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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.______ )*
The Rattlesnake Holding Company, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
753904 10 1
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(CUSIP Number)
Avrom Waxman, 565 Taxter Road, Suite 620, Elmsford, NY 10523 (914) 345-0900
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
May 3, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 753904 10 1 PAGE 2 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
J.L.B. of Nevada, Inc. 86 - 0854162
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
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7 SOLE VOTING POWER
NUMBER OF
SHARES 333,333
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
333,333
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
333,333
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.2%
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14 TYPE OF REPORTING PERSON*
CO
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SCHEDULE 13D
CUSIP NO. 753904 10 1 PAGE 3 OF 7 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jay L. Botchman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
N/A
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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7 SOLE VOTING POWER
NUMBER OF
SHARES 333,333
BENEFICIALLY -----------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING
PERSON -----------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
333,333
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10 SHARED DISPOSITIVE POWER
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
333,333
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.2%
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14 TYPE OF REPORTING PERSON*
IN
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CUSIP NO. 753904 10 1 Page 4 of 7
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, $.001 par
value ("Shares") of The Rattlesnake Holding Company, Inc.
("Issuer"), the principal executive office of which is located at
3 Stamford Landing, Suite 130, Stamford, Connecticut 06902.
Item 2. Identity and Background
(a) The persons filing this Schedule 13D are J.L.B. of Nevada,
Inc. ("JLB") and Jay L. Botchman. Mr. Botchman is the sole
shareholder of JLB. JLB and Mr. Botchman are collectively
referred to as the "Reporting Persons."
(b) JLB's business address is 1500 East Tropicana Avenue, Suite
100, Las Vegas, Nevada 89119. Jay L. Botchman's business
address is 1500 East Tropicana Avenue, Suite 100, Las Vegas, Nevada
89119.
(c) JLB is a private lending company located at 1500 East Tropicana
Avenue, Suite 100, Las Vegas, Nevada 89119. Its principal
business is lending. Jay L. Botchman's principal occupation is
serving as a private lender and investor through various corporations.
(d) The Reporting Persons have not, during the last five years,
been convicted in any criminal proceedings (excluding
traffic violations or similar misdemeanors).
(e) The Reporting Persons have not, during the last five years,
been a party to a civil proceeding of any judicial or
administrative body of competent jurisdiction as a result of
which any of such persons 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 a finding of any violation with
respect to such laws.
(f) JLB is a corporation organized under the laws of the State
of Nevada. Jay L. Botchman is a United States citizen.
Item 3. Source and Amount of Funds or Other Consideration
JLB used $250,000 of its working capital to purchase an 18%
Convertible Subordinated Secured Promissory Note Due September 4,
1997 (the "Note") from the Issuer on March 4, 1997.
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CUSIP NO. 753904 10 1 Page 5 of 7
Item 4. Purpose of Transaction
Commencing 120 days from the date of the Note, or sooner
with the consent of the Issuer, and until payment in full, the
unpaid principal amount of the Note, or any portion thereof, may,
at the election of JLB, be converted into Shares at the
conversion price per Share equal to $.75. The conversion of the
entire principal amount of the Note would result in the issuance
of 333,333 Shares to JLB. Jay L. Botchman is the sole officer,
director and shareholder of JLB.
JLB acquired the Note for investment purposes and not for
the purpose of influencing the management or exercising control
of the Issuer. If JLB converts the Note into Shares, such Shares
would also be acquired for investment purposes and not for the
purpose of influencing the management or exercising control of
the Issuer.
In connection with the issuance of the Note, the Issuer
granted JLB a security interest in the capital stock of certain
subsidiaries of the Issuer pursuant to the terms of a Security
Agreement dated as of March 4, 1997. The subsidiaries are as
follows: Rattlesnake Ventures, Inc., Rattlesnake-Danbury, Inc.,
Rattlesnake-Lynbrook, Inc. and Rattlesnake-Flemington, Inc.
The Issuer agreed in the Subscription Agreement entered into
between the Issuer and JLB in connection with the issuance of the
Note (a) to nominate and use its best efforts to cause a designee
of JLB to be elected to the Issuer's Board of Directors for a
period of three years and (b) to offer (or cause its subsidiaries
to offer) to JLB the right to purchase any securities of the
Issuer or its subsidiaries that are being offered for sale
(excluding securities issuable (i) under the Issuer's Employee
Stock Option Plan or other employee benefit plans, (ii) upon the
exercise of warrants or (iii) upon the conversion of convertible
securities) during the one-year period following the issuance of
the Note.
Except as described in this Schedule 13D Report, the
Reporting Persons have no present plans or proposals that relate
to or that would result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
(a) JLB is the holder of the Note, which as of July 2, 1997 is
convertible into 333,333 Shares, which would constitute
11.2% of the percentage of the outstanding Shares. Jay L.
Botchman is the sole shareholder of JLB so he would be the
beneficial owner of such Shares.
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CUSIP NO. 753904 10 1 Page 6 of 7
(b) JLB shall have the sole power to vote and dispose of the
333,333 Shares. JLB shall share voting and dispositive
powers with respect to 0 Shares. Jay L. Botchman, as the
sole shareholder of JLB, would be deemed to have the sole
power to vote and dispose of the 333,333 Shares and would
share voting and dispositive powers with respect to 0
Shares.
(c) JLB purchased the Note from the Issuer on March 4, 1997.
Commencing 120 days from the date of the Note, or sooner
with the consent of the Issuer, and until payment in full,
the unpaid principal amount of the Note, or any portion
thereof, may, at the election of JLB, be converted into
Shares at the conversion price per Share equal to $.75. The
conversion of the entire principal amount of the Note would
result in the issuance of 333,333 Shares to JLB. Jay L.
Botchman is the sole officer, director and shareholder of
JLB.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
Other than the agreements described in Item 4 above, the
Reporting Persons are not parties to any contracts, arrangements,
understandings or relationships (legal or otherwise) with respect
to any securities of the Issuer, including but not limited to
transfer or voting of any of the securities, finder's fees, joint
ventures, loan or option arrangements, puts or calls, guarantees
of profits, division of profits or loss, or the giving or
withholding of proxies.
Item 7. Material to be Filed as Exhibits
(a) 18% Convertible Subordinated Secured Promissory Note Due
September 4, 1997 of the Issuer issued to JLB.
(b) Security Agreement dated as of March 4, 1997 by and the
Issuer, Michael Lauer and JLB.
(c) Subscription Agreement between the Issuer and JLB.
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CUSIP NO. 753904 10 1 Page 7 of 7
SIGNATURE
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.
J.L.B. OF NEVADA, INC.
Date: May 9, 1997 By: /s/ JAY L. BOTCHMAN
-------------------------
Jay L. Botchman
President
/s/ JAY L. BOTCHMAN
Date: May 9, 1997 ----------------------------
JAY L. BOTCHMAN
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EXHIBIT 99.A
NEITHER THIS NOTE NOR THE SHARES OF COMMON STOCK INTO WHICH THIS NOTE
IS CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
SUBSCRIPTION AGREEMENT OF EVEN DATE (THE "SUBSCRIPTION AGREEMENT").
18% Convertible Subordinated Secured Promissory Note
Due September 4, 1997
of
THE RATTLESNAKE HOLDING COMPANY, INC.
March 4, 1997
$250,000
The Rattlesnake Holding Company, Inc., a Delaware corporation
(hereinafter called the "Company"), for value received, hereby promises to pay
to J.L.B. of Nevada, Inc., 1500 East Tropicana Avenue, Suite 100, Las Vegas, NE
89119, or registered assigns, on the 4th day of September, 1997 (the "Due
Date"), the principal amount of Two Hundred Fifty Thousand Dollars ($250,000)
and to pay interest on the Due Date (computed on the basis of a 360-day year of
twelve 30-day months) on the unpaid portion of said principal amount from the
date hereof at the rate of l8% per annum. Both the principal hereof and
interest hereon are payable at the principal office of the Company in Stamford,
Connecticut, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts.
1. Authorized Issue. This Note is one of a duly authorized
issue of 18% Convertible Subordinated Promissory Notes due September 4, 1997
(herein called the "Notes") made or to be made by the Company in an aggregate
amount of up to $500,000, in original authorized principal amount, similar in
terms except for dates, principal amounts and named payees, offered by the
Company pursuant to a subscription agreement of even date.
2. Conversion. (a) Commencing 120 days from the date hereof,
or sooner with the consent of the Company, and until payment in full, the
unpaid principal amount of this Note, or any portion thereof may, at the
election of the holder thereof, at any time, be converted, at the conversion
price per share of Common Stock equal to $.75, as adjusted and readjusted from
time to time
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in accordance with this Paragraph 2 (such conversion price, as so adjusted and
readjusted and in effect at any time, being herein called the "Conversion
Price"), into the number of fully paid and nonassessable shares of Common Stock
(the "Conversion Shares") determined by dividing the principal amount to be so
converted by the Conversion Price in effect at the time of such conversion.
