SCHEDULE 13D (Amendment No. 3)
Name of Issuer: Resorts International, Inc.
Title of Class of Securities: Common Stock, $.01 par value per share
CUSIP Number: 76155 40 4
Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications:
Merv Griffin c/o The Griffin Group, Inc.
780 Third Avenue, Suite 1801
New York, New York 10017
(212) 753-1503
Daryl S. Wickstrom, Esq.
Gibson, Dunn & Crutcher
200 Park Avenue
Suite 3216
New York, New York 10166
(212) 351-3970
Date of Event which Requires Filing of this Statement:
May 3, 1994
Check the following box if a fee is paid with the statement: Not
Applicable
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1. NAME OF REPORTING PERSON: Mervyn E. Griffin
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: ###-##-####
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: Not Applicable
3. SEC USE ONLY
4. SOURCE OF FUNDS: OO
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e): Not Applicable
6. CITIZENSHIP OR PLACE OF ORGANIZATION: United States
7. SOLE VOTING POWER: 9,064,965
8. SHARED VOTING POWER: 0
9. SOLE DISPOSITIVE POWER: 9,064,965
10. SHARED DISPOSITIVE POWER: 0
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
9,064,965
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES: Not Applicable
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 21.4%
14. TYPE OF REPORTING PERSON: IN
<PAGE>
Item 1. Security and Issuer.
This statement relates to shares of the common stock, par
value $.01 per share (the "Common Stock"), of Resorts International,
Inc., a Delaware corporation ("RII"), and warrants issued in respect of
such Common Stock. The address of RII's principal executive office is
North Carolina and Boardwalk, Atlantic City, New Jersey 08401.
Item 2. Identity and Background.
(a) This statement is being filed by Mervyn E. Griffin.
(b) Mr. Griffin's business address is c/o The Griffin Group,
Inc., 780 Third Avenue, Suite 1801, New York, New York 10017.
(c) Mr. Griffin is an entertainer and investor and he serves
as the Chairman of the Board of Directors of RII. RII's principal
executive offices are located at North Carolina and the Boardwalk,
Atlantic City, New Jersey 08401. RII is principally engaged, through
subsidiaries, in the ownership, development and operation of casino,
gaming, resort and hotel facilities in Atlantic City, New Jersey.
Mr. Griffin is also Chairman of The Griffin Group, Inc. ("TGG"), an
investment and management company that, among other things, provides
management services to Mr. Griffin's other investments. TGG's principal
executive offices are located at 780 Third Avenue, New York, New York
10017.
(d) Mr. Griffin has not, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations are
similar misdemeanors).
(e) Mr. Griffin has not, during the past five years, been a
party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which he was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or which found any violation with respect to such laws.
(f) Mr. Griffin is a citizen of the United States of America.
Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to the first reorganization of RII and certain of its
subsidiaries under Chapter 11 of Title 11 of the United States Codes
("Chapter 11 Proceedings"), Mr. Griffin received an aggregate of
4,400,000 shares of common stock of RII in exchange for $12,345,918 in
cash, a one-year promissory note in the amount of $11,000,000 secured by
a bank letter of credit, his agreement to the merger of the wholly-owned
parent of RII into a newly formed subsidiary of RII and the cancellation
of the previously outstanding common stock of RII, and his agreement to
waive certain rights in the Chapter 11 Proceedings and to provide
certain services to RII for a period of two years. Mr. Griffin also
made a $10,000 capital contribution to the former parent of RII prior to
the above-referenced merger. The sources of the above-referenced funds
were Mr. Griffin's personal funds.
In connection with a subsequent reorganization of RII in
Chapter 11 Proceedings completed on May 3, 1994, Atlantic Resorts
Holdings, Inc. ("ARH") received a Warrant to purchase 4,666,850 shares
of RII Common Stock. This Warrant was initially to be issued to TGG as
compensation pursuant to a License and Services Agreement, dated as of
September 17, 1992 (the "License Agreement"), between TGG and RII. The
right to receive this Warrant was assigned to ARH by TGG by an
Assignment dated April 20, 1994. The outstanding shares of ARH are
owned by The Merv Griffin Living Trust ("Trust"), for which Mr. Griffin
acts as Trustee and, in that capacity, has investment and voting control
over securities held by the Trust. The Warrant is presently
exercisable. Accordingly, Mr. Griffin may be deemed to be the
beneficial owner of the 4,666,850 shares of RII Common Stock subject to
the Warrant held by ARH.
Item 4. Purpose of Transaction.
Mr. Griffin acquired the first 4,400,000 shares of Common
Stock in connection with the first restructuring of RII pursuant to the
Chapter 11 Proceedings. Mr. Griffin later sold 1,885 shares of Common
Stock on the American Stock Exchange on December 19, 1991.
TGG agreed to accept the Warrant in partial compensation for
services rendered under the License Agreement and subsequently assigned
its rights to receive the Warrant to ARH. The Warrant was issued to ARH
in connection with the second restructuring of RII pursuant to the Plan
of Reorganization of RII and certain of its subsidiaries (the "New Plan
of Reorganization"), which Plan was consummated on May 3, 1994.
Mr. Griffin may from time to time in the future acquire
additional shares of Common Stock of RII pursuant to privately
negotiated transactions or in the open market. The purpose of any such
acquisition would be to increase his ownership interest in RII.
Mr. Griffin is not currently involved in any plan or proposal
that would result in any of the following:
(a) the acquisition by any person of additional securities of
RII, or the disposition of securities of RII;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving RII or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of RII
or any of its subsidiaries;
(d) any change in the present board of directors or
management of RII, including any plans or proposals to change the number
or term of directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or
dividend policy of RII;
(f) any other material change in RII's business or corporate
structure;
(g) changes in RII's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition
of control of the issuer by any person;
(h) causing the Common Stock to be delisted from the American
Stock Exchange;
(i) the Common Stock becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities and Exchange
Act of 1934; or
(j) any action similar to any of those listed above.
Item 5. Interest in the Securities of the Issuer.
