As filed with the Securities and Exchange Commission on
February 4, 1997
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
____________________
FOOD COURT ENTERTAINMENT NETWORK, INC.
(Exact name of Registrant as specified in its charter)
Delaware 51-0338736
(State or other juris- (I.R.S. Employer
diction of incorporation Identification
or organization) Number)
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, New York 10017
(212) 983-4500
(Address, including zip code, and telephone number,
including area code, of Registrant's
principal executive offices)
James N. Perkins
President and Chief Executive Officer
Food Court Entertainment Network, Inc.
220 East 42nd Street, 16th Floor
New York, New York 10017
(212) 983-4500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Stephen F. Ritner, Esquire
Stevens & Lee
One Glenhardie Corporate Center
1275 Drummers Lane
P.O. Box 236
Wayne, Pennsylvania 19087
(610) 964-1480
____________________
Approximate date of commencement of proposed sale to the
public: As soon as practicable after this Registration Statement
becomes effective.
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, check the following
box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act of
1933, please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective registration statement
filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434 please check the following box. [ ]
Pursuant to Rule 429(a) under the Securities Act of 1933,
this Registration Statement also relates to the Company's prior
Registration Statement on Form SB-2 (File No. 33-91054).
Pursuant to Rule 416 under the Securities Act of 1933, as
amended, there are also being registered such additional Warrants
and shares of Series A Common Stock as may become issuable
pursuant to anti-dilution provisions of the Warrants.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Amount
Title of each Amount Offering Aggregate
of
Class of Securities to be Price Offering
Registration
to be Registered Registered(1) per Unit Price
Fee(9)
<S> <C> <C> <C>
<C>
Series A Common Stock, 28,073,764(2) $3.78 $40,940,425.63
$12,406.19(10)
par value $.01
per share
Class A Warrants 4,711,563 5.13(3)
24,170,318.19(4) 5,575.48(11)
Class B Warrants 12,133,660 6.85(5) 83,115,571(6)
18,502.60(12)
Furman Selz Warrants 401,321 2.00(7) 802,642(8)
243.22
Total
$36,727.49
<FN>
(1) This Registration Statement also includes such
indeterminable number of additional Class A Warrants,
Class B Warrants and Furman Selz Warrants issuable as a
result of antidilution provisions contained therein.
(2) The registration fee for 17,246,544 shares of common stock
has been calculated in accordance with Rule 457(i) in
connection with the exercise of 4,711,563 Class A Warrants,
12,133,660 Class B Warrants and 401,321 Furman Selz
Warrants. The registration fee for the remaining 10,827,220
shares of common stock has been calculated in accordance
with Rule 457(c) and is based on the closing price of $3.78
as reported on the Nasdaq National Market System on
January 30, 1997.
(3) The exercise price of each Class A Warrant is $5.13.
(4) Calculated in accordance with Rule 457(i) based on an
exercise price of $5.13 for each Class A Warrant.
(5) The exercise price of each Class B Warrant is $6.85.
(6) Calculated in accordance with Rule 457(i) based on an
exercise price of $6.85 for each Class B Warrant.
(7) The exercise price of each Furman Selz Warrant is $2.00.
(8) Calculated in accordance with Rule 457(i) based on an
exercise price of $2.00 for each Furman Selz Warrant.
(9) Pursuant to Rule 429, the following securities are being
carried over from the Company's Registration Statement on
Form SB-2 (File No. 33-91054): (i) 6,440,000 shares of
common stock issuable upon exercise of 3,220,000 Class A
Warrants and 3,220,000 Class B Warrants; (ii) 3,220,000
Class B Warrants issuable upon exercise of 3,220,000 Class A
warrants; (iii) 1,125,000 Class A Warrants; and
(iv) 1,125,000 shares of common stock issuable upon the
exercise of 1,125,000 Class A Warrants.
(10) Pursuant to Rule 429, 6,440,000 shares of common stock are
being carried over from the Company's Registration Statement
on Form SB-2 (File No. 33-91054), and therefore, the
$15,544.83 filing fee associated with such securities that
was previously paid with such earlier Registration Statement
on Form SB-2 is carried forward.
(11) Pursuant to Rule 429, 1,125,000 Class A Warrants are being
carried over from the Company's Registration Statements on
Form SB-2 (File No. 33-91054), and therefore, the $2,327.59
filing fee associated with such securities that was
previously paid with such earlier Registration Statement on
Form SB-2 is carried forward.
(12) Pursuant to Rule 429, 3,220,000 Class B Warrants are being
carried over from the Company's Registration Statement on
Form SB-2 (File No. 33-91054), and therefore, the $6,662.07
filing fee associated with such securities that was
previously paid with such earlier Registration Statement on
Form SB-2 is carried forward.
</TABLE>
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(c) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(c), may
determine.
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK,INC.
28,073,764 shares of Series A Common Stock,
4,711,563 Redeemable Class A Warrants and
12,133,660 Redeemable Class B Warrants
401,321 Furman Selz Warrants
This Prospectus relates to the resale, from time to time, by
certain securityholders of the following securities of Food Court
Entertainment Network, Inc. (the "Company") which the Company
issued in a private placement (the "Private Placement") on
November 14, 1996: (i) up to 2,857,189 shares of Series A Common
Stock, par value $.01 per share (the "Series A Common Stock");
(ii) up to 3,341,742 redeemable Class A Warrants (the "Class A
Warrants") (includes up to 484,553 Class A Warrants issued as a
result of antidilution provisions contained therein); and
(iii) up to 3,336,863 redeemable Class B Warrants (the "Class B
Warrants," and together with the Class A Warrants the "Warrants")
(includes up to 479,674 Class B Warrants issued as a result of
antidilution provisions contained therein). The shares of
Series A Common Stock, the Class A Warrants and the Class B
Warrants issued in the Private Placement are sometimes
hereinafter referred to as the "Private Placement Common Stock,"
the "Private Placement Class A Warrants," and the Private
Placement Class B Warrants," respectively, and collectively as
the "Private Placement Securities." The Selling Securityholders
have agreed not to sell certain percentages of the Private
Placement Securities for periods ranging from November 14, 1996
to July 15, 1997.
This Prospectus also relates to the resale, from time to
time, by certain securityholders of up to 1,369,821 Class A
Warrants (includes up to 198,633 Class A Warrants issued as a
result of antidilution provisions contained therein), which the
Company issued in exchange for certain bridge warrants and sub-
bridge warrants (collectively, the "Bridge Warrants") in
connection with its initial public offering (the "IPO") on
October 16, 1995. The Class A Warrants issued in exchange for
the Bridge Warrants in connection with the IPO are sometimes
hereinafter referred to as the "IPO Class A Warrants."
This Prospectus also relates to the resale, from time to
time, by Furman Selz LLC ("Furman Selz") of warrants to acquire
up to 401,321 shares of Series A Common Stock (the "Furman Selz
Warrants").
This Prospectus also relates to up to 16,295,565 shares of
Series A Common Stock issuable by the Company upon exercise of
(i) Class A and Class B Warrants issued as part of the units (the
"Units") issued in the IPO and the Private Placement, (ii) the
IPO Class A Warrants and (iii) the Furman Selz Warrants. This
Prospectus also relates to up to an additional 124,213 shares of
Series A Common Stock issuable by the Company upon exercise of
warrants issued to D.H. Blair Investment Banking Corp. ("Blair")
and certain of its designees in connection with the Company's
preferred stock unit offering in 1994 (the "Preferred Stock
Warrants").
This Prospectus also relates to (i) up to 8,796,797 Class B
Warrants issuable by the Company upon the exercise of all Class A
Warrants and (ii) up to 8,796,797 shares of Series A Common Stock
issuable by the Company upon exercise of all such Class B
Warrants issuable by the Company upon exercise of all Class A
Warrants.
Each Class A Warrant entitles the holder to purchase, at an
exercise price of $5.13, subject to adjustment, one share of
Series A Common Stock and one Class B Warrant. Each Class B
Warrant entitles the holder to purchase at an exercise price of
$6.85, subject to adjustment, one share of Series A Common Stock.
The Warrants are subject to redemption by the Company for
$.05 per Warrant, upon 30 days' written notice, if the average
closing bid price of the Series A Common Stock exceeds $9.00 per
share with respect to the Class A Warrants and $12.00 per share
with respect to the Class B Warrants (subject to adjustment in
each case) for 30 consecutive business days ending within five
days of the notice of redemption. See "Description of
Securities." The Warrants are immediately exercisable at any
time and until 5:00 p.m. (New York time) on October 11, 2000,
except the Private Placement Class A Warrants and the Private
Placement Class B Warrants can be exercised by the Selling
Securityholders only between November 14, 1997 and 5:00 p.m. (New
York time) on October 11, 2000.