(b) (i) Any Note may be converted
in full or in part by the holder thereof by surrender of such Note with the
notice of conversion thereon duly executed by such holder (specifying the
portion of the principal amount thereof to be converted in the case of a
partial conversion) to the Company at its principal office, or at the office of
the agency maintained for such purpose. Upon any partial conversion of a Note,
the Company at its expense will forthwith issue and deliver to or upon the
order of the holder thereof a new Note or Notes in principal amount equal to
the unpaid and unconverted principal amount of such surrendered Note, such new
Note or Notes to be dated and to bear interest from the date to which interest
has been paid on such surrendered Note. Each conversion shall be deemed to have
been effected immediately prior to the close of business on the date on which
such Note shall have been so surrendered to the Company or such agency; and at
such time the rights of the holder of such Note as such shall, to the extent of
the principal amount thereof converted, cease, and the person or persons in
whose name or names any certificate or certificates for shares of Common Stock
(or Other Securities) shall be issuable upon such conversion shall be deemed to
have become the holder or holders of record thereof.
(ii) No payment or adjustment of interest
or dividends shall be made upon the conversion of any Note or Notes.
(c) As promptly as practicable after
the conversion of any Note in full or in part, and in any event within 15
calendar days thereafter, the Company at its expense (including the payment by
it or any applicable issue taxes) will issue and deliver to the holder of such
Note, or as such holder (upon payment of such holder of any applicable transfer
taxes) may direct, a certificate or certificates for the number of full shares
of Common Stock (or Other Securities) issuable upon such conversion, plus, in
lieu of any fractional shares to which such holder would otherwise be entitled,
cash equal to such fraction multiplied by the market value determined in good
faith by the Board of Directors of the Company of one full share as of the
close of business on the date of such conversion.
(d) Adjustments to Conversion Price and Number
of Securities.
(i) In case at any time or from
time to time the Company shall subdivide as a whole, split its Common Stock or
issue a dividend payable in shares or otherwise, the number of shares of Common
Stock then outstanding into a greater or lesser
2
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number of shares, the Conversion Price then in effect shall be increased or
reduced proportionately, and the number of shares issuable upon conversion of
this Note shall accordingly be increased proportionately.
(ii) In case of any reclassification or
change of outstanding shares of Common Stock issuable upon conversion of this
Note (other than change in par value, or from par value to no par value, or
from no par value to par value, or as a result or a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of outstanding shares of Common Stock, other than a change in number of
the shares issuable upon conversion of the Note) or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, the holder of this Note shall have the right
thereafter to convert this Note into the kind and amount of shares of stock and
other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock of the Company for which the Note might have been converted
immediately prior to such reclassification, change, consolidation, merger, sale
or conveyance. The above provisions of this Paragraph 2 shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(e) The Company will at all time reserve
and keep available, solely for issuance and delivery upon the conversion of the
Notes, all shares of Common Stock (or Other Securities) from time to time
issuable upon the conversion of the Notes. All shares of Common Stock issuable
upon conversion of the Notes shall be duly authorized and, when issued, validly
issued, fully paid and nonassessable with no liability on the part of the
holders thereof.
3. Restrictions on Transfer.
The holder acknowledges that he has been advised by the Company that
this Note and the shares of Common Stock (the "Conversion Shares") issuable
upon exercise thereof (collectively the "Securities") have not been registered
under the Securities Act of l933, as amended (the "Securities Act"), that the
Note is being issued, and the shares issuable upon exercise of the Note will be
issued, on the basis of the statutory exemption provided by section 4(2) of the
Securities Act relating to transactions by an issuer not involving any public
offering, and that the Company's reliance upon this statutory exemption is
based in part upon the representations made by the holder contained herein. The
holder acknowledges that he has been informed by the Company of, or is
otherwise familiar with, the nature of the limitations imposed by
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the Securities Act and the rules and regulations thereunder on the transfer of
securities. In particular, the holder agrees that no sale, assignment or
transfer of the Securities shall be valid or effective, and the Company shall
not be required to give any effect to any such sale, assignment or transfer,
unless (i) the sale, assignment or transfer of the Securities is registered
under the Securities Act, and the Company has no obligations or intention to so
register the Securities, or (ii) the Securities are sold, assigned or
transferred in accordance with all the requirements and limitations of Rule l44
under the Securities Act or such sale, assignment, or transfer is otherwise
exempt from registration under the Securities Act. The holder represents and
warrants that he has acquired this Note and will acquire the Securities for his
own account for investment and not with a view to the sale or distribution
thereof or the granting of any participation therein, and that he has no
present intention of distributing or selling to others any of such interest or
granting any participation therein. The holder acknowledges that the securities
shall bear the following legend:
"These securities have not been registered under the Securities Act
of l933. Such securities may not be sold or offered for sale,
transferred, hypothecated or otherwise assigned in the absence of an
effective registration statement with respect thereto under such Act
or an opinion of counsel to the Company that an exemption from
registration for such sale, offer, transfer, hypothecation or other
assignment is available under such Act."
3A. Registration Rights.
3A.l The Company shall advise the Holder of this Note or of the
Conversion Shares or any then holder of Notes or Conversion Shares (such
persons being collectively referred to herein as "holders") by written notice
at least four weeks prior to the filing of any registration statement under the
Securities Act of l933 (the "Act") covering securities of the Company, except
on Forms S-4 or S-8, and upon the request of any such holder within ten days
after the date of such notice, include in any such registration statement such
information as may be required to permit a public offering of the Conversion
Shares. The Company shall supply prospectuses and other documents as the Holder
may request in order to facilitate the public sale or other disposition of the
Conversion Shares, qualify the Conversion Shares for sale in such states as any
such holder designates and do any and all other acts and things which may be
necessary or desirable to enable such Holders to consummate the public sale or
other disposition of the Conversion Shares, and furnish indemnification in the
manner as set forth in Subsection 3A.2 of this Section 3A. Such holders shall
furnish information and indemnification as set forth in Subsection 3A.2 of this
Section 3A. For the purpose of the foregoing,
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inclusion of the Conversion Shares in a Registration Statement pursuant to this
sub-paragraph 3A.l under a condition that the offer and/or sale of such
Conversion Shares not commence until a date not to exceed 90 days from the
effective date of such registration statement shall be deemed to be in
compliance with this sub-paragraph 3A.l.
3A.2 The following provisions of this Section 3A shall also be
applicable to the exercise of the registration rights granted under this
Section 3A.l:
(A) The foregoing registration rights shall be contingent on the
holders furnishing the Company with such appropriate information (relating to
the intentions of such holders) as the Company shall reasonably request in
writing. Following the effective date of such registration, the Company shall
upon the request of any owner of Notes and/or Conversion Shares forthwith
supply such number of prospectuses meeting the requirements of the Act as shall
be requested by such owner to permit such holder to make a public offering of
all Conversion Shares from time to time offered or sold to such holder,
provided that such holder shall from time to time furnish the Company with such
appropriate information (relating to the intentions of such holder) as the
Company shall request in writing. The Company shall also use its best efforts
to qualify the Conversion Shares for sale in such states as such holder shall
reasonably designate.
(B) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Subsection 3A.l of this
Section 3A notwithstanding that Conversion Shares subject to this Note may be
included in any such registration. Any holder whose Conversion Shares are
included in any such registration statement pursuant to this Section 3A shall,
however, bear the fees of his own counsel and any registration fees, transfer
taxes or underwriting discounts or commissions applicable to the Conversion
Shares sold by him pursuant thereto.
(C) The Company shall indemnify and hold harmless each such
holder and each underwriter, within the meaning of the Act, who may purchase
from or sell for any such holder any Conversion Shares from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or any post-effective amendment thereto or any registration statement
under the Act or any prospectus included therein required to be filed or
furnished by reason of this Section 3A or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or alleged untrue statement or omission or alleged omission based upon
information furnished or required to be
5
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furnished in writing to the Company by such holder or underwriter expressly for
use therein, which indemnification shall include each person, if any, who
controls any such underwriter within the meaning of such Act; provided,
however, that the Company shall not be obliged so to indemnify any such holder
or underwriter or controlling person unless such holder or underwriter shall at
the same time agree to indemnify the Company, its directors, each officer
signing the related registration statement and each person, if any, who
controls the Company within the meaning of such Act, from and against any and
all losses, claims, damages and liabilities caused by any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement or any prospectus required to be filed or furnished by reason of this
Section 3A or caused by any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or alleged untrue statement or omission based upon information
furnished in writing to the Company by any such holder or underwriter expressly
for use therein.
4. Transfer and Exchange. This Note is transferable on the
Note Register of the Company at the expense of the Company (except for any
stamp tax or other governmental charge with respect to any transfer) upon
surrender of this Note for transfer at the principal office of the Company,
accompanied by a written instrument of transfer in form reasonably satisfactory
to the Company duly executed by the holder of this Note or his attorney duly
authorized in writing, and thereupon one or more new Notes, each in the
denomination of $50,000 or an integral multiple thereof and for the same
aggregate principal amount as the Note surrendered, and dated the date to which
interest has been paid on the Notes, will be issued to the designated
transferee or transferees. This Note is exchangeable for a like aggregate
principal amount of Notes of different denominations, as requested by the
holder or his attorney surrendering the same.
