
(i) THE INDIVIDUAL SIGNING THIS AGREEMENT OR ANY
AMENDMENT TO THIS AGREEMENT, ON BEHALF OF VENDOR OR
GALILEO, AS THE CASE MAY BE, IS, OR AT THE MATERIAL
TIME SHALL BE, DULY AUTHORIZED TO EXECUTE THIS
AGREEMENT OR AMENDMENT ON BEHALF OF VENDOR OR
GALILEO, AS THE CASE MAY BE, AND HAS FULL POWER AND
AUTHORITY TO BIND VENDOR OR GALILEO, AS THE CASE MAY
BE, TO THE TERMS AND CONDITIONS HEREOF; AND
(ii) THIS AGREEMENT CONSTITUTES A LEGAL, VALID, AND
BINDING AGREEMENT OF VENDOR OR GALILEO, AS THE CASE
MAY BE, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.
D. THE WARRANTIES AND REMEDIES SET FORTH IN ARTICLES 21.A
AND 21.B ARE EXCLUSIVE, AND GALILEO MAKES NO OTHER
WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OR MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO GALILEO
<PAGE>
SERVICES OR SOFTWARE.
E. EXCEPT FOR A BREACH OF THE EXCLUSIVE WARRANTIES SPECIFIED
IN ARTICLE 21.A AND EXCEPT FOR THE RIGHT TO RECEIVE THE
EXCLUSIVE REMEDY SPECIFIED IN ARTICLE 21.B, VENDOR HEREBY
WAIVES AND RELEASES GALILEO FROM ANY AND ALL OTHER
OBLIGATIONS AND LIABILITIES AND ALL RIGHTS, CLAIMS AND
REMEDIES IT MAY HAVE AGAINST GALILEO, EXPRESS OR IMPLIED,
ARISING BY LAW OR OTHERWISE DUE TO ANY DEFECTS, ERRORS,
MALFUNCTIONS OR INTERRUPTIONS OF SERVICE TO GALILEO
SERVICES OR THE SOFTWARE, INCLUDING ANY LIABILITY,
OBLIGATION, RIGHT, CLAIM OR REMEDY IN TORT OR FOR LOSS OF
REVENUE OR PROFIT OR A NY OTHER DIRECT, INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES.
F. EACH PARTY ACKNOWLEDGES THAT, IN ENTERING INTO THIS
AGREEMENT, IT DOES NOT DO SO ON THE BASIS OF, AND DOES
NOT RELY ON, ANY REPRESENTATION, WARRANTY OR OTHER
PROVISION EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT.
22. EXPENSES
Vendor shall be liable for an agrees to reimburse Galileo for
all attorneys' fees and court costs and related costs incurred
by Galileo to enforce this Agreement or to seek remedies for
breach of this Agreement by Vendor.
23. GOVERNING LAW
This Agreement and all disputes arising under or in connection
with this Agreement, including actions in tort, shall be
governed by the internal laws of the State or Illinois without
regard to its conflicts of laws principles. All actions
brought to enforce or arising out of this Agreement shall be
brought in federal or state courts located within the County
of Cook, State of Illinois, Vendor hereby consenting to
personal jurisdiction and venue therein. Galileo shall be
entitled to take such steps as it may consider necessary or
desirable in order to enforce any judgment or order against
Vendor with respect to this Agreement in any jurisdiction
where Vendor trades or has assets.
24. NOTICES
All notices, requests, demands or other communications given
or required hereunder shall be in writing in the English
language and shall be sent by first class mail, registered or
certified mail, postage prepaid, or by overnight or express
mail, facsimile or telex to the relevant party at its address
as set forth below or to such other address as such party
shall designate in writing for that purpose.
If to Galileo: If to Vendor:
<PAGE>
Galileo International Corporate Travel Link, Inc.
9700 West Higgins Road 35 Pershing Avenue
Rosemont, Illinois 60018 U.S.A. Newark, New Jersey 07114
Attn: COVZL - Contract Notices Attn: __________________
Notice sent via electronic means (e.g., telex, facsimile)
shall be effective immediately if sent on a business day prior
to 5:00 p.m. local time of the recipient. All other notices
shall be effective the first business day after transmission.
25. NON-ENGLISH VERSIONS
If any non-English versions of this Agreement are created,
then in the event of a conflict between this English version
and any non-English version, this English version shall
prevail.
26. ENTIRE AGREEMENT
A. This Agreement, including Attachment A, constitutes the
entire agreement and understanding of the parties on the
subject matter hereof, and, as of the effective date,
supersedes all prior agreements, whether written or oral,
between the parties concerning the subject matter hereof,
excluding amounts due Galileo or any of its predecessors
that may have accrued under a prior agreement between the
parties. Any such prior amounts due shall be deemed an
obligation of this Agreement for which all provisions
herein shall apply.
B. This Agreement may be modified only by further written
agreement signed by all of the parties to this Agreement,
except as otherwise expressly provided herein.
IN WITNESS WHEREOF, Vendor and Galileo have executed this Agreement
as of the day and year first above written.
CORPORATE TRAVEL LINK, INC. GALILEO INTERNATIONAL
PARTNERSHIP
By ___________________________ By ____________________________
Name _Joseph Cutrona Name ____Michael G. Foliot_____
Title _President______________ Title __Sr. Vice President_____
Date __August 4, 1995_________ Date ______August 28, 1995____
<PAGE>
ATTACHMENT A GALILEO CONTRACT NO. 33566
GALILEO SERVICES DISPLAY
AND RESERVATIONS AGREEMENT
1. Travel-Related Amenities include:
Limousine/Sedan
Chauffeured Transportation
2. Vendor confirmation response period shall be three (3) hours.
- -------------------------------------------------------------------
FEE SCHEDULE
1. Vendor agrees to pay Galileo the following fees under the
terms described in the above Agreement and as st forth in this
Attachment A:
A. Monthly booking fees of $1.00 USD for each Gross
Reservation processed through Galileo Services; or
B. The following monthly minimum charges for each calendar
month after the beginning of the term of this
Agreement:
Months Minimum Charge
1 through 24 $1,000.00 USD
25 and each month $1,000.00 USD until renegotiated
thereafter between the parties
whichever calculation results in the greater amount on a
month-by-month basis.
2. Vendor shall be invoiced monthly and shall remit to Galileo
the greater amount based on the following:
A. Monthly booking fees: (booking fee as specified in
paragraph 1.A above multiplied by number of Gross
Reservations); or
B. The monthly minimum charge as noted on invoice.
All calculation to determine the amount of Vendor's monthly
invoice shall be based solely on Galileo's records.
3. All payments required under this Agreement are due within
thirty (30) days from date of invoice. Payments not made
within thirty (30) days from date of invoice shall bear
interest from the date of invoice at the rate of one and one-
half (1 1/2) percent per month compounded, or the maximum rate
permitted by law, whichever is less.
<PAGE>
EXHIBIT 10.11
Galileo Contract No. 33565
GALILEOR INTERNATIONAL
ANCILLARY SERVICES AGREEMENT
This Ancillary Services Agreement
("Agreement") is made and entered into as of
this 28th day of August, 1995, between GALILEO
INTERNATIONAL PARTNERSHIP, a Delaware general
partnership whose principal place of business
is located at 9700 West Higgins Road,
Rosemont, Illinois 60018 U.S.A. ("Galileo")
and CORPORATE TRAVEL LINK, INC., a
______________________ corporation whose
mailing address is 35 Pershing Avenue, Newark,
New Jersey 07114 ("Customer").
W I T N E S S E T H
WHEREAS, Galileo provides computerized reservations and ticketing
services and other services ("Galileo Services") and is willing to
allow Customer to have limited access to its Galileo Services; and
WHEREAS, Customer desires to have limited access to Galileo
Services for the purpose of performing certain travel-related
functions and services.
NOW, THEREFORE, in consideration of the premises and the mutual
obligations hereinafter set forth, Galileo and Customer agree as
follows:
1. DEFINITIONS
For the purposes of this Agreement, the following words and
terms shall have the following meanings:
A. "Ancillary Equipment" means all equipment, including
communications equipment, provided by Galileo which is
used in conjunction with Ancillary Services, such as
personal computer workstations, CRT sets, and
printers.
For purposes of this Agreement, the term "Ancillary
Equipment" shall include all Software provided by Galileo
which is installed on the Ancillary Equipment.
B. "Ancillary Services" means limited access to Galileo
Services for the purpose of performing certain
travel- related functions and services, but specifically
excluding ticketing services.
C. "Charges" means all amounts payable by Customer to
Galileo under this Agreement.
D. "Confidential Information" means all trade secrets,
proprietary and confidential information of Galileo, its
affiliates, subsidiaries, successors or assigns
including, without limitation, the following: (i) any
and all hardware and software; (ii) any and all
algorithms, routines, subroutines, source code,
object code, software programs, computer processing systems
and techniques employed or used by Galileo, or its
affiliates, subsidiaries, successors or assigns, and
any related items such as specifications, layouts, flow
charts, manuals, instruction books, and other like
documentation together with all data and know how,
technical or otherwise included therein; (iii) all
documents, files, reports, drawings, plans, sketches,
equipment and the like related to the business of
Galileo, or its affiliates, subsidiaries, successors
or assigns; (iv) any and all upgrades, enhancements,
improvements or modifications to the Ancillary
Services or to the foregoing; (v) all customer pricing and
marketing information of Galileo, or its affiliates,
subsidiaries, successors or assigns; and (vi) this
Agreement.
E. "Galileo Services" or "Galileo" means Galileo's
computerized reservations and ticketing service and other
services. For purposes of this Agreement, Galileo
Services may include services of Galileo, ApolloR
and the Gemini Group Limited Partnership ("Gemini") and any
other computerized reservation system or authorized agent
thereof with whom Galileo has an agreement to
distribute such services or similar service ("Related
CRS"). Said parties shall not be considered third
parties
under this Agreement.
F. "Software" means all computer software licensed by
Galileo to Customer.
G. "Transaction" means a message accessing Galileo Services
that is transmitted by Customer. For purposes of this
Agreement, "Peak Period" means the hours from 7:00 a.m.
to 7:00 p.m., Mountain Time, Monday through Friday, and
"Off Peak Period" means the remaining hours.
Any term not defined herein shall have the meaning given such term
elsewhere in the Agreement.
R "Galileo" and "Apollo" are registered service marks of Galileo
International.
2. INSTALLATION
A. Galileo shall install or cause to be installed the
Ancillary Equipment, as applicable, at each location
set forth on an Attachment A to this Agreement ("Location")
and shall provide Customer connection to Ancillary
Services. Galileo shall use its best efforts to
<PAGE>
install and connect the Ancillary Equipment at the locations
by the planned installation dates set forth on each
Attachment A.
B. Each location shall be reviewed by a Galileo
representative to determine what, if any, physical
modifications shall be required to support the
Ancillary Equipment at that location. After the site
review is completed, Galileo shall issue a
site survey for each location. The site survey shall
detail the layout of all terminals, cables, and backroom
support
Ancillary Equipment (e.g., transaction processing
units and modems). At its own cost and expense,
Customer shall implement, or cause to be
implemented, any physical modification required by
the site survey, including, without limitation, the
furnishing of electrical power, the installation of data
cables, access to telephone lines, and any inside
wiring that may be necessary for data line connectivity.
C. Customer shall not relocate any installed Ancillary
Equipment without first obtaining Galileo's written
consent. Any approved relocation must be
accomplished by Galileo or its designee at
Customer's sole cost and expense.
D. Customer represents and warrants that each location is
owned or controlled by Customer and that it has authority
to enter into this Agreement on behalf of each said
location.
3. TRAINING
A. Galileo shall provide Customer appropriate and sufficient
training in Customer's use of Ancillary Equipment and
Ancillary Services. Customer shall be responsible to
ensure that its employees complete all required training.
Galileo shall designate the time and location of and
shall bear the cost of providing a trainer and/or
materials used in such training program.
B. Only qualified personnel who have satisfactorily
completed Galileo's training program applicable to
Customer's use of Ancillary Equipment and Ancillary
Services (hereinafter "Designated Users"), and
Customer employees trained by Designated Users, shall be
permitted to use Ancillary Services and operate
Ancillary Equipment.
C. Galileo may provide training to Customer's Designated
Users for use of any major enhancements or modifications
to Ancillary Services or Ancillary Equipment and may
provide additional training at Customer's request.
Any such training shall be a Customer's expense and at a time
<PAGE>
and location designated by Galileo.
D. Galileo may, at its discretion, monitor or test the
proficiency level of Customer's employees in the use of
the Ancillary Equipment and Ancillary Services. If
Galileo determines that their proficiency levels are
insufficient for the proper use of the Ancillary
Equipment and Ancillary Services, then Customer
must arrange for its employees to undertake any
further training which Galileo determines necessary to bring
Customer's employees to the desired proficiency
level. Customer is responsible for all costs and expenses
associated with any such additional training.
E. If any training conducted pursuant to this Article 3 is
not performed on-site, Customer, not Galileo, shall bear
all living expenses of Customer's employees while
attending any of the above training programs.
4. SOFTWARE LICENSE - RESTRICTIONS
A. (i) Galileo hereby grants Customer a nonexclusive
license to use the software during the term of this
Agreement. The Software is the property of Galileo
and may not be used, in whole or in part, by
Customer on other than or with the Ancillary
Equipment set forth on the Attachment A(s) unless
otherwise agreed to by Galileo. This license
automatically terminates upon termination of this
Agreement.
(ii) Title and full ownership rights to the Software
remain with Galileo or such other party with whom
Galileo has a distributorship or licensing agreement
("Licensor"). The Software is the proprietary
information and trade secret of Galileo or its
licensor, whether or not any portion thereof is or
may be validly copyrighted or patented. Customer
shall maintain the confidential nature of the
Software and related materials which are provided
hereunder for its own internal use and protect them
as it does its own most valuable and strategic
assets and trade secrets.
B. (i) Except with prior written consent of Galileo, or as
set forth in Article 4.8(ii) hereof, Customer shall
not copy, reproduce, or duplicate the Software in
any way, nor shall it sell, lease, pledge, assign,
license, dispose of, or otherwise transfer or
encumber the Software.
(ii) Any Software provided by Galileo hereunder in
machine-readable form amy be copied, in whole or in
part, in printed or machine-readable form solely for
<PAGE>
Customer's internal use for backup and archival
purposes and may be used only in the event of
damage, destruction, or loss of the original
Software supplied. The original and all copies of
the Software, in whole or in part, remain the
property of Galileo or its licensor.
(iii) Except with the prior written consent of Galileo,
Customer shall not add to, modify, enhance, or alter
the Software. Customer shall not disassemble,
reverse assemble, reverse compile or otherwise
reverse engineer any portion of the Software.
(iv) Except with the prior written consent of Galileo,
Customer shall not provide or otherwise make
available the Software or any part thereof,
including, but not limited to, programs, diagrams,
flow charts, logic, and operating and training
manuals, to any person other than Customer's
employees, officers, or directors who require access
to the Software in the normal course of Customer's
business.
(v) Customer shall advise all persons who are permitted
to have access to the Software of the nondisclosure
provisions of this Article 4, and Customer shall
take all necessary precautions to ensure that these
persons comply with such provisions. Customer shall
be liable to Galileo for any violation by any such
person of said non-disclosure provisions.
C. Except with the prior written consent of Galileo,
Customer shall not use the Software for any
functions other than those set forth in the related
operations manuals. Galileo may revoke any such
consent by giving thirty (30) days prior written notice to
Customer.
D. Galileo provides portions of the Software pursuant to
license agreements with various third party software
providers. Certain of these providers may require
Galileo to obtain Customer's agreement to and
compliance with software sublicenses. Customer agrees to
abide by all such sublicenses and, if required, agrees to
execute any such sublicense. Customer's failure to agree to
execute or abide by a sublicense shall constitute a
breach of this Agreement and in such event Galileo
may refuse to install, or may deinstall, the Software and any
related Ancillary Equipment and seek any other remedies
provided in this Agreement.
5. THIRD PARTY-PROVIDED PRODUCTS
A. Customer shall provide Galileo sixty (60) days prior
written notice of its intent to utilize a non-
Galileo provided software application which sends
Transactions to or interfaces with Galileo Services except
where the application (i) is created using a product
provided by Galileo; or (ii) has been previously designated
by Galileo as not being incompatible with Galileo.
B. Galileo may require that customer provide Galileo
information regarding the applications, configuration,
and operation of any hardware or software that is not
provided by Galileo which interfaces either directly
or indirectly with Ancillary Services or in connected to
Ancillary Equipment ("Third Party Hardware" or
"Third Party Software"; collectively "Third Party
Products") and may require that the Third Party Product
be tested or certified by Galileo, at Customer's expense.