The securityholders offering securities under this
Prospectus and the securities offered by such securityholders are
sometimes hereinafter referred to as the "Selling
Securityholders" and the "Selling Securityholder Securities,"
respectively. The Selling Securityholder Securities offered by
this Prospectus may be sold from time to time by the Selling
Securityholder or by their transferees. The distribution of the
Selling Securityholder Securities offered hereby by the Selling
Securityholders may be effected in one or more transactions that
may take place on the over-the-counter market, including ordinary
brokers' transactions, privately negotiated transactions or
through sales to one or more dealers for resale of such
securities as principals at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the
Selling Securityholders. The Selling Securityholders have also
agreed not to exercise the Private Placement Class A Warrants and
the Private Placement Class B Warrants before November 14, 1997;
provided, however, that purchasers of such Warrants are not
subject to such restrictions on exercisability.
The Company's Units, Series A Common Stock, Class A Warrants
and Class B Warrants are traded on the Nasdaq SmallCap Market
("Nasdaq") under the symbols FCENU, FCENA, FCENW and FCENZ. On
January 30, 1997 the closing bid prices of these securities on
Nasdaq was $6-9/16, $3-25/32, $1-9/16 and $1-5/16, respectively.
The Company has agreed to pay a solicitation fee (the
"Solicitation Fee") equal to 5% of the exercise price in
connection with the exercise of Warrants under certain
conditions. See "Plan of Distribution." The exercise prices of
the Warrants were determined by negotiation between the Company
and Blair, the underwriter of the Company's IPO, and are not
necessarily related to the Company's asset value, net worth or
other established criteria of value.
The Selling Securityholders, and intermediaries through whom
such securities are sold, may be deemed underwriters within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered, and
any profits realized or commissions received may be deemed
underwriting compensation. The Company has agreed to indemnify
the Selling Securityholders against certain liabilities,
including liabilities under the Securities Act.
The Company will not receive any of the proceeds from the
sale of securities by the Selling Securityholders. In the event
all of the outstanding Class A Warrants, Class B Warrants, Bridge
Warrants, Furman Selz Warrants and the Preferred Stock Warrants
are exercised, the Company will receive gross proceeds of
approximately $94,796,085.
The Series A Common Stock and the Series B Common Stock,
$.01 par value ("Series B Common Stock") of the Company are
essentially identical, except that the Series B Common Stock has
five votes per share and the Series A Common Stock has one vote
per share on all matters upon which stockholders may vote.
The securities offered hereby are speculative and involve a
substantial degree of risk. Prospective investors should
carefully consider the factors set forth under "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is February __, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files proxy statements,
reports and other information with the Securities and Exchange
Commission (the "Commission"). This filed material can be
inspected and copied at the Commission's office at 450 Fifth
Street, N.W., Washington, D.C. 20549 and the Commission's
Regional Offices in New York (7 World Trade Center, Suite 1300,
New York, New York 10048) and Chicago (500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511) and copies of such
materials can be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission
by the Company are incorporated in this Prospectus by reference
and made a part hereof:
(1) The Company's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
(2) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996, June 30, 1996, and September 30,
1996.
(3) The Company's Current Reports on Form 8-K dated
April 16, 1996, and December 17, 1996.
Each document or report subsequently filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the
termination of the offering of the securities under this
Prospectus shall be deemed to be incorporated by reference into
this Prospectus and to be a part of this Prospectus from the date
of filing of such document. Any statement contained herein, or
in the document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to
be modified or superseded for purposes of the Registration
Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement
or this Prospectus.
The Corporation will provide without charge to any person to
whom this Prospectus is delivered, on the written or oral request
of such person, a copy of any or all of the foregoing documents
incorporated by reference, other than certain exhibits to such
documents. Written requests should be directed to Food Court
Entertainment Network, Inc., 220 East 42nd Street, 16th Floor,
New York, New York 10017. Attention: Investor Relations Officer
(telephone: (212) 983-4500).
<PAGE>
THE COMPANY
The following discussion under the heading "The Company"
contains certain forward looking statements within the meaning of
the "safe harbor" provision of the Private Securities Litigation
Reform Act of 1995 that involve risks and uncertainties. The
Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
"Risk Factors" below and in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995 and Quarterly Report on Form 10-QSB for the
quarter ended September 30, 1996, which are incorporated herein
by reference. See "Incorporation of Certain Documents by
Reference."
Development. Food Court Entertainment Network, Inc. (the
"Company") was organized in February 1992. The Company's initial
plan has been to establish a national television network to
broadcast a high quality television program called Cafe USA to
large, enclosed shopping mall food courts ("Food Courts") across
the United States. While the development of a national
television network remains the core business of the Company,
management has determined that it is in the Company's best
interest to expand the Company's mission. The Company plans to
promote, introduce and operate electronic entertainment,
information and transaction systems in high-traffic consumer
areas such as shopping centers, multi-purpose malls, resorts,
travel facilities and entertainment and retail destinations,
utilizing both new and traditional media and contemporary
communications technologies.
The Company is in its development stage. The Company's
development activities to date have consisted primarily of
designing, developing and producing Cafe USA programming,
producing and evaluating three market tests of Cafe USA to
evaluate its acceptance in the market place, developing and
refining an end to end distribution system for the delivery and
management of Cafe USA programming into Food Courts, attracting
and engaging management employees, consultants and advisers for
marketing, operations and implementation of the Cafe USA network,
establishing contacts and entering into agreements with
advertisers and mall operators, and installing and operating Cafe
USA in 12 Food Courts.
In the fall of 1995, the Company began a ten-week evaluatory
period ("Evaluatory Period") of Cafe USA during which the Company
broadcast the Cafe USA program in four major enclosed malls in
the Chicago, Philadelphia, New York, and Greenville, South
Carolina market areas. The Company engaged A. C. Nielsen to
conduct a survey of 4,800 mall and Food Court visitors to the
four malls during the ten-week Evaluatory Period (the "1995
Nielsen Survey"). The purpose of the Evaluatory Period was to
gather data necessary to evaluate the acceptance of Cafe USA by
mall operators and Food Court visitors, and, assuming marketplace
acceptance, to determine the pricing structure for advertising,
since the Company's future viability and profitability are
dependent upon the generation of advertising revenue. To date,
the Company has generated very limited revenues from advertising
sales.
Based upon the results of the 1995 Nielsen Survey, the
Company believes sufficient support for the Cafe USA concept
exists in the marketplace to justify the expansion of Cafe USA in
Food Courts throughout the United States (the "Mall Buildout").
The conclusions drawn by the Company's management from the
Evaluatory Period, the 1995 Nielsen Survey and marketing and
sales activities during 1996 resulted in the Company's modifying
its business strategy. The Company determined that in order to
successfully sell Cafe USA to a substantial number of
advertisers, and thereby generate significant revenues, the
distribution network for Cafe USA must first be expanded.
Accordingly, the Company requires substantial funds in addition
to revenues from operations and financing available from external
sources in order to implement its business plan and reach
profitable operations. The Company intends to seek strategic
alliances, either through a joint venture, merger or acquisition
transaction, with other entities that have significant financial
or other resources, in order to provide the Company with the
necessary funding required to successfully complete the Mall
Buildout and to build its internal marketing and advertising
sales force. There can be no assurance that the Company will be
able to enter into any such arrangements. If the Company is
unsuccessful in securing any arrangements with third parties to
provide the necessary funding, the Company may be unable to
complete the Mall Buildout. See "Risk Factors-Capital Intensive
Nature of Business; Need for, and No Assurance of, Strategic
Alliances and Additional Financing to Develop Cafe USA."
Current Operations. The Company is currently producing its
own weekly television programming for Cafe USA and broadcasting
Cafe USA in 12 Food Courts. The Company has signed agreements
and begun the installation of Cafe USA in four additional Food
Courts. Management is presently in various stages of negotiation
for agreements or design plans to install Cafe USA in
16 additional Food Courts.
The Company currently has no paid advertisers. The Company
has an arrangement with Pan American World Airways, Inc.