The Company and its agents may treat the holder of this Note as the
owner for purposes of receiving payment as herein provided and for all other
purposes, whether or not this Note be overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
Any new Note or Notes to be delivered to you or upon your order,
pursuant to this Section 4, in substitution for or in lieu of any Note held by
you, will be delivered to you at your address as shown on the records of the
Company, or at such other address within the United States of America as you
may request, without any expense to you in connection with such delivery and
insured to your satisfaction.
6
<PAGE> 7
5. Prepayment Provisions. (a) This Note may be prepaid, at
the option of the Company, as a whole or in part, pro rata as to each Note
holder, at any time or from time to time, in each case on any date on or after
the date of issuance and prior to maturity, at a redemption price of l00% of
the principal amount of such Note, together with accrued interest through the
date of prepayment.
(b) If this Note is called for prepayment
pursuant to subsection 5(a) of this Note, the Company shall give written notice
to the holder of this Note not less than 30 nor more than 60 day prior to the
date fixed for the prepayment thereof. Such notice and all other notices to be
given to any holder of a Note shall be mailed by registered mail to the holder
thereof at the address shown on the Note Register.
Upon notice of any prepayment being given as provided in this
subsection 5(b), the Company covenants and agrees that it will prepay on the
date therein fixed for prepayment the entire principal amount of this Note so
as to be prepaid as specified in such notice at the principal amount thereof,
together with interest accrued thereon to such date fixed for prepayment, plus
the applicable premium, if any.
(c) Upon any partial redemption of the
Notes, upon presentation as herein provided, there shall be paid to the holder
the principal amount of the portion of the Notes so to be prepaid with the
unpaid interest accrued in respect thereof (in cash or in shares of Common
Stock of the Company, as the Company may elect), and either (i) the Note to be
partially prepaid shall be surrendered by the holder, in which event the
Company shall execute and deliver to or on the order of such holder, at the
expense of the Company, a new Note for the principal amount of the Note
remaining unpaid, dated as of the date to which interest has been paid on the
Note surrendered, and registered in the name of the holder, or (ii) if the
holder and the Company shall so determine, the Note to be partially prepaid
need not be so surrendered, but may be made available to the Company, at the
place of payment specified herein, for notation thereon of the payment of the
portion of the principal so paid, in which case the Company shall make such
notation and return the Note to or on the order of such holder.
(d) All Notes which may be prepaid shall not be
considered outstanding for purposes of this Section 5.
(e) Notwithstanding the foregoing, the Holder shall
be entitled to convert this Note into shares of Common Stock of the Company in
accordance with paragraph 2 up until the date of prepayment.
7
<PAGE> 8
6. Subordination of Indebtedness; Security
6.1 (a) This Note is issued subject to the
provisions of this Section 6; and each person taking or holding this Note,
accepts and agrees to be bound by these provisions.
(b) This Note is a junior general obligation
of the Company and is fully subordinated to all "senior indebtedness" of the
Company now existing or hereafter incurred. Senior indebtedness is all
indebtedness, liabilities and obligations of the Company for money borrowed
from banks, savings and loan associations, the Small Business Administration
and other financial institutions, and their affiliates, whether or not
evidenced by notes or other instruments or evidences of indebtedness, and any
deferrals, renewals or extensions of any such senior indebtedness and notes or
other instruments or evidences of indebtedness issued in respect of or in
exchange for any such senior indebtedness or any funding to pay or replace any
such senior indebtedness or credit unless in the instrument creating or
evidencing the same, or pursuant to which it is outstanding, it is provided
that such indebtedness or such deferral, renewal or extension thereof is not
senior in right of payment to this Note. No payment or distribution of any kind
or character on account of principal, premium, if any, or interest on this Note
shall be permitted during the continuance of any default in the payment of
principal, premium, if any, or interest on any senior indebtedness.
6.2 Subject to the foregoing, this Note is secured
by all of the issued and outstanding shares of the Company's wholly owned
subsidiaries Rattlesnake Ventures, Inc., Rattlesnake-Danbury, Inc.,
Rattlesnake-Lynbrook, Inc. and Rattlesnake-Flemington, Inc. The security
interest provided for herein shall be subject to a certain Security Agreement
dated as of the date hereof (the "Security Agreement") and the rights of the
Holder to pursue his remedies under such Security Agreement shall not be
affected by the subordination and moratorium described in paragraph 6.1 above.
7. Default. If one or more of the following events
(herein called "Events of Default") shall occur for any reason whatsoever (and
whether such occurrence shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), and the holder of this Note shall have
given fifteen (15) days prior written notice to the Company by certified or
registered mail, return receipt requested, and the Company shall not have cured
shall default within such period:
(i) default in the due and punctual payment of the
principal of, or interest on, any Note when and as the same shall
8
<PAGE> 9
become due and payable, whether at maturity or at a date fixed for
prepayment or by acceleration or otherwise;
(ii) default by the Company in any provision of the
Subscription Agreement executed in connection with the sale and
purchase of the Notes; or
(iii) the Company makes an assignment for the
benefit of creditors or admits in writing its inability to pay its
debts generally as they become due; or
(iv) an order, judgment or decree is entered
adjudicating the Company or any subsidiary bankrupt or insolvent;
or
(v) the Company petitions or applies to any
tribunal for the appointment of a trustee or receiver of the Company within the
meaning of the Securities Act, or of any substantial part of the assets of the
Company, or commences any proceedings (other than proceedings for the voluntary
liquidation and dissolution of a subsidiary) relating to the Company or any
subsidiary under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of any jurisdiction
whether now or hereafter in effect; or
(vi) any such petition or application is filed, or
any such proceedings are commenced, against the Company, and the Company by any
act indicates its approval thereof, consent or acquiescence therein, or an
order, judgment or decree is entered appointing any such trustee or receiver,
or approving the petition in any such proceedings, and such order, judgment or
decree remains unstayed and in effect for more than 60 days; or
(vii) any order, judgment or decree is entered in
any proceedings against the Company or any subsidiary within the meaning of the
Securities Act decreeing the dissolution of the Company and such order,
judgment or decree remains unstayed and in effect for more than 60 days; or
(viii) any order, judgment or decree is entered in
any proceedings against the Company or any subsidiary decreeing a split-up of
the Company which requires the divestiture of a substantial part of the
consolidated assets of the Company and its subsidiaries, or the divestiture of
the stock of a subsidiary and such order, judgment or decree remains unstayed
and in effect for more than 60 days;
Then and in each and every such case, so long as such Event of Default shall
not have been remedied, the holder of any Note, by notice in writing to the
Company, may declare the principal of this Note then outstanding and the
interest accrued thereon if not already due and payable, to be due and payable
immediately, and
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<PAGE> 10
upon any such declaration the same shall become and shall be immediately due
and payable, anything in this Note contained to the contrary notwithstanding.
8. Miscellaneous. (a) To the extent permitted by
applicable law, the Company hereby agrees to waive, and does hereby absolutely
and irrevocably waive and relinquish, the benefit and advantage of any
valuation, stay, appraisement, extension or redemption law now existing or
which may hereafter exist, which, but for this provision, might be applicable
to any sale made under the judgment, order or decree of any court, or
otherwise, based on the Notes or on any claim for principal or interest on the
Notes.
(b) Each Note is issued upon the express condition,
to which each successive holder expressly assents and by receiving the same
agrees, that no recourse under or upon any obligation, covenant or agreement of
the Notes, or for the payment of the principal of, or premium, if any, or the
interest on, a Note, or for any claim based on a Note, or otherwise in respect
hereof, shall be had against any incorporator or any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, whether by virtue of the constitution, statute or rule of law or
by any assessment or penalty or otherwise howsoever, all such individual
liability being hereby expressly waived and released as a condition of and as a
part of the consideration for the execution and issue of the Notes; provided,
however, that nothing herein shall prevent enforcement of the liability, if
any, of any stockholder or subscriber to capital stock upon or in respect of
capital stock not fully paid.
(c) Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of any Note
and of indemnity reasonably satisfactory to it, and upon reimbursement to the
Company of all reasonable expenses incidental thereto, and upon surrender and
cancellation of any such Note if mutilated, the Company will make and deliver a
new Note or like tenor in lieu of any such Note so lost, stolen, destroyed or
mutilated. Any new Note made and delivered in accordance with the provisions of
this subsection 8(c) shall be dated as of the date from which unpaid interest
has then accrued on the Note so lost, stolen, destroyed or mutilated.
(d) Any notice or demand which by any
provision of the Notes is required or provided to be given or served to or upon
the Company shall be deemed to have been sufficiently given or served for all
purposes by being sent as registered mail, postage prepaid, addressed to the
Company at its principal office.
