<PAGE>
As filed with the Securities and Exchange Commission on November ___, 1997
Registration No. 333-______________
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
THE GREAT AMERICAN BACKRUB STORE, INC.
- -------------------------------------------------------------------------------
(Exact name of issuer as specified in its charter)
New York 13-3729043
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4500 140th Avenue North, Suite 221, Clearwater, Florida 33762
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Satisfaction Agreement
Termination and Settlement Agreement
Settlement Agreement
Finder's Fee Agreement
Client Service Agreement
--------------------------------------
(Full title of the Plan)
David Coia, President
The Great American BackRub Store, Inc.
4500 140th Avenue, Suite 221
Clearwater, Florida 33762
--------------------------------------
(Name and address of agent for service)
(813) 532-4818
------------------------------------------------------------
(Telephone number, including area code of agent for service)
----------
copies to:
Sommer & Schneider LLP
600 Old Country Road, Suite 535
Garden City, NY 11530
(516) 228-8181
Approximate date of commencement of proposed sale to the public: Upon
the effective date of this Registration Statement.
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share price fee(1)
- ----------- ------------ ------------- ---------- --------
<S> <C> <C> <C> <C>
Common Stock,
$0.001 par value 1,830,000 $0.75 $1,372,500.00 $415.90
Common Stock
Purchase Warrant 243,333 -- -- --
Common Stock(2),
$0.001 par value 243,333 $0.50 $121,666.50 $ 36.87
Common Stock
Purchase Warrant 163,333 -- -- --
Common Stock(2)
$0.001 par value 163,333 $0.75 $122,499.75 $ 37.13
Common Stock
Purchase Warrant 163,334 -- -- --
Common Stock (2)
$0.001 par value 163,334 $1.00 $163,334.00 $ 49.50
TOTAL $1,780,000.25 $539.40
</TABLE>
- ------------
(1) The fee with respect to these shares has been calculated pursuant to Rules
457(h) and 457(c) under the Securities Act of 1933 and based upon the
average of the last price per share of the Registrant's Common Stock on
November 10, 1997, a date within five (5) days prior to the date of filing
of this Registration Statement, as reported by the NASDAQ SmallCap Market.
(2) Issuable upon exercise of the Common Stock Purchase Warrants.
Documents Incorporated by Reference /X/ Yes / / No
2
<PAGE>
PART II
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by reference in this
Registration Statement and made a part hereof:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, as amended; and
(b) The Company's Quarterly Report on Form 10-QSB for the period ended March
31, 1997; and
(c) The Company's Quarterly Report on Form 10-QSB for the period ended June 30,
1997; and
(d) The Company's Current Report on Form 8-K dated September 30, 1997;
(e) The Company's Current Report on Form 8-K dated October 16, 1997;
(f) The Company's quarterly Report on Form 10-QSB for the period ended
September 30, 1997, as amended; and
(g) All other documents filed by the Company after the date of this
Registration Statement under Section 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-effective
amendment to the Registration Statement which indicates that all securities
offered have been sold or which deregisters all securities then remaining
in the Registration Statement and to be part thereof from the date of
filing of such documents.
Item 4. Description of Securities.
Not Applicable
Item 5. Interest of Named Experts and Counsel.
Certain legal matters in connection with the shares being
registered herein will be passed upon for the Company by Sommer & Schneider LLP,
600 Old Country Road, Suite 535, Garden City, NY 11530.
Item 6. Indemnification of Directors and Officers.
The Certificate of Incorporation and By-laws of the Company
provide that the Company shall indemnify to the fullest permitted by New York
law any person whom it may indemnify thereunder, including directors, officers,
employees and agents of the Company. Such indemnification (other than as ordered
3
<PAGE>
by a court) shall be made by the Company only upon a determination that
indemnification is proper in the circumstances because the individual met the
applicable standard of conduct i.e., such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company. Advances for such indemnification may be made pending such
determination. Such determination shall be made by a majority vote of a quorum
consisting of disinterested directors, or by independent legal counsel or by the
stockholders. In addition, the Certificate of Incorporation provides for the
elimination, to the extent permitted by New York law, of personal liability of
directors to the Company and its stockholders for monetary damages for breach of
fiduciary duty as directors.
The Company has obtained a directors and officers insurance
and company reimbursement policy. The policy insures directors and officers
against unindemnified loss arising from certain wrongful acts in their
capacities and reimburse the Company for such loss for which the Company has
lawfully indemnified the directors of officers.
The Company has also agreed to indemnify each director and
executive officer pursuant to an Indemnification Agreement with each such
director and executive officer from and against any and all expenses, losses,
claims, damages and liability incurred by such director or executive officer for
or as a result of action taken or not taken while such director or executive
officer was acting in his capacity as a director, officer, employee or agent of
the Company. The obligations of the Company for indemnification is limited to
the extent provided in the New York Business Corporation Act and is also limited
in situations where, among others, the indemnitee is deliberately dishonest,
gains any profit or advantage to which he is not legally entitled or is
otherwise indemnified.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company 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 of 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.
Item 7. Exemption From Registration Claimed.
Not Applicable.
4
<PAGE>
Item 8. Exhibits.
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<S> <C>
4.0 Form of Warrant and Schedule of Warrant Holders and Exercise Prices
5.0 Consent and Opinion of Sommer & Schneider LLP
23.0 Consent of BDO Seidman, LLP
99.0 Finder's Fee Agreement between The Great American BackRub Store, Inc. and Josh Alexander
Associates dated October 16, 1997, as amended and supplemented
99.1 Termination and Settlement Agreement between The Great American BackRub Store, Inc. and Terrance
Murray dated as of October 16, 1997.