Furthermore, Galileo may determine that certain
terms and conditions pertaining to Customer's use of the
Third Party Products must be agreed to by Customer as
a condition of Customer's permissible use.
C. Customer shall bear sole responsibility to ensure that
all Third Party Products meet the requirements and
guidelines established by galileo and contained in
the product documentation as it may be changed from time to
time.
D. Customer is strictly prohibited from disassembling
Ancillary Equipment for any reason, including, but
not limited to, the purpose of installing Third Party
Hardware within Ancillary Equipment.
E. Galileo shall have no liability for any costs associated
with Customer's procurement or use of Third Party
Products and shall have no responsibility for
installing Third Party Products. In addition Galileo
shall have no liability whatsoever for and Customer releases
Galileo from any responsibility for (i) testing, certifying,
or assisting with the functional suitability, operation, or
compatibility of Third Party Products (unless the parties
have executed Galileo's standard product testing
agreement under which Customer agrees to pay
Galileo's then-current fees for such testing); (ii)
enhancement or modifications of Galileo Services
rendering Third Party Products incompatible with Galileo
Services; (iii) any defects, malfunctions, failure to
perform, loss, interruption, and errors of any kind by
Third Party products; or (iv) provision of support or
maintenance services of any kind for Third Party
Products. In the event of system failure following the
installation or use of Third Party Products, at
Customer's expense, Galileo shall attempt to restore or
reinstall Galileo-provided Software so long as Customer has
attempted and has been unable to restore same. Galileo
<PAGE>
shall have no obligation to restore or reinstall any of
Customer's data files or Third Party Products.
F. Customer shall (i) be liable to Galileo for any loss or
damage to Galileo Services, Ancillary Services or
Ancillary Equipment that is caused by the Third
Party Product's performance or failure to perform or by
Customer's installation, deinstallation or use of a
Third Party Product, including all costs incurred by
Galileo inn connection with the service and repair required
to restore Customer's connection to Galileo Services or
Ancillary Services; and (ii) indemnify and hold
harmless Galileo, its owners, officers, directors, agents,
and employees against and from any and all liabilities,
damages, losses, expenses, claims, demands, suits,
fines or judgments, including, but not limited to,
attorneys' fees, costs and expenses incident thereto,
which may be suffered by, accrue against, be charged to, or
be recovered from Galileo, its owners, officers,
directors, agents, or employees, by reason of any loss of,
damage to, or destruction of property, including loss of
the use thereof, or economic loss arising out of or in
connection with (a) any act, error or omission of
Customer, its officers, directors, agents, or employees in
the installation, deinstallation, or operation of a Third
Party Product; (b) any act, error, or omission of the
provider of a Third Party Product or any other third
party in the installation and operation of a Third
Party Product; and (c) any defect, malfunction, failure to
perform, and error of any kind caused or contributed
to by a Third Party Product.
G. In the event that Customer elects to utilize Third Party
Software which provides automatic transaction
capabilities, including, but not limited to, update,
query, retrieval, and download, Customer must
install a throttling mechanism to control the frequency
of Transactions transmitted through Galileo.
Customer's throttling mechanism must control such
frequency to no more than three (3) Transactions per
second per line interchange address (notwithstanding,
Galileo makes no Representation that Galileo accepts a
specified quantity of Transactions for a given time period).
Galileo may further require that Customer maintain, at
Customer's expense, a telecommunication line for such
application separate and distinct from any other
telecommunication line used in conjunction with services
provided by Galileo.
H. In the event that any Galileo-provided Software is
installed on Third Party Hardware, Customer shall
promptly remove all liens and pay all assessments,
license fees, or other charges when levied or
assessed on or against the Third Party Hardware or the
<PAGE>
ownership or use thereof.
I. Notwithstanding anything to the contrary herein, in order
to protect or maximize the operability of Galileo
Services, Galileo may direct Customer to (i)
temporarily or permanently discontinue its use of a Third
Party Product or (ii) prohibit direct or indirect
access to Ancillary Services by such Third Party Product,
and Customer must comply with such direction.
6. OPERATION OF ANCILLARY EQUIPMENT
A. To maintain an effective connection between Ancillary
Services and Ancillary Equipment and to prevent misuse of
Ancillary Services and Ancillary Equipment, Customer
agrees that Ancillary Services and Ancillary
Equipment shall be used and operated in strict accordance
with operating instructions provided by Galileo.
Prohibited uses include, but are not limited to,
nonbusiness uses, personal messages, providing services
unauthorized by this Agreement to third parties,
training others in the use of Ancillary Services, or other
uses designated by Galileo in writing as prohibited.
B. Customer may provide the Ancillary Services display only
to Customer's employees and may not provide Ancillary
Services to any other person or entity without the
written consent of Galileo. Customer expressly
acknowledges and agrees that, notwithstanding
anything to the contrary herein, all PNR, passenger and
other data and information entered into Galileo Services
is owned by Galileo.
C. Customer shall take all precautions necessary to prevent
unauthorized operation or use of Ancillary Services and
the Ancillary Equipment. Customer is liable and
responsible for any Transactions by Customer and its
employees using Ancillary Services and must ensure
that each agrees to use Ancillary Services and Ancillary
Equipment in accordance with the provisions set forth
herein. Galileo reserves the right to deny access to
Ancillary Services at an y time to any individual that
fails to comply with the provisions of this Agreement.
7. INDEMNIFICATION
A. Customer hereby agrees to indemnify and hold harmless
Galileo, its owners, officers, directors, agents, and
employees against and from any and all liabilities,
damages, losses, expenses, claims, demands, suits,
fines or judgments, including, but not limited to,
reasonable attorneys' fees, costs and expenses incident
thereto, which may be suffered by, accrue against, be
charged to, or be recovered from Galileo, its owners,
<PAGE>
officers, directors, agents, or employees, by reason
of any injuries to or deaths of persons or the loss
or, damage to, or destruction of property, including loss
of the use thereof or any other loss or claim whatsoever,
whether in contract or tort, law or equity, arising out of
or in connection with any act, failure to act, error
or omission of Customer, its officers, directors,
agents, or employees in the performance or failure of
performance of Customer's obligations under this
Agreement.
B. To the extent of Galileo's representations and warranties
under Article 12.A, Galileo hereby agrees to indemnify
and hold harmless Customer, its officers, directors,
agents, and employees against and from any and all
liabilities, damages, losses, expenses, claims,
demands, suits, fines or judgments, including, but not
limited to, reasonable attorneys' fees, costs and expenses
incident thereto, which may be suffered by, accrue against,
be charged to, or be recovered from Customer, its officers,
directors, agents, or employees, by reason of any
injuries to or deaths of persons or the loss of,
damage, to, or destruction of property, including loss of
the use thereof, arising out of or in connection with any
act, error or omission of Galileo, its owners, officers,
directors, agents, or employees in the performance
or failure of performance of Galileo's obligations
under this Agreement.
8. INSURANCE AND SECURITY INTEREST
A. Customer shall take all necessary precautions to protect
the Ancillary Equipment owned by Galileo and installed on
Customer's premises.
B. Customer hereby grants to Galileo a purchase money
security interest in any purchased Ancillary
Equipment to secure payment of the purchase price therefor,
and agrees that a copy of this Agreement may be filed as
a financing statement to protect Galileo's security
interest in such Ancillary Equipment in all jurisdictions
where the Ancillary Equipment or Customer may be located.
Upon payment in full of the purchase price for such
purchased Ancillary Equipment, Galileo shall, upon
Customer's request, take all steps necessary to
terminate its security interest in such Ancillary
Equipment.
C. (i) At its own cost, Customer shall procure and maintain
insurance, from an insurer nationally recognized and
acceptable to Galileo and on terms and conditions
acceptable to Galileo, insuring the Ancillary
Equipment against all risk of loss or damage,
including, without limitation, the risks of fire,
theft and such other risks as are customarily
insured in a standard all-risk policy. Such
insurance shall also provide the following:
(a) Full replacement value coverage for the Ancillary
Equipment, which value is stipulated to be not less
than the Insurance Value as specified on the
relevant Attachment A;
(b) An endorsement naming Galileo as a coinsured and as
a loss payee to the extent of its interest in the
Ancillary Equipment; and
(c) An endorsement requiring the insurer to give Galileo
at least thirty (30) days prior written notice of
any intended cancellation, nonrenewal, or material
change of coverage or any default in the payment of
a premium.
(ii) Prior to the installation of the Ancillary
Equipment, Customer shall cause the insurer to
provide Galileo with certificates of insurance
evidencing the insurance and endorsements specified
in Article 8.C(i) hereof.
(iii)If Customer fails to maintain or pay the premium on
the insurance required in Article 8.C(i) hereof,
then Galileo may secure equivalent insurance
coverage or pay an delinquent premium. If
Galileo elects to do so, then Galileo may, at its
option, demand that Customer immediately reimburse
Galileo to the extent of Galileo's cost of such
equivalent insurance or delinquent premium payment
plus interest at the rate of eighteen percent 918%)
per annum or the maximum interest rate allowed by law,
whichever is less, from the date of Galileo's
expenditure until the date of reimbursement to
Galileo and Customer shall immediately pay all such
amounts to Galileo.
D. (i) Notwithstanding anything stated herein to the
contrary, Customer shall be liable to Galileo for
any loss or damage to the Ancillary Equipment,
regardless of the cause thereof, occurring while
leased to Customer or while in the possession,
custody, or control of Customer.
(ii) If any Ancillary Equipment is lost, totally
destroyed, damaged beyond repair, or so damaged to
constitute a constructive total loss, then, within
sixty (60) days after such loss or damage, Customer
shall pay to Galileo an amount equal to the
replacement value of such equipment on the date of
such loss or damage less any insurance proceeds paid
to Galileo in accordance with Article 8.C hereof.
<PAGE>
9. ENTRY AND INSPECTION
Galileo or its designee shall have the right, upon reasonable
notice, to enter upon any location during Customer's business
hours for the purpose of monitoring Customer's operation of
the Ancillary Equipment or Ancillary Services, inspecting the
Ancillary Equipment, performing such repairs or maintenance of
support services as may be necessary, or removing the
Ancillary Equipment; provided, however, that Galileo shall not
during the course of such monitoring, inspection, repair, or
removal unreasonably interfere with Customer's business.
10. REPAIR AND MAINTENANCE
A. Galileo s hall provide or cause to be provided to
Customer support, repair and maintenance services
required for the Ancillary Equipment and Ancillary
Services. The support, repair and maintenance
services shall be provided during Galileo's normal business
hours and through a service organization designated by
Galileo.
B. To maintain an effective connection between the Ancillary
Equipment and Ancillary Services and to preserve the
functional integrity of the ancillary Equipment, neither
Customer nor any third party, other than a third party
designated by Galileo, shall perform or attempt to
perform maintenance, repair work, alterations,
modifications, support services or programming
of any nature whatsoever, to the Ancillary Equipment
or Ancillary Services. To obtain maintenance,
repair, or support services, Customer shall contact the
Help Desk/Galileo Technical Support Center.
Customer may, in the event of interruption in Ancillary
Services, call the Help Desk/Galileo Technical Support
Center.
C. Galileo or its designated agent shall perform
maintenance, repair, and support services for any
damage resulting from (i) accident, transportation,
neglect, or misuse; (ii) failure or variation of electrical
power; (iii) failure to properly maintain the installation
site, air conditioning, or humidity control; (iv) causes
other than ordinary use; or (v) maintenance, repair,
servicing, or modification of the Ancillary Equipment or
Ancillary Services performed or provided by anyone other
than Galileo or its designated agent. Unless the
aforesaid damages are a result of the fault or negligence
of Galileo or its designated agent, Customer shall be
responsible for all costs and expenses associated with
such maintenance, repair, and support services.
D. Notwithstanding the provisions of this Article 10,
Galileo shall have no responsibility for support,
<PAGE>
repair, and maintenance services relating to Galileo-
provided Software functionality and use thereof not
directly related to performing travel-related functions.
E. Customer shall be responsible for the support, repair,
and maintenance of Third Party Products. if repair and
maintenance is requested by Customer for Ancillary
Services or Ancillary Equipment, and Galileo or its
designated agent deems the problem to be attributed
to a Third Party Product, Galileo shall have no
obligation to perform the necessary repair and, further,
Customer may incur a service call fee.
11. ENHANCEMENTS OR MODIFICATIONS
A. Galileo retains the right to enhance or modify Ancillary
Services or Ancillary Equipment at Galileo's discretion
at any time during the term of this Agreement. Any such
enhancement or modification may be provided at Galileo's
sole discretion, subject to Galileo's charges, terms and
conditions. If Customer commences use of any such
enhancement or modification, Customer's use shall
constitute an agreement by Customer (i) to pay Galileo
the prevailing charges, if any, for such enhancement or
modification, (ii) to follow the written procedures and
instructions provided by Galileo for such enhancement or
modification; and (iii) that upon Customer's use of such
enhancement or modification this Agreement shall be
deemed to be supplemented thereby and all the terms and
provisions of this Agreement shall apply to Customer's
use of such enhancement or modification.
B. Notwithstanding anything to the contrary set forth in
Article 11.A hereof, Galileo may, at its sole discretion,
determine that certain enhancements or modifications to
Ancillary Services or Ancillary Equipment must be
accepted by Customer as a condition of Customer's
continued use of same. There shall be no additional
charge to Customer for such required modification or
enhancement. If Customer fails to accept such
required enhancement or modification in accordance with
Galileo's terms and conditions, Galileo shall have the
option of deinstalling the Ancillary Equipment or
disconnecting the Ancillary Service requiring the
enhancement or modification at the applicable
locations and providing Customer with an alternative that
does not require such required enhancement or modification,
if one exists. If such alternative does not exist, Customer
must accept such required modification or enhancement
or shall be deemed in breach of this Agreement.
12. REPRESENTATIONS AND WARRANTY
A. GALILEO REPRESENTS AND WARRANTS THAT:
<PAGE>
(i) IT IS THE OWNER OR LICENSEE OF THE SOFTWARE PROVIDED
UNDER THIS AGREEMENT;
(ii) IT HAS THE RIGHT TO PROVIDE ANCILLARY SERVICES SET
FORTH HEREIN TO THE CUSTOMER; AND
(iii)IT SHALL USE ITS BEST EFFORTS TO MAXIMIZE THE UPTIME
OF THE ANCILLARY EQUIPMENT.
B. CUSTOMER'S REMEDIES FOR BREACH OF THE WARRANTIES SET
FORTH IN ARTICLE 12.A HEREOF SHALL BE SOLELY LIMITED
TO REPAIR OR REPLACEMENT OF THE SOFTWARE, ANCILLARY
EQUIPMENT OR ANCILLARY SERVICES CAUSING THE BREACH
AND INDEMNIFICATION UNDER ARTICLE 7.5 HEREOF.
C. THE WARRANTIES AND REMEDIES SET FORTH IN ARTICLE 12.A AND
12.B HEREOF ARE EXCLUSIVE AND GALILEO MAKES NO OTHER
WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO THE SOFTWARE, ANCILLARY EQUIPMENT OR
ANCILLARY SERVICES.
D. EXCEPT FOR A BREACH OF THE EXCLUSIVE WARRANTIES SPECIFIED
IN ARTICLE 12.A HEREOF AND EXCEPT FOR THE RIGHT TO
RECEIVE THE EXCLUSIVE REMEDIES SPECIFIED IN ARTICLE
12.B HEREOF, CUSTOMER HEREBY WAIVES AND RELEASES GALILEO,
ITS OWNERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS FROM
ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES AND ALL
RIGHTS, CLAIMS AND REMEDIES OF CUSTOMER AGAINST GALILEO,
ITS OWNERS, OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS,
EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE, DUE TO
ANY DEFECTS OR INTERRUPTIONS OF SERVICE IN, OR ERRORS
(INCLUDING, WITHOUT LIMITATION, ANY ERRORS IN
RESERVATIONS AVAILABILITY RECORDS) OR MALFUNCTIONS BY
SOFTWARE, ANCILLARY EQUIPMENT, OR ANCILLARY SERVICES,
INCLUDING ALL LIABILITY, OBLIGATION, RIGHT, CLAIM, OR
REMEDY IN TORT, AND INCLUDING ALL LIABILITY, OBLIGATION,
RIGHT, CLAIM OR REMEDY FOR LOSS OF REVENUE OR PROFIT OR
ANY OTHER DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES.
13. FORCE MAJEURE
Except for any payment obligations, neither party shall be
deemed to be in default or liable for any delays in the
event and to the extent that performance thereof is delayed or
prevented by acts of God, public, enemy, war, civil
disorder, fire, flood, explosion, riot, labor disputes, work
stoppage or strike, unavailability of equipment, any act or
order of any governmental authority, or any other cause, whether
similar or dissimilar, beyond its control.