(a) Mr. Griffin beneficially owns 9,064,965 shares of the
Common Stock constituting 21.4% of the total issued and outstanding
shares of the Common Stock of RII.
(b) Mr. Griffin exercises the sole voting and dispositive
power for 9,064,965 shares of the Common Stock.
(c) Mr. Griffin initially acquired 4,400,000 shares of Common
Stock in connection with the first restructuring of RII pursuant to the
first Plan of Reorganization in exchange for the consideration described
in Item 3 herein. On December 19, 1991, Mr. Griffin sold 1,885 shares of
Common Stock at $1.00 per share on the American Stock Exchange through
J.P. Morgan Securities, Inc., 60 Wall Street, New York, New York 10260.
ARH received the Warrant on May 3, 1994 for the consideration described
in Item 3 in connection with the second restructuring of RII pursuant to
the New Plan of Reorganization.
(d) No other person is known to have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from
the sale of, the Common Stock beneficially owned by Mr. Griffin.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respects to Securities of the Issuer.
There are no contracts, arrangements, understandings or
relationships between Mr. Griffin and anyone else with respect to any
securities of RII, other than an understanding with Mr. David P. Hanlon,
former President and Chief Executive Officer of RII, pursuant to which
Mr. Griffin is to be granted a right of first refusal upon any
disposition of shares of Common Stock acquired by Mr. Hanlon pursuant to
the option granted to Mr. Hanlon under a prior Senior Management Stock
Option Plan of RII. A definitive agreement has not yet been executed by
the parties. Pursuant to Mr. Hanlon's option, he has the right to
acquire up to 1,089,275 shares of Common Stock (the "Option Shares").
The option is presently exercisable.
Item 7. Material to be Filed as Exhibits.
A. Warrant to Purchase Common Stock
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true,
complete and correct.
Dated: June 9, 1994 /s/MERVYN E. GRIFFIN
MERVYN E. GRIFFIN
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY OTHER
JURISDICTION AND HAS BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREUNDER.
THE SALE, PLEDGE OR OTHER TRANSFER OF THIS SECURITY IS RESTRICTED IN
ACCORDANCE WITH THE SECURITIES ACT AND SUCH SECURITIES LAWS. THE HOLDER
OF THIS SECURITY AGREES THAT THIS SECURITY MAY NOT BE SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO RESORTS INTERNATIONAL, INC.,
(2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND IN COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (3) IN
COMPLIANCE WITH OR PURSUANT TO EXEMPTIONS FROM THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND SECURITIES LAWS OF
ANY STATE.
WARRANT
TO PURCHASE COMMON STOCK OF
RESORTS INTERNATIONAL, INC.
No. 1
THIS IS TO CERTIFY THAT, for value received, ATLANTIC RESORTS
HOLDINGS, INC. is entitled to purchase from RESORTS INTERNATIONAL, INC.,
a corporation organized under the laws of the State of Delaware (the
"Company"), at any time or from time to time following the date hereof
and prior to 5:00 p.m. (New York City time) on May 3, 1998 (the
"Expiration Date") at the Warrant Office (as defined in Section 2.1), at
the exercise price stated in Section 1.6 (the "Exercise Price"),
4,666,850 duly authorized, validly issued, fully paid and nonassessable
shares of Common Stock (as defined in Section 3.1(a)) and is entitled
also to exercise the other appurtenant rights, powers and privileges
hereinafter set forth.
ARTICLE I
EXERCISE OF WARRANTS
1.1 Method of Exercise. To exercise this Warrant in whole or
in part, the holder hereof shall deliver to the Company, at any time or
from time to time following the date hereof and prior to 5:00 p.m. (New
York City time) on the Expiration Date at the Warrant Office, (a) a
written notice, in substantially the form of the Subscription Notice
attached as Schedule A hereto, of such holder's election to exercise
this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (b) a bank or certified check in an amount equal
to the payment of the aggregate Exercise Price for the number of shares
of Common Stock being purchased and (c) this Warrant. The Company
shall, as promptly as practicable and in any event within 14 days
thereafter, execute and deliver or cause to be executed and delivered,
in accordance with said notice, a certificate or certificates
representing the aggregate number of shares of Common Stock specified in
said notice. The stock certificate or certificates so delivered shall
be in denominations as may be specified in said notice and shall be
issued in the name of such holder or such other name as shall be
designated in said notice. Such certificate or certificates shall be
deemed to have been issued, and such holder or holders or any other
person so designated to be named therein shall be deemed for all
purposes to have become the holder of record of such shares of Common
Stock, as of the date said notice, payment and Warrant is received by
the Company as aforesaid. If this Warrant shall have been exercised
only in part, the Company shall, upon surrender of this Warrant, at the
time of delivery of said certificate or certificates, deliver to such
holder a new Warrant evidencing the rights of such holder to purchase
the remaining shares of Common Stock subject to this Warrant, which new
Warrant shall in all other respects be identical with this Warrant, or,
at the request of such holder, appropriate notation may be made on this
Warrant and the same returned to such holder. The Company shall pay all
expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of such stock certificates or new
Warrants, except that the holder hereof shall (i) pay and satisfy (or
deliver funds to the Company in an amount sufficient to pay and satisfy)
all stock transfer taxes which shall be payable upon the issuance of
such stock certificate or certificates, if such stock certificates shall
be registered in a name or names other than the name of the holder
hereof, and (ii) pay and satisfy (or deliver funds to the Company in an
amount sufficient to pay and satisfy) any federal, state or local
withholding taxes payable in connection with the issuance of shares of
Common Stock hereunder.
1.2 Warrant Shares to be Fully Paid and Nonassessable. All
shares of Common Stock issued upon the exercise of this Warrant (the
"Warrant Shares") shall be validly issued, fully paid and nonassessable.
1.3 Fractional Shares. Upon any exercise of this Warrant,
the Company shall not issue a certificate representing any fraction of a
share of Common Stock. In lieu of such issuance, the Company shall pay
to the holder of this Warrant cash in an amount equal to the Current
Market Value of a share of Common Stock (as defined in Section 3.1(a))
multiplied by such fraction.