99.2 Settlement Agreement between The Great American BackRub Store, Inc. and Keith Dee dated October
28, 1997.
99.3 Satisfaction Agreement between The Great American BackRub Store, Inc. and Bernard Winciq dated
October 16, 1997
99.4 Consent of Board of Directors dated October 15, 1997
99.5 Client Service Agreement dated November 14, 1997 between Claudio Iodice, Ronald Russo and The
Great American BackRub Store, Inc.
99.6 Finder's Fee Agreement dated November 10, 1997 between The Great American BackRub Store, Inc.,
Larry Penna and Herman Epstein.
99.7 Warrant Exercise and Indemnification Agreement.
</TABLE>
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement; and
5
<PAGE>
(c) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (1)(a) and (1)(b) do not
apply if the registration statement is on Form S-3 or Form S-8
and the information required to be included in a
post-effective amendment by this paragraphs is contained in
periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934
and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus, to each person
to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus
and furnished pursuant to and meeting the requirements of Rule 14a-3 or
Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Item 310(b)
of Registration S-B is not set forth in the prospectus, to deliver, or
cause to be delivered, to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
(6) To deliver or cause to be delivered with the prospectus to each
employee to whom the prospectus is sent or given, a copy of the
registrant's annual report to stockholders for its last fiscal year,
unless such employee otherwise has received a copy of such report, in
which case the registration shall state in the prospectus that it will
promptly furnish, without charge, a copy of such report on written
request of the employee. If the last fiscal year of the registrant has
ended within 120 days prior to the use of the prospectus, the annual
report of the registrant for the preceding fiscal year may be so
delivered, but within such 120-day period the annual report for the
last fiscal year will be furnished to each such employee.
(7) To transmit or cause to be transmitted to all employees participating
in the Plans who do not otherwise receive such material as stockholders
of the registrant, at the time and in the manner such material is sent
to its stockholders, copies of all reports, proxy statements and other
communications distributed to its stockholders generally.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Clearwater, State of Florida, on November 24, 1997.
THE GREAT AMERICAN BACKRUB STORE, INC.
/s/ David Coia
--------------------------------------------------
David Coia, President and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Date
- ---------- ----
<S> <C> <C>
/s/ David S. Coia Chairman and Chief Executive Officer November 24, 1997
- --------------------------
David S. Coia
/s/ David Coia President and Chief Operating Officer November 24, 1997
- ---------------------------
David Coia
/s/ David West Chief Financial Officer, Treasurer, November 24, 1997
- --------------------------- Secretary and Director
David West
/s/ Kevin P. Stone Director November 24, 1997
- ---------------------------
Kevin P. Stone
/s/ Waylon E. McMullen Director November 24, 1997
- ---------------------------
Waylon E. McMullen
</TABLE>
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ ------------
<S> <C>
4.0 Form of Warrant and Schedule of Warrant Holders and Exercise Prices
5.0 Consent and Opinion of Sommer & Schneider LLP
23.0 Consent of BDO Seidman, LLP
99.0 Finder's Fee Agreement between The Great American BackRub Store, Inc. and Josh Alexander
Associates dated October 16, 1997, as amended and supplemented
99.1 Termination and Settlement Agreement between The Great American BackRub Store, Inc. and Terrance
Murray dated as of October 16, 1997.
99.2 Settlement Agreement between The Great American BackRub Store, Inc. and Keith Dee dated October
28, 1997.
99.3 Satisfaction Agreement between The Great American BackRub Store, Inc. and Bernard Winciq dated
October 16, 1997
99.4 Consent of Board of Directors dated October 15, 1997
99.5 Client Service Agreement dated November 14, 1997 between Claudio Iodice, Ronald Russo and The
Great American BackRub Store, Inc.
99.6 Finder's Fee Agreement dated November 10, 1997 between The Great American BackRub Store, Inc.,
Larry Penna and Herman Epstein.
99.7 Warrant Exercise and Indemnification Agreement.
</TABLE>
<PAGE>
EXHIBIT 4.0
Form of Warrants issued to the following individuals:
<TABLE>
<CAPTION>
Name Number of Shares Price Per Share
- ---- ---------------- ---------------
<S> <C> <C>
Keith Dee 30,000 $0.50
Keith Dee 30,000 $0.75
Keith Dee 30,000 $1.00
William Zanker 100,000 $0.50
William Zanker 100,000 $0.75
William Zanker 100,000 $1.00
Terrance Murray 33,333 $0.50
Terrance Murray 33,333 $0.75
Terrance Murray 33,334 $1.00
Bernard Wincig 80,000 $0.50
</TABLE>
1
<PAGE>
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON THE EXERCISE OF THIS WARRANT ARE TRANSFERABLE
ONLY IN ACCORDANCE WITH PARAGRAPH H HEREOF.
Void after 5:00 P.M., New York Time, on October 15, 2002
Warrant to Purchase
__________ Shares
of Common Stock
WARRANT TO PURCHASE COMMON STOCK
This is to Certify That, FOR VALUE RECEIVED, ____________, (the "Holder") is
entitled to purchase, subject to the provisions of this Warrant, from The Great
American BackRub Store, Inc., a New York corporation, having an office at 53
West 36th Street, Room 1202, New York New York 10018 (the "Company"), an
aggregate of _________ shares (the "Warrant Shares") of the Company's Common
Stock, $0.001 par value ("Common Stock") at a price of $_____ per share at any
time on or after October 16, 1997 until 5:00 P.M. New York Time, on October 15,
2002. The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for a share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time, are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price."