14. CHARGES
<PAGE>
A. Customer shall pay to Galileo license, lease, purchase,
installation, and service fees; taxes; and other fees as
set forth in this Agreement, Attachment A, and all other
applicable attachments to this Agreement, without setoff
or counterclaim. Monthly fees commence upon the
Ancillary Services being operational.
B. For each location as of the effective date of the
Agreement and any location added thereafter in
accordance with the Agreement, Customer shall pay Galileo
the Charges as follows:
(i) Customer shall pay Galileo an Installation Charge as
set forth on Attachment A.
(ii) Customer shall pay to Galileo monthly, in advance,
a Monthly Fixed Charge for the Ancillary Equipment,
interconnection to Ancillary Services, and
associated maintenance, repair, and support
services, as set forth on Attachment A.
C. Customer acknowledges that a change in Customer's
hardware or software configuration may result in an
adjustment to the Charges. Except for such
increases as specified in Article 14.H hereof, such
adjustments shall be by written supplement hereto.
D. Customer shall be charged in accordance with each
Attachment A hereto for: (i) the installation or
deinstallation of hardware or software; (ii) relocation
of hardware or software within the location; (iii) each
location disconnect or relocation to different premises;
(iv) hardware or software modifications, upgrades, or
enhancements; (v) excess cable required for
installation; (vi) installation or peripheral devices
requested by Customer; and (vii) similar installation and
deinstallation related expenses.
E. When applicable, Customer shall pay all SITA (Societe
International Telecommunications Aeronautiques) charges
incurred in connection with Customer's use of Ancillary
Services under this Agreement.
F. Customer further agrees to pay an overtime premium for
maintenance or repair services provided outside of normal
business hours at Customer's request. Normal business
hours are 8:00 a.m. to 5:00 p.m., local time, Monday
through Friday, except holidays observed by Galileo.
G. Invoices shall be sent to each location address, as
specified on Attachment A, unless alternate written
instructions are provided by Customer to Galileo.
All amounts payable hereunder are due within ten 910) days
after the date of invoice and shall be paid in U.S.
dollars on a U.S. bank. Any past due amounts shall
accrue interest at a rate not to exceed one and one-
half percent (1-1.5%) per month compounded or the maximum
rate permitted by law, whichever is less. The accrual of
such interest shall not affect any of Galileo's rights or
remedies under this Agreement.
H. All Charges are subject to increase by Galileo upon
thirty (30) days prior written notice, except that
Galileo may not increase such Charges by more than
twelve (12) percent in any one calendar year.
Notwithstanding the foregoing, the communications cost
elements of any of the above Charges shall be subject to
increase, at any time and without limitation, to cover any
increase in the cost thereof incurred by Galileo.
15. TAXES AND FEES
Customer covenants and agrees to pay when due or reimburse and
indemnify and hold Galileo and its owners harmless from and
against all taxes, fees and other charges of every nature
whatsoever (together with any related interest or
penalties not arising from fault on the part of Galileo), now
or hereafter imposed or assessed against Galileo, its owners or
Customer by any Federal, state, county, or local governmental
authority, upon or with respect to this Agreement or upon or
with respect to the ordering, purchase, sale, ownership,
delivery, leasing, possession, use, operation, return or
other disposition of property and services thereof or upon the
rents, receipts or earnings arising therefrom (excepting
only Federal, state and local taxes based on or measured by
the net income of Galileo). Notwithstanding the foregoing,
unless otherwise specified, Galileo shall be responsible
for the filing of all personal property tax returns and
shall pay all taxes indicated thereon, Customer shall reimburse
Galileo for all such taxes, fees and charges within ten (10)
days of receipt of Galileo's invoice therefor.
16. TERM
A. The term of this Agreement shall commence on 9/15/95 and
shall continue until terminated by either party upon
thirty (30) days prior written notice.
B. Upon termination of this Agreement, for any reason
whatsoever, Customer shall allow Galileo onto its
premises to remove, at Customer's expense, all
leased or licensed Ancillary Equipment and Galileo
Software, and Customer shall return to Galileo all
Confidential Information, including, but not limited
to, all manuals, guides, and written materials provided to
Customer and all copies of such materials, whether in
written or computer readable form.
<PAGE>
C. Those provisions of the Agreement which by their nature
and intent should survive expiration or termination of
the Agreement, including, but not limited to,
confidentiality and Software license restrictions,
shall so survive.
17. TERMINATION FOR CAUSE
A. If either party (the "Defaulting Party") becomes
insolvent; if the other party (the "Insecure Party") has
evidence that the Defaulting Party is not paying its
bills when due without just cause; if a receiver of
the Defaulting Party's assets is appointed; if the Defaulting
Party takes any step leading to its cessation as a going
concern; or if the Defaulting Party either ceases or
suspends operations for reasons other than a strike,
then the Insecure Party may immediately terminate this
Agreement on written notice to the Defaulting Party
unless the Defaulting Party immediately gives
adequate assurance of the future performance of this
Agreement by establishing an irrevocable letter of credit --
issued by a U.S. bank acceptable to the insecure Party,
on terms and conditions acceptable to the insecure Party, and
in 1an amount sufficient to cover all a mounts potentially
due from the Defaulting party under this Agreement --
amount sufficient to cover all amounts potentially
due from the Defaulting Party under this Agreement -- that
may be drawn upon by the Insecure Party if the Defaulting
Party does not fulfill its obligations under this
Agreement in a timely manner. If bankruptcy
proceedings are commenced with respect to the Defaulting
Party and if this Agreement has not otherwise terminated,
then the Insecure Party may suspend all further
performance of this Agreement until the Defaulting
Party assumes or rejects this Agreement pursuant to
Section 365 of the Bankruptcy Code or any similar or
successor provision. Any such suspension of further
performance by the Insecure Party pending the Defaulting
Party's assumption or rejection shall not be a breach of this
Agreement and shall not affect the Insecure Party's right to
pursue or enforce any of its rights under this Agreement
or otherwise.
B. If either party (the "Defaulting Party") refuses,
neglects, or fails to perform, observe or keep an of
the covenants, agreements, terms or conditions contained
herein on its part to be performed, observed and
kept, and such refusal, neglect or failure continues for
a period of thirty (30) days after written notice
(except in the case of any payments due where the period to
cure such nonpayment shall be five (5) days after notice)
to the Defaulting Party thereof, then without prejudice to
any other rights or remedies of the other party, this
Agreement shall, at the option of the non-defaulting
<PAGE>
party, terminate as of the expiration of the notice
period. Notwithstanding anything to the contrary
herein, in the event Customer is the Defaulting Party, the
Galileo may, at its sole option and without
prejudice to any other of its rights or remedies, reduce or
restrict provision or services provided under the Agreement
without termination of the Agreement.
C. The right of either party to require strict performance
and observance of any obligations under this Agreement
shall not be affected in any way by any previous waiver,
forbearance or course of dealing. Exercise by either
party of its right to terminate under this Agreement
shall not affect or impair its right to bring suit
for any default or breach of this Agreement. All obligations
of each party that have accrued before termination or
that are of a continuing nature shall survive
termination.
D. If this Agreement includes more than one location and if
Customer's default or breach relates to fewer than all
locations, then Galileo may, at its sole option, exercise
its rights under this Article to terminate this entire
Agreement or only with respect to the location(s)
involved.
18. ASSIGNMENT, MERGER, AND SALE
A. Customer shall not assign, transfer, or sublease this
Agreement or any right or obligation hereunder unless the
assignee, transferee or sublessee expressly assumes all
of the liabilities and obligations of Customer hereunder
and Customer has obtained the prior written consent of
Galileo, which shall not be unreasonably withheld. Any
purported assignments,, transfers or subleases made
without such assumption and consent shall, at
Galileo's option, be null and void ab initio.
B. If Galileo consents to the assignment, transfer or
sublease, Customer may be required to pay Galileo a
one- time transfer fee and any sublicense distribution costs
that are incurred by Galileo in connection with the
assignment of Customer's use of Software.
Customer's failure to pay these fees shall result in
the assignment being rendered null and void ab initio.
C. In the event Customer acquires or gains control of
another entity or merges with or is acquired or
becomes controlled by any person or entity not presently
owning a controlling interest in Customer, then Galileo, at
its sole option, may immediately terminate this Agreement
without any obligation or liability to Customer,
other than past due amounts.
<PAGE>
19. PUBLICITY, ADVERTISING AND PROMOTION
A. Except in any proceeding to enforce the provisions of
this Agreement or except as otherwise required by law,
neither party shall publicize or disclose to any third
party the provisions of this Agreement or any of the
Charges, terms, or conditions herein without the
prior written consent of the other party.
B. Neither party shall use the name or logo of the other in
publicity releases or advertising regarding or related to
this Agreement without securing the prior written
approval of the other party. Request for approval
shall be directed to the respective addresses set forth in
Article 22 hereof.
20. CONFIDENTIALITY
A. All Confidential Information, including all applicable
rights to patents, copyrights, trademarks, and trade
secrets inherent therein or related thereto, is and
shall remain the sole and exclusive property of Galileo or
its Licensor (as applicable).
B. Customer shall maintain the confidentiality of the
Confidential Information using the highest degree of
care. Customer shall not use, sell, transfer,
publish, disclose, display, or otherwise make available to
others, except as authorized in this Agreement, the
Confidential Information or any other material relating to
the Confidential Information at any time before or after
the termination of this Agreement nor shall Customer permit
its officers, directors, employees, agents, or
contractors to divulge the Confidential Information
or use the Confidential Information other than as authorized
in this Agreement without the prior written consent of
Galileo.
C. Customer shall ensure that each of its employees,
officers, directors, agents or contractors who has
access to the Confidential Information provided under this
Agreement is aware of this confidentiality
requirement and agrees to be bound by it. Customer shall
be liable to Galileo for any violation by any such person
of any of the provisions of this Article 20.
21. ANCILLARY EQUIPMENT
A. It is understood that: (i) all Ancillary Equipment shall
remain the sole property of Galileo; (ii) Customer shall
not remove any identifying marks from any such Ancillary
Equipment; (iii) Customer shall not subject the Ancillary
Equipment to any lien or encumbrance; and (iv) Galileo
may enter Customer's premises to remove the Ancillary
Equipment immediately upon termination of this
Agreement.
B. Customer agrees to make, execute, acknowledge and
deliver, any time or from time to time, all
documents, instruments, and assurances, including, without
limitation, financing statements under the
Uniform Commercial Code, as may be requested by Galileo
to preserve Galileo's ownership rights and title in and to
the Ancillary Equipment, and hereby authorizes Galileo,
where permitted b law, to file financing statements and
amendments thereto relating tot he Ancillary Equipment
without Customer's signature where desirable in Galileo's
judgment to preserve Galileo's ownership rights and title
in and to the Ancillary Equipment. Upon deinstallation
of the Ancillary Equipment, Galileo shall, upon
Customer's request, take all steps necessary to
terminate any Uniform Commercial Code filing made with
respect thereto.
22. NOTICES
Notices given or required hereunder shall be deemed sufficient
if sent by first class mail, postage prepaid, or any more
expedient written means to the address of Customer as
specified in the preamble of this Agreement; notices
to Galileo should be sent to:
GALILEO INTERNATIONAL
9700 WEST HIGGINS ROAD
ROSEMONT, IL 60018
ATTN: COVZL - CONTRACT NOTICES
Notices sent via electronic means (e.g., telex, facsimile)
shall be effective immediately if received on a business
day prior to 5:00 p.m. local time of the recipient. All other
notices shall be effective the first business day after
receipt.
23. GOVERNING LAW
This Agreement and any dispute arising under or in connection
with this Agreement, including any action in tort, shall be
governed by the internal laws of the State of Illinois,
without regard to its conflict of laws principles. All
actions brought to enforce or arising out of this
Agreement shall be brought in federal or state courts located
within the County of Cook, State of Illinois, the parties
hereby consenting to personal jurisdiction and venue
therein.
24. SEVERABILITY
If any provision of this Agreement is held invalid or
otherwise unenforceable, the unenforceability of the
remaining provisions shall not be impaired thereby.
25. CAPTIONS
The captions appearing in this Agreement have been inserted as
a matter of convenience and in no wa define, limit or enlarge
the scope of this Agreement or any of the provisions of this
Agreement.
26. INDEPENDENT CONTRACTORS
This Agreement is not intended to and shall not be construed
to create or establish an agency, partnership, or joint
venture relationship between the parties hereto.
27. ADDITIONAL COVENANTS
The individual signing this Agreement or any amendments to
this Agreement, on behalf of the Customer, or if more
than one, each of them, represents and warrants that:
(i) he or she is duly authorized to execute this Agreement on
behalf of Customer; (ii) he or she has full power and
authority to bind Customer to t he terms and conditions hereof;
(iii) no representations or warranties of Customer or the
undersigned, nor any statements written or oral, made or
furnished to Galileo either herein or with respect tot he
organization or business of Customer, contains any untrue
statement of a material fact or omits a material fact
necessary to make the representation, warranty, or statement not
misleading; and (iv) this Agreement constitutes a legal,
valid, and binding agreement of Customer, enforceable in
accordance with its terms. Customer shall be liable for
and agrees to reimburse Galileo for all attorneys' fees and court
costs incurred by Galileo to enforce this Agreement or to seek
remedies for breach of this Agreement by Customer.
28. ENTIRE AGREEMENT
A. The following Attachments are part of this Agreement: A.
This Agreement constitutes the entire agreement and
understanding of the parties on the subject matter
hereof and, as of the effective date, supersedes all prior
agreement, whether written or oral, between the parties
hereto concerning the subject matter hereof, excluding
amounts due Galileo which may have accrued under a prior
agreement between the parties. Any such prior amounts
due shall be deemed an obligation of this Agreement for
which all provisions herein shall apply.
B. This Agreement may be modified only by further written
amendment or supplement signed by all parties to this
Agreement.
<PAGE>
C. If any non-English interpretive version of the Agreement
is created, then, in the event of a conflict between the
English version and any non-English version, the English
version shall control.
<PAGE>
IN WITNESS WHEREOF, Customer and Galileo have executed this
Agreement as of the day and year first above written.
CUSTOMER GALILEO INTERNATIONAL PARTNERSHIP
By By
Name JOSEPH CUTRONA Name Michael G. Foliot
Title President Title Sr. Vice President
Date August 4, 1995 Date August 28, 1995
<PAGE>
EXHIBIT 10.12
WORLDSPAN CAR RENTAL ASSOCIATE
RESERVATION AGREEMENT
THIS WORLDSPAN Car Rental Associate Reservation Agreement ("Agreement")
effective as
of 22 June , 1995 between WORLDSPAN, L. P., a Delaware limited
partnership, having its
principal place of business at 300 Galleria Parkway, N.W., Atlanta, Georgia
30339
("WORLDSPAN") and Corporate Travel Link, Incorporated. ("Associate").
WORLDSPAN provides computerized reservation systems with related data
processing
facilities.
Associate owns, operates and/or represents car rental locations.
WORLDSPAN offers its computerized reservation systems and services to
travel agents and
other entities for the purpose of facilitating the transaction of travel
related business.
WORLDSPAN is prepared to provide to Associate the car rental booking
services available
through its computerized reservation systems for the booking of car
reservations at locations owned,
operated or otherwise represented by Associate.
Associate desires to participate in the WORLDSPAN systems for the
purpose of facilitating the
sale of Associate's services to travel agents and other entities.
NOW THEREFORE, in consideration of the mutual agreements hereinafter
set forth,
WORLDSPAN and Associate agree as follows:
1. DEFINITIONS
1.1 The capitalized terms used in this
Agreement and any associated supplement
or addendum to this Agreement shall have the meanings set
forth below:
ABACUS - Shall mean ABACUS Distribution Systems, PTE, Ltd.,
a CRS company
authorized to sell and service a WORLDSPAN System in IATA
Traffic Conference
3.
AccessPLUS - Shall mean supplemental services provided by
WORLDSPAN to
permit enhanced connectivity between the WORLDSPAN System
and Associate
System.
<PAGE>
1. DEFINITIONS (Cont.)
ARINC - Shall mean Aeronautical Radio, Inc.
Associate Location - Shall mean any location where cars
and other vehicles may be
rented that is owned, operated, licensed or represented by
Associate.
Associate System - Shall mean Associate's automated
reservations system.