1.4 Legend on Warrant Shares. Each certificate for Warrant
Shares shall bear a legend substantially as follows:
THE SECURITIES REFERRED TO HEREIN HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION AND
HAVE BEEN SOLD IN RELIANCE UPON EXEMPTIONS THEREUNDER. THE
SALE, PLEDGE OR OTHER TRANSFER OF SUCH SECURITIES IS
RESTRICTED IN ACCORDANCE WITH THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE HOLDER HEREOF AGREES THAT THESE
SECURITIES MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (1) TO THE COMPANY, (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS, OR (3) IN
COMPLIANCE WITH OR PURSUANT TO EXEMPTIONS FROM THE
REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legends (except a new certificate
issued upon completion of a public distribution pursuant to a
registration statement under the Securities Act of securities
represented thereby) also shall bear such legends unless, in the case of
the legend regarding registration under the Securities Act, in the
opinion of counsel reasonably acceptable to the Company, the securities
represented thereby no longer require such legend.
1.5 Acknowledgment of Continuing Obligation. The Company
will, at the time of any exercise of this Warrant in whole or in part,
upon reasonable request of the holder hereof, acknowledge in writing its
continuing obligation to the holder hereof in respect of any rights to
which the holder shall continue to be entitled after such exercise in
accordance with this Warrant; provided, however, that the failure of the
holder hereof to make any such request shall not affect the continuing
obligation of the Company to the holder in respect of such rights.
1.6 Exercise Price. The price per share at which each share
of Common Stock will be purchased upon exercise of this Warrant shall be
the lesser of (a) $1.875 and (b) the average of the daily closing prices
for the 20 consecutive trading days following May 3, 1994, subject to
adjustment pursuant to Article III. For purposes of the preceding
sentence, the closing price for each day shall be the last such reported
sales price regular way or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices regular way
for such day, in each case on the principal national securities exchange
or in the NASDAQ-National Market System to which the shares of Common
Stock are listed or admitted to trading, or, if not listed or admitted
to trading, the average of the closing bid and asked prices of the
Common Stock in the over-the-counter market as reported by NASDAQ or any
comparable system, or if the Common Stock is not listed on NASDAQ or a
comparable system, the average of the closing bid and asked prices as
furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Board of Directors of
the Company acting in good faith.
ARTICLE II
WARRANT OFFICE; TRANSFER,
DIVISION OR COMBINATION OF WARRANTS
2.1 Warrant Office. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office
shall initially be the Company's office at 1133 Boardwalk, Atlantic
City, New Jersey 08401 and may subsequently be such other office of the
Company or of any transfer agent of the Common Stock as to which written
notice has previously been given to all the holders of Warrants.
2.2 Ownership of Warrant. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon
made by anyone other than the Company) for all purposes and shall not be
affected by any notice to contrary.
2.3 Transfer of Warrants. The Company agrees to maintain at
the Warrant Office books for the registration of transfer of the
Warrants.
ARTICLE III
ANTI-DILUTION PROVISIONS
3.1 Mandatory Adjustments. (a) In addition to the terms
defined elsewhere in this Warrant, as used in this Warrant, the
following terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued subsequent to the Effective Date other than (A) shares
issued upon exercise of the Warrants and (B) any shares of Common Stock
issued in connection with any Convertible Securities, warrants or
options granted after the Effective Date which have an exercise or
conversion price per share equal to or greater than the Current Market
Value on the date they are granted.
"Capitalized Lease" means, with respect to any Person, any
lease or any other agreement with respect to the use of property that,
in accordance with GAAP, should be capitalized on the lessee's or user's
balance sheet.
"Capitalized Lease Obligation" of any person means, as of any
date as of which the amount thereof is to be determined, the amount of
the liability capitalized in respect of a Capitalized Lease of such
Person.
"Common Stock" means the common stock, par value $.01 per
share, of the Company as constituted on May 3, 1994 and any capital
stock into which such common stock thereafter may be changed on one or
more occasions as a result of a stock split, stock dividend or
combination or reclassification of shares, or through a merger,
consolidation, reorganization or recapitalization, or by any other
means, and in addition to such common stock also includes capital stock
of the Company of any other class that is not preferred as to dividends
or assets over any other class of capital stock of the Company and that
is not subject to redemption; provided, however, that the shares of
Common Stock receivable upon exercise of the Warrants shall include only
shares designated as Common Stock on May 3, 1994; and provided, further,
however, that "Common Stock" shall not include shares of the Company's
Class B Redeemable Common Stock, par value $.01 per share.
"Convertible Securities" means Indebtedness, shares of stock
or other securities that, with or without payment of additional
consideration in cash or property, are convertible into or exchangeable
for Additional Shares of Common Stock, either immediately or upon the
arrival of a specified date or the happening of a specified event.
"Current Market Value" of a share of Common Stock means, for
each trading day: (A) the closing price for Common Stock as reported on
the American Stock Exchange; (B) if the Common Stock is not listed on
the American Stock Exchange, the closing price as reported on the prin
cipal national securities exchange on which the Common Stock is listed;
(C) if the Common Stock is not listed on any national securities
exchange, the closing price in the over-the-counter market as reported
on the NASDAQ/National Market System; or (D) if no such closing price is
available, the fair market value as determined in good faith by the
Board of Directors of the Company.
"Current Warrant Price" per share of Common Stock, as of any
date, means the amount equal to the quotient resulting from dividing the
Exercise Price per Stock Unit in effect on such date by the number of
shares (including any fractional share) of Common Stock comprising a
Stock Unit on such date.
"Effective Date" means the effective date of the Company's
plan of reorganization filed pursuant to chapter 11 of title 11 of the
United States Code on March 21, 1994.