A. EXERCISE OF WARRANT. Subject to the following conditions precedent and the
provisions of Section H and I hereof, this Warrant may be exercised in
whole or in part at any time or from time to time on or after October 16,
1997, and before 5:00 P.M. New York Time on October 15, 2002, or, if either
such day is a day on which banking institutions are authorized by law to
close, then on the next succeeding day which shall not be such a day, by
presentation and surrender hereof to the Company at any office maintained
by it, or at the office of its Warrant Agent, if any, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of shares specified in such form. If this
Warrant should be exercised in part only, the Company shall, upon surrender
of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder hereof to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant
at its office, or by the Warrant Agent of the Company at its office, in
proper form for exercise, the Holder shall be deemed to be the holder of
record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that a certificate representing such shares of Common Stock shall
not then be actually delivered to the Holder.
2
<PAGE>
B. RESERVATION OF SHARES. The Company hereby agrees that at all times there
shall be reserved for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be required for
issuance of delivery upon exercise of this Warrant.
C. FRACTIONAL SHARES. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon exercise hereof, the Company shall
issue to the Holder the next whole share.
D. EXCHANGE, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and
surrender hereof to the Company or at the office of the Warrant Agent for
other Warrants of different denominations entitling the holder thereof to
purchase in aggregate the same number of shares of Common Stock purchasable
hereunder. The term Warrant as used herein includes any Warrants into which
this Warrant may be divided or exchanged. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. Any such new warrant executed
and delivered shall constitute an additional contractual obligation on the
part of the Company, whether or not this Warrant so lost stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
E. RIGHTS OF THE HOLDER. The Holder shall not, by virtue here of, be entitled
to any rights of a shareholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth
herein.
F. STOCK DIVIDENDS, RECLASSIFICATION, REORGANIZATION, ANTI-DILUTION
PROVISIONS, ETC. This Warrant is subject to the following further
provisions:
1. In case, prior to the expiration of this Warrant by exercise or
by its terms, the Company shall issue any shares of its Common
Stock as a stock dividend or subdivide the number of outstanding
shares of Common Stock into a greater number of shares, then, in
either of such cases, the Exercise Price per share of the Warrant
Shares purchasable pursuant to this Warrant in effect at the time
of such action shall be proportionately reduced and the number of
Warrant Shares at that time purchasable pursuant to this Warrant
shall be proportionately increased. In the event the Company
shall reduce the number of outstanding shares of Common Stock by
combining such shares into a smaller number of shares, then, in
such case, the Exercise Price per share of the Warrant Shares
purchasable pursuant to this Warrant in effect at the time of
such action shall not be altered, but the number of Warrant
Shares at that time purchasable pursuant to this Warrant shall be
proportionately decreased. Any dividend paid or distributed upon
the Common Stock in stock of any other class of securities
convertible into shares of Common Stock shall be treated as a
dividend paid in Common Stock to the extent that shares of Common
Stock are issuable upon the conversion thereof.
3
<PAGE>
2. In case, prior to the expiration of this Warrant by exercise or
by its terms, the Company shall be recapitalized by reclassifying
its outstanding Common Stock, $0.001 par value, into stock with a
different par value or by changing its outstanding Common Stock
with par value to stock without par, the Company or a successor
corporation shall be consolidated or merge with or convey all or
substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations (any
such corporation being included within the meaning of the term
successor corporation in the event of any consolidation or merger
of any such corporation with, or the sale of all or substantially
all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or securities
of a successor corporation, the holder of this Warrant shall
thereafter have the right to purchase upon the terms and
conditions and during the time specified in this Warrant, in lieu
of the Warrant Shares theretofore purchasable upon the exercise
of this Warrant, the kind and amount of shares of stock and other
securities receivable upon such recapitalization or
consolidation, merger or conveyance by a holder of the number of
shares of Common Stock which the holder of this Warrant might
have purchased immediately prior to such recapitalization or
consolidation, merger or conveyance.
3. Upon the occurrence of each event requiring an adjustment of the
Exercise Price and of the number of Warrant Shares purchasable at
such adjusted Exercise Price by reason of such event in
accordance with the provisions of this Section F, the Company
shall compute the adjusted Exercise Price and the adjusted number
of Warrant Shares purchasable at such adjusted Exercise Price by
reason of such event in accordance with the provisions of this
Section F and shall prepare a certificate setting forth such
adjusted Exercise Price and the adjusted number of Warrant Shares
and showing in detail the facts upon which such conclusions are
based. The Company shall mail forthwith to each holder of this
Warrant a copy of such certificate, and thereafter said
certificate shall be conclusive and shall be binding upon such
holder unless contested by such holder by written notice to the
Company within thirty (30) days after receipt of the certificate
by such holder.
4. In case:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to
receive a dividend or any other distribution in
respect of the Common Stock (including cash),
pursuant to without limitation, any spin-off,
split-off or distribution of the Company's assets; or
4
<PAGE>
(b) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to
subscribe for or purchase any shares of stock of any
class or to receive any other rights; or
(c) of any classification, reclassification or other
reorganization of the capital stock of the Company,
consolidation or merger of the Company with or into
another corporation, or conveyance of all or
substantially all of the assets of the Company; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, and in any such case, the Company shall mail to the
Holder, at least twenty (20) days prior thereto, a notice
stating the date or expected date on which a record is to be
taken for the purpose of such dividend or distribution of
rights, or the date on which such classification,
reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation, or winding up is to take
place, as the case may be. Such notice shall also specify the
date or expected date, if any is to be fixed, as of which
holders of Common Stock of record shall be entitled to
participate in said dividend on distribution of rights, or
shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such
classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation,
or winding up, as the case may be. The failure to give such
notice shall not affect the validity of any such proceeding or
transaction and shall not affect the right of the holder of
this Warrant to participate in said dividend, distribution of
rights, or any such exchange and acquire the kind and amount
of cash, securities or other property as the Holder would have
been entitled to acquire if it was the record holder of the
Warrant Shares which could be obtained upon the exercise of
the Warrants immediately before such proceeding or
transaction; provided that, the Holder exercises the Warrants
within 30 days after discovery that such action or proceeding
has taken place.