("Pan Am") pursuant to which Pan Am advertising is broadcast on
the Cafe USA network in exchange for airline travel. Based upon
its current plan to proceed with the Mall Buildout, the Company
is attempting to obtain commitments from additional advertisers
for participation in mall expansion and is negotiating with mall
operators for installation and operation of Cafe USA in
additional malls.<PAGE>
RECENT DEVELOPMENTS
On November 14, 1996, the Company completed the sale of
units comprised of an aggregate of 2,857,189 shares of Series A
Common Stock, 2,857,189 Class A warrants and 2,857,189 Class B
Warrants in a private placement (the "Private Placement") to
accredited investors for net cash proceeds of approximately
$7.8 million.
As a result of securities sold in the Private Placement, the
antidilution provisions set forth in the Warrants required the
Company (i) to issue an additional 1,275,545 Class A Warrants and
1,020,258 Class B Warrants and (ii) to adjust the exercise price
of the Class A and Class B Warrants from $6.00 to $5.13 and $8.00
to $6.85, respectively.
The net proceeds received by the Company from the Private
Placement will enable the Company to install Cafe USA in up to 31
new mall Food Courts and to continue operations through
approximately April 30, 1997.
Digital Equipment Corporation ("DEC") is developing software
applications and will provide hardware necessary to deliver the
Cafe USA program digitally through telephone wires into malls
nationwide. The Company and DEC are negotiating the details of
the arrangement including discounts on pricing, deferred payment
terms, and ownership of and marketing rights to the hardware/
software functionality. DEC has begun developing the software
and the Company has paid $150,000 as of January 22, 1997 towards
these services, and is currently negotiating the terms of a
formal written agreement. It is estimated that the total cost of
the software applications development will be approximately
$1,000,000.
On December 3, 1996, the Company terminated a programming
and sales agreement with Turner Private Networks, Inc.
("Turner"), pursuant to which Turner was the exclusive provider
of programming for Cafe USA and the exclusive advertising sales
agent for national advertising. The Company has assumed
exclusive control over the production of programming and
advertising sales for Cafe USA. Pursuant to the terms of the
agreement, upon termination Turner received 125,000 shares of
Series A Common Stock and approximately $72,000 in cash for work
completed and for the Company's right to reuse certain
programming. During the eight-month term of the agreement, the
Company paid Turner a total of 250,000 shares of Series A Common
Stock (including the 125,000 shares of Series A Common Stock paid
to Turner upon termination of the agreement).
On December 16, 1996, the Company entered into a financial
advisory agreement with Furman Selz LLC ("Furman Selz"), a New
York investment banking firm. Pursuant to the agreement Furman
Selz will provide financial advisory services to the Company for
a period of approximately 18 months. Furman Selz received
warrants to purchase 401,321 shares of Series A Common Stock,
which is equal to five percent of the outstanding shares of
Series A and Series B Common Stock, at an exercise price of $2.00
per share. The warrants contain certain antidilution provisions.
The Company will be required to recognize an aggregate charge to
operations of approximately $328,000 over an 18-month period for
the value of the Furman Selz Warrants. In the event additional
warrants are issued in accordance with antidilution provisions of
the Furman Selz Warrants, the fair value of such Warrants will be
charged to operations for the remaining term of the agreement.
On January 23, 1997, the Company entered into a sales
representation agreement with ABC New Media Sales ("ABC")
pursuant to which ABC will act as the Company's exclusive
advertising sales representative. Under the terms of the
agreement, ABC will receive a commission equal to 15% on the
first $15.0 million of net advertising revenue, 10% on the net
advertising revenue between $15.0 million and $30.0 million, and
7.5% on net advertising revenue over $30.0 million. The
agreement is for a period of six years, subject to the right of
the parties to terminate after two years.
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the
following information should be carefully considered by potential
investors in evaluating the Company, its business and the
securities offered hereby. An investment in the securities
offered hereby is highly speculative and subject to a high degree
of risk and only those who can bear the risk of the entire loss
of their investment should purchase securities of the Company.
Unproven Commercial Viability; Need for Market Acceptance.
There can be no assurance that the Company's television
programming and advertising in shopping mall Food Courts will be
accepted in the marketplace or that the Company's operations will
be commercially viable. The commercial viability of the Cafe USA
concept will be determined in large part by the acceptance of
Cafe USA by advertisers and mall operators. The Company is
currently broadcasting Cafe USA in 12 mall food courts. The
Company has no paid advertisers and is currently only
broadcasting advertisements for Pan Am in exchange for airline
travel. Without further acceptance by the marketplace, the
Company may be forced to cease operations. While the Company has
conducted testing of its Cafe USA concept, such testing was on a
limited basis. There can be no assurance that the test results
of the acceptance of Cafe USA in four malls are indicative of
widespread acceptance in the marketplace or that, if accepted,
will ever result in the Company achieving profitable operations.
See "The Company."
Capital Intensive Nature of Business; Need for, and No
Assurance of, Strategic Alliances and Additional Financing to
Develop Cafe USA. The Company currently receives no revenues
from operations and has relied on the proceeds of equity
financings to fund its operations. The net proceeds received by
the Company in the Private Placement will enable the Company to
continue operations through approximately April 30, 1997.
Management of the Company intends to pursue strategic alliances
through a combination of one or more joint venture, merger or
acquisition transactions because advertising revenues that may be
generated by Cafe USA and financing that may be available from
external sources may not provide the Company with sufficient
capital required to complete the Company's business plan for
expansion of Cafe USA. However, there can be no assurances that
the Company will be able to complete one or more of such
strategic alliances. Since the Company anticipates receiving
only limited revenues from advertisers during the early stages of
the Mall Buildout, the Company will remain dependent upon
external sources of financing, including this Offering, until
such time as the Company is able to complete one or more
strategic alliances. If the Company is unable to either complete
one or more strategic alliances or obtain additional financing on
acceptable terms, the Company will be unable to complete the
expansion of Cafe USA and will be forced to cease business.
Development Stage Company; Significant Losses. The Company
is a development stage company which has engaged primarily in the
development of the Cafe USA network. The Company has realized
only minimal revenues to date, has incurred substantial losses
since its inception and expects to continue incurring losses in
the foreseeable future. Accordingly, the Company, as of
September 30, 1996, had a deficit accumulated in the development
stage of approximately $13.8 million. The Company has continued
to incur substantial losses since such date. Furthermore, for
the foreseeable future, the Company expects losses to continue
and will be entirely dependent on public or private financing.
Requirement for Capital Equipment; Potential Negative Effect
on Statement of Operations. The Company's business is capital
intensive, requiring substantial outlays for the purchase and
installation of broadcasting equipment. The cost of "outfitting"
each mall with equipment necessary to transmit and receive Cafe
USA is currently costing approximately $150,000, consisting of
approximately $100,000 in equipment costs and $50,000 in
installation costs. There are no assurances, however, that
future costs will not exceed current costs. Although the Company
has been seeking financing for all or a portion of these costs in
view of the Company's limited cash resources, the Company has
been unsuccessful in securing such financing to date and there is
no assurance that this financing can be obtained on favorable
terms, if at all. Irrespective of whether financing is obtained,
the Company's future operations will be charged for the
depreciation of the equipment, including the installation costs,
and, if the Company has to remove the equipment for relocation
before the expiration of the expected life of the equipment, a
loss would have to be recognized equal to the undepreciated
installation costs because they would provide no future benefit.
Possible Need for Additional Statistical Data. To provide
the necessary data for the sale of advertising, the Company may
need additional testing and market research to develop reliable
statistical data. The Company retained A. C. Nielsen to conduct
the 1995 Nielsen Survey. The Company had previously conducted a
much smaller A. C. Nielsen survey during a one-week demonstration
of its programming and advertising in May, 1994 in the Haywood
Mall in Greenville, South Carolina and a more preliminary Audits
and Surveys research study in October, 1992. The 1995 Nielsen
Survey was still limited in scope (only four malls) and may not
provide sufficient data required for the sale of advertising.
Accordingly, the Company may still require substantial additional
data before it can determine whether it can charge commercially
viable rates to advertisers. Pricing for advertising is based
substantially on the number of visitors exposed to Cafe USA
programming and advertising and the impact of the advertising
upon those exposed. As with broadcast media, the validation
research will be on-going and will provide the basis for the
Company's pricing to advertisers. There is no assurance that all
of the necessary data will be obtained, or if obtained, will be
favorable or be accepted by advertisers.
New Enterprise. The Company was formed in February, 1992
and its success depends upon several factors, including the
quality of its programming and managing the technical aspects of
its operations. Investors should be aware of the difficulties
normally encountered by a new enterprise and the high rate of
failure of such enterprises. There is no history upon which to
base any assumption as to the likelihood that the Company will
prove successful, and as such, there can be no assurances that
the Company will be a viable and profitable business. The
likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays
encountered in connection with the development of a business in
the area in which the Company intends to operate and in
connection with the formation and commencement of operations of a
new business in general. The Company is unable to predict how
long it will be before it begins to generate revenues or how long
its losses will continue. There is a substantial risk that the
Company will have inadequate working capital to pay all of its
expenses during this start-up period.