"Indebtedness" of any Person means, as of any date as of which
the amount thereof is to be determined, (i) all obligations of such
Person that, in accordance with generally accepted accounting
principles, would be classified on a balance sheet of such Person as
debt or indebtedness, including all obligations of such Person in
respect of borrowed money or evidenced by bonds, debentures, notes or
other evidences of indebtedness, and (ii) in addition (A) all
obligations that are secured by any Lien existing on property owned by
such Person whether or not the obligations secured thereby shall have
been assumed by such Person, (B) all Capitalized Lease Obligations of
such Person, (C) all obligations of such Person to purchase any
materials, supplies or other property, or to obtain the services of any
Person, if the relevant contract or other related document requires that
payment for such materials, supplies or other property, or for such
services, shall be made regardless of whether or not delivery of such
materials, supplies or other property is ever made or tendered or such
services are ever performed or tendered, (D) all obligations of such
Person to advance or supply funds to, or to purchase property or
services from, any other Person in order to maintain the working
capital, net worth or any other balance sheet condition of such other
Person or to pay debts, dividends or expenses of such other Person or to
assure such other Person or any third party against any liability or
loss and (E) guarantees, endorsements and other contingent obligations,
direct or indirect, on the part of such Person (other than endorsement
of negotiable instruments for collection in the ordinary course of
business) for the payment, discharge or satisfaction of Indebtedness of
others to pay the same or to the owners of such indebtedness of others
of the character described above, including any agreement, contingent or
otherwise, to (x) purchase such indebtedness of others, (y) purchase or
sell property or services primarily to permit the debtor in respect of
such indebtedness of others to pay the same or the owner of such
Indebtedness of others to avoid loss or (z) supply funds to or invest in
any such debtor.
"Lien" means: (i) any interest in property (whether real,
personal or mixed and whether tangible or intangible) that secures an
obligation owed to, or a claim by, a Person other than the owner of such
property, whether such interest is based on the common law, statute or
contract, including without limitation any such interest arising from a
Capitalized Lease, arising from a mortgage, charge, pledge, security
agreement, conditional sale or trust receipt, arising by way of the
right of set-off, or deposit in trust, or arising from a lease,
consignment or bailment given for security purposes; (ii) any
encumbrances upon such property that does not secure such an obligation;
and (iii) any exception to or defect in the title to or ownership in
terest in such property, including without limitation reservations,
rights of entry, possibilities of reverter, encroachments, easements,
right of way, restrictive covenants, leases, licenses and profits a
prendre.
"Person" includes an individual, a corporation, an
association, a partnership, a trust or estate, a government and any
agency or political subdivision thereof or any other entity.
"Stock Unit" means one share of Common Stock until the
occurrence of any adjustment specified in this Section 3.1 and
thereafter means such other number of shares of Common Stock as may
result from any one or more of such adjustments.
"Warrants" means the warrants, of which this Warrant is one,
to purchase up to an aggregate of 4,666,850 shares of Common Stock which
were originally issued by the Company on May 3, 1994.
(b) If at any time or from time to time the Company shall (i)
take a record of the holders of the Common Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution
of, shares of Common Stock, (ii) subdivide the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (iii)
combine the outstanding shares of Common Stock into a smaller number of
shares of Common Stock then the number of shares of Common Stock
thereafter constituting a Stock Unit shall be adjusted so as to consist
of the same number of shares that a record holder of the number of
shares of Common Stock constituting a Stock Unit immediately prior to
the happening of such event would own or be entitled to receive after
the happening of such event.
(c) If at any time or from time to time the Company shall
take a record of the holders of the Common Stock for the purpose of
entitling them to receive any dividend or other distribution of (i) any
evidence of Indebtedness (other than Convertible Securities), (ii) any
share of its capital stock (other than Convertible Securities or
Additional Shares of Common Stock) or any other securities or property
(other than cash) or (iii) any warrant or other right to subscribe for
or purchase any Indebtedness (other than Convertible Securities), any
shares of its capital stock (other than Convertible Securities or
Additional Shares of Common Stock) or any other securities or property,
then the number of shares of Common Stock thereafter constituting a
Stock Unit shall be adjusted to that number determined by multiplying
the number of shares of Common Stock constituting a Stock Unit
immediately prior to such adjustment by a fraction the numerator of
which is the Current Market Value of a share of Common Stock at such
record date and the denominator of which is the Current Market Value of
a share of Common Stock less the portion of any such cash so
distributable and of the value of such Indebtedness, shares of capital
stock, other securities or property or warrants or other subscription or
purchase rights so distributable that are applicable to one share of
Common Stock. A reclassification of the Common Stock into shares of
Common Stock and shares of any other class of capital stock shall be
deemed a distribution by the Company to the holders of the Common Stock
of such shares of such other class of capital stock within the meaning
of this Section 3.1(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common
Stock as part of such reclassification, shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common
Stock within the meaning of Section 3.1(b).
(d) If at any time or from time to time, except as provided
in this Section 3.1(d), the Company shall issue or sell any Additional
Shares of Common Stock for a consideration per share less than the
Current Market Value per share of Common Stock, then the number of
shares of Common Stock thereafter constituting a Stock Unit shall be
adjusted to that number determined by multiplying the number of shares
of Common Stock constituting a Stock Unit immediately prior to such
adjustment by a fraction (i) the numerator of which is the number of
shares of Common Stock outstanding immediately prior to the issuance of
such Additional Shares of Common Stock, plus the number of Additional
Shares of Common Stock deemed to be outstanding pursuant to Sections
3.1(e) and 3.1(f) immediately prior to the issuance of Additional Shares
of Common Stock as contemplated by this Section 3.1(d) plus the number
of such Additional Shares of Common Stock intended to be issued or sold
as contemplated by this Section 3.1(d) (without giving effect to the
adjustment then being made) and (ii) the denominator of which is the
number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock, plus the number of
Additional Shares of Common Stock deemed to be outstanding pursuant to
Sections 3.1(e) and 3.1(f) immediately prior to the issuance of
Additional Shares of Common Stock as contemplated by this Section
3.1(d), plus the number of shares of Common Stock that the aggregate
consideration for the total number of such Additional Shares of Common
Stock intended to be issued or sold as contemplated by this Section
3.1(d) (without giving effect to the adjustment then being made) would
purchase at such Current Market Value. For the purposes of this Section
3.1(d), the date as of which the Current Market Value and the Exercise
Price per share of Common Stock shall be computed shall be the earlier
of the date on which the Company enters into a firm contract for the
issuance of such Additional Shares of Common Stock or the date of actual
issuance of such Additional Shares of Common Stock. The provisions of
this Section 3.1(d) shall not apply to any issuance of Additional Shares
of Common Stock for which an adjustment is provided under Section
3.1(b). No adjustment of the number of shares of Common Stock
constituting a Stock Unit shall be made under this Section 3.1(d) upon
the issuance of any Additional Shares of Common Stock that are issued
pursuant to the exercise of any warrants or other subscription or
purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities, if any such adjustment
previously shall have been made upon the issuance of such warrants or
other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any warrant or other rights therefor) pursuant to
Sections 3.1(e) or 3.1(f).