Booking - A confirmed reservation for a car or other vehicle
to be rented at an
Associate Location, regardless of the number of days
requested or created in the
itinerary portion of the customer's passenger name record
under the control of a
WORLDSPAN User. For example, one car rental at an Associate
Location shall be
counted as one Booking. Multiple car rentals within the
same PNR constitute
multiple Bookings.
Cancellation - Shall mean only those Bookings canceled by a
WORLDSPAN User,
prior to check-in, through the WORLDSPAN System in which
the Booking was
originally made.
Confidential Information - Shall mean proprietary
information, data, drawings,
specifications, documentation, manuals, plans, and other
materials marked as
"Confidential", "Sensitive", or "Proprietary", except:
(I) information known to the
receiving party prior to disclosure; (ii) information
developed by the receiving party
independent of any confidential materials provided by the
disclosing party, or; (iii)
information which is widely known or publicly available in
the relevant trade or
industry.
CRS - Shall mean a computerized reservation system
(sometimes called a global
distribution system) as used by travel agents and other
entities that market or sell
travel related products and services. A CRS collects,
stores, processes, displays and
distributes information concerning air and ground
transportation, lodging and other
travel related goods and services and enables its users
and other users to: (I) inquire
about, reserve or otherwise confirm the availability of such
goods and services
and/or (ii) issue tickets to permit the purchase or use of
such goods and services.
GRS - Shall mean Global Reference System, a static display
contained in the
WORLDSPAN System which Associate may use to communicate
information to
WORLDSPAN Users (sometimes referred to as "Direct Reference
System" or "DRS").
<PAGE>
1. DEFINITIONS (Cont.)
IATA - Shall mean the International Air Transport Association.
Net Bookings - Shall mean the total of Bookings, minus
Cancellations, during a
given period.
PNR - Shall mean a passenger name record created in the
WORLDSPAN System.
SITA - Shall mean Societe Internationale de
Telecommunications Aeronautiques.
WORLDSPAN User - Shall mean a person or entity which
utilizes the
WORLDSPAN System, directly or indirectly, to make car
rental reservations.
WORLDSPAN System - Shall mean any CRS provided by WORLDSPAN,
regardless of the facilities employed to permit access
to such system.
2. RESPONSIBILITIES OF ASSOCIATE
A. Associate will at its own cost provide through
Associate System its car or
other vehicle reservations services and such other services
as may be mutually
agreed upon through the WORLDSPAN System in a uniform manner
to all
WORLDSPAN Users. If Associate participates in other CRS's,
Associate will
provide services and service levels to the WORLDSPAN System
and WORLDSPAN
Users which are at least equal to the services and service
levels provided to any such
other CRS and its users including, but not limited to,
communications methods and
methods of access to the Associate System, except for
methods not permitted due to
technical limitations in the WORLDSPAN System.
B. Associate shall be responsible for all costs
incurred in marketing its services
to WORLDSPAN Users, except for the initial publicity and
system briefing to such
WORLDSPAN Users which will be the responsibility of WORLDSPAN.
C. Unless otherwise specifically provided herein,
Associate may use the
facilities of ARINC, SITA or other mutually agreed upon
communication network,
to send and receive reservation information transmitted
between the WORLDSPAN
System and the Associate System. Associate shall be solely
responsible for any costs
it may incur in the use of the ARINC, SITA or other networks
or any
communications facilities and/or equipment necessary to
communicate with the
WORLDSPAN System.
2. RESPONSIBILITIES OF ASSOCIATE (Cont.)
D. Associate shall maintain, via CRT entry or other
mutually agreed upon
facility, a current, accurate availability status for car or
other vehicle rentals
maintained in the WORLDSPAN System, so the availability
status reflected in the
WORLDSPAN System will be the same as the availability
status reflected in the
Associate System. Associate agrees to honor, or cause to
be honored, all Bookings
made through the WORLDSPAN System for as long as the
availability status in the
WORLDSPAN System remains in an "open" or "sell" category.
Associate shall
<PAGE>
obtain comparable alternate rentals for customers for whom a Booking has been
made by a WORLDSPAN User and the rented vehicle is unavailable. In the event
that the cost to the customer of the comparable rental exceeds the amount
that the
customer would have paid Associate, then Associate shall promptly pay to such
customer an amount equal to the additional cost incurred by such customer in
securing the alternate rental services.
E. Associate shall, via CRT entry or as mutually agreed, create and update, as
applicable, company, location and city policy information pages in the
WORLDSPAN System. The content and format of the information contained on
these pages shall be determined by WORLDSPAN. Associate shall, at a minimum,
provide the following information with respect to its policies and information
on:
corporate and sales contacts, corporate rate policies, government rate policies,
insurance policies and driver qualification policies. Associate shall, at a
minimum,
also provide the following information with respect to its Associate Location
policies
and information on: age restrictions, collision damage waiver, credit card
information for guarantee and deposits, drop off charges, refueling
requirements,
business hours, all applicable insurance policies, makes associated with
vehicle code,
personal accident insurance, telephone
number of rental location, acceptable forms of payment, all applicable tax
information and driver's license requirements. Associate shall promptly
input this
car rental detail information and all information pertinent to their doing
business into
the WORLDSPAN System.
F. Associate will process Booking messages at a level at least equal to the
service level provided to any other CRS, and its subscribers or users, in which
Associate participates.
<PAGE>
2. RESPONSIBILITIES OF ASSOCIATE (Cont.)
G. Associate shall update all car rental and vehicle rates via CRT entry or as
mutually agreed. Associate guarantees the rate sold to a customer at the time
the
Booking is created. Associate agrees to correct any inaccurate rate included
in the
WORLDSPAN System within twenty-four (24) hours of notice of such inaccuracy.
In the event that a Booking is made on a "request" basis and when Associate's
acceptance of said Booking is subject to a rate greater than the rate advised
to the
WORLDSPAN User through the WORLDSPAN System, then Associate shall advise
the WORLDSPAN User of the rate through a special message field in the PNR or
otherwise as appropriate.
H. Associate agrees to append a confirmation number to each Booking. Such
confirmation number will be transmitted by Associate to WORLDSPAN Users as
follows:
1) If Bookings are received on a normal queue basis where
transmission is wholly within the WORLDSPAN System, the confirmation
number will be transmitted after "end transaction" within four (4) hours of
receipt of each Booking made during normal business hours, i.e., 8:30 a.m.
through 5:00 p.m. local time of Associate's offices, Monday through Friday.
Confirmation numbers for Bookings received after 5:00 p.m. or on weekends
shall be transmitted during the first four (4) business hours of the next
business day.
2) If Bookings are received via ARINC, SITA or similar third
party, where transmission is via a shared data communications network, the
confirmation number will be transmitted after "end transaction" and within
one (1) hour of receipt of each Booking. WORLDSPAN agrees that
performance of this obligation may be delayed at times when transmission
delays occur over ARINC, SITA or similar third party communication
network which delays are not within the control of Associate.
3) If Bookings are received through WORLDSPAN's
AccessPLUS via a direct and dedicated communications line or other
mutually agreed upon communications network that provides interactive
transmissions, the confirmation number will be transmitted before "end
transaction" and within seven (7) seconds of receipt of each Booking.
2. RESPONSIBILITIES OF ASSOCIATE (Cont.)
I. Associate shall be solely responsible for forwarding to rental locations
through the Associate System "sell", "request" and "cancel" messages received
from
the WORLDSPAN System. Associate shall be solely responsible for sending written
confirmation of reservations upon request for same.
J. Associate shall reasonably cooperate with WORLDSPAN to secure any
governmental approvals or exemptions necessary to put this Agreement and any and
all parts thereof into effect, and shall assist WORLDSPAN to maintain such
approvals once received.
<PAGE>
K. To permit Associate services and updated information to be provided to
WORLDSPAN Users, Associate will either: (I) lease from WORLDSPAN at
WORLDSPAN's then current monthly charges, a sufficient number of
WORLDSPAN terminals; or (ii) arrange for dial-in access to the WORLDSPAN
System through WORLDSPAN licensed software programs and access agreements;
or (iii) secure WORLDSPAN's prior written approval and certification of
Associate's
own software and/or hardware to enable Associate to access the WORLDSPAN
System.
L. Associate shall cooperate with WORLDSPAN in efforts to improve the
quantity and quality of those services provided to WORLDSPAN Users, especially
those related to the dissemination of more complete, accurate, and current data
pertaining to Associate services. Associate also agrees to assist WORLDSPAN in
expanding and maintaining information concerning Associate services in the
WORLDSPAN System, including the direct updating of Associate data by Associate
personnel through WORLDSPAN terminals and/or by other means as mutually
agreed.
M. Associate will have allocated space in GRS to communicate any reasonable
information. Associate shall, at a minimum, promptly provide basic booking
policy
and procedure information in a succinct and easily readable format. Associate
shall
be responsible for, and assumes all liability with respect to, the entry,
updating and
accuracy of this information in GRS as well as information otherwise provided by
Associate pursuant to this Agreement. Information entered into GRS
<PAGE>
2. RESPONSIBILITIES OF ASSOCIATE (Cont.)
M. (Continued)
which WORLDSPAN in its sole discretion determines to be inappropriate,
misleading, or defamatory, may be deleted by WORLDSPAN from GRS, without
liability, upon notice to Associate. Associate shall at all times comply with
WORLDSPAN's GRS keyword indexing scheme.
N. Associate warrants that it shall not knowingly cause transactions made,
initiated, derived, solicited, or prompted through the WORLDSPAN System to be
finalized in any manner outside the WORLDSPAN System.
O. Associate warrants that it has the authority to transact the Bookings on
behalf
of each Associate Location included in the WORLDSPAN System and guarantees
payment of all fees and charges due pursuant to this Agreement, regardless of
whether Associate owns, manages, controls, represents, or franchises any such
Associate Location. On behalf of Associate Locations, Associate guarantees the
performance of all Associate obligations included in this Agreement.
P. Associate agrees that it will not discriminate against or disfavor in any
manner whatsoever any WORLDSPAN User on account of that User's selection,
possession or use of the WORLDSPAN System.
Q. Associate agrees promptly to pay WORLDSPAN all amounts due pursuant
to this Agreement, and all agreements, supplements, addenda, schedules and
exhibits
now or hereafter completed pursuant to this Agreement, without deduction,
set-off,
or counterclaim.
R. The use of the WORLDSPAN international communications network is
restricted to WORLDSPAN business by various international government
regulations and agreements, and said network shall not be utilized by
Associate to
conduct any third party communications traffic. "Third party communications
traffic", for purposes of this subsection, includes the use of the WORLDSPAN
international network to communicate with others in any manner, including but
not
limited to direct message transmission or depositing of information in the
WORLDSPAN computer center for the purpose of communication with others,
which communications do not pertain to WORLDSPAN business. WORLDSPAN
shall have the right to terminate this Agreement in the event Associate
contravenes
the foregoing restrictions or WORLDSPAN is required by any governmental
authority having jurisdiction thereof to cease handling Associate's messages or
communications, and WORLDSPAN shall not be liable for any damages of any
nature whatsoever incurred by Associate due to such
2. RESPONSIBILITIES OF ASSOCIATE (Cont.)
R. (Continued)
termination and Associate hereby releases, discharges and agrees to
indemnify and save harmless WORLDSPAN, its partners, affiliates, directors,
officers, agents and employees from and against any and all claims or actions
of any
nature whatsoever arising out of or attributable to any such termination,
including
but not limited to any penalties or fines imposed upon WORLDSPAN as a result of
such third party communications traffic.
<PAGE>
3. RESPONSIBILITIES OF WORLDSPAN
A. WORLDSPAN will provide WORLDSPAN Users with displays of
Associate's car or vehicle rental locations, including car or vehicle
availability, rate
information.
B. WORLDSPAN shall include Associate's rental locations in the
WORLDSPAN System to enable responses to WORLDSPAN Users requesting
information and desiring to make Bookings on such rental cars or vehicles.
C. WORLDSPAN will identify all transactions transmitted to Associate which
were booked by WORLDSPAN Users through a unique identification code which
identifies the individual WORLDSPAN User location from which the transaction
originated. The manner of identification and identification codes used will
be as
defined by WORLDSPAN. Upon request, WORLDSPAN will provide Associate
with a list of such WORLDSPAN Users and identification codes for the limited
purposes of promoting reservations of car and vehicle rentals through the
WORLDSPAN System, to validate WORLDSPAN invoices and to facilitate
Associate's business transactions with WORLDSPAN Users.
D. Prior to the last day of each month, WORLDSPAN will supply Associate
with a report showing Bookings at each Associate Location for the preceding
month
by individual WORLDSPAN User.
E. WORLDSPAN shall provide reasonable information to Associate to
substantiate the charges to Associate pursuant to this Agreement.
F. WORLDSPAN shall maintain one or more facilities for the purpose of
responding to Associate's questions concerning the operation of, or any data
within,
the WORLDSPAN System.
<PAGE>
3. RESPONSIBILITIES OF WORLDSPAN (Cont.)
G. WORLDSPAN retains the right to enhance or modify, in whole or in part, the
WORLDSPAN System at its discretion. Any enhancement or modification of the
WORLDSPAN System will be offered to other similar participants on a non-
discriminatory basis; provided, however, that technical, equipment or human
resource limitations may make it impractical or not feasible for WORLDSPAN to
implement an enhancement or modification at the same time for all associates. In
such case, WORLDSPAN will determine the order of implementation in its sole
discretion. The foregoing shall include, but is not limited to, the right of
WORLDSPAN to migrate or include Associate, other WORLDSPAN participants
and WORLDSPAN Users to any new WORLDSPAN System. Nothing herein shall
be construed to require WORLDSPAN to develop or utilize any additional CRS.
H. WORLDSPAN will not knowingly take action (or fail to take action) to
preclude or in any way impair, other than inconsequentially, the ability of
WORLDSPAN Users to book reservations through the WORLDSPAN System.
4. SERVICE LEVEL
Associate shall participate in (check one and initial):
X a. Manual Queue or Teletype Bookings
b AccessPLUS (if Associates chooses to participate in
AccessPLUS, then Associate must execute and deliver
an AccessPLUS Addendum to this Agreement.
5. TERM
This Agreement shall become effective as of the date the Agreement is executed
on behalf
of WORLDSPAN and shall continue in full force and effect for an Initial Term
of one (1)
year and, thereafter until terminated by either party at the end of the Initial
Term or any time
thereafter upon not less than thirty (30) days prior written notice to the
other, or until
otherwise terminated pursuant to the terms of this Agreement.
<PAGE>
6. FEES
A. Associate shall pay a fee of Three Dollars and Fifty Five Cents ($3.55) per
Net Booking recorded in the WORLDSPAN System, provided that Associate shall
pay WORLDSPAN each month an amount equal to the fees for one hundred (100)
Net Bookings, regardless of the number of Net Bookings
actually recorded.
B. For the purposes of calculating the fees due
hereunder, such fees shall not
become due until the applicable rental date as recorded
in the WORLDSPAN
System.
C. WORLDSPAN shall submit monthly invoices covering
the fees earned
hereunder for that month and such invoices shall be due
and payable by Associate
within thirty (30) days of the date of each such invoice.
WORLDSPAN may impose
a late payment fee at the rate of one percent (1%) per
month for any amount more
than fifteen (15) days overdue. All payments shall be in
U.S. currency.
D. Following the expiration of the Initial Term, fees charged to Associate
pursuant to this Agreement may be increased upon not less than thirty (30) days
notice.
E. WORLDSPAN reserves the right to separately charge for any service which
it currently provides without separate charge including, but not limited to,
additional
GRS pages or future enhancements regarding credit card authorization.
The services
which Associate receives without separate charge from time
to time shall be referred
to as "Additional Services." In the event that WORLDSPAN
decides to separately
charge for any Additional Service, WORLDSPAN shall give not
less than sixty (60)
days' prior written notice to Associate of its decision to
charge for such service. If
Associate elects not to participate in such Additional
Services, Associate shall notify
WORLDSPAN at least ten (10) days prior to the effective date
of the separate charge
for such Additional Service, and WORLDSPAN shall have no
obligation to provide
such Additional Service to Associate after such effective
date.
F. Any charge for any Additional Service hereinafter
imposed may be modified
by WORLDSPAN at its discretion on not less than thirty (30)
days' prior written
notice. In the event that Associate elects in its sole
discretion that it does not desire
to pay such modified charge, then Associate shall notify
WORLDSPAN of such
election at least ten (10) days prior to the effective date
of such modification, and
WORLDSPAN shall not be obligated to provide such
Additional Service to
Associate after such effective date.
7. OTHER SYSTEMS
Associate acknowledges that users of the ABACUS CRS and
other third parties utilizing
or marketing the WORLDSPAN System may be allowed access to
Associate information
in the WORLDSPAN System and allowed to transact Bookings.