Dependence Upon Others. The success of the Company's
operations will depend upon numerous factors, many of which are
beyond the Company's control, including (i) the ability of the
Company to enter into strategic alliances through a combination
of one or more joint venture, merger or acquisition transaction,
(ii) the ability of the Company to obtain contracts with
advertisers that will produce revenues; (iii) the ability to
produce or purchase programming; and (iv) the ability and the
operating resources to install, maintain and service the video
and audio system satisfactorily, to obtain and service
satisfactory network communication and to obtain the services of
and pay a sufficient number of representatives on a local basis
necessary to operate and service all facets of the Cafe USA
business. These and other factors will require the use of
outside suppliers as well as the talents and efforts of the
Company. There can be no assurance of success with any or all of
these factors on which the Company's operations will depend.
Lack of Programming and Production Experience. Because of
the absence of any operating history in connection with
broadcasting programming and advertising to mall Food Courts on
the part of the Company or advertising entities, there can be no
assurance that the Cafe USA programming and advertising will be
viewed favorably by consumers or that advertisers will be
attracted to either the concept of this medium or the specific
programming developed by the Company. Further, the Company has
broadcast during only approximately 12 months in a limited number
of Food Courts and there can be no assurances that the technology
associated with the broadcasting will prove to be manageable.
Risks Relating to Agreement with DEC. Although DEC has
agreed to develop software applications and provide hardware
necessary to deliver Cafe USA digitally through
telecommunications network into malls nationwide, the execution
of a definitive agreement, which is currently being negotiated,
is subject to certain conditions. There can be no assurance that
the Company will enter into a definitive agreement with DEC. To
date, the Company has made payments to DEC aggregating $150,000
and is currently negotiating the terms of a definitive agreement.
If a definitive agreement is not entered into, there can be no
assurance that the Company will have rights to the software
applications and the hardware developed by DEC. Accordingly, the
payments made to DEC by the Company, which are not returnable,
may not result in the Company having a digital delivery system
for Cafe USA or the ownership of the software applications and
related hardware.
Dependence Upon Mall Operators. The ability of the Company
to establish the Cafe USA network is dependent upon the Company
entering into agreements with mall operators for the installation
of Cafe USA in mall Food Courts. While agreements have been
entered into with several mall developers, there is no assurance
that mall operators will accept Cafe USA in Food Courts or
continue to accept it once it is installed.
Reliance on Senior Management and Key Employees. The
Company is substantially dependent on the efforts of its senior
management. The Company has entered into employment agreements
with its Chairman, Robert H. Lenz, and its President, James N.
Perkins, with terms ending September 30, 1999. Darren M.
Sardoff, the Company's Senior Vice President, Business Affairs
and Chief Financial Officer, has entered into an employment
agreement in September, 1995 which continues from year to year
unless terminated by either the Company or Mr. Sardoff upon
30 days' notice prior to October of each year. On January 17,
1997, the Company entered into a three-year employment agreement
with Jamie Korson who will serve as the Company's Senior Vice
President, Sales. The loss of services of any of such
individuals could have a material adverse effect on the Company's
prospects. The Company maintains key-person life insurance
coverage in the face amount of $2,000,000 for each of Messrs.
Lenz and Perkins naming the Company as beneficiary. See
"Management." Management of the Company believes that the future
success of Cafe USA will depend on the Company's ability to
attract additional key personnel in sales, marketing, technical
support, finance, programming and mall relations. However, there
can be no assurances that the Company will be successful in
attracting or retaining additional personnel necessary to conduct
its business.
Competition. While the Company is operating in a new
industry, it is aware of other companies which have
unsuccessfully attempted to utilize the shopping mall for point
of sale broadcast or video advertising. Entities which enter the
shopping mall Food Court business in the future may have
substantially greater marketing, financial and human resources
than the Company and may provide significant long term
competition. Since Cafe USA is a broadcasting medium, the
Company will also be competing for advertising revenue with other
established media. Furthermore, the Company does not possess any
patented or copyrighted trade secrets or intellectual property to
provide barriers to competition.
Charge to Income in the Event of Release of Escrow Shares.
If the Company attains certain earnings thresholds (which
thresholds will be increased as a result of this Offering) or the
Company is sold at certain prices, the Company will be required
to recognize additional compensation expense in connection with
the release from escrow to certain stockholders of the Company of
636,115 shares of Series B Common Stock (the "Escrow Shares").
Accordingly, the Company will, in the event of the release of the
Escrow Shares, recognize during the period in which the earnings
thresholds are met or such per share sales prices obtained, what
could be a substantial charge that would have the effect of
substantially increasing the Company's loss or reducing or
eliminating earnings, if any, at such time. Such charge will not
be deductible for income tax purposes. Although the amount of
compensation expense recognized by the Company will not affect
the Company's total stockholders' equity or cash flow, it may
have a depressive effect on the market price of the Company's
securities.
Restrictions on Exercise of Warrants. Holders of Warrants
will only be able to exercise the Warrants if (i) a current
prospectus under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities underlying the
Warrants is then in effect and (ii) such securities are qualified
for sale or exempt from qualification under the applicable
securities laws of the states in which the various holders of
such Warrants reside. The value of the Warrants may be greatly
reduced if a current prospectus covering the securities issuable
upon the exercise of the Warrants is not kept effective or if
such securities are not qualified, or exempt from qualification,
in the states in which the holders of the Warrants reside.
Influence by Management and Other Stockholders; Possible
Depressive Effect on the Company's Securities. One of the
Company's current directors (who is also an officer) and four
other stockholders own collectively 98.95% of the issued and
outstanding Series B Common Stock. All current officers and
directors, together with such four other stockholders of Series B
Common Stock, beneficially own in the aggregate approximately
27.72% of the total outstanding capital stock of the Company and
have approximately 51.03% of the total voting power thereof. As
a result, such individuals will be able to substantially
influence the election of all of the Company's directors and
otherwise substantially influence the Company's operations.
Furthermore, the disproportionate vote afforded the Series B
Common Stock could also serve to impede or prevent a change of
control of the Company thereof. As a result, potential acquirers
may be discouraged from seeking to acquire control of the Company
through the purchase of Series A Common Stock, which could have a
depressive effect on the price of the Company's securities.
Potential Adverse Effect of Redemption of Warrants. The
Class A Warrants, Class B Warrants and Furman Selz Warrants may
be redeemed by the Company at a redemption price of $.05 per
Warrant upon 30 days' notice if, the average closing bid price of
the Series A Common Stock exceeds $9.00 per share with respect to
the Class A Warrants and $12.00 per share with respect to the
Class B Warrants for 30 consecutive business days ending within
5 days of the notice of redemption. Redemption of the Warrants
could force the holders to exercise the Warrants and pay the
exercise price at a time when it may be disadvantageous for the
holders to do so, to sell the Warrants at the then current market
price when they might otherwise wish to hold the Warrants, or to
accept the redemption price, which, at the time the Warrants are
called for redemption is likely to be substantially less than the
market value of the warrants. See "Description of Securities --
Redeemable Warrants."
Possible Depressive Effect of Future Sales of Common Stock
and Exercise of Registration Rights. The Company has outstanding
6,950,714 shares of Series A Common Stock, 1,075,715 shares of
Series B Common Stock, 8,796,797 Class A Warrants and 7,097,447
Class B Warrants. The 3,220,000 shares of Series A Common Stock,
Class A Warrants and Class B Warrants sold in the IPO are freely
tradeable without restriction under the Securities Act, unless
acquired by "affiliates" of the Company as that term is defined
in the Securities Act. None of the 1,075,715 shares of Series B
Common Stock, 573,125 shares of Series A Common Stock issued
prior to the IPO and the 250,000 shares issued to Turner in
connection with the programming services provided by Turner have
been registered under the Securities Act, and all are "restricted
securities" under Rule 144 of the Act. The holders of the
573,125 shares of Series A Common Stock issued prior to the IPO
have certain "demand" and "piggyback" registration rights. The
current management holders of the Series B Common Stock have
placed 636,115 of their shares of Series B Common Stock in
escrow. The Company also has outstanding stock options and
warrants (or commitments to issue options, stock options and
warrants) to purchase 2,642,138 shares of Series A Common Stock
at prices ranging from $2.00 to $6.85 per share.