(e) If at any time or from time to time the Company shall
take a record of the holders of the Common Stock for the purpose of
entitling them to receive a distribution of, or in any manner (whether
directly or by assumption in a merger in which the Company is the
surviving corporation and in which the shareholders of the Company
immediately prior to the merger continue to own at least 51% of the
Common Stock outstanding immediately after the merger or otherwise)
shall issue or sell any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible
Securities, whether or not the rights to exercise, exchange or convert
thereunder are immediately exercisable, and the consideration per share
for which Additional Shares of Common Stock at any time thereafter may
be issuable pursuant to the terms of such Convertible Securities shall
be less than the Current Market Value per share of Common Stock, then
the number of shares of Common Stock thereafter constituting a Stock
Unit shall be adjusted as provided in Section 3.1(d) on the basis that
(i) the maximum number of Additional Shares of Common Stock issuable
pursuant to all such warrants or other rights or necessary to effect the
conversion or exchange of all such Convertible Securities shall be
deemed to have been issued and outstanding as of the date of the
determination of the Current Market Value per share of Common Stock as
hereinafter provided, and (ii) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to
be the minimum consideration received or receivable by the Company for
the issuance of such Additional Shares of Common Stock pursuant to the
terms of such warrants, rights or Convertible Securities. For the
purposes of this Section 3.1(e), the date as of which the Current Market
Value per share of Common Stock shall be computed shall be the earliest
of (x) the date on which the Company shall take a record of the holders
of the Common Stock for the purpose of entitling them to receive any
such warrants or other rights, (y) the date on which the Company shall
enter into a firm contract for the issuance of such warrants or other
rights and (z) the date of actual issuance of such warrants or other
rights.
(f) If at any time or from time to time the Company shall
take a record of the holders of Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Company is
the surviving corporation and in which the shareholders of the Company
immediately prior to the merger continue to own at least 51% of the
Common Stock outstanding immediately after the merger or otherwise)
issue or sell, any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
consideration per share for which Additional Shares of Common Stock may
at any time thereafter be issuable pursuant to the terms of such Convert
ible Securities shall be less than the Current Market Value per share of
Common Stock, then the number of shares of Common Stock thereafter
constituting a Stock Unit shall be adjusted as provided in Section
3.1(d) on the basis that (i) the maximum number of Additional Shares of
Common Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued and
outstanding as of the date for the determination of the Current Market
Value per share of Common Stock as hereinafter provided and (ii) the
aggregate consideration for such maximum number of Additional Shares of
Common Stock shall be deemed to be the minimum consideration received or
receivable by the Company for the issuance of such Additional Shares of
Common Stock pursuant to the terms of such Convertible Securities. For
the purposes of this Section 3.1(f), the date as of which the Current
Market Value per share of Common Stock shall be computed shall be the
earliest of (x) the date on which the Company shall take a record of the
holders of Common Stock for the purpose of entitling them to receive any
such Convertible Securities, (y) the date on which the Company shall
enter into a firm contract for the issuance of such Convertible
Securities and (z) the date of actual issuance of such Convertible
Securities. No adjustment of the number of shares of Common Stock
constituting a Stock Unit shall be made under this Section 3.1(f) upon
the issuance of any Convertible Securities that are issued pursuant to
the exercise of any warrants or other subscription or purchase rights
therefor, if any such adjustment shall previously have been made upon
the issuance of such warrants or other rights pursuant to Section
3.1(e).
(g) If, at any time after any adjustment of the number of
shares of Common Stock constituting a Stock Unit shall have been made
pursuant to Section 3.1(e) or 3.1(f) on the basis of the issuance of
warrants or other rights or the issuance of Convertible Securities, or
after any new adjustments of the number of shares of Common Stock
constituting a Stock Unit shall have been made pursuant to this Section
3.1(g): (i) such warrants or rights or the right of conversion or
exchange under such Convertible Securities shall expire in whole or in
part and a portion of such warrants or rights, or the right of
conversion or exchange in respect of a portion of such Convertible
Securities, as the case may be, shall not have been exercised, or, (ii)
the consideration per share, for which shares of Common Stock are
issuable pursuant to such warrants or rights or the terms of such Con
vertible Securities, shall be increased solely by virtue of provisions
therein contained for an automatic increase in such consideration per
share upon the arrival of a specified date or the happening of a
specified event, such previous adjustment shall be rescinded and
annulled and the Additional Shares of Common Stock that were deemed to
have been issued by virtue of the computation made in connection with
the adjustment so rescinded and annulled, shall no longer be deemed to
have been issued by virtue of such computation. Thereupon, a
recomputation shall be made of the effect of such rights or options or
Convertible Securities on the basis of (i) treating the number of
Additional Shares of Common Stock, if any, theretofore actually issued
or issuable pursuant to the previous exercise of such warrants or rights
or such right of conversion or exchange under such Convertible
Securities, as having been issued on the date or dates of such original
adjustment and on the exact terms on which the original adjustment was
made, and (ii) treating any such warrants or rights or any such
Convertible Securities that then remain outstanding and exercisable,
exchangeable or convertible into Additional Shares of Common Stock as
having been granted or issued immediately after the time of such
increase of the consideration per share for which shares of Common Stock
are issuable under such warrants or rights or Convertible Securities;
and, if and to the extent called for by the foregoing provisions of this
Section 3.1(g) on the basis aforesaid, a new adjustment of the number of
shares of Common Stock constituting a Stock Unit shall be made, which
new adjustment shall supersede the previous adjustment so rescinded and
annulled.