Associate consents to
such access and agrees to pay for such Bookings and otherwise
treat such Bookings as
if received from a WORLDSPAN User.
8. TAXES
<PAGE>
In addition to any other charges set forth herein, Associate shall
pay to WORLDSPAN or
reimburse WORLDSPAN, as appropriate, all sales, use, excise, or other
similar taxes now
or hereafter imposed by any federal, state or local taxing authority
on amounts paid to
WORLDSPAN by Associate.
Notwithstanding the foregoing, Associate shall not, in any event,
be responsible for any
taxes payable on WORLDSPAN's net income or taxes in lieu of net
income taxes, or for
charges imposed on WORLDSPAN for the privilege of doing business.
9. INDEMNIFICATION
A. Each party shall indemnify, defend and hold
harmless the other party, its
directors, officers, employees and agents, from all
liabilities, damages and expenses
and claims for damages, suits, proceedings, recoveries,
judgments or executions
(including, but not limited to litigation costs and
expenses and reasonable attorneys'
fees) arising out of or in connection with any claim that
the use of the indemnifying
party's system or data (including, without limitation,
software) by the other party
infringes any third party patent, copyright, trademark or
other property right.
B. Associate shall defend, indemnify and hold harmless
WORLDSPAN, its
partners, affiliates, officers, directors, employees and
agents from and against all
liabilities, suits, costs, damages and claims (including
litigation costs, expenses and
reasonable attorney's fees) which may be suffered by,
accrued against, charged to or
recoverable from WORLDSPAN, its partners, affiliates,
officers, directors,
employees or agents by reason of or in connection with
Associates performance or
failure to perform, or improper performance of any of its
obligations under this
Agreement.
<PAGE>
10. DISCLAIMER
A. WORLDSPAN DISCLAIMS AND ASSOCIATE HEREBY WAIVES ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR INTENDED USE, OR ANY LIABILITY IN
NEGLIGENCE TORT, STRICT LIABILITY OR OTHERWISE, WITH RESPECT
TO THE WORLDSPAN SYSTEM OR FOR EQUIPMENT, DATA OR SERVICES
FURNISHED HEREUNDER. ASSOCIATE AGREES THAT WORLDSPAN
SHALL NOT BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES UNDER ANY
CIRCUMSTANCES, INCLUDING, BUT NOT LIMITED TO, LOSS OF
REVENUES, EVEN IF ADVISED OF THE RISK OF SUCH DAMAGES IN
ADVANCE.
B. WORLDSPAN shall have no responsibility or liability
to Associate and/or
any car or Associate Location due to the failure of any
WORLDSPAN User or
customer of any such WORLDSPAN User to remit to Associate
or any Associate
Location for sales made or any other dispute relating to
the arrangement between
Associate and/or any Associate Location and such WORLDSPAN
User or any such
customer of such WORLDSPAN User.
11. FORCE MAJEURE
Except for Associate's obligation to make payments hereunder, neither
party will be deemed
in default of this Agreement as a result of a failure to perform its
obligations caused by acts
of God or governmental authority, strikes or labor disputes, fires,
acts of war, failure of third
party suppliers, or for any other cause beyond the control of the
party. WORLDSPAN shall
not be liable to Associate nor any Associate Locations, nor deemed to
be in default of this
Agreement, on account of any delays, errors, malfunctions or
breakdowns with respect to
the WORLDSPAN System, equipment, data or services provided hereunder
unless such
delay, error, malfunction or breakdown results solely from the gross
negligence or willful
misconduct of WORLDSPAN.
12. CONFIDENTIAL INFORMATION
A. Confidential Information disclosed by one party to
another, including but not
limited to the list of WORLDSPAN Users provided Associate
pursuant to Section
3.C. hereof, are for the exclusive use of the receiving
party and shall not be
disclosed or made available to any other person, firm,
corporation, or governmental
entity in any form or manner whatsoever; provided, however,
that in the event
information, materials, or documentation covered by this
Agreement are subpoenaed
or
12. CONFIDENTIAL INFORMATION (Cont.)
A. (Continued)
otherwise requested or demanded by any court or
overnmental authority, the
receiving party shall give prompt notice to the disclosing
party prior to furnishing the
same and shall exercise its best efforts, in cooperation
with, and at the expense of the
disclosing party, to quash or limit such request, demand
and/or subpoena. The
<PAGE>
covenants set forth in this Section shall survive
indefinitely the termination or
cancellation of this Agreement.
B. Title and full and complete ownership rights to
all WORLDSPAN owned or
developed software contained in the WORLDSPAN System or
used by
WORLDSPAN in the performance of this Agreement shall
remain with
WORLDSPAN. Associate understands and agrees that
WORLDSPAN's owned or
developed software is WORLDSPAN's trade secret and
proprietary information
whether any portion thereof is or may be copyrighted or
patented.
13. SYSTEM OPERATING STANDARDS
Associate will use equipment leased from WORLDSPAN, if applicable,
and the
WORLDSPAN System only as follows:
A. Associate will take all reasonable precautions
to prevent unauthorized and
improper use and operation of the equipment and the
WORLDSPAN System.
Misuse of the WORLDSPAN System or equipment shall include,
but is not limited
to, speculative booking or reservation of space in
anticipation of demand,
interference with WORLDSPAN's operations or systems, or
improper access.
Associate's improper use of the WORLDSPAN System or
equipment will be
considered a material breach of the Agreement, and WORLDSPAN
will have the
right to deny or suspend Associate's access to the WORLDSPAN
System
immediately without notice or liability to Associate.
B. Associate will not use the WORLDSPAN System or any
data or information
from the WORLDSPAN System to develop or publish any
reservation, rate, or tariff
guide. Associate will not publish, disclose or otherwise
make available to any third
party the compilations of data from or through the WORLDSPAN
System.
C. Associate will protect any of WORLDSPAN's equipment,
software and
training materials provided to Associate from loss, theft,
and damage and will return
them to WORLDSPAN at the termination of this Agreement in
13. SYSTEM OPERATING STANDARDS (Cont.)
C. (Continued)
good condition and repair. Associate is responsible
for any loss, damage, or
theft of WORLDSPAN equipment or software. If Associate leases
equipment from WORLDSPAN, Associate will insure the
equipment in the
amount provided in Schedule A of its WORLDSPAN Car Rental
Associate
Equipment and Software Addendum, with companies and on terms
and conditions
acceptable to WORLDSPAN. Associate will provide WORLDSPAN
with not less
than thirty (30) days' advance written notice of any change
to said insurance.
Associate will provide WORLDSPAN with evidence of said
insurance upon request.
14. ASSIGNMENT
Associate shall not sell, assign, license, sub-license or
otherwise convey in whole or in
part to any third party this Agreement or the services provided
hereunder without the
<PAGE>
prior written consent of WORLDSPAN, which consent shall not be
unreasonably
withheld.
15. NON-EXCLUSIVITY
This is a non-exclusive Agreement and that similar Agreements may be
entered into by
either party with any other person.
16. APPLICABLE LAW
This Agreement shall be governed by, construed and enforced
according to the laws of
the State of Georgia and of the United States of America, without
regard to its conflict
of laws and rules. Each party hereby consents to the
non-exclusive jurisdiction of the
courts of the State of Georgia and United States Federal Courts
located in Georgia to
resolve any dispute arising out of this Agreement.
17. TERMINATION
A. If Associate fails to timely make any payment
required pursuant to this
Agreement and such failure continues for five (5) business
days after written notice
by WORLDSPAN, WORLDSPAN may, in its sole discretion, suspend
services to
Associate in whole or in part or terminate this Agreement in
its entirety.
17. TERMINATION (Cont.)
B. Except for Associate's failure to make timely
payment, if either party shall
refuse, neglect or fail to perform, observe or keep any of
the covenants, Agreements,
terms or conditions contained herein on its part to be
performed, observed or kept
and such refusal, neglect or failure shall continue for a
period of thirty (30) days after
written notice, the non-defaulting party shall have the
right, in addition to any other
right or remedy it may have, to terminate this Agreement.
C. If either party petitions for relief under the
Bankruptcy Code of the United
States, or if voluntary bankruptcy proceedings are
instituted by a party under any
federal, state or foreign insolvency laws, or if such a
proceeding is imminent, or if
it is adjudged bankrupt, or if it makes any assignment for
the benefit of its creditors
of all or substantially all of its assets; or if an
involuntary petition is filed or
execution issued against it and not dismissed or satisfied
within thirty (30) days; or
if its interest hereunder passes by operation of law to any
other person, except in case
of merger or acquisition, the other party may, at its option,
terminate this Agreement
by written notice; provided, however, that all monies owed
hereunder prior to the
date of termination shall be immediately due and payable.
18. NOTICES
All notices, requests, demands or other communications hereunder
shall be in writing, hand
delivered, sent by mail, overnight mail, facsimile or teletype and
shall be deemed to have
been given when received at the following addresses:
If to WORLDSPAN:
<PAGE>
WORLDSPAN, L. P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Teletype: ATLMS1P
Facsimile: 404/563-7878
ATTN: Legal Department
<PAGE>
18. NOTICES (Cont.)
with a copy to:
WORLDSPAN, L. P.
300 Galleria Parkway, NW
Atlanta, Georgia 30339
U.S.A.
Teletype: HDQAS1P
Facsimile: 404/563-7268
ATTN: Manager - Car Industry Marketing
If to Associate:
Corporate Travel Link, Incorporated
18 Village Green Court
South Orange, New Jersey 07079
Teletype:
Facsimile:
ATTN: Joseph Cutrona - President
Any notice provided by facsimile or teletype which is
received after 4:00 p.m. local time
shall be deemed received the following business day. A party may
change its addresses for
notice on not less than ten (10) days' prior written notice to the
other party.
19. MISCELLANEOUS
A. Nothing in this Agreement is intended or shall be
construed to create or
establish an agency, partnership, or joint venture
relationship between the parties
hereto.
B. Neither party shall make any use of the other
party's corporate name, logo,
trademarks or service marks, except following the owner's
prior written consent,
provided that nothing contained in this provision shall be
construed as preventing
either party from publicizing the existence and general
nature of this Agreement.
C. The captions appearing in this Agreement have been
inserted as a matter of
convenience and in no way define, limit, or enlarge the scope
of this Agreement or
any of the provisions thereof.
<PAGE>
19. MISCELLANEOUS (Cont.)
D. No waiver by either party of any one breach of this
Agreement shall
constitute a waiver of any other breach of the same or any
other provision hereof and
no waiver shall be effective unless made in writing. The
right of either party to
require strict performance and observance of any obligations
hereunder shall not be
affected in any way by any previous waiver, forbearance or
course of dealing.
E. This Agreement embodies the entire understanding
of the parties and
supersedes all other prior agreements and understandings
related to the subject
matter hereof, including but not limited to any prior
"WORLDSPAN Car Rental
Reservations Agreement." This Agreement may be modified
only by a further
written agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this WORLDSPAN Car Rental
Associate
Reservation Agreement to be executed by their duly authorized undersigned
representatives as of
the day and year first above written.
Corporate Travel Link, Inc. WORLDSPAN, L.P.
(Print Company Name)
By: /S/ By: /S/ 7/13/95
(Signature) Richard R. Jann
Manager - Car Industry Marketing
JOSEPH CUTRONA
(Print Name)
President
(Print Title)
<PAGE>
EXHIBIT 10.13
ROBOTIC LASERS, INC.
FIRST INTERIM LOAN AGREEMENT
(SERIES 2)
This agreement dated December 1, 1995, between Robotic
Lasers, Inc., a New Jersey corporation, Joseph Cutrona, Mark A.
Kenny and Steven E. Pollan (collectively "RLI" or the "Company")
and Loeb Holding Corporation as agent ("Loeb") is intended as an
interim agreement until a definitive agreement is executed by all
of the parties. The execution of a definitive agreement and the
advance of additional funds by Loeb is subject to completion of
normal and customary due diligence by Loeb.
As consideration for the execution of this agreement and the
delivery by RLI of a promissory note in the form attached hereto
as Exhibit A, Loeb agrees to loan to RLI the sum of $50,000 for
the specific purposes described in Exhibit B hereto. Such note
shall be due in 60 days together with interest at the rate of 9%
per annum unless converted by Loeb solely at the option of Loeb
into notes and stock as described as follows:
1. Amount to be invested -- $250,000.00. Loeb and RLI to
mutually agree on the uses of these funds.
2. Investor to receive:
(a) 841,455 shares of the common stock of RLI.
(b) A note for $237,500.00, interest at 9% per annum
payable quarterly in arrears (however, first interest payment
will be due on March 31, 1996).
(c) A note for $12,500.00 having the same terms and
conditions as the $237,500.00 note in 2b above but also
convertible as described elsewhere herein.
3. The principal amount of the $237,500.00 note in 2b above
shall be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any
time without penalty. The final agreement and note shall contain
terms and provisions substantially identical to the Memorandum of
Sale of Corporate Stock and the promissory notes executed by the
parties hereto, dated September 5, 1995.
4. The principal amount of the $12,500.00 note in 2c above
shall be convertible at the sole option of the holder into a
maximum of 15% of the fully diluted common shares of RLI as
determined based on the audited pretax profits of RLI during the
second and third years of operations of the Company on a sliding
scale based upon RLI achieving between 50% and 80% of the
<PAGE>
projections provided to Loeb and attached hereto as Exhibit C.
(Example: If RLI achieves 80% or better of projection, no
conversion; if RLI achieves 50% or less or projection, conversion
into 15% of the Company; if RLI achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of
15% of the Company i.e., 70% achievement equals one-third of 15%
of the Company). The $12,500 principal amount, together with
any accrued but unpaid interest, shall become a demand note after
the third year of operations of the Company unless previously
converted.
5. Costs incurred by Loeb in drafting and/or executing all
documents related to this agreement and in performing due
diligence shall be paid at closing by RLI in an aggregate amount
not to exceed $5,000.00.
6. The parties acknowledge that on or about September 5,
1995, they executed a promissory note in the amount of
$475,000.00, a promissory note with conversion features in the
amount of $25,000.00, and a Memorandum of Sale of Corporate
Stock. The parties agree that the promissory note for
$237,500.00 referred to in 2b above will be in the same or
similar form as the $475,000.00 note dated September 5, 1995;
that the promissory note for $12,500.00 referred to in 2c above
will be in the same or similar form as the $25,000.00 note dated
September 5, 1995; and that the definitive agreement referred to
herein shall be in the same or similar form as the Memorandum of
Sale of Corporate Stock executed by the parties hereto on
September 5, 1995.
7. The within interim loan agreement, and the definitive
agreement and promissory notes to be executed by the parties
hereto as provided above, are not intended to supersede or
replace the promissory notes and the Memorandum of Sale of
Corporate Stock dated September 5, 1995, and the aforesaid
documents dated September 5, 1995, remain in full force and
effect.
LOEB HOLDING CORPORATION, ROBOTIC LASERS, INC.
as agent, Obligee Obligor
By:______________________ By: __________________
WARREN D. BAGATELLE JOSEPH CUTRONA, President
By: __________________________
MARK A. KENNY,
Vice President
By: __________________________
STEVEN E. POLLAN,
Treasurer/Ass't. Secretary
<PAGE>
PROMISSORY NOTE
$50,000.00 December 1, 1995
FOR VALUE RECEIVED, the undersigned (The Maker) promises to
pay to the order of Loeb Holding Corporation, as agent, or to any
successor holder of this Note being referred to herein as the
Lender, or to such other person or at such other place as the
Lender may from time to time designate in writing, the principal
sum of Fifty Thousand Dollars ($50,000.00), together with
interest on the unpaid balance from time to time outstanding from
the date of this Note at the rate of interest and in the manner
hereinafter provided.
1. Maturity. The entire outstanding unpaid principal
balance of this Note, together with all accrued and unpaid
interest, and all other charges and payments due under this Note
(herein collectively called the Loan Balance) shall be due and
payable on January 30, 1996, or on such earlier date that this
Note becomes due and payable as a result of acceleration,
prepayment or as otherwise provided herein.
2. Basic Interest Payments. The Maker shall pay interest
on the unpaid principal of this Note at an interest rate of 9%
per annum. Interest shall accrue and shall become due upon the
maturity of this Note, as provided in Paragraph 1 above.
3. Prepayment. This Note may be paid in part or in whole
at any time prior to maturity without the prior written consent
of the Lender.
4. Repayment Priority. At the time of payment of all or
<PAGE>
any portion of the Loan Balance, the proceeds shall be applied by
the Lender first, to the payment of interest then due, second, to
the payment of the then outstanding principal balance under this
Note and, third, to any other payments and charges due under this
Note.