An additional 9,660,000 shares of Series A Common stock
issuable upon exercise of the Company's Class A and Class B
Warrants issued or issuable in connection with the Company's IPO
may be resold without restriction provided there is a current
prospectus under the Securities Act relating thereto and
applicable state securities laws are complied with. Furthermore,
1,120,000 shares of Series A Common Stock underlying the unit
purchase options issued to D. H. Blair Investment Banking Corp.
("Blair") in connection with the IPO are subject to restrictions
on transferability until October 11, 1998 and thereafter, are
freely transferable without restriction provided there is a
current prospectus under the Securities Act relating thereto and
applicable state securities laws are complied with. The
existence of the Unit Purchase Options issued in the IPO,
outstanding options and warrants, Class A Warrants, Class B
Warrants, and other options that may be issued by the Company may
hinder future financing by the Company, and exercise of these
securities may further dilute the interest of the persons holding
Series A Common Stock. Further, the holders of such options and
warrants may exercise them at a time when the Company would
otherwise be able to obtain additional equity capital on terms
more favorable to the Company. No prediction can be made as to
the effect, if any, that sale of these securities or the
availability of such securities for sale without restriction will
have on the market prices of the Company's securities prevailing
from time to time. Nevertheless, the possibility that
substantial amounts of securities may be sold in the public
market may adversely affect prevailing market prices for the
Company's securities and could impair the Company's ability to
raise capital through the sale of its securities.
Effect of Outstanding Options and Warrants; Registration
Rights. The Company currently has outstanding a substantial
number of Class A Warrants, Class B Warrants and other options to
purchase shares of Series A Common Stock. For the terms of
outstanding options and warrants, the holders thereof are given
an opportunity to profit from a rise in the market price of the
Series A Common Stock with a resulting dilution in the interest
of the other stockholders. Further, the terms on which the
Company may obtain additional financing during that period may be
adversely affected by the existence of such options and warrants.
The holders of such options and warrants may exercise them at a
time when the Company might be able to obtain additional capital
through a new offering of securities on terms more favorable than
those provided by such securities. In addition, certain holders
have registration rights with respect to their securities, the
exercise of which may involve substantial expense to the Company.
Authorization of Preferred Stock. The Company's Certificate
of Incorporation authorizes the issuance of up to
5,000,000 shares of preferred stock, par value $.01 per share,
with such designation, rights and preferences as may be
determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without
stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders
of the Company's Series A and Series B Common Stock. In the
event of issuance, preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. There can be no
assurance that the Company will not issue shares of preferred
stock in the future.
No Dividends Anticipated. The Company has never paid any
cash dividends on its Series A and Series B Common Stock and does
not anticipate the payment of cash dividends in the foreseeable
future.
Possible Restrictions on Market-Making Activities in the
Company's Securities. D.H. Blair & Co., Inc. ("Blair & Co.") is
currently, and the Company believes that it intends in the future
to continue to be, a market maker in the Company's securities.
Regulation M, which was recently adopted to replace Rule 10b-6
and certain other rules promulgated under the Exchange Act may
prohibit Blair & Co. from engaging in any market-making
activities with regard to the Company's securities for the period
from five business days (or such other applicable period as
Regulation M may provide) prior to any solicitation by Blair of
the exercise of Warrants until the later of the termination of
such solicitation activity or the termination (by waiver or
otherwise) of any right that Blair may have to receive a fee for
the exercise of such Warrants following such solicitation. As a
result, Blair & Co. may be unable to provide a market for the
Company's securities during certain periods while the Warrants
are exercisable. In addition, under applicable rules and
regulations under the Exchange Act, any person engaged in the
distribution of Warrants offered by Selling Securityholders may
not simultaneously engage in market-making activities with
respect to any securities of the Company for the applicable
"cooling off" period (currently at least two and possibly nine
business days) prior to the commencement of such distribution.
Accordingly, in the event Blair & Co. is engaged in a
distribution of the Selling Securityholder Warrants, Blair & Co.
will not be able to make a market in the Company's securities
during the applicable restrictive period. Any temporary
cessation of such market-making activities could have an adverse
effect on the market price of the Company's securities.
Investigation of the Placement Agent by the Securities and
Exchange Commission. The Company has been advised that the
Securities and Exchange Commission (the "Commission") is
conducting an investigation concerning various business
activities of Blair and Blair & Co. The investigation appears to
be broad in scope, involving numerous aspects of Blair and
Blair & Co.'s compliance with the federal securities laws and
compliance with the federal securities laws by issuers whose
securities were underwritten by Blair or Blair & Co., or in which
Blair or Blair & Co. made over-the-counter markets, and persons
associated with Blair or Blair & Co., such issuers and other
persons. The Company has been advised by Blair that the
investigation has been ongoing since at least 1989 and that it is
cooperating with the investigation. Neither the Company, Blair
nor Blair & Co. can predict whether this investigation will ever
result in any type of formal enforcement action against Blair or
Blair & Co. An unfavorable resolution of this investigation
could have the effect of limiting Blair & Co.'s ability to make a
market in the Company's securities, which could affect the
liquidity or price of such securities. Any temporary cessation
of such market making activities could have a material adverse
effect on the market prices of the Company's securities.
<PAGE>
USE OF PROCEEDS
The Company will receive none of the proceeds from the sale
of the Selling Securityholder Securities, which are being sold by
the Selling Securityholders. Any proceeds from the exercise of
the Warrants, to the extent that the Warrants are exercised, will
be utilized by the Company for general corporate purposes.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholder Securities may be sold from time
to time to purchasers directly by any of the Selling
Securityholders, or, alternatively, any of the Selling
Securityholders may from time to time offer the Selling
Securityholder Securities through dealers or agents, who may
receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Securityholders
and/or purchasers of the Selling Securityholder Securities from
whom they may act as agent. Sales will be made at prices and on
terms then prevailing or at prices related to the current market
price, or in negotiated transactions. A Selling Securityholder
that sells such Selling Securityholder Securities pursuant to the
Registration Statement of which this Prospectus is a part will be
required to deliver such Prospectus to purchasers and will be
subject to certain of the civil liability provisions under the
Securities Act in connection with such sales. There can be no
assurance that any of the Selling Securityholder Securities will
be sold by the Selling Securityholders.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the Selling
Securityholder Warrants may not simultaneously engage in market-
making activities with respect to any securities of the Company
during the applicable "cooling off" period (currently at least
two and possibly nine business days) prior to the commencement of
such distribution. Accordingly, in the event Blair or Blair &
Co. is engaged in a distribution of the Selling Securityholder
Warrants, neither of such firms will be able to make a market in
the Company's securities during the applicable restrictive
period. However, neither Blair nor Blair & Co. have agreed to
nor are either of them obligated to act as a broker-dealer in the
sale of the Selling Securityholder Warrants and the Selling
Securityholders may be required, and in the event Blair & Co. is
a market maker, will likely be required, to sell such securities
through another broker-dealer. In addition, each Selling
Securityholder desiring to sell Warrants will be subject to the
applicable provisions of the Exchange Act and the rules and
regulations thereunder, which provisions may limit the timing of
the purchases and sales of shares of the Company's securities by
such Selling Securityholders.
The Commission has recently adopted Regulation M which will
replace Rule 10b-6 and certain other rules promulgated under the
Exchange Act. Regulation M may prohibit Blair & Co. from
engaging in any market-making activities with regard to the
Company's securities for the period from five business days (or
such other applicable period as Regulation M may provide) prior
to any solicitation by Blair & Co. of the exercise of Warrants
until the later of the termination of such solicitation activity
or the termination (by waiver or otherwise) of any right that
Blair & Co. may be unable to provide a market for the Company's
securities during certain periods while the Warrants are
exercisable.
Holders of outstanding Warrants can exercise their Warrants
for their applicable underlying securities upon payment of the
exercise prices therefor to the Company. The Company has agreed
not to solicit Warrant exercises other than through Blair unless
Blair declines or is unable to make such solicitation. Except
for any Warrants held by the Blair at the time of exercise, upon
any exercise of the Class A and Class B Warrants, the Company
will pay a fee to Blair (the "Solicitation Fee") of 5% of the
aggregate exercise price if (i) the market price of the Company's
Series A Common Stock on the date the Warrants are exercised is
greater than the then exercise price of the Warrants; (ii) the
exercise of the Warrants was solicited by a member of the
National Association of Securities Dealers, Inc. designated in
writing by the warrantholder as having solicited the exercise;
(iii) the Warrants are not held in a discretionary account;
(iv) disclosure of compensation arrangements is made both at the
time of the offering and at the time of exercise of the Warrants;
and (v) the solicitation of exercise of the Warrants was not in
violation of Rule 10b-6 promulgated under the Exchange Act.