(e) No course of dealing between the Company and
the holder of any Note or any delay on the part of the holder in exercising any
rights under a Note shall operate as a waiver of any rights of any holder of
the Note.
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<PAGE> 11
(f) The Company hereby waives presentment and notice
of dishonor. In the event the holder is successful in any action at law or
equity to enforce the provisions of this Note, the Holder shall be entitled to
recover from the Company all reasonable attorney's fees and costs of
collection.
9. Binding Effect. The Company agrees that the
provisions of this Note shall bind and shall inure to the benefit
of the parties hereto and their successors and assigns.
10. Amendment and Waiver. This Note may be amended, and the
performance and observance of any term of this Note may be waived, with (and
only with) the written consent of the Company and such Note purchaser as to
whom performance is to be waived.
11. Interest Rate. If any interest rate specified
herein is held to be impermissible, then the rate charged on the
indebtedness represented hereby shall be reduced to the highest
rate then permitted by law.
12. Communications. All notices and other communications
provided for hereunder or under the Notes shall be in writing, and, if to you,
shall be delivered or mailed by registered mail addressed to you at your
address as shown in the records of the Company in this Note hereto or to such
other address as you may designate to the Company in writing and, if to the
Company, shall be delivered or mailed by registered mail to the Company at 3
Stamford Landing, Suite 130, Stamford, Connecticut 06902, attention: Office of
the President, or to such other address as the Company may designate to you in
writing.
13. Delaware Law. This Note shall be construed in accordance
with and governed by the laws of the State of Delaware without regard to
principles of conflicts of law, and cannot be changed, discharged or terminated
orally but only by an instrument in writing signed by the party against whom
enforcement of any change, discharge or termination is sought.
14. Counterparts. This Note may be executed simultaneously
in any number of counterparts each of which when so executed and delivered
shall be an original, but such counter parts together shall constitute but one
and the same instrument.
15. Headings. The headings of the sections of this Note
are inserted for convenience only and do not affect the meaning of
such section.
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<PAGE> 12
IN WITNESS WHEREOF, the undersigned has caused this Note to
be signed in its corporate name by a duly authorized officer and to be dated
the date and year first above written.
THE RATTLESNAKE HOLDING COMPANY, INC.
By /s/ WILLIAM J. OPPER
---------------------------------
William J. Opper
Chairman
12
<PAGE> 1
EXHIBIT 99.B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated as of March 4, 1997
is made by The Rattlesnake Holding Company., Inc., a Delaware corporation (the
"Company") in favor of J.L.B. OF NEVADA, INC. and Michael Lauer (the "Secured
Party").
The Secured Promissory Notes dated as of March 4, 1997 in the
aggregate amount of Five Hundred Thousand Dollars ($500,000) (collectively the
"Note") executed by the Company in favor of the Secured Party provides, subject
to its terms and conditions, for a concurrent loan to the Company. It is a
condition to the concurrent loan under the Note by the Secured Party that the
Company shall have executed and delivered, and granted the Lien provided for in
this Agreement.
To induce the Secured Party to enter into, and to extend credit under,
the Note and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company has agreed to pledge,
assign and grant a security interest in the Collateral as security for the
Secured Obligations. Accordingly, the Company agrees with the Secured Party as
follows:
1. Definitions and Interpretation.
1.1 Certain Defined Terms. The following terms shall have
the following meanings under this Agreement:
"BASIC DOCUMENT" shall mean the Note and this Agreement.
"CODE" shall mean the Uniform Commercial Code as in effect in
the State of New York from time to time or, by reason of mandatory application,
any other applicable jurisdiction.
"COLLATERAL" shall mean all right, title and interest of the
Company in the shares of capital stock (the "Stock") held by the Company in the
following subsidiaries (collectively the "Subsidiaries") of the company: 100
shares of Rattlesnake Ventures, Inc., 100 shares of Rattlesnake-Danbury, Inc.,
100 shares of Rattlesnake-Lynbrook, Inc. and 100 shares of Common Stock of
Rattlesnake-Flemington, Inc.
"DEFAULT" shall mean any default described in the Note.
"LIEN" shall mean, with respect to any property, any
mortgage, lien, pledge, charge, security interest or encumbrance
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of any kind in respect of such property or any agreement to give, or notice of,
any of the foregoing.
"SECURED OBLIGATIONS" shall mean any and all obligations of
the Company for the performance of its agreements, covenants and undertakings
under or in respect of the Note, including the payment of all amounts owed
thereunder.
1.2 Interpretation. In this Agreement, unless otherwise
indicated, the singular includes the plural and plural the singular; words
importing either gender include the other gender; references to statutes or
regulations are to be construed as including all statutory or regulatory
provisions consolidating, amending or replacing the statute or regulation
referred to; references to "writing" include printing, typing, lithography and
other means of reproducing words in a tangible visible form; the words
"including," "includes" and "include" shall be deemed to be followed by the
words "without limitation"; references to articles, sections (or subdivisions
of sections), exhibits, annexes or schedules are to this Agreement; references
to agreements and other contractual instruments shall be deemed to include all
subsequent amendments, extensions and other modifications to such instruments
(without, however, limiting any prohibition on any such amendments, extensions
and other modifications by the terms of any such document); and references to
persons or entities including their respective permitted successors and
assigns.
2. Collateral.
2.1 Grant. As collateral security for the prompt payment in
full when due (whether at stated maturity, by acceleration or otherwise) and
performance of the Secured Obligations, the Company hereby pledges, assigns and
grants to the Secured Party a security interest in all of the Company's right,
title and interest in and to the Collateral.
2.2 Perfection. Concurrently with the execution and delivery
of this Agreement, the Company shall (i) file such financing statements and
other documents in such offices as the Secured Party may reasonably request in
writing to perfect and establish the Lien granted by this Agreement, (ii)
deliver to the attorneys for the Secured Party and pledge to the Secured Party
certificates representing the Stock, and (iii) take all such other actions as
shall be necessary or as the Secured Party may request to perfect and establish
the priority of the Lien granted by this Agreement.
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<PAGE> 3
2.3 Preservation and Protection of Security Interests.
The Company shall:
(a) upon the acquisition after the date of this
Agreement by the Company of any instrument or chattel paper evidencing all or
any part of the interests constituting the Collateral, promptly deliver and
pledge to the Secured Party all such instruments or chattel paper, endorsed or
accompanied by such instruments of assignment and transfer in such form and
substance as the Secured Party may request; and
(b) give, execute, deliver, file or record any
and all financing statements, notices, contracts, agreements or other
instruments, obtain any and all governmental approvals and take any and all
steps that may be necessary or as the Secured Party may request to create,
perfect, establish the priority of, or to preserve the validity, perfection or
priority of, the Lien granted by this Agreement or to enable the Secured Party
to exercise and enforce its rights, remedies, powers and privileges under this
Agreement with respect to such Lien.
2.4 Attorney-in-Fact.
(a) The Secured Party is hereby appointed the
attorney-in-fact of the Company for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Secured Party may deem necessary or advisable to accomplish the purposes of
this Agreement, to preserve the validity, perfection and priority of the Lien
granted by this Agreement (including, without limitation, the filing or
recording of such financing statements as Secured Party may deem appropriate or
necessary) and, following any Default, to exercise its rights, remedies, powers
and privileges under this Agreement. This appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Secured Party shall be entitled under this Agreement upon
the occurrence and continuation of any Default (i) to ask, demand, collect, sue
for, recover, receive and give receipt and discharge for amounts due and to
become due under and in respect of all or any part of the Collateral; (ii) to
receive, endorse and collect any instruments or other drafts, instruments,
documents and chattel paper in connection with clause (i) above (including any
draft or check representing the proceeds of insurance or the return of unearned
premiums); (iii) to file any claims or take any action or proceeding that the
Secured Party may deem necessary or advisable for the collection of all or any
part of the Collateral, including the collection of any compensation due and to
become due under any contract or agreement with respect to all or any part of
the Collateral; and (iv) to execute, in connection with any sale or disposition
of the Collateral under Section 4,
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<PAGE> 4
any endorsements, assignments, bills of sale or other instruments of conveyance
or transfer with respect to all or any part of the Collateral.
(b) So long as no Default shall have occurred and
be continuing, the Company shall have the right to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral for all
purposes not inconsistent with the terms of this Agreement.
(c) If any Default shall have occurred and be
continuing, and whether or not the Secured Party exercises any available right
to declare any Secured Obligation due and payable or seeks or pursues any other
right, remedy, power or privilege available to it under applicable law, this
Agreement or any other Basic Document, all payments and other distributions on
the Collateral shall be paid directly to the Secured Party or its designee,
retained by it and applied as set forth in Section 4.04.
2.5 Rights and Obligations.
(a) The Company shall remain liable to perform
its duties and obligations under the contracts and agreements included in the
Collateral in accordance with their respective terms to the same extent as if
this Agreement had not been executed and delivered. The exercise by the Secured
Party of any right, remedy, power or privilege in respect of this Agreement
shall not release the Company from any of its duties and obligations under such
contracts and agreements. The Secured Party shall have no duty, obligation or
liability under such contracts and agreements by reason of this Agreement or
any other Basic Document, nor shall the Secured Party be obligated to perform
any of the duties or obligations of the Company under any such contract or
agreement or to take any action to collect or enforce any claim under any such
contract or agreement.