(h) The following provisions shall be applicable to the
making of adjustments of the number of shares of Common Stock
constituting a Stock Unit provided for in this Section 3.1:
(i) The sale or other disposition of any issued shares
of Common Stock owned or held by or for the account of the Company shall
be deemed an issuance thereof for the purposes of this Section 3.1.
(ii) To the extent that any Additional Shares of Common
Stock or any Convertible Securities or any warrants or other rights to
subscribe for or purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for a cash consideration, the
consideration received by the Company therefor shall be deemed to be the
amount of the cash received or receivable by the Company therefor or, if
such Additional Shares of Common Stock or Convertible Securities are
offered by the Company for subscription, the subscription price or, if
such Additional Shares of Common Stock or Convertible Securities are
sold to underwriters or dealers for public offering without a
subscription offering, the initial public offering price, in any such
case excluding any amounts paid or receivable for accrued interest or
accrued dividends, or otherwise in connection with, the issue thereof.
To the extent that such issuance shall be for a consideration other than
cash, except as herein otherwise expressly provided, the amount of such
consideration shall be deemed to be the fair market value of such
consideration at the time of such issuance. In case any Additional
Shares of Common Stock or any Convertible Securities or any warrants or
other rights to subscribe for or purchase such Additional Shares of
Common Stock or Convertible Securities shall be issued in connection
with any merger in which the Company issues any securities, the amount
of consideration therefor shall be deemed to be the fair market value of
such portion of the assets and business of the nonsurviving corporation
as is determined to be attributable to such Additional Shares of Common
Stock, Convertible Securities, warrants or other rights, as the case may
be, in good faith by the Board of Directors of the Company. In the
event of any consolidation or merger of the Company in which the Company
is not the surviving corporation or in the event of any sale of all or
substantially all the assets of the Company for stock or other
securities of any corporation, the Company shall be deemed to have
issued a number of Additional Shares of Common Stock or Convertible
Securities of the other corporation computed on the basis of the actual
exchange ratio on which the transaction was predicated and the
consideration received for such issuance shall be equal to the fair
market value on the date of such transaction, of such stock or
securities of the other corporation, and if any such calculation results
in adjustment in the number of shares of Common Stock comprising a Stock
Unit immediately prior to such merger, consolidation or sale for
purposes of this Section 3.1(h), such merger, consolidation or sale
shall be deemed to have been made after giving effect to such
adjustment. The consideration for Additional Shares of Common Stock
issuable pursuant to any warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the Company for
issuing such warrants or other rights, plus the additional consideration
payable to the Company upon the exercise of such warrants or other
rights. The consideration for any Additional Shares of Common Stock
issuable pursuant to the terms of any Convertible Securities shall be
the consideration received by the Company for issuing any warrants or
other rights to subscribe for or purchase such Convertible Securities,
plus the consideration paid or payable to the Company in respect of the
subscription for or purchase of such Convertible Securities, plus the
additional consideration, if any, payable to the Company upon the
exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional
Shares of Common Stock or Convertible Securities in payment or
satisfaction of any dividends upon any class of capital stock other than
Common Stock, the Company shall be deemed to have received for such
Additional Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or satisfied.
(iii) The adjustments required by this Section 3.1 shall
be made whenever and as often as any specified event requiring an
adjustment shall occur, except that no adjustment of the number of
shares of Common Stock constituting a Stock Unit that would otherwise be
required shall be made (except in the case of a subdivision or
combination of shares of Common Stock, as provided for in Section
3.1(b)) unless and until such adjustment either by itself or with other
adjustments not previously made adds or subtracts at least 1/20th of a
share to or from the number of shares of Common Stock constituting a
Stock Unit immediately prior to the making of such adjustment. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 3.1
and not previously made, would result in a minimum adjustment. For the
purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(iv) In computing adjustments under this Section 3.1,
fractional interests in Common Stock shall be taken into account to the
nearest one-thousandth of a share.
(v) If the Company shall take a record of the holders of
the Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights and shall, thereafter
and before the distribution to shareholders thereof, legally abandon its
plan to pay or deliver such dividend, distribution, subscription or
purchase rights, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(i) If the Company shall reorganize its capital, reclassify
its capital stock, merge or consolidate into another corporation, or
sell, transfer or otherwise dispose of all or substantially all its
property, assets or business to another corporation and, pursuant to the
terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or
acquiring corporation are to be received by or distributed to the
holders of shares of Common Stock, then the holder shall have the right
thereafter to receive, upon exercise of this Warrant, Stock Units
comprising the number of shares of common stock of the successor or
acquiring corporation receivable, upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition
of assets, by a holder of the number of shares of Common Stock
constituting a Stock Unit immediately prior to such event. If, pursuant
to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, any cash, shares of stock or
other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) are to be received by
or distributed to the holders of shares of Common Stock in addition to
common stock of the successor or acquiring corporation, there shall be a
reduction of the Current Warrant Price per Stock Unit in an amount equal
to the amount of any such cash and of the value of such shares of stock
or other securities or property to be received by or distributed to the
holders of shares of Common Stock applicable to the number of shares of
Common Stock then constituting a Stock Unit. Upon any such
reorganization, reclassification, merger, consolidation or disposition
of assets, the successor or acquiring corporation shall expressly assume
the due and punctual observance and performance of the covenants and
conditions of this Warrant to be performed and observed by the Company,
subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in
order to provide for adjustments of Stock Units which shall be as nearly
equivalent as practicable to the adjustments provided for in this
Section 3.1(i). For the purposes of this Section 3.1(i), "common stock
of the successor or acquiring corporation" shall include stock of such
corporation of any class that is not preferred as to dividends or assets
over any other class of stock of such corporation and that is not
subject to redemption and also shall include any evidences of
indebtedness, shares of stock or other securities that are convertible
into or exchangeable for any such stock, either immediately or upon the
occurrence of a specified date or the happening of a specified event and
any warrant or other right to subscribe for or purchase any such stock.