5. In case the Company at any time while this Warrant shall
remain unexpired and unexercised, shall dissolve, liquidate,
or wind up its affairs, the holder of this Warrant may
thereafter receive upon exercise hereof in lieu of each share
of Common Stock of the Company which it would have been
entitled to receive, the same kind and amount of any
securities or assets as may be issuable, distributable or
payable upon any such dissolution, liquidation or winding up
with respect to each share of Common Stock of the Company.
G. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as
required by the provisions of the foregoing Section, the Company shall
forthwith file in the custody of its Secretary at its principal office and
with the Warrant Agent, an officer's certificate showing the adjusted
5
<PAGE>
Exercise Price determined as therein provided, setting forth
in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of
Common Stock, if any, the consideration for such shares,
determined as such Section F. provided, and such other facts
as shall be necessary to show the reason for and the manner
of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times
for inspection by the holder and the Company shall,
forthwith after each such adjustment, mail a copy of such
certificate to the holder.
H. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933. Neither this Warrant,
the Warrant Shares, nor any other security issued or issuable upon exercise
of this Warrant may be sold or otherwise disposed or except as follows:
1. to a person who, in the opinion of counsel reasonably
satisfactory to the Company, is a person to whom the Warrant
or Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus
under the Securities Act of 1933, as amended (the "Act") with
respect thereto and then only against receipt of an agreement
of such person to comply with the provisions of this Section
H. with respect to any resale or other disposition of such
securities; or
2. to any person upon delivery of a prospectus then meeting the
requirements of the Act relating to such securities and the
offering thereof for such sale or disposition.
I. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the holder as follows:
1. The Company is duly organized and, as of the date of the
original issuance hereof, validly existing and in good
standing under the laws of the state of New York.
2. The Company shall at all times reserve and keep available out
of its authorized shares of Common Stock, solely for the
purpose of issuing Warrant Shares upon the exercise of this
Warrant, such shares as may be issuable upon the exercise
hereof.
3. Warrant Shares, when issued and paid for in accordance with
the terms of this Warrant, will be fully paid and not
assessable.
4. This Warrant has been duly authorized and approved by all
required corporate action by the Company and does not violate
the certificate of incorporation or by-laws of the Company.
6
<PAGE>
J. REGISTRATION RIGHTS. The Company has agreed to register this Warrant
and the shares underlying this Warrant on Form S-8 or if not available,
on such other form of registration statement as is available to the
Company under the Act.
[CORPORATE SEAL] THE GREAT AMERICAN BACKRUB STORE, INC.
By:_________________________________
William Zanker, President
Dated:
7
<PAGE>
PURCHASE FORM
TO BE EXECUTED
UPON EXERCISE OF WARRANTS
TO: The Great American BackRub Store, Inc.
53 West 36th Street, Room 1202
New York, NY 10018
The undersigned hereby exercises, according to the terms and conditions
thereof, the right to purchase _____________ Shares of Common Stock, evidenced
by the within Warrant Certificate, and herewith makes payment of the purchase
price in full,
Dated:___________________________________
Name:____________________________________
Address:_________________________________
Signature:_______________________________
UPON EXERCISE OF THIS WARRANT PAYMENT SHOULD BE MADE TO THE ORDER OF
THE GREAT AMERICAN BACKRUB STORE, INC.
8
<PAGE>
SOMMER & SCHNEIDER LLP
600 OLD COUNTRY ROAD
GARDEN CITY, NEW YORK 11530
------------
Herbert H. Sommer Telephone (516) 228-8181
Joel C. Schneider Facsimile (516) 228-8211
------------
November 24, 1997
Combined Opinion and Consent
----------------------------
The Great American BackRub Store, Inc.
53 West 36th Street, Room 1202
New York, NY 10018
Re: The Great American BackRub Store, Inc.
Gentlemen:
We have acted as counsel to The Great American BackRub Store, Inc., a
New York corporation (the "Company"), in connection with the preparation and
filing with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933 as amended (the "Act") of the Company's Registration
Statement on Form S-8, filed contemporaneously with the Commission relating to
the registration under the Act of 2,100,000 shares (the "Shares") of the
Company's Common Stock, $0.001 par value (the "Common Stock").
In rendering this opinion, we have reviewed the Registration Statement
on Form S-8, as well as a copy of the Certificate of Incorporation of the
Company, as amended, and the By-Laws of the Company. We have also reviewed such
statutes and judicial precedents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In our examination, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the conformity with,
the original documents of all documents submitted to us as certified or
photostatic copies, and the authenticity of the originals of such copies.
Based on the foregoing and in reliance thereon, and subject to the
qualifications and limitations set forth herein, we are of the opinion that:
(1) The Company has been duly incorporated and is a validly existing
corporation under the laws of the State of New York;
<PAGE>
The Great American BackRub Store, Inc.