(b) No Lien granted by this Agreement in the
Company's right, title and interest in any contract or agreement shall be
deemed to be a consent by the Secured Party to any such contract or agreement.
(c) No reference in this Agreement to proceeds or
to the sale or other disposition of Collateral shall authorize the Company to
sell or otherwise dispose of any Collateral.
(d) The Secured Party shall not be required to
take steps necessary to preserve any rights against prior parties to any part
of the Collateral.
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<PAGE> 5
3. Representations, Warranties and Covenants. As of the date
of this Agreement, the Company represents, warrants and covenants to the
Secured Party as follows:
3.1 Title. The Company is the sole beneficial owner of
the Collateral in which it purports to grant a Lien pursuant to this Agreement,
and such Collateral is free and clear of all Liens. The Lien granted by this
Agreement in favor of the Secured Party has attached and constitutes a
perfected security interest in all of such Collateral prior to all other Liens.
3.2 Sales and Other Liens. The Company shall not
dispose of any Collateral, create, incur, assume or suffer to exist any Lien
upon any Collateral or file or suffer to be on file or authorize to be filed,
in any jurisdiction, any financing statement or like instrument with respect to
all or any part of the Collateral in which the Secured Party is not named as
the sole secured party.
3.3 Principal Place of Business. The Company's chief
executive office and principal place of business is located at
the address set forth below.
3.4 Further Assurances. The Company agrees that, from
time to time upon the written request of the Secured Party, the Company will
execute and deliver such further documents and do such other acts and things as
the Secured Party may reasonably request in order fully to effect the purposes
of this Agreement.
3.5 Stock and Future Issuances. The Stock constitutes
all of the issued and outstanding shares of capital stock of the Subsidiaries.
No additional capital stock of the Subsidiaries may be issued, and no transfer
of assets of the Subsidiaries shall be made, until the repayment of the Note in
full.
4. Remedies.
4.1 Events of Default, Etc. If any Default shall have
occurred and be continuing:
(a) The Secured Party in its discretion may make
any reasonable compromise or settlement it deems desirable with respect to any
of the Collateral and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, all or any part of the
Collateral;
(b) The Secured Party in its discretion may, in
its name or in the name of the Company or otherwise, demand, sue for, collect
or receive any money or property at any time payable or receivable on account
of or in exchange for all or any part of the Collateral, but shall be under no
obligation to do so;
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<PAGE> 6
(c) The Secured Party in its discretion may, upon
ten business days' prior written notice to the Company of the time and place,
with respect to all or any part of the Collateral which shall then be or shall
thereafter come into the possession, custody or control of the Secured Party or
any of its agents, sell, lease or otherwise dispose of all or any part of such
Collateral, at such place or places as the Secured Party deems best, for cash,
for credit or for future delivery (without thereby assuming any credit risk)
and at public or private sale, without demand of performance or notice of
intention to effect any such disposition or of time or place of any such sale
(except such notice as is required above or by applicable statute and cannot be
waived), and the Secured Party or any other person or entity may be the
purchaser, lessee or recipient of any or all of the Collateral so disposed of
at any public sale (or, to the extent permitted by law, at any private sale)
and thereafter hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of redemption (statutory or
otherwise), of the Company, any such demand, notice and right or equity being
hereby expressly waived and released. The Secured Party may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the sale may be
so adjourned; and
(d) The Secured Party shall have, and in its
discretion may exercise, all of the rights, remedies, powers and privileges
with respect to the Collateral of a secured party under the Code (whether or
not the Code is in effect in the jurisdiction where such rights, remedies,
powers and privileges are asserted) and such additional rights, remedies,
powers and privileges to which a secured party is entitled under the laws in
effect in any jurisdiction where any rights, remedies, powers and privileges in
respect of this Agreement or the Collateral may be asserted, including the
right, to the maximum extent permitted by law, to exercise all voting,
consensual and other powers of ownership pertaining to the Collateral as if the
Secured Party were the sole and absolute owner of the Collateral (and the
Company agrees to take all such action as may be appropriate to give effect to
such right).
The proceeds of, and other realization upon, the Collateral by virtue of the
exercise of remedies under this Section 4.01 shall be applied in accordance
with Section 4.4.
4.2 Deficiency. If the proceeds of, or other realization
upon, the Collateral by virtue of the exercise of remedies under Section 4.01
are insufficient to cover the costs and expenses of such exercise and the
payment in full of the
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<PAGE> 7
other Secured Obligations, the Company shall remain liable for any deficiency.
4.3 Private Sale.
(a) The Secured Party shall incur no liability as
a result of the sale, lease or other disposition of all or any part of the
Collateral at any private sale pursuant to Section 4.01 conducted in a
commercially reasonable manner. The Company hereby waives any claims against
the Secured Party arising by reason of the fact that the price at which the
Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale or was less than the aggregate
amount of the Secured Obligations, even if the Secured Party accepts the first
offer received and does not offer the Collateral to more than one offeree.
(b) The Company recognizes that, by reason of
certain prohibitions contained in the Securities Act of 1933 and applicable
state securities laws, the Secured Party may be compelled, with respect to any
sale of all or any part of the Collateral, to limit purchasers to those who
will agree, among other things, to acquire the Collateral for their own
account, for investment and not with a view to distribution or resale. The
Company acknowledges that any such private sales may be at prices and on terms
less favorable to the Secured Party than those obtainable through a public sale
without such restrictions, and, notwithstanding such circumstances, agree that
any such private sale shall be deemed to have been made in a commercially
reasonable manner and that the Secured Party shall have no obligation to engage
in public sales and no obligation to delay the sale of any Collateral for the
period of time necessary to permit the respective Issuer of such Collateral to
register it for public sale.
4.4 Application of Proceeds. Except as otherwise
expressly provided in this Agreement and except as provided below in this
Section 4.04, the proceeds of, or other realization upon, all or any part of
the Collateral by virtue of the exercise of remedies under Section 4.01 and any
other cash at the time held by the Secured Party under this Agreement, shall be
applied by the Secured Party:
First, to the payment of the costs and expenses of
such exercise of remedies, including reasonable out-of-pocket costs and
expenses of the Secured Party, the fees and expenses of its agents and counsel
and all other expenses incurred and advances made by the Secured Party in that
connection;
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<PAGE> 8
Next, to the payment in full of the remaining
Secured Obligations in such manner as the Secured Party may
determine; and
Finally, to the payment to the Company, or its
respective successors or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
As used in this Section 4, "proceeds" of Collateral shall mean cash,
securities and other property realized in respect of, and distributions in kind
of, Collateral, including any property received under any bankruptcy,
reorganization or other similar proceeding as to the Company or any issuer of,
or account debtor or other obligor on, any of the Collateral.
5. Miscellaneous.
5.1 Waiver. No failure on the part of the Secured Party
to exercise and no delay in exercising, and no course of dealing with respect
to, any right, remedy, power or privilege under this Agreement shall operate as
a waiver of such right, remedy, power or privilege, nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
5.2 Notices. All notices and communications to be given
under this Agreement shall be given or made in writing to the intended
recipient at the address specified below or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall
be deemed to have been duly given when transmitted by telex or telecopier,
delivered to the telegraph or cable office or personally delivered or, in the
case of a mailed notice, upon receipt, in each case, given or addressed as
provided in this Section 5.02:
To the Company: The Rattlesnake Holding Company, Inc.
3 Stamford Landing, Suite 130
Stamford, Connecticut 06902
Fax No.: (203) 975-7973
Attention: David Sederholt
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With a copy to: Goldstein & DiGioia, LLP
369 Lexington Avenue
New York, New York 10017
Fax No.: (212) 557-0295
Attn: Victor J. DiGioia
To the Secured Party:
Michael Lauer J.L.B. of Nevada, Inc.
c/o Lancer Group 1500 East Tropicana Avenue
200 Park Avenue Suite 100
Suite 3900 Las Vegas, NE 89119
New York, NY 10166 Attn: Jay Botchman
With a copy to: Caplin & Drysdale
One Thomas Circle NW
Washington, D.C. 20005
Fax No. (202) 429-3301
Attn: Graeme Bush
5.3 Expenses, Etc. The Company agrees to pay or to reimburse
the Secured Party for all costs and expenses (including reasonable attorney's
fees and expenses) that may be incurred by the Secured Party in any effort to
enforce any of the provisions of Section 4 or any of the obligations of the
Company in respect of the Collateral or in connection with (a) the preservation
of the Lien of, or the rights of the Secured Party under this Agreement or (b)
any actual or attempted sale, lease, disposition, exchange, collection,
compromise, settlement or other realization in respect of, or care of, the
Collateral, including all such costs and expenses (and reasonable attorney's
fees and expenses) incurred in any bankruptcy, reorganization, workout or other
similar proceeding relating to the Company.