The foregoing provision of this Section 3.1(i) similarly shall apply to
successive reorganizations, reclassifications, mergers, consolidations
or dispositions of assets.
(j) If at any time or from time to time the Company shall
take any action affecting the Common Stock, other than an action
described in this Section 3.1, unless in the opinion of the Board of
Directors of the Company such action will not have a materially adverse
effect upon the rights of the holders of Warrants, the number of shares
of Common Stock or other stock constituting a Stock Unit, or the Current
Warrant Price, shall be adjusted in such manner and at such time as the
Board of Directors of the Company may determine to be equitable in the
circumstances.
(k) Irrespective of any adjustments of the number or kind of
securities issuable upon exercise of this Warrant or the Exercise Price,
this Warrant may continue to express the same number of shares of Common
Stock and Exercise Price as stated prior to any such adjustments.
(l) The Company shall make any computation required under
this Section 3.1. If any such computation is challenged by a holder of
Warrants, a "Big Six" accounting firm ("Accounting Firm") chosen by the
Company shall make the computation. The holder shall bear all costs
incurred in connection with the services of such Accounting Firm unless
the calculation made by the Accounting Firm (i) differs from the
Company's calculation by more than 15% and (ii) such difference is
detrimental to the holder, in which case the Company shall bear all such
costs.
(m) Whenever there is an adjustment in the Exercise Price or
in the number or kind of securities constituting a Stock Unit, as
provided in this Section 3.1, the Company shall (i) promptly file in the
custody of its Secretary or Assistant Secretary a certificate signed by
an officer of the Company, showing in detail the facts requiring such
adjustment and the number and kind of securities constituting a Stock
Unit after such adjustment, and (ii) cause a copy of such calculation of
the adjustment and a notice stating that such adjustment has been
affected and stating the Exercise Price then in effect and the number
and kind of securities constituting a Stock Unit to be sent to the
holders.
(n) If the Company shall propose (i) to pay a dividend
payable in stock of any class to the holders of shares of Common Stock
or to make any other dividend or distribution to the holders of shares
of Common Stock, (ii) to offer to the holders of shares of Common Stock
rights to subscribe for or to purchase shares of Common Stock or shares
of stock of any class or any other securities, or rights or options
convertible into or exchangeable for shares of Common Stock, (iii) to
affect any reclassification of the Common Stock (other than a
reclassification involving only the subdivision or combination of
outstanding shares of Common Stock), (iv) to effect any capital
reorganization, (v) to effect any consolidation, merger or sale,
transfer or other disposition of all or substantially all of its
property, assets or business or (vi) to effect the liquidation,
dissolution or winding up of the Company, the Company will give notice,
at least ten days prior to the relevant record date for determining
holders entitled to vote on any such transaction or to receive any such
dividend or distribution, of such proposed action to the holder of this
warrant specifying the date on which a record is to be taken for the
purposes of such stock dividend, distribution or rights, or the date on
which such reclassification, reorganization, consolidation, merger,
sale, transfer, disposition, liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of
shares of Common Stock, if any such date is to be fixed, and setting
forth such facts with respect thereto as shall be reasonably necessary
to indicate the effect of such action on the Common Stock and the number
and kind of any other shares of stock that will constitute a Stock Unit,
and the Exercise Price, after giving effect to any adjustment that will
be required as a result of such action.
3.2 Voluntary Adjustment by the Company. The Company may at
its option, at any time during the term of this Warrant, reduce the then
current Exercise Price to any amount deemed appropriate by a majority of
the independent members of the Board of Directors of the Company;
provided, however, that if the Company elects so to reduce the then
current Exercise Price, such reduction shall remain in effect for at
least a 15-day period, after which time the Company may, at its option,
reinstate the Exercise Price in effect prior to such reduction.
3.3 No Adjustment for Dividends. Except as expressly
provided in Section 3.1, no adjustment in respect of any dividends or
other payments or distributions made to holders of securities issuable
upon exercise of this Warrant shall be made during the term of this
Warrant or upon the exercise of this Warrant.
ARTICLE IV
CERTAIN COVENANTS OF THE COMPANY
4.1 Reservation of Stock. The Company shall reserve and set
apart and have at all times, free from preemptive rights and free from
liens, claims and encumbrances created by the Company, a number of
shares of authorized but unissued Common Stock or other securities or
property deliverable upon the exercise of this Warrant sufficient to
enable it at any time to fulfill all its obligations hereunder.
4.2 Fully Paid Stock. Before taking any action which would
cause an adjustment reducing the Exercise Price below the then par value
of the shares of Common Stock or other securities issuable hereunder
upon exercise of this Warrant, the Company will take any corporate
action which may be necessary in order that the Company may validly and
legally issue fully paid and nonassessable shares of such Common Stock
or other securities issuable hereunder at such adjusted Exercise Price.
4.3 Certain Registrations. If any shares of Common Stock or
other securities issuable hereunder required to be reserved for the
purposes of exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than
the Securities Act) or under any state law (other than securities or
Blue Sky laws) before such shares or other securities may be issued upon
exercise of this Warrant, the Company will, at its expense and as
expeditiously as possible, cause such shares or other securities to be
duly registered or approved, as the case may be.
ARTICLE V
MISCELLANEOUS
5.1 Entire Agreement. This Warrant shall constitute the
entire agreement between the holder hereof and the Company with respect
to the issuance of this Warrant and the Warrant Shares and related
transactions and shall supersede all previous negotiations, commitments,
writings, understandings and agreements (whether written or oral) with
respect thereto.
5.2 Successors and Assigns. This Warrant and the rights
evidenced hereby shall inure to the benefit of and be binding upon the
successor and assigns of the Company and the holder hereof, subject to
the limitations on assignment and transfer set forth in the legend at
the head of this Warrant.