November 24, 1997
Page 2
(2) The Shares when issued in connection with the Satisfaction Agreement,
Termination and Settlement, Settlement Agreement, Finder's Fee
Agreements, Client Service Agreement, and associated Warrants, in
accordance with the terms thereof will be legally issued, fully paid
and non-assessable.
This opinion is limited to the General Corporation Law and the
Constitution of the State of New York and we express no opinion with respect to
the laws of any other jurisdiction. We consent to your filing this opinion with
the Securities and Exchange Commission as an exhibit to the Registration
Statement on Form S-8. This opinion is not to be used, circulated, quoted or
otherwise referred to for any other purpose without our prior written consent.
Very truly yours,
/s/ Herbert H. Sommer
Herbert H. Sommer
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Great American Backrub Store, Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-8 of our report
dated January 31, 1997, relating to the financial statements of The Great
American Backrub Store, Inc., appearing in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996. Our report contains an explanatory
paragraph regarding uncertainties as to the Company's ability to continue as a
going concern.
/s/ BDO Seidman, LLP
- --------------------
BDO Seidman, LLP
New York, New York
November 21, 1997
<PAGE>
JOSH ALEXANDER ASSOCIATES
271-19H GRAND CENTRAL PARKWAY
FLORAL PARK, NEW YORK 11005
718-281-2879
FAX 718-281-2882
September 4, 1997
The Great American Backrub Store, Inc
53 West 36th Street
New York, NY 10018
Att: William Zanker, President
Gentlemen:
This letter shall serve to confirm our understanding, wherein and whereby you
have retained us, on an non-exclusive basis to locate a merger candidate and/or
acquisition for your Company.
We agree to render such efforts on your behalf as we, in our sole discretion,
deem necessary. In the event we find a merger candidate and/or acquisition
acceptable to you, you agree to pay to us, simultaneously with the closing of
such transaction, a fee equal to 15% of the consideration paid or to be paid by
you for such acquisition and/or merger, which fee shall be paid in free-trading
Common Shares of your Company issued pursuant to a Registration under Form S-8.
It is expressly understood and agreed, however, that nothing herein contained
shall require you to issue more than 1,000,000 shares of Common Stock to us or
our designees in satisfaction of the payment of our fees. (Should 15% represent
more then 1,000,000 shares of your Common Stock we agree to accept 1,000,000
shares in full payment our fees).
It is understood and agreed that we shall not be entitled to reimbursement of
expenses incurred by us in seeking out and investigating potential merger and/or
acquisition candidates for you. However, should we find a merger and/or
acquisition candidate acceptable to you, you agree, immediately, upon the
signing of a Letter of Intent relative to such merger and/or acquisition
candidate, to pay to us $25,000 as and for a non-accountable expense allowance
so that we can continue our due diligence of such merger and/or acquisition
candidate, on your behalf.
If this letter, generally, expresses our understanding please sign the copy
hereof where indicated and return same to us.
JOSH ALEXANDER ASSOCIATES
By /s/ A. Schneider
-------------------------
Accepted and Agreed to:
THE GREAT AMERICAN BACKRUB STORE INC.,
By /s/ William Zanker
--------------------------
William Zanker, Pres.
<PAGE>
JOSH ALEXANDER ASSOCIATES
271-19H GRAND CENTRAL PARKWAY
FLORAL PARK, NEW YORK 11005
718-281-2879
FAX 718-281-2882
October 17, 1997
The Great American Backrub Store, Inc
53 West 36th Street
New York, NY 10018
Gentlemen:
This will confirm our telephonic advise wherein and whereby we have irrevocably
agreed to accept a total of 750,000 shares of your Common Stock, registered
under Form S-8 as our full compensation as finder in the acquisition of
Caribaun.
Very truly yours,
JOSH ALEXANDER ASSOCIATES
BY /s/ Arlene Schneider
-----------------------------
Arlene Schneider
<PAGE>
TERMINATION AND SETTLEMENT AGREEMENT
TERMINATION AND SETTLEMENT AGREEMENT, dated as of October 16, 1997 by
and between The Great American BackRub Store, Inc., a New York corporation
("GAB") and Terrance Murray, ________________________ ("Murray").
W I T N E S S E T H
WHEREAS, GAB and Murray agree that it is in their respective best
interests to terminate, effective October 16, 1997, Murray's employment pursuant
to the agreement between GAB and Murray dated November 1, 1994 as amended (the
"Employment Agreement"), pursuant to the terms and conditions provided herein.
NOW, THEREFORE, IT IS AGREED:
1. Each of GAB and Murray agree as follows:
(a) Murray's employment by GAB terminates effective
October 16, 1997.
(b) The Employment Agreement is terminated and of no
further force and effect, effective October 15, 1997.
(c) Murray agrees to accept, in lieu of all compensation
and other consideration for services rendered under
the Employment Agreement, five year Warrants to
purchase 100,000 shares of the Company's common stock
of which 1/3 are exercisable at $.50 per share, 1/3
are exercisable at $.75 per share and 1/3 are
exercisable at $1.00 per share.
2. GAB agrees to register the shares issuable to Murray pursuant to the
exercise of the Warrants on Form S-8.