5.4 Amendments, Etc. Any provision of this Agreement may be
modified, supplemented or waived only by an instrument in writing duly executed
by the Company and the Secured Party. Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Secured Party, each holder of any of the Secured Obligations and the Company,
and any such waiver shall be effective only in the specific instance and for
the purposes for which given.
5.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company, the Secured
Party and each holder of any of the Secured Obligations and their
respective successors and permitted assigns. The Company shall
not assign or transfer its rights under this Agreement without the prior
written consent of the Secured Party.
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<PAGE> 10
5.6 Survival. All representations and warranties made
in this Agreement or in any certificate or other document delivered pursuant to
or in connection with this Agreement shall survive the execution and delivery
of this Agreement or such certificate or other document (as the case may be) or
any deemed repetition of any such representation or warranty.
5.7 Agreements Superseded. This Agreement supersedes
all prior agreements and understandings, written or oral, among the parties
with respect to the subject matter of this Agreement.
5.8 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
5.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK. THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK FOR THE
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. THE COMPANY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first above written.
THE RATTLESNAKE HOLDING COMPANY, INC.
a Delaware corporation
By /s/ WILLIAM J. OPPER
-----------------------------------
William J. Opper, Chairman
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EXHIBIT 99C
SUBSCRIPTION AGREEMENT
TO: J.L.B. OF NEVADA, INC.
1500 East Tropicana Avenue
Suite 100
Las Vegas, NE 89119
Attn: Jay Botchman
Gentlemen/Ladies:
The following sets forth the terms of your subscription for
18% convertible promissory notes (the "Notes") of The Rattlesnake Holding
Company, Inc., a Delaware corporation (the "Corporation" or the "Company").
1. Subscription: the Offering. (a) By your signature hereto,
you hereby subscribe to purchase $250,000 principal amount 18% convertible
promissory notes. Cumulative semi-annual dividends are payable on each Note at
the rate of 18% per annum. Each Note is convertible into shares (the
"Conversion Shares") of the Company's Common Stock $.001 par value per share
(the "Common Stock") at a conversion rate equal to $.75 per share, subject to
adjustment to prevent dilution, at any time after 120 days from the date of the
Note, or sooner with the consent of the Company, and until payment in full of
the Note. The Notes are secured by all of the shares of the Company's Common
stock of Rattlesnake Ventures, Inc., Rattlesnake-Danbury, Inc.,
Rattlesnake-Lynbrook, Inc. and Rattlesnake-Flemington, Inc., the Company's
wholly owned subsidiaries, subject to the terms and conditions of a certain
security agreement (the "Security Agreement"). The Notes are part of an
offering (the "Offering") of up to $500,000 principal amount of Notes. The
private offering is being made on a best efforts basis with no minimum. The
Company reserves the right to close on the Offering for a lesser total amount.
(b) Subscription payments should be made payable to "The
Rattlesnake Holding Company, Inc." and should be delivered, together with two
executed copies of this Agreement to The Rattlesnake Holding Company, Inc.,
Attention: David Sederholt, President. In the event the subscription is not
accepted in whole or in part by the Company, the full or ratable amount, as the
case may be, of any subscription payment received will be promptly refunded to
the subscriber without deduction therefrom or interest thereon.
(c) This subscription is subject to the terms and conditions
of the Offering which are described in this Agreement, and the exhibits annexed
hereto, as same may be amended or supplemented.
(d) In the event this subscription is accepted by the
Company, in whole or in part, and subject to the conditions set forth in
Section 2 of this Agreement, the Company shall deliver to you, the Note, dated
the date of closing of the Offering, and a fully executed copy of this
Agreement and the Security Agreement.
<PAGE> 2
(f) The Company may engage an agent to introduce the Company
to persons who may be interested in providing short term financing for the
Company and to advise the Company in connection with the structure, terms and
conditions thereof. In consideration for such services, the Company may pay a
fee of up to 10% of the aggregate gross proceeds from the sale of the Notes
and/or issue securities as compensation to such agents. No agent prepared any
of the information to be delivered to prospective investors in connection with
the Offering. Prospective investors are advised to conduct their own review of
the business, properties and affairs of the Company before subscribing to
purchase Notes.
(g) The Company has the right to accept or reject this
subscription in whole or in part. Unless this subscription is accepted in whole
or in part or rejected by the Company within 30 days from the receipt hereof by
the Company, the subscription shall be deemed rejected in whole.
2. Additional Covenants. Subject to the acceptance of
this subscription, the Company hereby agrees that:
(a) The Company will nominate and use its best efforts
to cause to be elected to the Company's board of directors for a
period of three years from the acceptance of this subscription, a
designee of JLB of Nevada, Inc. ("JLB").
(b) Subject to the conditions set forth in this paragraph,
for a period of one year from the acceptance of this subscription, JLB is
hereby granted the right to purchase for its account, or its designee, any
securities of the Company or any of its subsidiaries, not including securities
issuable under the Company's Employee Stock Option Plan or other employee
benefit plans, or issuable upon exercise of warrants or conversion of
convertible securities. The Company will offer, or cause any of its
subsidiaries to offer, to JLB the opportunity, on terms not more favorable to
the Company or such subsidiary than can be secured elsewhere, to purchase any
such securities. If JLB fails to accept in writing such proposal made by the
Company or any of its subsidiaries within ten business days after receipt of a
notice containing such proposal, then JLB shall have no further claim or right
with respect to the proposal contained in such notice. If, thereafter, such
proposal is materially modified, the Company shall again offer and cause each
subsidiary to offer to JLB and shall in all respects have the same obligations
and adopt the same procedures with respect to such proposal as are provided
hereinabove with respect to the original proposal.
3. Representations and Warranties of the Company. The
Company represents and warrants to, and agrees with, you as
follows:
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<PAGE> 3
(a) The Company, and each of its subsidiaries,
is duly organized, validly existing and in good standing under the laws of
their states of incorporation, with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry out the business
in which it is engaged. The Company, and each of its subsidiaries, is duly
qualified to transact the business in which it is engaged and is in good
standing as a foreign corporation in every jurisdiction in which its ownership,
leasing, licensing or use of property or assets or the conduct of its business
make such qualification necessary.
(b) The Company is authorized to issue
25,000,000 shares of capital stock, of which 5,000,000 have been designated
preferred stock, par value $.10 per share, and 20,000,000 have been designated
common stock, par value $.01 per share.
(c) The Company has all requisite power and
authority to execute, deliver and perform its obligations under this Agreement
and the Security Agreement, and to issue, sell and deliver and perform its
obligations under the Note. This Agreement and the Security Agreement has been
duly authorized by the Company, and (subject, with respect to enforceability,
to the provisions of bankruptcy and similar laws) when executed and delivered
by the Company, will constitute the legal, valid and binding obligation of the
Company, enforceable as to the Company in accordance with its terms. The Note
has been duly authorized by the Company and (subject, with respect to
enforceability, to the provisions of bankruptcy and similar laws), when
executed, issued, sold and delivered in accordance with the terms of this
Agreement, against payment therefor, the Note will have been validly executed,
issued, sold and delivered and will constitute the legal, valid and binding
obligation of the Company, enforceable as to the Company in accordance with its
terms.
(d) No consent, authorization, approval, order,
license, certificate or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or any other
tribunal is required by the Company for the execution, deliver or performance
by the Company of this Agreement and the Security Agreement or the execution,
issuance, sale, delivery or performance of the Note.
(e) No consent of any party to any contract,
agreement, instrument, lease, license, arrangement or understanding to which
the Company is a party or to which any of its properties or assets are subject
is required for the execution, delivery or performance by the Company of this
Agreement and the Security Agreement, or the execution, issuance, sale,
delivery or performance of the Note.
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<PAGE> 4
(f) The execution, delivery and performance of
this Agreement and the Security Agreement, and the execution, issuance, sale,
delivery and performance of the Note, will not violate, result in a breach of,
conflict with (with or without the giving of notice or the passage of time or
both) or entitle any party to terminate or call a default under any contract,
agreement, instrument, lease, license, arrangement or understanding or violate
or result in a breach of any term of the certificate of incorporation or
by-laws of, or conflict with any law, rule, regulation, order, judgment or
decree binding upon, the Company or to which any of its operations, businesses,
properties or assets are subject.
(g) The shares of common stock issuable upon
conversion of the Note in accordance with their terms have been duly reserved
for such issuance. Such shares are validly authorized and, if and when the Note
is converted in whole or in part in accordance with its terms, the shares
issued upon such conversion will be validly issued, fully paid and
nonassessable and will not be issued in violation of any preemptive or other
rights of stockholders.