5. Waivers by the maker. The Maker hereby waives
presentment for payment, protest and demand, notice of protest,
demand and of dishonor and nonpayment of this Note. The Maker's
liability hereunder shall remain unimpaired notwithstanding any
extension of the time of payment or other indulgence granted by
the Lender.
6. Governing Law. The Maker agrees that this Note shall be
construed in accordance with and governed by the law of New York.
7. Severability. The terms and provisions of this Note are
severable, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part, such determination shall not in any manner impair or
otherwise affect the validity, legality or enforceability of any
of the remaining terms and provisions of this Note.
8. Execution of definitive agreement. The within
promissory note constitutes Exhibit A to a certain agreement
entitled Robotic Lasers, Inc., First Interim Loan Agreement
(Second Series), by and between Loeb Holding Corporation as
lender and Robotic Lasers, Inc., as borrower. The aforesaid
parties anticipate that they will execute a permanent definitive
agreement within the next sixty days. In the event that a
permanent financing agreement is executed, the Loan Balance shall
<PAGE>
not be due and payable by the undersigned upon the maturity of
this promissory note, and the terms of the definitive agreement
shall in all respects govern the repayment, if any, of the Loan
Balance. Upon execution of the definitive agreement, the Maker
shall surrender the within promissory note.
ROBOTIC LASERS, INC.
By: _____________________________
JOSEPH CUTRONA, President
ATTEST:
___________________________ By: _____________________________
STEVEN E. POLLAN, Secretary MARK A. KENNY, Vice President
By: _____________________________
STEVEN E. POLLAN, Secretary
<PAGE>
EXHIBIT B
The parties agree that the monies advanced hereunder have
been estimated for the 30-day period commencing with the date of
this agreement and are designated for the following purposes:
Prosoft, Inc. $60,000.00
Accountants ($15,000.00 est.) 10,000.00
Operating Expenses 47,000.00
Salaries 18,000.00
Consultants (sales; computer) 10,000.00
Legal Expenses, for securities
work (if needed) 1,000.00
Vehicle 2,000.00
Vehicle and telephone expenses 2,200.00
TOTAL: $150.000.00
<PAGE>
EXHIBIT C
Pursuant to Paragraph 4 of the Interim Loan Agreement,
borrower estimates that the audited pre-tax profits of RLI for
the first three years of operations will be as follows:
1/1/95 - 12/31/95 $ Break even
1/1/96 - 12/31/96 2,200,000.00
1/1/97 - 12/31/97 2,700,000.00
<PAGE>
ROBOTIC LASERS, INC.
SECOND INTERIM LOAN AGREEMENT
(SERIES 2)
This agreement dated December 4, 1995, between Robotic
Lasers, Inc., a New Jersey corporation, Joseph Cutrona, Mark A.
Kenny and Steven E. Pollan (collectively "RLI" or the "Company")
and Loeb Holding Corporation as agent ("Loeb") is intended as an
interim agreement until a definitive agreement is executed by all
of the parties. The execution of a definitive agreement and the
advance of additional funds by Loeb is subject to completion of
normal and customary due diligence by Loeb.
As consideration for the execution of this agreement and the
delivery by RLI of a promissory note in the form attached hereto
as Exhibit A, Loeb agrees to loan to RLI the sum of $50,000 for
the specific purposes described in Exhibit B hereto. Such note
shall be due in 60 days together with interest at the rate of 9%
per annum unless converted by Loeb solely at the option of Loeb
into notes and stock as described as follows:
1. Amount to be invested -- $250,000.00. Loeb and RLI to
mutually agree on the uses of these funds.
2. Investor to receive:
(a) 841,455 shares of the common stock of RLI.
(b) A note for $237,500.00, interest at 9% per annum
payable quarterly in arrears (however, first interest payment
will be due on March 31, 1996).
(c) A note for $12,500.00 having the same terms and
conditions as the $237,500.00 note in 2b above but also
convertible as described elsewhere herein.
3. The principal amount of the $237,500.00 note in 2b above
shall be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any
time without penalty. The final agreement and note shall contain
terms and provisions substantially identical to the Memorandum of
Sale of Corporate Stock and the promissory notes executed by the
parties hereto, dated September 5, 1995.
4. The principal amount of the $12,500.00 note in 2c above
shall be convertible at the sole option of the holder into a
maximum of 15% of the fully diluted common shares of RLI as
determined based on the audited pretax profits of RLI during the
second and third years of operations of the Company on a sliding
scale based upon RLI achieving between 50% and 80% of the
projections provided to Loeb and attached hereto as Exhibit C.
(Example: If RLI achieves 80% or better of projection, no
conversion; if RLI achieves 50% or less or projection, conversion
<PAGE>
into 15% of the Company; if RLI achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of
15% of the Company i.e., 70% achievement equals one-third of 15%
of the Company). The $12,500 principal amount, together with
any accrued but unpaid interest, shall become a demand note after
the third year of operations of the Company unless previously
converted.
5. Costs incurred by Loeb in drafting and/or executing all
documents related to this agreement and in performing due
diligence shall be paid at closing by RLI in an aggregate amount
not to exceed $2,500.00.
6. The parties acknowledge that on or about September 5,
1995, they executed a promissory note in the amount of
$475,000.00, a promissory note with conversion features in the
amount of $25,000.00, and a Memorandum of Sale of Corporate
Stock. The parties agree that the promissory note for
$237,500.00 referred to in 2b above will be in the same or
similar form as the $475,000.00 note dated September 5, 1995;
that the promissory note for $12,500.00 referred to in 2c above
will be in the same or similar form as the $25,000.00 note dated
September 5, 1995; and that the definitive agreement referred to
herein shall be in the same or similar form as the Memorandum of
Sale of Corporate Stock executed by the parties hereto on
September 5, 1995.
7. The within interim loan agreement, and the definitive
agreement and promissory notes to be executed by the parties
hereto as provided above, are not intended to supersede or
replace the promissory notes and the Memorandum of Sale of
Corporate Stock dated September 5, 1995, and the aforesaid
documents dated September 5, 1995, remain in full force and
effect.
LOEB HOLDING CORPORATION, ROBOTIC LASERS, INC.
as agent, Obligee Obligor
By:______________________ By: __________________________
WARREN D. BAGATELLE JOSEPH CUTRONA, President
By: __________________________
MARK A. KENNY,
Vice President
By:
_________________________
STEVEN E. POLLAN,
Treasurer/Ass't. Secretary
<PAGE>
PROMISSORY NOTE
$100,000.00 December 4, 1995
FOR VALUE RECEIVED, the undersigned (The Maker) promises to
pay to the order of Loeb Holding Corporation, as agent, or to any
successor holder of this Note being referred to herein as the
Lender, or to such other person or at such other place as the
Lender may from time to time designate in writing, the principal
sum of One Hundred Thousand Dollars ($100,000.00), together with
interest on the unpaid balance from time to time outstanding from
the date of this Note at the rate of interest and in the manner
hereinafter provided.
1. Maturity. The entire outstanding unpaid principal
balance of this Note, together with all accrued and unpaid
interest, and all other charges and payments due under this Note
(herein collectively called the Loan Balance) shall be due and
payable on February 2, 1996, or on such earlier date that this
Note becomes due and payable as a result of acceleration,
prepayment or as otherwise provided herein.
2. Basic Interest Payments. The Maker shall pay interest
on the unpaid principal of this Note at an interest rate of 9%
per annum. Interest shall accrue and shall become due upon the
maturity of this Note, as provided in Paragraph 1 above.
3. Prepayment. This Note may be paid in part or in whole
at any time prior to maturity without the prior written consent
of the Lender.
4. Repayment Priority. At the time of payment of all or
<PAGE>
any portion of the Loan Balance, the proceeds shall be applied by
the Lender first, to the payment of interest then due, second, to
the payment of the then outstanding principal balance under this
Note and, third, to any other payments and charges due under this
Note.
5. Waivers by the maker. The Maker hereby waives
presentment for payment, protest and demand, notice of protest,
demand and of dishonor and nonpayment of this Note. The Maker's
liability hereunder shall remain unimpaired notwithstanding any
extension of the time of payment or other indulgence granted by
the Lender.
6. Governing Law. The Maker agrees that this Note shall be
construed in accordance with and governed by the law of New York.
7. Severability. The terms and provisions of this Note are
severable, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part, such determination shall not in any manner impair or
otherwise affect the validity, legality or enforceability of any
of the remaining terms and provisions of this Note.
8. Execution of definitive agreement. The within
promissory note constitutes Exhibit A to a certain agreement
entitled Robotic Lasers, Inc., First Interim Loan Agreement
(Second Series), by and between Loeb Holding Corporation as
lender and Robotic Lasers, Inc., as borrower. The aforesaid
parties anticipate that they will execute a permanent definitive
agreement within the next sixty days. In the event that a
permanent financing agreement is executed, the Loan Balance shall
not be due and payable by the undersigned upon the maturity of
this promissory note, and the terms of the definitive agreement
shall in all respects govern the repayment, if any, of the Loan
Balance. Upon execution of the definitive agreement, the Maker
shall surrender the within promissory note.
ROBOTIC LASERS, INC.
By: _____________________________
JOSEPH CUTRONA, President
ATTEST:
___________________________ By: _____________________________
STEVEN E. POLLAN, Secretary MARK A. KENNY, Vice President
By: ___________________________
STEVEN E. POLLAN, Secretary
EXHIBIT B
The parties agree that the monies advanced hereunder have
been estimated for the 30-day period commencing with the date of
this agreement and are designated for the following purposes:
Prosoft, Inc. $60,000.00
Accountants ($15,000.00 est.) 10,000.00
Operating Expenses 47,000.00
Salaries 18,000.00
Consultants (sales; computer) 10,000.00
Legal Expenses, for securities
work (if needed) 1,000.00
Vehicle 2,000.00
Vehicle and telephone expenses 2,200.00
TOTAL: $150.000.00
<PAGE>
EXHIBIT C
Pursuant to Paragraph 4 of the Interim Loan Agreement,
borrower estimates that the audited pre-tax profits of RLI for
the first three years of operations will be as follows:
1/1/95 - 12/31/95 $ Break even
1/1/96 - 12/31/96 2,200,000.00
1/1/97 - 12/31/97 2,700,000.00
<PAGE>
$50,000.00 Dated: January 16, 1996
ROBOTIC LASERS, INC.
THIRD INTERIM LOAN AGREEMENT
(SERIES 2)
This agreement dated January 16, 1996, between Robotic
Lasers, Inc., a New Jersey corporation, Joseph Cutrona, Mark A.
Kenny and Steven E. Pollan (collectively "RLI" or the "Company")
and Loeb Holding Corporation as agent ("Loeb") is intended as an
interim agreement until a definitive agreement is executed by all
of the parties. The execution of a definitive agreement and the
advance of additional funds by Loeb is subject to completion of
normal and customary due diligence by Loeb.
As consideration for the execution of this agreement and the
delivery by RLI of a promissory note in the form attached hereto
as Exhibit A, Loeb agrees to loan to RLI the sum of $50,000 for
the specific purposes described in Exhibit B hereto. Such note
shall be due in 60 days together with interest at the rate of 9%
per annum unless converted by Loeb solely at the option of Loeb
into notes and stock as described as follows:
1. Amount to be invested -- $250,000.00. Loeb and RLI to
mutually agree on the uses of these funds.
2. Investor to receive:
(a) 841,455 shares of the common stock of RLI.
(b) A note for $237,500.00, interest at 9% per annum
payable quarterly in arrears (however, first interest payment
will be due on March 31, 1996).
(c) A note for $12,500.00 having the same terms and
conditions as the $237,500.00 note in 2b above but also
convertible as described elsewhere herein.
3. The principal amount of the $237,500.00 note in 2b above
shall be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any
time without penalty. The final agreement and note shall contain
terms and provisions substantially identical to the Memorandum of
Sale of Corporate Stock and the promissory notes executed by the
parties hereto, dated September 5, 1995.
4. The principal amount of the $12,500.00 note in 2c above
shall be convertible at the sole option of the holder into a
maximum of 15% of the fully diluted common shares of RLI as
determined based on the audited pretax profits of RLI during the
second and third years of operations of the Company on a sliding
scale based upon RLI achieving between 50% and 80% of the
<PAGE>
projections provided to Loeb and attached hereto as Exhibit C.
(Example: If RLI achieves 80% or better of projection, no
conversion; if RLI achieves 50% or less or projection, conversion
into 15% of the Company; if RLI achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of
15% of the Company i.e., 70% achievement equals one-third of 15%
of the Company). The $12,500 principal amount, together with
any accrued but unpaid interest, shall become a demand note after
the third year of operations of the Company unless previously
converted.
5. Costs incurred by Loeb in drafting and/or executing all
documents related to this agreement and in performing due
diligence shall be paid at closing by RLI in an aggregate amount
not to exceed $5,000.00.
6. The parties acknowledge that on or about September 5,
1995, they executed a promissory note in the amount of
$475,000.00, a promissory note with conversion features in the
amount of $25,000.00, and a Memorandum of Sale of Corporate
Stock. The parties agree that the promissory note for
$237,500.00 referred to in 2b above will be in the same or
similar form as the $475,000.00 note dated September 5, 1995;
that the promissory note for $12,500.00 referred to in 2c above
will be in the same or similar form as the $25,000.00 note dated
September 5, 1995; and that the definitive agreement referred to
herein shall be in the same or similar form as the Memorandum of
Sale of Corporate Stock executed by the parties hereto on
September 5, 1995. The parties further acknowledge that, in
addition to the $500,000.00 previously advanced to Robotic by
Loeb (as embodied in the promissory notes of September 5, 1995),
Loeb has made further advances of the following sums on the dates
indicated: $50,000.00 on December 5, 1995, $50,000.00 on
December 13, 1995, and $50,000.00 on December 27, 1995.
7. The within interim loan agreement, and the definitive
agreement and promissory notes to be executed by the parties
hereto as provided above, are not intended to supersede or
replace the promissory notes and the Memorandum of Sale of
Corporate Stock dated September 5, 1995, and the aforesaid
documents dated September 5, 1995, remain in full force and
effect.
LOEB HOLDING CORPORATION, ROBOTIC LASERS, INC.
as agent, Obligee Obligor
By:______________________ By: __________________________
WARREN D. BAGATELLE JOSEPH CUTRONA, President
By: __________________________
MARK A. KENNY,
Vice President
By:
_________________________
STEVEN E. POLLAN,
Treasurer/Ass't. Secretary
<PAGE>
PROMISSORY NOTE
$50,000.00 January 16, 1996
FOR VALUE RECEIVED, the undersigned (The Maker) promises to
pay to the order of Loeb Holding Corporation, as agent, or to any
successor holder of this Note being referred to herein as the
Lender, or to such other person or at such other place as the
Lender may from time to time designate in writing, the principal
sum of Fifty Thousand Dollars ($50,000.00), together with
interest on the unpaid balance from time to time outstanding from
the date of this Note at the rate of interest and in the manner
hereinafter provided.
1. Maturity. The entire outstanding unpaid principal
balance of this Note, together with all accrued and unpaid
interest, and all other charges and payments due under this Note
(herein collectively called the Loan Balance) shall be due and
payable on March 16, 1996, or on such earlier date that this Note
becomes due and payable as a result of acceleration, prepayment
or as otherwise provided herein.
2. Basic Interest Payments. The Maker shall pay interest
on the unpaid principal of this Note at an interest rate of 9%
per annum. Interest shall accrue and shall become due upon the
maturity of this Note, as provided in Paragraph 1 above.
3. Prepayment. This Note may be paid in part or in whole
at any time prior to maturity without the prior written consent
of the Lender.
4. Repayment Priority. At the time of payment of all or
<PAGE>
any portion of the Loan Balance, the proceeds shall be applied by
the Lender first, to the payment of interest then due, second, to
the payment of the then outstanding principal balance under this
Note and, third, to any other payments and charges due under this
Note.
5. Waivers by the maker. The Maker hereby waives
presentment for payment, protest and demand, notice of protest,
demand and of dishonor and nonpayment of this Note. The Maker's
liability hereunder shall remain unimpaired notwithstanding any
extension of the time of payment or other indulgence granted by
the Lender.
6. Governing Law. The Maker agrees that this Note shall be
construed in accordance with and governed by the law of New York.
7. Severability. The terms and provisions of this Note are
severable, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part, such determination shall not in any manner impair or
otherwise affect the validity, legality or enforceability of any
of the remaining terms and provisions of this Note.