3. Murray irrevocably, unconditionally and generally releases and
forever discharges GAB and each of GAB's direct or indirect affiliates,
investors, partners, officers, directors, partners, employees and agents from
any and all claims, liabilities , demands and causes of action known or unknown,
fixed or contingent, which Murray claimed in the past, or now claims, or may be
able to claim in the future against any of them arising directly or indirectly
out of Murray's employment therewith or the termination of such employment, or
Murray's ownership of any equity or other interest therein or any right to the
same, including but not limited to all claims which Murray does not know or
suspect at this time to exist and which, if known, would materially affect this
release. Murray hereby covenants not to file a lawsuit or demand for arbitration
to assert any such claim. This release includes a release of any and all claims
for violation of any federal, state or municipal statute, including but not
limited to claims arising under federal, state, or local laws prohibiting
employment discrimination, Title VII of the Civil Rights Act 0f 1964, the Civil
Rights Act of 1991, the Age Discrimination in Employment Act of 1967 and the
Americans with Disabilities Act. This release does not release any claim Murray
may have against GAB for a breach of any provision of this Agreement. Murray
acknowledges that the consideration given for the waiver and release agreements
set forth herein and elsewhere in this Agreement, which consideration was
factored into the compensation to be received by Murray as a consultant to GAB
as provided in Section (c) above, are in addition to anything of value to which
Murray was already entitled.
1
<PAGE>
4. GAB, on behalf of itself and each of its direct or indirect
affiliates, shareholders, investors, officers, directors, partners, employees
and agents irrevocably, unconditionally and generally releases and forever
discharges Murray from any and all claims, liabilities, demands and cause of
action known or unknown, fixed or contingent, which GAB claimed in the past, or
now claims, or may be able to claim in the future against Murray arising
directly or indirectly out of Murray's employment therewith, including but not
limited to all claims which GAB does not know or suspect at this time to exist
and which, if known, would materially affect this release. GAB hereby covenants
not to file a lawsuit or demand for arbitration to assert any such claim. This
release does not release any claim GAB may have against Murray for a breach of
any provision of this Agreement.
5. Murray agrees to cooperate with GAB in connection with any
litigation involving GAB in which Murray may be needed as a witness. Such
cooperation by Murray will be provided at no charge to GAB, subject to
scheduling at mutually convenient times (subject to court directives) except
that GAB will reimburse Murray, upon documentation, for his reasonable
out-of-pocket expenses should he be required to travel for a deposition or trial
testimony.
6. Notwithstanding Sections 3 and 4 above, the terms of a
separate indemnification agreement shall survive delivery of this Agreement.
7. Murray acknowledges that he has had the opportunity to review this
Agreement with legal counsel of his choosing, is knowingly making the releases
herein, and is entering into this Agreement of his own free will.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the day and year first above written.
THE GREAT AMERICAN BACKRUB STORE, INC.
By: /s/ William Zanker
----------------------------------
William Zanker, President
/s/ Terrance Murray
--------------------------------------
Terrance Murray
2
<PAGE>
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated as of October 17, 1997 by and between The
Great American BackRub Store, Inc., a New York corporation ("GAB") and Keith
Dee, ________________________ ("Dee").
W I T N E S S E T H
WHEREAS, GAB and Dee agree that it is in their respective best
interests to resolve any and all claims Dee may have against GAB, pursuant to
the terms and conditions provided herein.
NOW, THEREFORE, IT IS AGREED:
1. Dee agrees to accept, in full settlement of all claims against GAB,
five year Warrants to purchase 90,000 shares of the Company's common stock of
which 1/3 are exercisable at $.50 per share, 1/3 are exercisable at $.75 per
share and 1/3 are exercisable at $1.00 per share.
2. GAB agrees to register the shares issuable to Dee pursuant to the
exercise of the Warrants on Form S-8.
3. Dee irrevocably, unconditionally and generally releases and forever
discharges GAB and each of GAB's direct or indirect affiliates, investors,
partners, officers, directors, partners, employees and agents from any and all
claims, liabilities , demands and causes of action known or unknown, fixed or
contingent, which Dee claimed in the past, or now claims, or may be able to
claim in the future against any of them arising directly or indirectly out of
Dee's employment therewith or the termination of such employment, or Dee's
ownership of any equity or other interest therein or any right to the same,
including but not limited to all claims which Dee does not know or suspect at
this time to exist and which, if known, would materially affect this release.
Dee hereby covenants not to file a lawsuit or demand for arbitration to assert
any such claim. This release includes a release of any and all claims for
violation of any federal, state or municipal statute, including but not limited
to claims arising under federal, state, or local laws prohibiting employment
discrimination, Title VII of the Civil Rights Act 0f 1964, the Civil Rights Act
of 1991, the Age Discrimination in Employment Act of 1967 and the Americans with
Disabilities Act. This release does not release any claim Dee may have against
GAB for a breach of any provision of this Agreement.
4. GAB, on behalf of itself and each of its direct or indirect
affiliates, shareholders, investors, officers, directors, partners, employees
and agents irrevocably, unconditionally and generally releases and forever
discharges Dee from any and all claims, liabilities, demands and cause of action
known or unknown, fixed or contingent, which GAB claimed in the past, or now
claims, or may be able to claim in the future against Dee arising directly or
indirectly out of Dee's employment therewith, including but not limited to all
claims which GAB does not know or suspect at this time to exist and which, if
known, would materially affect this release. GAB hereby covenants not to file a
lawsuit or demand for arbitration to assert any such claim. This release does
not release any claim GAB may have against Dee for a breach of any provision of
this Agreement.
1
<PAGE>
5. Dee agrees to cooperate with GAB in connection with any litigation
involving GAB in which Dee may be needed as a witness. Such cooperation by Dee
will be provided at no charge to GAB, subject to scheduling at mutually
convenient times (subject to court directives) except that GAB will reimburse
Dee, upon documentation, for his reasonable out-of-pocket expenses should he be
required to travel for a deposition or trial testimony.