4. Representations and Warranties of the Subscriber.
You hereby represent and warrant to, and agree with, the Company as
follows:
(a) You are an "Accredited Investor" as that
term is defined in Section 501(a) of Regulation D promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). Specifically you are
(check appropriate items(s)):
____(i) A bank as defined in Section 3(a)(2) of the
Securities Act, or a savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its
individual or fiduciary capacity; a broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); an insurance company as defined in Section 2(13) of the Securities Act;
an investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section 2(a)(48) of that Act; a
small Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958; a plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the benefit of its employees, if such plan has total assets
in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment advisor, or if the
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<PAGE> 5
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;
_____(ii) A private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of
1940;
_____(iii) An organization described in Section
501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the securities offered, with total assets in excess of $5,000,000;
_____(iv) A director, executive officer, or general
partner of the Company;
_____(v) A natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of
his or her purchase exceeds $1,000,000;
_____(vi) A natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level in the
current year;
_____(vii) A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in
Rule 506(b)(2)(ii); or
X (viii) An entity in which all of the equity
owners are accredited investors. (If this alternative is checked, you must
identify each equity owner and provide statements signed by each demonstrating
how each qualified as an accredited investor.)
(b) If you are a natural person, you are: a
bona fide resident of the State contained in your address set forth at the
outset of this Agreement as your home address; at least 21 years of age; and
legally competent to execute this Agreement. If an entity, you are duly
authorized to execute this Agreement and this Agreement, when executed and
delivered by you, will constitute your legal, valid and binding obligation
enforceable against you in accordance with its terms.
(c) You have received, read carefully and are
familiar with this Agreement and the Security Agreement and the
Note. You have received all materials which have been requested by
you; and the Company has answered all inquiries of you or your
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<PAGE> 6
representatives in connection with this transaction. You have had access to all
additional information necessary to verify the accuracy of the information set
forth in this Agreement and any other materials furnished herewith, and you
have taken all the steps necessary to evaluate the merits and risks of an
investment as proposed hereunder.
(d) You or your purchaser representative have
such knowledge and experience in finance, securities, investments and other
business matters so as to be able to protect your interests in connection with
this transaction, and your investment in the Company hereunder is not material
when compared to your total financial capacity.
(e) You understand the various risks of an
investment in the Company as proposed herein and can afford to bear such risks,
including, but not limited to, the risks of losing your entire investment.
(f) You acknowledge that no market for the Note
or the shares of Common Stock issuable upon conversion of the Note presently
exists and none may develop in the future and that you may find it impossible
to liquidate your investment at a time when it may be desirable to do so, or at
any other time.
(g) You have been advised by the Company that
the Note, and the Common Stock issuable upon conversion of the Note
(collectively, the "Securities") have not been registered under the Securities
Act, that the Securities will be issued on the basis of the statutory exemption
provided by Section 4(2) of the Securities Act and/or Regulation D promulgated
thereunder relating to transactions by an issuer not involving any public
offering and under similar exemptions under certain state securities laws, that
this transaction has not been reviewed by, passed on or submitted to any
Federal or state agency or self-regulatory organization where an exemption is
being relied upon, and that the Company's reliance thereon is based in part
upon the representations made by you in this Agreement. You acknowledge that
you have been informed by the Company of, or are otherwise familiar with, the
nature of the limitations imposed by the Securities Act and the rules and
regulations thereunder on the transfer of securities. In particular, you agree
that no sale, assignment or transfer of the Securities shall be valid or
effective, and the Company shall not be required to give any effect to any such
sale, assignment or transfer, unless (i) the sale, assignment or transfer of
the Securities is registered under the Securities Act, it being understood that
the Securities are not currently registered for sale and that the Company has
no obligation or intention to so register the Securities except as contemplated
herein, or (ii) the Securities are sold, assigned or transferred in accordance
with all the requirements and limitations of Rule 144 under the Securities
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<PAGE> 7
Act, it being understood that Rule 144 is not available at the present time for
the sale of the Securities, or (iii) such sale, assignment, or transfer is
otherwise exempt from registration under the Securities Act. You acknowledge
that the Securities shall be subject to a stop transfer order and the
certificate or certificates evidencing any Securities shall bear the following
or a substantially similar legend and such other legends as may be required by
state blue sky laws:
"These securities have not been registered
under the Securities Act of l933. Such
securities may not be sold or offered for
sale, transferred, hypothecated or otherwise
assigned in the absence of an effective
registration statement with respect thereto
under such Act or an opinion of counsel to the
Company that an exemption from registration
for such sale, offer, transfer, hypothecation
or other assignment is available under such
Act."
The Company has agreed to register the shares of Common Stock
issuable upon exercise of the Note under the terms and conditions set forth in
the Note.
(h) You will acquire the Securities for your own
account (or for the joint account of you and your spouse either in joint
tenancy, tenancy by the entirety or tenancy in common) for investment and not
with a view to the sale or distribution thereof or the granting of any
participation therein, and that you have no present intention of distribution
or selling to others any of such interest or granting any participation
therein.
(i) It never has been represented, guaranteed
or warranted by any broker, the Company, any of the officers, directors,
shareholders, employees or agents of either, or any other persons, whether
expressly or by implication, that:
(i) the Company or you will realize
any given percentage of profits and/or amount
or type of consideration, profit or loss as a
result of the Company's activities or your
investment in the Company; or
(ii) the past performance or
experience of the management of the
Company, or of any other person, will in
any way indicate the predictable results
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<PAGE> 8
of the ownership of the securities or of
the Company's activities.
(j) You understand that the net proceeds from
all subscriptions paid and accepted pursuant to the Offering (after deduction
for expenses of the Offering) will be used for general working capital.
(k) Without limiting any of your other
representations and warranties hereunder, you acknowledge that you
have reviewed and are aware of the following:
BUSINESS OF THE COMPANY
You have received a copy of the Company's forms 10-KSB for
the fiscal year ended June 30, 1996, and the Company's quarterly reports on
forms 10-QSB for the quarter ended September 30, 1996 and are fully familiar
with their contents including the Company's financial statements and the risks
of an investment in the Company outlined therein.
LIMITED OPERATING HISTORY; RECENT LOSSES
The Company commenced operations in March 1992 and currently
operates four restaurants. The Company's operations are subject to all of the
risks inherent in the establishment of a developing business, including the
absence of a substantial operating history. During the years ended June 30,
1995 and 1996, the Company incurred losses of $2,758,371 and $3,193,155,
respectively and as of June 30, 1996, had an accumulated deficit of $7,391,159.
The Company anticipates it will continue to incur losses for the immediate
future. The likelihood of the success of the Company must be considered in
light of the problems, expenses, difficulties, complications and delays
frequently encountered in connection with a developing business and the
competitive environment in which the Company operates. The Company has not been
in business long enough to enable an investor to make a reasonable judgment as
to its future performance. There can be no assurance the Company will ever
operate profitability or be commercially successful. In addition, the Company's
independent auditors stated in their report on the Company's financial
statements for fiscal year 1996, that the Company's recurring losses from
operations raises substantial doubt as to the ability of the Company to
continue as a going concern. See also "MANAGEMENT'S DISCUSSION AND ANALYSIS" in
the Form 10-KSB.
NEED FOR ADDITIONAL FUNDS
There can be no assurance of the number of Notes that will be
sold or the amount of proceeds that the Company will
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<PAGE> 9
receive from this Offering, or that such proceeds, if received, together with
cash generated from other sources, will be sufficient to maintain operations.
The Company will need additional funds from loans and/or the sale of equity
securities to repay the Notes and implement its business plan. No assurance can
be given that such funds will be available or, if available, will be on
commercially reasonable terms satisfactory to the Company. The final terms of
such offering may result in additional dilution to the shareholders of the
Company.
SMALL RESTAURANT BASE; GEOGRAPHIC CONCENTRATION
The Company currently operates six restaurants and intends to
terminate restaurant operations at two locations due to poor performance. The
Company has previously terminated restaurant operations at two other locations.
Rattlesnake's existing restaurants are located in three states, Connecticut,
New York and New Jersey. As a result, the Company's results of operations may
be materially affected by change in the local economy and regional weather
conditions. In addition, the Company has not previously managed restaurants
which are geographically dispersed, and there can be no assurance that the
Company will be able to operate restaurants outside its current area of
operation.
PROPOSED RESTRUCTURE OF THE COMPANY
The Company has implemented a restructuring plan which
includes the termination and sale of three restaurant locations, the reduction
of administrative and operational staff and the termination of expansion plans.
The plan also includes the sale of the Company's location in White Plains in
exchange for the assumption of existing liabilities. The purchaser is a group
of which the Company's Chairman of the Board, William J. Opper, is a member.
Mr. Opper will relinquish his position as Chief Executive Officer of the
Company upon the completion of the sale. There can be no assurance the
restructure will be successfully implemented.
GENERAL RISKS OF THE RESTAURANT BUSINESS
The success of the Company's sites are dependent in major
part upon the general economic health of the restaurant business which, in
turn, is affected by both inflation and recession, general employment and wage
levels, and changing consumer tastes, demographic patterns, tax laws, economic
conditions, and governmental regulations (including health costs and wage and
price contracts). Accordingly, the success of the Company is dependent upon
numerous factors which are outside of the control of the Company and cannot be
readily predicted. See "Business" in the Form 10-KSB.