8. Execution of definitive agreement. The within
promissory note constitutes Exhibit A to a certain agreement
entitled "ROBOTIC LASERS, INC., Third Interim Loan Agreement,
Series 2" by and between Loeb Holding Corporation as lender and
Robotic Lasers, Inc., as borrower. The aforesaid parties
anticipate that they will execute a permanent definitive
agreement within the next sixty days. In the event that a
permanent financing agreement is executed, the Loan Balance shall
<PAGE>
not be due and payable by the undersigned upon the maturity of
this promissory note, and the terms of the definitive agreement
shall in all respects govern the repayment, if any, of the Loan
Balance. Upon execution of the definitive agreement, the Maker
shall surrender the within promissory note.
The remainder of this page is intended to be
blank.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
promissory note this 16th day of January, 1996.
ROBOTIC LASERS, INC.
By: _____________________________
JOSEPH CUTRONA, President
ATTEST:
___________________________ By: _____________________________
STEVEN E. POLLAN, Secretary MARK A. KENNY, Vice President
By: ___________________________
STEVEN E. POLLAN, Secretary
<PAGE>
EXHIBIT B
The parties agree that the monies advanced hereunder have
been estimated for the 30-day period commencing with the date of
this agreement and are designated for the following purposes:
Software costs $ 7,000.00
Accountants (partial payment) 8,000.00
Salaries 22,000.00
Vehicle leases 1,500.00
Vehicle and telephone expenses 2,000.00
Health insurance 2,200.00
Automobile insurance 1,000.00
Miscellaneous business expenss 6,300.00
TOTAL: $ 50.000.00
<PAGE>
EXHIBIT C
Pursuant to Paragraph 8 of the Third Interim Loan
Agreement, borrower estimates that the audited pre-tax profits of
RLI for the first three years of operations will be as follows:
1/1/95 - 12/31/95 $ (Break even)
1/1/96 - 12/31/96 2,200,000.00
1/1/97 - 12/31/97 2,700,000.00
The parties understand that the above figures are rough
estimates only, and that they are subject to revision upwards or
downwards after the final cost of the software development is
determined and after further consultation with CTL's accountants.
<PAGE>
$25,000.00 Dated: February 23, 1996
ROBOTIC LASERS, INC.
FOURTH INTERIM LOAN AGREEMENT
(SERIES 2)
This agreement dated February 23, 1996, between Robotic
Lasers, Inc., a New Jersey corporation, Joseph Cutrona, Mark A.
Kenny and Steven E. Pollan (collectively "RLI" or the "Company")
and Loeb Holding Corporation as agent ("Loeb") is intended as an
interim agreement until a definitive agreement is executed by all
of the parties. The execution of a definitive agreement and the
advance of additional funds by Loeb is subject to completion of
normal and customary due diligence by Loeb.
As consideration for the execution of this agreement and the
delivery by RLI of a promissory note in the form attached hereto
as Exhibit A, Loeb agrees to loan to RLI the sum of $50,000 for
the specific purposes described in Exhibit B hereto. Such note
shall be due in 60 days together with interest at the rate of 9%
per annum unless converted by Loeb solely at the option of Loeb
into notes and stock as described as follows:
1. Amount to be invested -- $250,000.00. Loeb and RLI to
mutually agree on the uses of these funds.
<PAGE>
2. Investor to receive:
(a) 841,455 shares of the common stock of RLI.
(b) A note for $237,500.00, interest at 9% per annum
payable quarterly in arrears (however, first interest payment
will be due on March 31, 1996).
(c) A note for $12,500.00 having the same terms and
conditions as the $237,500.00 note in 2b above but also
convertible as described elsewhere herein.
3. The principal amount of the $237,500.00 note in 2b above
shall be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any
time without penalty. The final agreement and note shall contain
terms and provisions substantially identical to the Memorandum of
Sale of Corporate Stock and the promissory notes executed by the
parties hereto, dated September 5, 1995.
4. The principal amount of the $12,500.00 note in 2c above
shall be convertible at the sole option of the holder into a
maximum of 15% of the fully diluted common shares of RLI as
determined based on the audited pretax profits of RLI during the
second and third years of operations of the Company on a sliding
scale based upon RLI achieving between 50% and 80% of the
projections provided to Loeb and attached hereto as Exhibit C.
<PAGE>
(Example: If RLI achieves 80% or better of projection, no
conversion; if RLI achieves 50% or less or projection, conversion
into 15% of the Company; if RLI achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of
15% of the Company i.e., 70% achievement equals one-third of 15%
of the Company). The $12,500 principal amount, together with
any accrued but unpaid interest, shall become a demand note after
the third year of operations of the Company unless previously
converted.
5. Costs incurred by Loeb in drafting and/or executing all
documents related to this agreement and in performing due
diligence shall be paid at closing by RLI in an aggregate amount
not to exceed $5,000.00.
6. The parties acknowledge that on or about September 5,
1995, they executed a promissory note in the amount of
$475,000.00, a promissory note with conversion features in the
amount of $25,000.00, and a Memorandum of Sale of Corporate
Stock. The parties agree that the promissory note for
$237,500.00 referred to in 2b above will be in the same or
similar form as the $475,000.00 note dated September 5, 1995;
that the promissory note for $12,500.00 referred to in 2c above
will be in the same or similar form as the $25,000.00 note dated
September 5, 1995; and that the definitive agreement referred to
herein shall be in the same or similar form as the Memorandum of
Sale of Corporate Stock executed by the parties hereto on
<PAGE>
September 5, 1995. The parties further acknowledge that, in
addition to the $500,000.00 previously advanced to Robotic by
Loeb (as embodied in the promissory notes of September 5, 1995),
Loeb has made further advances of the following sums on the dates
indicated: $50,000.00 on December 5, 1995, $50,000.00 on
December 13, 1995, and $50,000.00 on December 27, 1995,
$25,000.00 on January 29, 1996 and $25,000.00 on February 7,
1996.
7. The within interim loan agreement, and the definitive
agreement and promissory notes to be executed by the parties
hereto as provided above, are not intended to supersede or
replace the promissory notes and the Memorandum of Sale of
Corporate Stock dated September 5, 1995, and the aforesaid
documents dated September 5, 1995, remain in full force and
effect.
LOEB HOLDING CORPORATION, ROBOTIC LASERS, INC.
as agent, Obligee Obligor
By:______________________ By: __________________________
WARREN D. BAGATELLE JOSEPH CUTRONA, President
By: __________________________
MARK A. KENNY,
Vice President
<PAGE>
By:
_________________________
STEVEN E. POLLAN,
Treasurer/Ass't. Secretary
<PAGE>
PROMISSORY NOTE
$25,000.00 February 23, 1996
FOR VALUE RECEIVED, the undersigned (The Maker) promises to
pay to the order of Loeb Holding Corporation, as agent, or to any
successor holder of this Note being referred to herein as the
Lender, or to such other person or at such other place as the
Lender may from time to time designate in writing, the principal
sum of Twenty Five Thousand Dollars ($25,000.00), together with
interest on the unpaid balance from time to time outstanding from
the date of this Note at the rate of interest and in the manner
hereinafter provided.
1. Maturity. The entire outstanding unpaid principal
balance of this Note, together with all accrued and unpaid
interest, and all other charges and payments due under this Note
(herein collectively called the Loan Balance) shall be due and
payable on April 23, 1996, or on such earlier date that this Note
becomes due and payable as a result of acceleration, prepayment
or as otherwise provided herein.
2. Basic Interest Payments. The Maker shall pay interest
on the unpaid principal of this Note at an interest rate of 9%
per annum. Interest shall accrue and shall become due upon the
maturity of this Note, as provided in Paragraph 1 above.
3. Prepayment. This Note may be paid in part or in whole
<PAGE>
at any time prior to maturity without the prior written consent
of the Lender.
4. Repayment Priority. At the time of payment of all or
any portion of the Loan Balance, the proceeds shall be applied by
the Lender first, to the payment of interest then due, second, to
the payment of the then outstanding principal balance under this
Note and, third, to any other payments and charges due under this
Note.
5. Waivers by the maker. The Maker hereby waives
presentment for payment, protest and demand, notice of protest,
demand and of dishonor and nonpayment of this Note. The Maker's
liability hereunder shall remain unimpaired notwithstanding any
extension of the time of payment or other indulgence granted by
the Lender.
6. Governing Law. The Maker agrees that this Note shall be
construed in accordance with and governed by the law of New York.
7. Severability. The terms and provisions of this Note are
severable, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part, such determination shall not in any manner impair or
otherwise affect the validity, legality or enforceability of any
of the remaining terms and provisions of this Note.
8. Execution of definitive agreement. The within
promissory note constitutes Exhibit A to a certain agreement
entitled "ROBOTIC LASERS, INC., Third Interim Loan Agreement,
Series 2" by and between Loeb Holding Corporation as lender and
Robotic Lasers, Inc., as borrower. The aforesaid parties
<PAGE>
anticipate that they will execute a permanent definitive
agreement within the next sixty days. In the event that a
permanent financing agreement is executed, the Loan Balance shall
not be due and payable by the undersigned upon the maturity of
this promissory note, and the terms of the definitive agreement
shall in all respects govern the repayment, if any, of the Loan
Balance. Upon execution of the definitive agreement, the Maker
shall surrender the within promissory note.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
promissory note this 23rd day of February, 1996.
ROBOTIC LASERS, INC.
By: _____________________________
JOSEPH CUTRONA, President
ATTEST:
___________________________ By: _____________________________
STEVEN E. POLLAN, Secretary MARK A. KENNY, Vice President
By: ___________________________
STEVEN E. POLLAN, Secretary
<PAGE>
EXHIBIT B
The parties agree that the monies advanced hereunder are
designated for the following purposes:
Salaries 12,000.00
Vehicle leases 1,500.00
Vehicle and telephone expenses 2,000.00
Health insurance 2,200.00
Automobile insurance 1,000.00
Miscellaneous business expenss 6,300.00
TOTAL: $ 25.000.00
<PAGE>
EXHIBIT C
Pursuant to Paragraph 8 of the Fourth Interim Loan
Agreement, borrower estimates that the audited pre-tax profits of
RLI for the first three years of operations will be as follows:
1/1/95 - 12/31/95 $ (Break even)
1/1/96 - 12/31/96 2,200,000.00
1/1/97 - 12/31/97 2,700,000.00
The parties understand that the above figures are rough
estimates only, and that they are subject to revision upwards or
downwards after the final cost of the software development is
determined and after further consultation with CTL's accountants.
<PAGE>
$25,000.00 Dated: March 12, 1996
ROBOTIC LASERS, INC.
FIFTH INTERIM LOAN AGREEMENT
(SERIES 2)
This agreement dated March 12, 1996, between Robotic Lasers,
Inc., a New Jersey corporation, Joseph Cutrona, Mark A. Kenny and
Steven E. Pollan (collectively "RLI" or the "Company") and Loeb
Holding Corporation as agent ("Loeb") is intended as an interim
agreement until a definitive agreement is executed by all of the
parties. The execution of a definitive agreement and the advance
of additional funds by Loeb is subject to completion of normal
and customary due diligence by Loeb.
As consideration for the execution of this agreement and the
delivery by RLI of a promissory note in the form attached hereto
as Exhibit A, Loeb agrees to loan to RLI the sum of $25,000 for
the specific purposes described in Exhibit B hereto. Such note
shall be due in 60 days together with interest at the rate of 9%
per annum unless converted by Loeb solely at the option of Loeb
into notes and stock as described as follows:
1. Amount to be invested -- $250,000.00. Loeb and RLI to
mutually agree on the uses of these funds.
<PAGE>
2. Investor to receive:
(a) 841,455 shares of the common stock of RLI.
(b) A note for $237,500.00, interest at 9% per annum
payable quarterly in arrears (however, first interest payment
will be due on March 31, 1996).
(c) A note for $12,500.00 having the same terms and
conditions as the $237,500.00 note in 2b above but also
convertible as described elsewhere herein.
3. The principal amount of the $237,500.00 note in 2b above
shall be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any
time without penalty. The final agreement and note shall contain
terms and provisions substantially identical to the Memorandum of
Sale of Corporate Stock and the promissory notes executed by the
parties hereto, dated September 5, 1995.
4. The principal amount of the $12,500.00 note in 2c above
shall be convertible at the sole option of the holder into a
maximum of 15% of the fully diluted common shares of RLI as
determined based on the audited pretax profits of RLI during the
second and third years of operations of the Company on a sliding
scale based upon RLI achieving between 50% and 80% of the
projections provided to Loeb and attached hereto as Exhibit C.
<PAGE>
(Example: If RLI achieves 80% or better of projection, no
conversion; if RLI achieves 50% or less or projection, conversion
into 15% of the Company; if RLI achieves between 50% and 80% of
projection, the note is convertible into the pro-rata portion of
15% of the Company i.e., 70% achievement equals one-third of 15%
of the Company). The $12,500 principal amount, together with
any accrued but unpaid interest, shall become a demand note after
the third year of operations of the Company unless previously
converted.
5. Costs incurred by Loeb in drafting and/or executing all
documents related to this agreement and in performing due
diligence shall be paid at closing by RLI in an aggregate amount
not to exceed $5,000.00.
6. The parties acknowledge that on or about September 5,
1995, they executed a promissory note in the amount of
$475,000.00, a promissory note with conversion features in the
amount of $25,000.00, and a Memorandum of Sale of Corporate
Stock. The parties agree that the promissory note for
$237,500.00 referred to in 2b above will be in the same or
similar form as the $475,000.00 note dated September 5, 1995;
that the promissory note for $12,500.00 referred to in 2c above
will be in the same or similar form as the $25,000.00 note dated
September 5, 1995; and that the definitive agreement referred to
herein shall be in the same or similar form as the Memorandum of
Sale of Corporate Stock executed by the parties hereto on
<PAGE>
September 5, 1995. The parties further acknowledge that, in
addition to the $500,000.00 previously advanced to Robotic by
Loeb (as embodied in the promissory notes of September 5, 1995),
Loeb has made further advances of the following sums on the dates
indicated: $50,000.00 on December 5, 1995, $50,000.00 on
December 13, 1995, and $50,000.00 on December 27, 1995,
$25,000.00 on January 29, 1996, $25,000.00 on February 7, 1996
and $25,000.00 on March 11, 1996.
7. The within interim loan agreement, and the definitive
agreement and promissory notes to be executed by the parties
hereto as provided above, are not intended to supersede or
replace the promissory notes and the Memorandum of Sale of
Corporate Stock dated September 5, 1995, and the aforesaid
documents dated September 5, 1995, remain in full force and
effect.
LOEB HOLDING CORPORATION, ROBOTIC LASERS, INC.
as agent, Obligee Obligor
By:______________________ By: __________________________
WARREN D. BAGATELLE JOSEPH CUTRONA, President
By: __________________________
MARK A. KENNY,
Vice President
<PAGE>
By:
_________________________
STEVEN E. POLLAN,
Treasurer/Ass't. Secretary
<PAGE>
PROMISSORY NOTE
$25,000.00 March 12, 1996
FOR VALUE RECEIVED, the undersigned (The Maker) promises to
pay to the order of Loeb Holding Corporation, as agent, or to any
successor holder of this Note being referred to herein as the
Lender, or to such other person or at such other place as the
Lender may from time to time designate in writing, the principal
sum of Twenty Five Thousand Dollars ($25,000.00), together with
interest on the unpaid balance from time to time outstanding from
the date of this Note at the rate of interest and in the manner
hereinafter provided.
1. Maturity. The entire outstanding unpaid principal
balance of this Note, together with all accrued and unpaid
interest, and all other charges and payments due under this Note
(herein collectively called the Loan Balance) shall be due and
payable on April 23, 1996, or on such earlier date that this Note
becomes due and payable as a result of acceleration, prepayment
or as otherwise provided herein.
2. Basic Interest Payments. The Maker shall pay interest
on the unpaid principal of this Note at an interest rate of 9%
per annum. Interest shall accrue and shall become due upon the
maturity of this Note, as provided in Paragraph 1 above.
3. Prepayment. This Note may be paid in part or in whole
<PAGE>
at any time prior to maturity without the prior written consent
of the Lender.
4. Repayment Priority. At the time of payment of all or
any portion of the Loan Balance, the proceeds shall be applied by
the Lender first, to the payment of interest then due, second, to
the payment of the then outstanding principal balance under this
Note and, third, to any other payments and charges due under this
Note.
5. Waivers by the maker. The Maker hereby waives
presentment for payment, protest and demand, notice of protest,
demand and of dishonor and nonpayment of this Note. The Maker's
liability hereunder shall remain unimpaired notwithstanding any
extension of the time of payment or other indulgence granted by
the Lender.
6. Governing Law. The Maker agrees that this Note shall be
construed in accordance with and governed by the law of New York.