Blair may reallow a portion of the Solicitation Fee to members of
the National Association of Securities Dealers, Inc. The costs
of Blair's solicitation will be borne by the Company.
The Selling Securityholders and broker-dealers, if any,
acting in connection with such sale might be deemed to be
underwriters within the meaning of Section 2(11) of the
Securities Act and any commission received by them and any profit
on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Company has agreed to pay substantially all of the
expenses incident to the registration of all of the securities
covered under this Prospectus, other than transfer taxes, if any,
and commissions and discounts of dealers and agents.
<PAGE>
SELLING SECURITYHOLDERS
This Prospectus relates to an offering by the Selling
Securityholders of (i) up to 2,857,189 shares of Private
Placement Series A Common Stock (ii) up to 3,341,742 Private
Placement Class A Warrants, (iii) up to 3,336,863 Private
Placement Class B Warrants, (iv) up to 1,369,821 IPO Class A
Warrants and (v) up to 401,321 Furman Selz Warrants. The Selling
Securityholder Securities are being registered to permit public
secondary trading of the shares of Series A Common Stock and/or
Warrants, and the Selling Securityholders may offer such shares
of Series A Common Stock and Warrants for resale from time to
time. See "Plan of Distribution." For a description of the
Company's Common Stock, Class A Warrants, Class B Warrants and
Furman Selz Warrants, see "Description of Securities."
The Company has filed with the Commission under the
Securities Act a Registration Statement on Form S-3, of which
this Prospectus forms a part, with respect to the resale of the
Selling Securityholder Securities. The Company has agreed, among
other things, to bear certain expenses in connection with the
registration and sale of the shares of Series A Common Stock and
Warrants being offered by the Selling Securityholders. See "Plan
of Distribution."
Set forth below is certain information with respect to each
Selling Securityholder as of December 31, 1996. Except as
indicated below, to the best of the Company's knowledge, there
have been no material relationships between any of the Selling
Securityholders and the Company within the past three years.
<TABLE>
Private Placement Series A Common Stock
<CAPTION>
Number of Number of
Shares Owned at Shares Offered
Commencement by the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 31,746 31,746
R. Peter & Hanna Altman 7,937 7,937
Alan & Chris Balfour 7,937 7,937
Rudy & Betty Ballato 15,873 15,873
Geoffrey W. Baylor 7,937 7,937
John H.K. Belt 7,937 7,937
Bruce W. & Julie A. Bennett 7,937 7,937
Charles M. Berger 15,873 15,873
Robert Berger 7,937 7,937
Ronald J. Berk 7,937 7,937
Mitchell & Kathryn W. Birzon 15,873 15,873
Baxter J. Braband 15,873 15,873
Joan Brout 15,873 15,873
John N. Burdette 3,969 3,969
Robert D. Burke, M.D. 7,937 7,937
Gloria M. Buzi 3,969 3,969
Chelsea Associates, Inc. 15,873 15,873
CLFS Equities Ltd. 15,873 15,873
Kenneth & Sherry Cohen 15,873 15,873
Martin A. Cooper, M.D. 7,937 7,937
Lee R. Curtis 7,937 7,937
Steven A. Dawes 15,873 15,873
Errett & Evelyn Deck 15,873 15,873
Thomas J. & Joanne DeLuca 7,937 7,937
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 7,937 7,937
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 31,746 31,746
Eastern Shore Radiation
Oncology Associates 15,873 15,873
Elvin E. & Genevieve M. Eberle 7,937 7,937
Jonathan & Irene Elias 15,873 15,873
William G. Everett 23,810 23,810
Fairfield-Maxwell, Ltd. 31,746 31,746
Edward J. Farrell 15,873 15,873
Shaban & Shaista Faruqui 15,873 15,873
Jeffrey A. Feibelman 39,683 39,683
Mark Fischgrund 7,937 7,937
David Fohrman 23,810 23,810
John S. & Elsie C. Fok 11,905 11,905
Tanya Gayle Foreman 15,873 15,873
Dr. Dalia Fried 3,969 3,969
Erwin & Jenny Fried 3,969 3,969
E. Kipp Friedle 7,937 7,937
Marshall Froker 3,969 3,969
James E. Galton 15,873 15,873
Martin R. Garfield 3,969 3,969
Lisa Susan Gatschet 31,746 31,746
Jonathan Goldstein 31,746 31,746
Morton E. Goulder 7,937 7,937
Richard Grant 3,969 3,969
Harold Greenberg 7,937 7,937
Alexander & Laura Gryschuk 31,746 31,746
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 7,937 7,937
Daniel Gutkin 7,937 7,937
Philip N. Haddad, III 7,937 7,937
Arthur H. Halper 7,937 7,937
Bruce B. Hanson 7,937 7,937
Dennis & Marcia Harrington 7,937 7,937
Bill R. Hay 15,873 15,873
Bruce A. Herman 7,937 7,937
Blake A. Hershey 7,937 7,937
Julian Herskowitz 3,969 3,969
Morris Hodkin 3,969 3,969
Stanley D. Hoffman 63,492 63,492
International Foam Products,
Inc. 7,937 7,937
Jack L. Irwin 15,873 15,873
George R. & Judith A. Isley 15,873 15,873
Jacob Katz, as Trustee for Jack
Katz DFP, Inc. Defined
Benefit Plan 15,873 15,873
Ivan Jacobs, M.D. 7,937 7,937
Stephen Baldwin Jayne 7,937 7,937
John and Anita Mastandrea, as
Trustees for John and Anita
Mastandrea Revokable Living
Trust 47,619 47,619
Wesley P. Jones 7,937 7,937
Jeff Riemer, as Trustee for
J.S. Riemer, Inc.
Employees' Pension Trust 31,746 31,746
Robert Jung 7,937 7,937
Louis & Irene Katz 47,619 47,619
Kathleen W. Katzmann 7,937 7,937
Leonard & Eileen Keller 47,619 47,619
Gerald Kesselman 7,937 7,937
Dr. Robert & Myriam Klein 31,746 31,746
Paul J. Kuehn 3,969 3,969
Joseph S. Kulpa 7,937 7,937
Clyde Kurlander 7,937 7,937
Robert H. Lenz (1) 15,873 15,873
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 7,937 7,937
Theodore A. Livingston 7,937 7,937
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 7,937 7,937
Brian McLean 15,873 15,873
Martin & Lynn Mendelssohn 7,937 7,937
Alan E. Messenschmidt 3,969 3,969
Ira Michaels 7,937 7,937
Sheri Migdol 7,937 7,937
Richard & Maria Molinsky 15,873 15,873
Robin Morris 15,873 15,873
George & Irene Motonaga 7,937 7,937
John B. Muller 3,969 3,969
Nano-Cap Hyper Growth
Partnership L.P. 7,937 7,937
Concetta Neff 7,937 7,937
New Jersey Wolfson Trust 476,190 476,190
James Nigro 47,619 47,619
Stephen Osman 31,746 31,746
Timothy & Elizabeth O'Sullivan 7,937 7,937
John & Paula Pataki 7,937 7,937
Wayne Pensenstadler 7,937 7,937
James N. & Judith W. Perkins (2) 15,873 15,873
Robert Perl 3,969 3,969
David J. Pokoski, M.D. 31,746 31,746
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 7,937 7,937
Daniel A. Potter 7,937 7,937
Rajesh & Noopur Prasad 7,937 7,937
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 7,937 7,937
Pattabhirama & Pindi Rajendran 15,873 15,873
Jeff Riemer 31,746 31,746
Denis J. Rinello 7,937 7,937
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 7,937 7,937
Mark E. & Connie E. Roman 3,969 3,969
Mark E. Roman 3,969 3,969
Norton A. Rosenberg 3,969 3,969
Alan H. & Linda S. Rosenthal 7,937 7,937
Alan J. Rubin 31,746 31,746
David W. Ruttenberg 7,937 7,937
Jacob Safier 47,619 47,619
Alan & Leah Sakowitz 15,873 15,873
Samuel J. Holtzman Trust 31,746 31,746
Nicolo & Maddalena Saulle 3,969 3,969
Louise Schrier 15,873 15,873
Kenneth W. Scott 15,873 15,873
David R. Simon 7,937 7,937
Herschel J. Sklaroff 7,937 7,937
Steven Sklow 15,873 15,873
Gary E. Sommer 7,937 7,937
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 31,746 31,746
Doug Terry 47,619 47,619
Lance James Thomas 15,873 15,873