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<PAGE> 10
COMPETITION
Competition in the restaurant industry is intense. Many of
the Company's competitors are well established and have substantially greater
financial, marketing and other resources than the Company. There can be no
assurance that the Company will be able to compete with other restaurants or
that the expansion of restaurant chains in the local market will not adversely
affect the Company's ability to attain profitability. See "Business-
Competition" in the Form 10-KSB.
CHANGES IN FOOD COSTS
The Company's profitability depends in large measure on its
ability to anticipate and react to changes in food costs. Various factors
beyond the Company's control, including adverse weather conditions and natural
disasters, may affect food costs. While management has attempted to anticipate
and react to changing food costs to date, there can be no assurance that it
will be able to do so in the future. See "Management's Discussion and Analysis"
in the Form 10-KSB.
GOVERNMENT REGULATION
The restaurant business is subject to various federal, state
and local government regulations, including those relating to the sale of food
and alcoholic beverages. While the Company to date had been able to obtain and
retain necessary governmental approvals, the failure to obtain or retain food
or liquor licenses could have a severe adverse effect on the Company's
operating results. Restaurant operating costs are affected by increases in the
minimum hourly wage, unemployment tax rates, sales taxes and other similar
matters, over which the Company has no control. The Company also may be subject
to certain states' "dram shop" laws, which generally provide that an individual
injured by an intoxicated person has the right to recover damages from an
establishment that wrongfully served alcoholic beverages to the intoxicated
person. See "Business--Government Regulation" in the Form 10-KSB.
TRADEMARK RIGHTS
The Company uses various trade names and marks including
"Rattlesnake Southwestern Grill" and similar variations. Another business has
registered the name "The Rattlesnake Club" as a federal trademark. The Company
has obtained a license for the use of the name "The Rattlesnake Southwestern
Grill" from this trademark holder. There can be no assurance that the right to
the use of any such trademark outside of its respective current area of usage
will not be claimed by others. There can be no assurance as to the extent of
the protection that will be granted to the Company
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as a result of having such trademarks or that the Company will be able to
afford the expenses of any complex litigation which may be necessary to enforce
its trademark or license rights. See "Business-Trademarks" in the Form 10-KSB.
DEPENDENCE UPON EXECUTIVE OFFICERS
The Company is dependent upon the services of its Chairman,
William J. Opper, Vice Chairman, Stephan A. Stein, President, David C.
Sederholt and Executive Vice-President, Peter C. Markatos for its future
operations. The loss of the services of one or more of these individuals would
have a material adverse affect on the Company's operations. The Company has
entered into three-year employment agreements with each, however, in connection
with the restructure of the company's operations, Mr. Opper will resign his
position as Chief Executive Officer. The Company has obtained, "key man" life
insurance in the amount of $3,000,000 on Messrs. Opper, Sederholt and Markatos.
See "Management." in the Form 10-KSB.
TRADING MARKET FOR THE COMMON STOCK
The Common Stock commenced public trading in June 1995 and
trading to date has often been limited. The current "float," or number of
shares held by non-affiliates and freely tradable, for the Common Stock is
approximately 1,650,000 shares. By reason of the relatively recent and limited
trading history of the Common Stock, there is no assurance that a sufficiently
active trading market for the Common Stock would necessarily be available to
holders of Conversion Shares in the event the Conversion Shares are
successfully registered.
NASDAQ ELIGIBILITY AND MAINTENANCE REQUIREMENTS; POSSIBLE DELISTING
OF SECURITIES FROM NASDAQ SYSTEM
The Board of Governors of the National Association of
Securities Dealers, Inc. has established certain standards for the initial
listing and continued listing of a security on Nasdaq which standards are
proposed to be increased in the future. There can be no assurance that the
Company will continue to satisfy the requirements for maintaining a Nasdaq
listing. If the Company's securities were excluded from Nasdaq, it would
adversely affect the prices of such securities and the ability of holders to
sell them, and the Company would be required to comply with the initial listing
requirements to be relisted on Nasdaq.
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RESTRICTIONS ON TRANSFERABILITY OF THE NOTES
The Notes and the Conversion Shares have not been registered
under the Act. Accordingly, under the Act the Notes and the Conversion Shares
may not be resold unless a registration statement is filed and becomes
effective or an exemption from registration is available. Similar restrictions
on transferability are imposed under the securities or "blue sky" laws of
certain states. As a result of these limitations on transferability, an
investment in the Notes should not be considered liquid. Further, even though
the holders of the Notes and Conversion Shares have been granted certain
registration rights, there can be no assurance that the Conversion Shares will
ever be registered for public sale under the Act.
INTEREST UPON CONVERSION OF NOTES
Accrued interest will not be paid on any Notes which are
converted between an interest payment date and the next record date for
interest payments.
REDEMPTION OF NOTES; LOSS OF RIGHT TO CONVERT NOTES
The Notes are redeemable, in whole or in part, at the option
of the Company, for the principal amount plus accrued and unpaid interest, on
not less than thirty days prior written notice, at any time. Although a holder
will have the opportunity to convert his Note after the notice of redemption
but prior to the redemption date, a holder who has not converted after the
redemption date will have only the right to receive the redemption price of the
principal amount of his Note and accrued and unpaid interest.
NO INVESTORS' COUNSEL
The Company has not retained any independent professionals to
review or comment on this offering or otherwise protect the interests of the
investors hereunder. Although the Company has retained its own counsel, neither
such firm nor any other firm has made, on behalf of the investors, any
independent examination of any factual matters represented by management
herein, and purchasers of the securities offered hereby should not rely on the
firm so retained with respect to any matters herein described.
POTENTIAL ANTI-TAKEOVER EFFECT
The Company's Certificate of Incorporation and by-laws
contain provisions which may discourage certain transactions which involve an
actual or potential change in control of the Company. The Company's Certificate
of Incorporation provides for a staggered
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Board of Directors pursuant to which the Board is divided into three classes of
directors and the members of only one class (or one-third of the Board) are
elected each year to serve a three-year term. A director can be removed only
for cause by a vote of the holders of 70% of the voting power of the Company's
outstanding securities. This provision makes it more difficult to change
majority control of the Board and may discourage attempts by third parties to
make a tender offer or otherwise obtain control of the Company even if such an
attempt would be beneficial to the Company and its stockholders.
These provisions may make the Company a less attractive
acquisition candidate. They may also discourage or impede offers to acquire the
Company not approved by the Board of Directors, including offers for some or
all of the shares of any class or series of the Company's capital stock at
substantial premiums above the then current market value of such shares.
ARBITRARY DETERMINATION OF TERMS OF NOTES
The terms of the Notes, including the interest rate and
conversion rate, were arbitrarily determined by the Company and may not bear
any relationship to the assets , earnings or book value of the Company, the
market value of the Company's Common Stock, or any other recognized criteria of
value.
(l) You acknowledge that the representations,
warranties and agreements made by you herein shall survive the execution and
delivery of this Agreement and the purchase of the Notes.
5. Indemnification. You acknowledge that you
understand the meaning and legal consequences of the representations and
warranties contained in paragraph 4 hereof, and you hereby agree to indemnify
and hold harmless the Company and each incorporator, officer, director,
employee, agent and controlling person thereof, past, present or future, from
and against any and all loss, damage or disability due to or arising out of a
breach of any such representation or warranty.
6. Transferability. Neither this Agreement, nor any of
your interests herein, shall be assignable or transferable by you in whole or
in part except by operation of law.
7. Miscellaneous.
(a) All notices or other communications given or made
hereunder shall be in writing and shall be delivered or mailed to you at your
address set forth on the signature page of this Agreement and to the
Corporation at the address set forth below. Notices hand delivered shall be
deemed given upon receipt and
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notices sent by mail shall be deemed given on the second business day following
deposit in the United States mail.
(b) This Agreement shall be construed in
accordance with and governed by the internal laws of the State of New York
without reference to that State's conflicts of laws provisions.
(c) This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and may be amended only by a writing executed by all parties hereto.
(d) This Agreement may be executed in one or
more counterparts representing, however, one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year this subscription has been accepted by the
Company as set forth below.
Very truly yours,
THE RATTLESNAKE HOLDING COMPANY, INC.
By /s/ WILLIAM J. OPPER
-----------------------------------
William J. Opper
Chairman of the Board
AGREED AND ACCEPTED:
J.L.B. OF NEVADA, INC.
By: /s/ JAY BOTCHMAN
- ---------------------------
Signature of Subscriber
Date Executed: March 4, 1997 Date Accepted: March 4, 1997
Note Certificate to be issued as follows (Please Print):
J.L.B. OF NEVADA, INC. Attn: Jay Botchman
- -----------------------------------------
Name
1500 East Tropicana Avenue
- -----------------------------------------
Address
Suite 100-Las Vegas, NE 89119
- -----------------------------------------
- -----------------------------------------
Social Security Number
Principal Amount of Notes Subscribed For: $250,000
--------
Total Subscription Paid: $250,000
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