5.3 Waiver and Amendment. Any term or provision of this
Warrant may be waived at any time by the party which is entitled to the
benefits thereof and any term or provision of this Warrant may be
amended or supplemented at any time by agreement of the holder hereof
and the Company, except that any waiver of any term or condition, or any
amendment or supplementation, of this Warrant must be in writing and
signed by the holder hereof and the Company. A waiver of any breach or
failure to enforce any of the terms or conditions of this Warrant must
be in writing and signed by the holder hereof and the Company. A waiver
of any breach or failure to enforce any of the terms or conditions of
this Warrant shall not in any way affect, limit or waive a party's
rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
5.4 Governing Law; Binding Effect; Severability. (a) This
Warrant shall be enforced, governed and construed in all respects in
accordance with the laws of the State of New York without giving effect
to conflicts of law rules or principles.
(b) This Warrant and the rights, powers and duties set forth
herein shall be binding upon and inure to the benefit of the parties
hereto, and their respective heirs, estates, legal representatives,
successors and permitted assigns.
(c) If any provision of this Warrant is valid or unenforceable
under any applicable statute or rule of law, then such provision shall
be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law.
Any provision hereof which may prove invalid or unenforceable under any
law shall not affect the validity or enforceability of any other
provision hereof.
5.5 File of Warrant. A copy of this Warrant shall be filed
with the records of the Company.
5.6 Notices. Any notice or other communication required or
permitted to be given or delivered hereunder to the holder hereof shall
be delivered personally, sent by courier guaranteeing overnight delivery
or sent by certified or registered mail (return receipt requested,
postage prepaid) to the holder at the last address shown on the books of
the Company maintained at the Warrant Office for the registration of
transfers of the Warrants or at any more recent address of which the
holder shall have notified the Company in writing. Any notice or other
communication required or permitted to be given or delivered hereunder
to the Company shall be delivered personally, sent by courier
guaranteeing overnight delivery or sent by certified or registered mail
(return receipt requested, postage prepaid) to the Warrant Office or
such other address as shall have been furnished by the Company to the
holder hereof. All such notices and other communications shall be
deemed to have been duly given (a) if personally delivered, on the date
delivered, (b) if sent by courier guaranteeing overnight delivery, on
the date delivered, or (c) if by certified or registered mail, on the
fifth business day after the date of mailing, in each case given or
addressed as aforesaid.
5.7 Limitation of Liability; Not Stockholders. No provision
of this Warrant shall be construed as conferring upon the holder hereof
the right to vote, consent, receive dividends or receive notice as a
stockholder of the Company. No provision hereof, in the absence of
affirmative action by the holder hereof to purchase shares of Common
Stock or other securities upon exercise of this Warrant, and no mere
enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the Exercise Price
therefor or as a stockholder of the Company, whether such liability is
asserted by the Company, by creditors of the Company or by others.
5.8 Loss, Destruction, Etc. of Warrants. Upon receipt of
evidence satisfactory to the Company of the loss, theft, mutilation or
destruction of this Warrant, and in the case of any such loss, theft or
destruction upon delivery of a bond of indemnity in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of this Warrant, the
Company will make and deliver a new Warrant, of like tenor, in lieu of
such lost, stolen, destroyed or mutilated Warrant. Any Warrant issued
under the provisions of this Section 5.8 in lieu of any Warrant alleged
to be lost, destroyed or stolen, or in lieu of any mutilated Warrant,
shall constitute an original contractual obligation on the part of the
Company.
5.9 Headings. The headings of the Articles and Sections of
this Warrant are for the convenience of reference only and shall not,
for any purpose, be deemed a part of this Warrant.
5.10 Casino Control Act. This Warrant shall be subject to the
New Jersey Casino Control Act, N.J.S.A. 5:12-1 ET SEQ., and the rules
and regulations of the New Jersey Casino Control Commission (the
"Commission") as they currently exist or as they hereinafter may be
amended (the "Act"), including without limitation the following:
(a) This Warrant shall be subject to redemption by the
Company, by action of the Board of Directors, if, in the judgment of the
Board of Directors, such action should be taken, pursuant to
Section l51(b) of the General Corporation Law of Delaware or any other
applicable provision of law, to the extent necessary to prevent the loss
or secure the reinstatement of any government-issued license or
franchise held by the Company or any of its subsidiaries to conduct any
portion of the business of the Company or such subsidiary, which license
or franchise is conditioned upon some or all of the holders of the
Company's securities possessing prescribed qualifications. In the event
a the holder of this Warrant is found not to possess such prescribed
qualifications by the Commission pursuant to the Act (a "Disqualified
Holder"), such Disqualified Holder shall indemnify the Company for any
and all direct or indirect costs, including attorneys' fees, incurred by
the Company as a result of such holder's continuing ownership or failure
to divest promptly.
(b) If the holder of this Warrant is found to be a
Disqualified Holder, the holder shall dispose of his interest in the
Company within 120 days following the Company's receipt of notice (the
"Notice Date") of the holder's disqualification (which notice
immediately shall be delivered to the holder).
(c) It shall be unlawful for a Disqualified Holder to
(i) receive any dividends or interest upon this Warrant, (ii) exercise
directly or through any trustee or nominee, any right conferred by this
Warrant, or (iii) receive any remuneration in any form, for services
rendered or otherwise, from any subsidiary of the Company that holds a
casino license issued by the Commission.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed in its name by its duly authorized officer.
Dated as of May 3, 1994
RESORTS INTERNATIONAL, INC.
By:_____________________________
Christopher D. Whitney
Executive Vice President and
Chief of Staff
<PAGE>
SCHEDULE A
TO
WARRANT
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby
elects to exercise purchase rights represented by said Warrant for, and
to purchase thereunder,__________shares of the Common Stock covered by
said Warrant and herewith makes payment in full of the Exercise Price
therefor by bank or certified check pursuant to Section 1.1 of such
Warrant, and requests: (a) that certificates for such shares (and any
securities or other property issuable upon such exercise) be issued in
the name of and delivered to____________________whose address is
__________________________________; and (b) if such shares shall not
include all the shares issuable as provided in said Warrant, that a new
Warrant of like tenor and date for the balance of the shares issuable
thereunder be delivered to the undersigned and in connection therewith
the undersigned is surrendering the original Warrant enclosed herewith.
___________________________
Dated: ___________, 199_.