7. Severability. The terms and provisions of this Note are
severable, and if any term or provision shall be determined to be
superseded, illegal, invalid or otherwise unenforceable in whole
or in part, such determination shall not in any manner impair or
otherwise affect the validity, legality or enforceability of any
of the remaining terms and provisions of this Note.
8. Execution of definitive agreement. The within
promissory note constitutes Exhibit A to a certain agreement
entitled "ROBOTIC LASERS, INC., Third Interim Loan Agreement,
Series 2" by and between Loeb Holding Corporation as lender and
Robotic Lasers, Inc., as borrower. The aforesaid parties
<PAGE>
anticipate that they will execute a permanent definitive
agreement within the next sixty days. In the event that a
permanent financing agreement is executed, the Loan Balance shall
not be due and payable by the undersigned upon the maturity of
this promissory note, and the terms of the definitive agreement
shall in all respects govern the repayment, if any, of the Loan
Balance. Upon execution of the definitive agreement, the Maker
shall surrender the within promissory note.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
promissory note this 12th day of March, 1996.
ROBOTIC LASERS, INC.
By: _____________________________
JOSEPH CUTRONA, President
ATTEST:
___________________________ By: _____________________________
STEVEN E. POLLAN, Secretary MARK A. KENNY, Vice President
By: ___________________________
STEVEN E. POLLAN, Secretary
<PAGE>
EXHIBIT B
The parties agree that the monies advanced hereunder are
designated for the following purposes:
Salaries 12,000.00
Vehicle leases 1,500.00
Vehicle and telephone expenses 2,000.00
Health insurance 2,200.00
Automobile insurance 1,000.00
Miscellaneous business expenss 6,300.00
TOTAL: $ 25.000.00
<PAGE>
EXHIBIT C
Pursuant to Paragraph 8 of the Fourth Interim Loan
Agreement, borrower estimates that the audited pre-tax profits of
RLI for the first three years of operations will be as follows:
1/1/95 - 12/31/95 (Break even)
1/1/96 - 12/31/96 2,200,000.00
1/1/97 - 12/31/97 2,700,000.00
The parties understand that the above figures are rough
estimates only, and that they are subject to revision upwards and
downwards after the final cost of the software development is
determined and after further consultation with CTL's accountants.
<PAGE>
Exhibit 10.14
October 10, 1996
Joseph Cutrona Mark A. Kenny
P.O. Box 2039 P.O. Box 2039
Newark, New Jersey 07114 Newark, New Jersey 07114
Corporate Travel Link, Incorporated Prosoft, Inc.
2401 Morris Avenue 55 Madison Avenue, Suite 200
Union, New Jersey 07083 Morristown, New Jersey 07960
RE: CONSULTING SERVICES TO BE RENDERED BY PROSOFT, INC.
Dear Sirs:
The purpose of this letter is to set forth the understanding between Genisys
Reservation Systems, Inc. ("Genisys"), Corporate Travel Link, Incorporated, a
wholly owned subsidiary of Genisys ("CTL"), Prosoft, Inc. ("Prosoft"), Joseph
Cutrona ("Cutrona") and Mark A. Kenny ("Kenny") relating to the satisfaction of
certain future financial obligations of CTL to be owed to Prosoft. Attached to
this letter as Exhibit A are the itemized details of a cost proposal which
Prosoft has submitted to CTL to render computer software design and other
consulting services to CTL in connection with the design and development of a
computerized vendor payment system (the "Proposal"). The Proposal has been
accepted by CTL and, pursuant to the Proposal, CTL has agreed to pay Prosoft a
fee of $218,000 for such services. In order to assist CTL in the continued
development of the software for the payment system and in partial satisfaction
of CTL's obligation to pay Prosoft $218,000 for its consulting services as
described above, Cutrona, the current Chairman of the Board and President of
both CTL and Genisys, and Kenny, currently a Vice President and Director of both
CTL and Genisys, each hereby agree to transfer 14,533 shares of Genisys common
stock currently owned by them to Prosoft or its designees. In addition to such
transfer of shares of Genisys common stock by Cutrona and Kenny, Genisys hereby
agrees to pay Prosoft $109,000 in cash in partial satisfaction of CTL's
<PAGE>
obligation to pay Prosoft for its consulting
services as described above. Such cash amount shall be payable by Genisys to
Prosoft no later than thirty (30) days after the later to occur of (i) the date
of consummation of the sale by Genisys of its common stock to the public
pursuant to a prospectus, registration statement or other similar disclosure
document filed with the United States Securities and Exchange Commission in
accordance with applicable securities laws and regulations, or (ii) the earlier
to occur of the date of operation of the payment system or the date of
satisfactory completion of the beta testing of all elements of the payment
system. CTL, Genisys and Prosoft each hereby acknowledge and agree that the
aggregate of 29,066 shares of Genisys common stock to be transferred by Cutrona
and Kenny to Prosoft or its designees has a total value of $108,997.50, or $3.75
per share. Prosoft hereby also agrees to accept the 29,066 shares of Genisys
common stock from Cutrona and Kenny and the cash payment from Genisys on the
terms and conditions described herein in full and complete satisfaction of the
$218,000 to be owed to Prosoft by CTL. The 29,066 shares of Genisys common stock
to be transferred from Cutrona and Kenny to Prosoft or its designees are
hereinafter collectively referred to as the "Genisys Shares". Prosoft
acknowledges that the Genisys Shares (i) will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), or the securities
laws of any state and such Genisys Shares may not be sold, transferred, pledged
or hypothecated to any person or entity unless they have been so registered or
Genisys shall have received an opinion of counsel satisfactory to Genisys to the
effect that registration thereof for purposes of transfer is not required under
the Securities Act, (ii) shall contain a legend stating that such Genisys Shares
have not been registered under the Securities Act or the securities laws of any
state and repeating the restrictions on transferability set forth in clause (i)
above, and (iii) shall be registered in the name of Prosoft or its designees. If
Prosoft requests that the Genisys Shares be transferred to its designees,
Prosoft agrees that such designees shall be required to provide CTL and Genisys
with a written acknowledgement that the Genisys Shares will contain the
restrictions on transferability set forth in the preceding sentence before
Cutrona and Kenny shall be required to transfer the Genisys Shares to such
designees. In addition to the restrictions on transferability set forth in the
preceding paragraph, Prosoft hereby agrees that, if (i) Genisys files a
registration statement with the United States Securities and Exchange Commission
to register shares of its common stock in connection with a public offering
within two (2) years after the date of transfer of the Genisys Shares to
Prosoft, and (ii) the underwriter(s) for such public offering so requests,
Prosoft will execute and deliver an agreement, in form and substance reasonably
satisfactory to Prosoft, Genisys and the underwriter(s), pursuant to which
Prosoft will agree not to, directly or indirectly, sell, offer or contract to
sell or grant any option to purchase, transfer, assign or pledge, or otherwise
encumber, or dispose of any of the Genisys Shares (or any securities convertible
into or exercisable or exchangeable for any Genisys Shares) without the prior
written consent of the underwriter(s) for the same period of time after the
effective date of such registration statement as other holders of 5% or more of
the outstanding shares of common stock of Genisys shall have agreed in writing
with such underwriter(s) not to so sell or otherwise transfer or dispose of
their shares of Genisys common stock. If Genisys does not file a registration
statement to register shares of its common stock in connection with a public
offering within two (2) years after the date of transfer of the Genisys Shares
to Prosoft, then Prosoft agrees that, for a period of two (2) years after the
date of transfer of the Genisys Shares to Prosoft, Prosoft will not, directly or
indirectly, sell, offer or contract to sell or grant any option to purchase,
transfer, assign or pledge, or otherwise encumber, or dispose of any of the
Genisys Shares (or any securities convertible into or exercisable or
exchangeable for any Genisys Shares) without the prior written consent of
Genisys. If Prosoft requests that the Genisys Shares be transferred to its
designees, Prosoft agrees that such designees shall be required to execute and
deliver to CTL and Genisys a written agreement whereby such designees agree to
be bound by the terms and provisions of this paragraph before Cutrona and Kenny
shall be required to transfer the Genisys Shares to Prosoft's designees.
Very truly yours,
GENISYS RESERVATION SYSTEMS, INC.
By:________________________________
Title:
Acknowledged, agreed and accepted
this _____ day of October, 1996:
________________________
Joseph Cutrona
________________________
Mark A. Kenny
CORPORATE TRAVEL LINK, INCORPORATED
By:_______________________________
Title:
PROSOFT, INC.
By:_______________________________
Title:
<PAGE>
EXHIBIT A
PROSOFT, INC. PAYMENT SYSTEM DEVELOPMENT The following items indicate all of the
systems, subsystems, on-line applications, database design and reporting systems
necessary to support the payment system, as well as their related costs for
development.
Credit Card Authorizations(*) $ 10,000.00
(Real-time, 7 or less days)
Credit Card Authorizations(*) 10,000.00
(Batch, 8 or more days)
NDC Payment Charges (CREDITS)(*) 20,000.00
Chemical Bank EFTs (DEBITS)(*) 20,000.00
On-Line Reporting System 20,000.00
Database Design (Pinnacle)(*) 15,000.00
PNR Trip Charges (OK TO PAY)
Service Provider Bank Information(*) 12,000.00
CTL Entity/Bank Information(*) 3,000.00
Database Design (Pinnacle Payment System)
Payment System Audit Records(*) 15,000.00
Dispute Debit/Credit Records(*) 10,000.00
Applications
Service Provider Bank Information
Maintenance Application(*) 20,000.00
Dispute Debit/Credit Maintenance
Application(*) 22,000.00
Bank Account Cash Flow Forecaster 10,000.00
Service Provider Payment Reporting System(*) 26,000.00
Credit Card Algorithm Validator Program(*) 5,000.00
Total Development Costs: $218,000.00
(*) Indicates
that development must be completed in order to put system into production.
-3-
<PAGE>
EXHIBIT 21
LIST OF SUBSIDIARIES
1. Corporate Travel Link, Inc.
<PAGE>
EXHIBIT 24.1
consent of independent auditors
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement in Form SB-2 of our report
dated July 8, 1996 relating to the consolidated financial
statements of Genisys Reservation Systems, Inc. and Subsidiary
which appears in such Prospectus.
We also consent to the reference to us under "Experts" in the
Prospectus.
WISS & COMPANY, LLP
Woodbridge, New Jersey
October , 1996
<PAGE>
EXHIBIT 24.2
CONSENT OF McLAUGHLIN & STERN, LLP
We hereby consent to the reference to our firm name under the heading "Legal
Matters" included herein in the Registration Statement (Form SB-2) of Genysis
Reservation Systems, Inc.
McLaughlin & Stern, LLP
New York, New York
October 29, 1996
<PAGE>
Exhibit 28.1
October 22, 1996
Joseph Cutrona Mark A. Kenny
82 Kendall Drive 12 Lisa Drive
Parlin, New Jersey 08859 Chatham, New Jersey 07928
RE: ISSUANCE OF GENISYS COMMON SHARES
Dear Sirs:
The purpose of this letter is to set forth the understanding between Genisys
Reservation Systems, Inc. (Genisys), Joseph Cutrona (Cutrona) and Mark A.
Kenny (Kenny) relating to the issuance of shares of common stock by Genisys to
Cutrona and/or Kenny in repayment of certain shares of Genisys common stock
which have been, or will be, sold or transferred by Cutrona and/or Kenny for the
benefit of the business of either Genisys or Corporate Travel Link, Inc., a
wholly- owned subsidiary of Genisys (CTL). In order to assist in the
furtherance of the development of the business of Genisys and CTL, Cutrona
and/or Kenny have heretofore sold or transferred, and may in the future further
sell or transfer, shares of Genisys common stock owned by them individually to
third parties (all such shares so sold or transferred by Cutrona and/or Kenny
being hereinafter referred to as the "Transferred Shares"). Attached to this
letter as Exhibit A is a description of certain milestone events (each a
"Milestone Event") relating to the future development of the Genisys
computerized reservation system for ground transportation service reservations,
the Genisys computerized payment system and the general business of Genisys and
CTL. In consideration of the sale or transfer of the Transferred Shares by
Cutrona and/or Kenny and upon the satisfactory attainment or completion by
Genisys and CTL of each Milestone Event by no later than the corresponding date
set forth on Exhibit A and in accordance with the other terms and conditions set
forth on Exhibit A and in accordance with the other terms and conditions set
forth on Exhibit A, Genisys will issue to Cutrona and/or Kenny an amount of
shares of Genisys common stock equal to one-sixth (1/6th) of the Transferred
Shares. If for any reason a particular Milestone Event is not attained or
completed by the corresponding date or in accordance with the other terms and
conditions set forth on Exhibit A, Genisys shall have no obligation whatsoever
to issue any common shares to Cutrona and/or Kenny or otherwise reimburse
Cutrona and/or Kenny in an amount equal to one-sixth (1/6th) of the Transferred
Shares and Cutrona and Kenny shall have no right whatsoever to receive any
Genisys common shares or any other consideration in reimbursement for such
Transferred Shares. Any shares of Genisys common stock which are issued to
Cutrona and/or
<PAGE>
________________ Kenny in accordance with this paragraph are hereinafter
collectively referred to as the "Genisys Shares." Cutrona and Kenny acknowledge
that the Genisys Shares (i) will not be registered under the Securities Act of
1933, as amended (the "Securities Act"), or the securities laws of any state and
the Genisys Shares may not be sold, transferred, pledged or hypothecated to any
person or entity unless they have been so registered or Genisys shall have
received an opinion of counsel satisfactory to Genisys to the effect that
registration thereof for purposes of transfer is not required under the
Securities Act, (ii) shall contain a legend stating that the Genisys Shares have
not been registered under the Securities Act or the securities laws of any state
and repeating the restrictions on transferability set forth in clause (i) above,
and (iii) shall be registered in the name of Cutrona and/or Kenny. In addition
to the restrictions on transferability set forth in the preceding paragraph,
Cutrona and Kenny hereby agree that, if (i) Genisys files a registration
statement with the United States Securities and Exchange Commission to register
shares of its common stock in connection with a public offering within two (2)
years after the date of transfer of any of the Genisys Shares to Cutrona and/or
Kenny, and (ii) the underwriter(s) for such public offering so requests, Cutrona
and/or Kenny will execute and deliver an agreement, in form and substance
reasonably satisfactory to Cutrona and/or Kenny will execute and deliver an
agreement, in form and substance reasonably satisfactory to Cutrona and/or
Kenny, Genisys and the underwriter(s), pursuant to which Cutrona and/or Kenny
will agree not to, directly or indirectly, sell, offer or contract to sell or
grant any option to purchase, transfer, assign or pledge, or otherwise encumber,
or dispose of any of the Genisys Shares (or any securities convertible into or
exercisable or exchangeable for any Genisys Shares) without the prior written
consent of the underwriter(s) for the same period of time after the effective
date of such registration statement as other holders of 5% or more of the
outstanding shares of common stock of Genisys shall have agreed in writing with
such underwriter(s) not to so sell or otherwise transfer or dispose of their
shares of Genisys common stock. If Genisys does not file a registration
statement to register shares of its common stock in connection with a public
offering within two (2) years after the date of transfer of the Genisys Shares
to Cutrona and/or Kenny, then Cutrona and Kenny agree that, for a period of two
(2) years after the date of the transfer of the Genisys Shares to Cutrona and/or
Kenny, Cutrona and/or Kenny will not, directly or indirectly, sell, offer or
contract to sell or grant any option to purchase, transfer, assign or pledge, or
otherwise encumber, or dispose of any
<PAGE>
of the Genisys Shares (or any securities
convertible into or exercisable or exchangeable for any Genisys Shares) without
the prior written consent of Genisys. Very truly yours, GENISYS RESERVATION
SYSTEMS, INC. By:___________________________________ Name Title Acknowledged,
agreed and accepted this ____ day of October, 1996. ____________________________
Joseph Cutrona ____________________________ Mark A. Kenny
<PAGE>
EXHIBIT A MILESTONE
EVENT COMPLETION DATE
1. Successful beta testing of the February 1, 1997
Genisys Reservation System with
the SABRE airline reservation
system
2. Successful completion and operation March 1, 1997
of the Genisys Payment System
3. At least twelve (12) major corporate
customers July 1, 1997
utilizing the Genisys
Reservation System For their
ground transportation reservations
4. Successful beta testing of the Genisys July 1, 1997
Reservation System with the Apollo
airline reservation system
5. Maintenance of a cash and short term July 1, 1998
investment reserve of at least $500,000
through and including July 1, 1998
6. Attainment by Genisys of quarterly net December 31, 1998
operating income of at
least $300,000 for the quarter ended
December 31, 1998 income of at least
$300,000 for the quarter ended
December 31, 1998
<PAGE>