Harry Tobiassen 7,937 7,937
Elmer A. Triplett 15,873 15,873
Vail Corporation of
Louisiana, Inc. 7,937 7,937
Donald J. Vernine 15,873 15,873
Johnny D. & Norma Jean Walker 3,969 3,969
Warren A. Noden, as Trustee for
Warren A. Noden Trust 7,937 7,937
Wayne D. Eig, as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 3,969 3,969
Dr. Robert M. Weiss 31,746 31,746
Aaron Wolfson 71,429 71,429
Abraham Wolfson 63,492 63,492
Martin & Rivka Wolmark 23,810 23,810
Joseph Yasgur 7,937 7,937
Harry Young 15,873 15,873
Harry & Miriam Zarin 7,937 7,937
Robert Zarin 7,937 7,937
Kal Zeff 158,730 158,730
Seymour H. Zisook 7,937 7,937
Robert D. Zucker 15,873 15,873
Total 2,857,189 2,857,189
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
<TABLE>
Private Placement Class A Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 37,130 37,130
R. Peter & Hanna Altman 9,283 9,283
Alan & Chris Balfour 9,283 9,283
Rudy & Betty Ballato 18,565 18,565
Geoffrey W. Baylor 9,283 9,283
John H.K. Belt 9,283 9,283
Bruce W. & Julie A. Bennett 9,283 9,283
Charles M. Berger 18,565 18,565
Robert Berger 9,283 9,283
Ronald J. Berk 9,283 9,283
Mitchell & Kathryn W. Birzon 18,565 18,565
Baxter J. Braband 18,565 18,565
Joan Brout 18,565 18,565
John N. Burdette 4,642 4,642
Robert D. Burke, M.D. 9,283 9,283
Gloria M. Buzi 4,642 4,642
Chelsea Associates, Inc. 18,565 18,565
CLFS Equities Ltd. 18,565 18,565
Kenneth & Sherry Cohen 18,565 18,565
Martin A. Cooper, M.D. 9,283 9,283
Lee R. Curtis 9,283 9,283
Steven A. Dawes 18,565 18,565
Errett & Evelyn Deck 18,565 18,565
Thomas J. & Joanne DeLuca 9,283 9,283
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 9,283 9,283
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 37,130 37,130
Eastern Shore Radiation Oncology
Associates 18,565 18,565
Elvin E. & Genevieve M. Eberle 9,283 9,283
Jonathan & Irene Elias 18,565 18,565
William G. Everett 27,848 27,848
Fairfield-Maxwell, Ltd. 37,130 37,130
Edward J. Farrell 18,565 18,565
Shaban & Shaista Faruqui 18,565 18,565
Jeffrey A. Feibelman 46,413 46,413
Mark Fischgrund 9,283 9,283
David Fohrman 27,848 27,848
John S. & Elsie C. Fok 13,924 13,924
Tanya Gayle Foreman 18,565 18,565
Dr. Dalia Fried 4,642 4,642
Erwin & Jenny Fried 4,642 4,642
E. Kipp Friedle 9,283 9,283
Marshall Froker 4,642 4,642
James E. Galton 18,565 18,565
Martin R. Garfield 4,642 4,642
Lisa Susan Gatschet 37,130 37,130
Jonathan Goldstein 37,130 37,130
Morton E. Goulder 9,283 9,283
Richard Grant 4,642 4,642
Harold Greenberg 9,283 9,283
Alexander & Laura Gryschuk 37,130 37,130
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 9,283 9,283
Daniel Gutkin 9,283 9,283
Philip N. Haddad, III 9,283 9,283
Arthur H. Halper 9,283 9,283
Bruce B. Hanson 9,283 9,283
Dennis & Marcia Harrington 9,283 9,283
Bill R. Hay 18,565 18,565
Bruce A. Herman 9,283 9,283
Blake A. Hershey 9,283 9,283
Julian Herskowitz 4,642 4,642
Morris Hodkin 4,642 4,642
Stanley D. Hoffman 74,260 74,260
International Foam Products, Inc. 9,283 9,283
Jack L. Irwin 18,565 18,565
George R. & Judith A. Isley 18,565 18,565
Jacob Katz, as Trustee for
Jack Katz DFP, Inc. Defined
Benefit Plan 18,565 18,565
Ivan Jacobs, M.D. 9,283 9,283
Stephen Baldwin Jayne 9,283 9,283
John and Anita Mastandrea as
Trustees for John and Anita
Mastandrea Revokable Living
Trust of 4-29-96 55,695 55,695
Wesley P. Jones 9,283 9,283
Jeff Riemer, as Trustee for
J.S. Riemer, Inc.
Employees' Pension Trust 37,130 37,130
Robert Jung 9,283 9,283
Louis & Irene Katz 55,695 55,695
Kathleen W. Katzmann 9,283 9,283
Leonard & Eileen Keller 55,613 55,613
Gerald Kesselman 9,269 9,269
Dr. Robert & Myriam Klein 37,130 37,130
Paul J. Kuehn 4,642 4,642
Joseph S. Kulpa 9,283 9,283
Clyde Kurlander 9,283 9,283
Robert H. Lenz (1) 18,565 18,565
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 9,283 9,283
Theodore A. Livingston 9,283 9,283
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 9,283 9,283
Brian McLean 18,565 18,565
Martin & Lynn Mendelssohn 9,283 9,283
Alan E. Messenschmidt 4,642 4,642
Ira Michaels 9,283 9,283
Sheri Migdol 9,283 9,283
Richard & Maria Molinsky 18,565 18,565
Robin Morris 18,565 18,565
George & Irene Motonaga 9,283 9,283
John B. Muller 4,642 4,642
Nano-Cap Hyper Growth
Partnership L.P. 9,283 9,283
Concetta Neff 9,283 9,283
New Jersey Wolfson Trust 556,947 556,947
James Nigro 55,695 55,695
Stephen Osman 37,130 37,130
Timothy & Elizabeth O'Sullivan 9,283 9,283
John & Paula Pataki 9,283 9,283
Wayne Pensenstadler 9,283 9,283
James N. & Judith W. Perkins (2) 18,565 18,565
Robert Perl 4,642 4,642
David J. Pokoski, M.D. 37,130 37,130
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 9,283 9,283
Daniel A. Potter 9,283 9,283
Rajesh & Noopur Prasad 9,283 9,283
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 9,283 9,283
Pattabhirama & Pindi Rajendran 18,565 18,565
Jeff Riemer 37,130 37,130
Denis J. Rinello 9,283 9,283
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 9,283 9,283
Mark E. & Connie E. Roman 4,642 4,642
Mark E. Roman 4,642 4,642
Norton A. Rosenberg 4,642 4,642
Alan H. & Linda S. Rosenthal 9,283 9,283
Alan J. Rubin 37,130 37,130
David W. Ruttenberg 9,283 9,283
Jacob Safier 55,695 55,695
Alan & Leah Sakowitz 18,565 18,565
Samuel J. Holtzman Trust 37,130 37,130
Nicolo & Maddalena Saulle 4,642 4,642
Louise Schrier 18,565 18,565
Kenneth W. Scott 18,565 18,565
David R. Simon 9,283 9,283
Herschel J. Sklaroff 9,283 9,283
Steven Sklow 18,565 18,565
Gary E. Sommer 9,283 9,283
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 37,130 37,130
Doug Terry 55,695 55,695
Lance James Thomas 18,565 18,565
Harry Tobiassen 9,283 9,283
Elmer A. Triplett 18,565 18,565
Vail Corporation of Louisiana,
Inc. 9,283 9,283
Donald J. Vernine 18,565 18,565
Johnny D. & Norma Jean Walker 4,642 4,642
Warren A. Noden, as Trustee for
Warren A. Noden Trust 9,283 9,283
Wayne D. Eig as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 4,642 4,642
Dr. Robert M. Weiss 37,130 37,130
Aaron Wolfson 83,543 93,543
Abraham Wolfson 74,260 74,260
Martin & Rivka Wolmark 27,848 27,848
Joseph Yasgur 9,283 9,283
Harry Young 18,565 18,565
Harry & Miriam Zarin 9,283 9,283
Robert Zarin 9,283 9,283
Kal Zeff 185,649 185,649
Seymour H. Zisook 9,283 9,283
Robert D. Zucker 18,565 18,565
Total 3,341,742 3,341,742
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
<TABLE>
Private Placement Class B Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Magid Abraham 37,076 37,076
R. Peter & Hanna Altman 9,269 9,269
Alan & Chris Balfour 9,269 9,269
Rudy & Betty Ballato 18,538 18,538
Geoffrey W. Baylor 9,269 9,269
John H.K. Belt 9,269 9,269
Bruce W. & Julie A. Bennett 9,269 9,269
Charles M. Berger 18,538 18,538
Robert Berger 9,269 9,269
Ronald J. Berk 9,269 9,269
Mitchell & Kathryn W. Birzon 18,538 18,538
Baxter J. Braband 18,538 18,538
Joan Brout 18,538 18,538
John N. Burdette 4,635 4,635
Robert D. Burke, M.D. 9,269 9,269
Gloria M. Buzi 4,635 4,635
Chelsea Associates, Inc. 18,538 18,538
CLFS Equities Ltd. 18,538 18,538
Kenneth & Sherry Cohen 18,538 18,538
Martin A. Cooper, M.D. 9,269 9,269
Lee R. Curtis 9,269 9,269
Steven A. Dawes 18,538 18,538
Errett & Evelyn Deck 18,538 18,538
Thomas J. & Joanne DeLuca 9,269 9,269
Milton I. Drucker, as Trustee
for The Drucker Group Inc.