6. Notwithstanding Sections 3 and 4 above, the terms of a
separate indemnification agreement shall survive delivery of this Agreement.
7. Dee acknowledges that he has had the opportunity to review this
Agreement with legal counsel of his choosing, is knowingly making the releases
herein, and is entering into this Agreement of his own free will.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
duly executed as of the day and year first above written.
THE GREAT AMERICAN BACKRUB STORE, INC.
By: /s/ David Coia
-----------------------------
David Coia, President
/s/ Keith Dee
-----------------------------
Keith Dee
2
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
83 West 36 Street -- Room 1202
New York, New York 10018
October 16, 1997
Bernard Wincig, Esq.
Wincig & Wincig
574 Fifth Avenue
New York, New York 10036
Dear Bernie:
In full satisfaction of fees billed for your past legal services through
September 30, 1997, this letter shall serve as your advice and our company's
acknowledgment that you are to receive sufficient warrants in order to purchase
80,000 shares of common stock of our company at a unit price of $.50 per share.
Kindly mark your records accordingly; and keep this advice in your records
for your reference.
Very truly yours,
THE GREAT AMERICAN
BACKRUB STORE, INC.
By: /s/ William Zanker
---------------------------------
WILLIAM ZANKER, President
Accepted this 16th day
of October, 1997.
WINCIG & WINCIG
By: /s/ Bernard Wincig
-------------------------
BERNARD WINCIG, Partner
<PAGE>
CONSENT
The undersigned, being all of the Directors of The Great
American BackRub Store, Inc. do hereby agree and consent to the
attached resolutions being adopted without meeting.
/s/ William Zanker /s/ Stephen Seligman
------------------------- -------------------------
William Zanker Stephen Seligman
/s/ Andrew Hyams /s/ Terrance Murray
------------------------- -------------------------
Andrew Hyams Terrance Murray
/s/ Donald R. Fleisher
-------------------------
Donald R. Fleisher
Dated: October 15, 1997
<PAGE>
Special Resolutions
(The Great American BackRub Store, Inc.)
Issuance of Shares to Josh Alexander Associates
RESOLVED, that the issuance of 750,000 shares of the Corporation's
Common Stock to Josh Alexander Associates at the closing of the Corporation's
acquisition of Caribsun Corp. in accordance with the agreement presented to the
Board September 9, 1997, as amended, is hereby approved.
Issuance of Shares to William Zanker
RESOLVED, that Mr. Zanker's efforts in connection with the acquisition
of Caribsun extended well beyond the scope of his duties and will represent a
substantial benefit to the Corporation and its shareholders.
RESOLVED, that the Corporation issue 250,000 shares of Common Stock to
Mr. Zanker at the closing of the Corporation's acquisition of Caribsun Corp. as
compensation for such services.
<PAGE>
CLIENT SERVICE AGREEMENT
This Agreement is made and entered into this 14 day of November, 1997
between Claudio Iodice, residing at 215 St. Andrew Grand, Boca Raton, Florida
33486 ("Iodice"), Ronald Russo, residing at 684 Madison Hill Road, Clark, New
Jersey 07066 ("Russo") and The Great American BackRub Store, Inc., with offices
at 4500 140th Avenue North, Suite 221, Clearwater, Florida 33762 ("GAB"). Iodice
and Russo are collectively referred to herein as "Consultants".
W I T N E S S E T H
Whereas, Consultants each disseminate information about publicly traded
companies, and
Whereas, GAB is publicly held with its common stock trading on the OTC
Bulletin Board, and
Whereas, GAB desires to publicize itself with the intention of making
its name and business better known throughout the brokerage community and among
investors,
NOW THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed:
1. ENGAGEMENT: GAB hereby engages Consultants to publicize GAB to
brokers, prospective investors and shareholders.
2. MARKETING PROGRAM: Consists of the following components:
(A) Consultants will review and analyze all aspect of GAB's goals and
make recommendations on feasibility and achievement of desired goals.
(B) Consultants will provide through their network contact with firms
and brokers interested in GAB and schedule and conduct the necessary due
diligence and obtain the required approvals necessary for those firms to
participate in the market for GAB stock.
(C) Consultants will schedule broker dealer conferences at GAB's
request. These conferences, the expenses for which GAB shall alone be
responsible, are intended to tell GAB's story to the investment community and
expose GAB to as many brokers, dealers, and potential market makers as possible.
Consultants will prepare all necessary documents, handouts, or other such
printed matter as may be required to properly conduct such meetings. GAB agrees
to produce and make available to Consultants copies of an audio, video, or slide
presentation suitable for investment professionals.
(D) Consultants will use their reasonable best efforts to obtain for
GAB significant exposure on national financial radio programming, in independent
financial newsletters and through on-line facsimile internet and other broadcast
media services.
<PAGE>
(E) At GAB's request, Consultants will undertake special projects
related to promoting GAB's business planning and will assist in the preparation
of business plans and financial models and projections during the one year
period following the date of this Agreement.
3. TIME OF PERFORMANCE: Services to be performed under this Agreement
shall commence upon execution of this Agreement and shall continue until
completion, which is expected to occur within twelve (12) months.
4. COMPENSATION AND EXPENSES: In consideration of the services to be
performed by Consultants, GAB agrees to pay compensation to Consultants an
amount equal to an aggregate of 500,000 shares of GAB's common stock which shall
be issued pursuant to an S-8 registration statement as follows:
Claudio Iodice 250,000 shares
Ronald Russo 250,000 shares
Consultants shall pay and be responsible for all expenses they incur except for
expenses specifically approved by GAB in writing related to broker or investment
conferences and meetings, printing of business plans and financial models,
slide, video, audio production costs, or expenses related to special projects.
5. REPRESENTATIONS AND WARRANTIES OF GAB: GAB represents and warrants
to Consultants, each representation and warranty being deemed to be material,
that:
(A) GAB will cooperate fully and timely with Consultants to enable
Consultants to perform their obligations under this Agreement.
(B) The execution and performance of this Agreement by GAB has been
duly authorized by the Board of Directors of GAB in accordance with applicable
law.
(C) The performance of GAB under this Agreement will not violate any
applicable court decree, nor will it violate any provisions of the
organizational documents of GAB or any contractual obligations by which GAB may
be bound.
6. CONFIDENTIALITY: Until such time as the same may become publicly
known, Consultants agree that any and all information transmitted to it from GAB
are to be considered confidential and Consultants agree to hold all information
confidential and not to disclose such information to any person, company or
entity without the prior written approval of GAB, except as may be reasonably
required in the performance of Consultant's obligations as described herein.
Upon completion of its duties as described herein, Consultant's agrees to return
all materials furnished to it by GAB to GAB.
<PAGE>
7. NOTICES: All notices hereunder shall be in writing and addressed to
the party at the address set forth above, or at such other addresses to which
notice pursuant to this section may be given and shall be delivered by personal
delivery, certified mail, express mail , or by national overnight courier
service. Notices will be deemed given upon the earlier of actual receipt or
three (3) business days after being mailed or delivered to such courier service.
Any notices to be given hereunder will be effective if executed and sent by the
attorneys for the parties giving such notice, and in connection therewith the
parties and under their respective counsel agree that in giving such notice such
counsel may communicate directly in writing with such parties to the extent
necessary to give such notice.
CONFIRMED AND AGREED ON THE _______ DAY OF NOVEMBER, 1997.
THE GREAT AMERICAN BACKRUB STORE, INC.
By: /s/ David Coia
-------------------------
David Coia, President
CONFIRMED AND AGREED ON THE _______ DAY OF NOVEMBER, 1997.
CONSULTANTS:
/s/ Claudio Iodice
- ----------------------
Claudio Iodice
/s/ Ronald Russo
- ----------------------
Ronald Russo
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
4500 140th AVENUE NORTH, SUITE 221
CLEARWATER, FL 33762
------------
Telephone ((813) 532-4818
Facsimile (813) 532-4737
November 10, 1997
Mr. Herman Epstein
411 Hackensack Avenue
Hackensack, NJ 07601
-and-
Mr. Larry Penna
411 Hackensack Avenue
Hackensack, NJ 07601
Gentlemen:
In satisfaction of all claims for services rendered by you in
connection with the identification and acquisition of Caribsun Corp. by The
Great American BackRub Store, Inc. (the "Company"), we agree to issue shares of
the Company's common stock to you as follows:
Herman Epstein 165,000
Larry Penna 165,000
Please acknowledge that you agree to the foregoing and acknowledge that
these services were provided by you at the request of the Company's prior
management by signing and returning a copy of this letter.
Very truly yours,
THE GREAT AMERICAN BACKRUB
STORE, INC.
By: /s/ David Coia
-----------------------
David Coia, President
Accepted and Acknowledged:
/s/ Herman Epstein
- ------------------------
Herman Epstein
/s/ Larry Penna
- ------------------------
Larry Penna
<PAGE>
EXHIBIT 99.7
WARRANT EXERCISE AND
INDEMNIFICATION AGREEMENT
This Agreement is made and entered into as of the 24th day of November,
1997 by and between William Zanker ("Zanker"), and The Great American Backrub
Store, Inc., a New York corporation (the "Company").
WHEREAS, the Company and Zanker entered into a consulting agreement on
October 16, 1997 (the "Consulting Agreement"); and
WHEREAS, pursuant to the Consulting Agreement the Company issued five
year warrants to Zanker to purchase an aggregate of 300,000 shares for $225,000
(the "Warrants"); and
WHEREAS, the Company is obligated to pay Zanker $190,000 pursuant to
the Consulting Agreement; and
WHEREAS, Zanker wishes to exercise and the Company wishes to permit
Zanker to exercise the Warrants by waiving all right to cash compensation under
the Consulting Agreement.
NOW THEREFORE, for good and valuable consideration receipt of which is
hereby acknowledged, the parties do hereby agree as follows:
1. Zanker, concurrently with the effective date of the registration
statement relating to the shares of common stock issuable upon the exercise of
the Warrants, waives all rights to cash compensation under the Consulting
Agreement in exchange for the exercise of the Warrants into 300,000 shares of
the Company's common stock and hereby exercises the Warrants.
2. The Company hereby accepts Zanker's waiver of $190,000 of cash
compensation due under the Consulting Agreement as the full exercise price of
the Warrants.
3. Zanker hereby agrees to indemnify and hold the Company harmless for
any and all liability arising from or related to a judgment in an action
entitled Chemical Bank v. William Zanker (93-117205, Supreme Court New York) and
agrees to place 75,000 shares in escrow with Sommer & Schneider LLP with
instructions to sell such shares to provide a fund to pay such liabilities,
whether on behalf of Zanker or if the Company is called upon to pay such
liabilities. Upon satisfaction of the liabilities the remaining portion of the
fund, if any, will be paid to Zanker.
4. Except as set forth above, Zanker shall continue to perform services
under the Consulting Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
/s/ William Zanker
------------------------------
William Zanker
THE GREAT AMERICAN BACKRUB STORE, INC.
By: /s/ David Coia
---------------------------
David Coia, President