Retirement Trust 9,269 9,269
Edmund H. Shea, Jr., as
Trustee for E&M RP Trust 37,076 37,076
Eastern Shore Radiation Oncology
Associates 18,538 18,538
Elvin E. & Genevieve M. Eberle 9,269 9,269
Jonathan & Irene Elias 18,538 18,538
William G. Everett 27,807 27,807
Fairfield-Maxwell, Ltd. 37,076 37,076
Edward J. Farrell 18,538 18,538
Shaban & Shaista Faruqui 18,538 18,538
Jeffrey A. Feibelman 46,345 46,345
Mark Fischgrund 9,269 9,269
David Fohrman 27,807 27,807
John S. & Elsie C. Fok 13,904 13,904
Tanya Gayle Foreman 18,538 18,538
Dr. Dalia Fried 4,635 4,635
Erwin & Jenny Fried 4,635 4,635
E. Kipp Friedle 9,269 9,269
Marshall Froker 4,635 4,635
James E. Galton 18,538 18,538
Martin R. Garfield 4,635 4,635
Lisa Susan Gatschet 37,076 37,076
Jonathan Goldstein 37,076 37,076
Morton E. Goulder 9,269 9,269
Richard Grant 4,635 4,635
Harold Greenberg 9,269 9,269
Alexander & Laura Gryschuk 37,076 37,076
Stuart E. Feick, as Trustee for
Gulfstream Asset Management
Corp. Retirement Trust 9,269 9,269
Daniel Gutkin 9,269 9,269
Philip N. Haddad, III 9,269 9,269
Arthur H. Halper 9,269 9,269
Bruce B. Hanson 9,269 9,269
Dennis & Marcia Harrington 9,269 9,269
Bill R. Hay 18,538 18,538
Bruce A. Herman 9,269 9,269
Blake A. Hershey 9,269 9,269
Julian Herskowitz 4,635 4,635
Morris Hodkin 4,635 4,635
Stanley D. Hoffman 74,151 74,151
International Foam Products, Inc. 9,269 9,269
Jack L. Irwin 18,538 18,538
George R. & Judith A. Isley 18,538 18,538
Jacob Katz, as Trustee for
Jack Katz DFP, Inc. Defined
Benefit Plan 18,538 18,538
Ivan Jacobs, M.D. 9,269 9,269
Stephen Baldwin Jayne 9,269 9,269
John and Anita Mastandrea, as
Trustees for John and Anita
Mastandrea Revokable Living
Trust 55,613 55,613
Wesley P. Jones 9,269 9,269
Jeff Riemer 37,076 37,076
Robert Jung 9,269 9,269
Louis & Irene Katz 55,613 55,613
Kathleen W. Katzmann 9,269 9,269
Leonard & Eileen Keller 55,613 55,613
Gerald Kesselman 9,269 9,269
Dr. Robert & Myriam Klein 37,076 37,076
Paul J. Kuehn 4,635 4,635
Joseph S. Kulpa 9,269 9,269
Clyde Kurlander 9,269 9,269
Robert H. Lenz (1) 18,538 18,538
Leon Sutton, as Trustee for
Leon Sutton Defined Benefit
Plan 9,269 9,269
Theodore A. Livingston 9,269 9,269
Martin Cooper, M.D., as Trustee
for Martin Cooper, M.D., A
Professional Corp. Defined
Benefit Pension Plan 9,269 9,269
Brian McLean 18,538 18,538
Martin & Lynn Mendelssohn 9,269 9,269
Alan E. Messenschmidt 4,635 4,635
Ira Michaels 9,269 9,269
Sheri Migdol 9,269 9,269
Richard & Maria Molinsky 18,538 18,538
Robin Morris 18,538 18,538
George & Irene Motonaga 9,269 9,269
John B. Muller 4,635 4,635
Nano-Cap Hyper Growth
Partnership L.P. 9,269 9,269
Concetta Neff 9,269 9,269
New Jersey Wolfson Trust 556,134 556,134
James Nigro 55,613 55,613
Stephen Osman 37,076 37,076
Timothy & Elizabeth O'Sullivan 9,269 9,269
John & Paula Pataki 9,269 9,269
Wayne Pensenstadler 9,269 9,269
James N. & Judith W. Perkins (2) 18,538 18,538
Robert Perl 4,635 4,635
David J. Pokoski, M.D. 37,076 37,076
Jesse D. Roggen, as Trustee for
Poseidon Capital Pension &
Profit Sharing Plan 9,269 9,269
Daniel A. Potter 9,269 9,269
Rajesh & Noopur Prasad 9,269 9,269
Hosny Selim, as Trustee for
Radiation Therapists
Associates P.C. Profit
Sharing Plan 9,269 9,269
Pattabhirama & Pindi Rajendran 18,538 18,538
Jeff Riemer 37,076 37,076
Denis J. Rinello 9,269 9,269
Robert S. Bogatin, as Trustee
for Robert S. Bogatin Trust 9,269 9,269
Mark E. & Connie E. Roman 4,635 4,635
Mark E. Roman 4,635 4,635
Norton A. Rosenberg 4,635 4,635
Alan H. & Linda S. Rosenthal 9,269 9,269
Alan J. Rubin 37,076 37,076
David W. Ruttenberg 9,269 9,269
Jacob Safier 55,613 55,613
Alan & Leah Sakowitz 18,538 18,538
Samuel J. Holtzman Trust 37,076 37,076
Nicolo & Maddalena Saulle 4,635 4,635
Louise Schrier 18,538 18,538
Kenneth W. Scott 18,538 18,538
David R. Simon 9,269 9,269
Herschel J. Sklaroff 9,269 9,269
Steven Sklow 18,538 18,538
Gary E. Sommer 9,269 9,269
Stanley D. Hoffman, M.D., as
Trustee for Stanley D.
Hoffman, M.D. Profit
Sharing Plan 37,076 37,076
Doug Terry 55,613 55,613
Lance James Thomas 18,538 18,538
Harry Tobiassen 9,269 9,269
Elmer A. Triplett 18,538 18,538
Vail Corporation of Louisiana,
Inc. 9,269 9,269
Donald J. Vernine 18,538 18,538
Johnny D. & Norma Jean Walker 4,635 4,635
Warren A. Noden, as Trustee for
Warren A. Noden Trust 9,269 9,269
Wayne D. Eig, as Trustee for
Wayne D. Eig, Chartered
Defined Benefit Pension
Plan & Trust 4,635 4,635
Dr. Robert M. Weiss 37,076 37,076
Aaron Wolfson 83,421 83,421
Abraham Wolfson 74,151 74,151
Martin & Rivka Wolmark 27,807 27,807
Joseph Yasgur 9,269 9,269
Harry Young 18,538 18,538
Harry & Miriam Zarin 9,269 9,269
Robert Zarin 9,269 9,269
Kal Zeff 185,378 185,378
Seymour H. Zisook 9,269 9,269
Robert D. Zucker 18,538 18,538
Total 3,336,863 3,336,863
<FN>
____________
(1) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(2) Mr. Perkins is President, Chief Executive Officer and
Director of the Company.
</TABLE>
The Selling Securityholders have agreed not to sell the
Private Placement Common Stock, the Private Placement Class A
Warrants and the Private Placement Class B Warrants except after
the time periods and in the percentage amounts set forth below
and not to exercise the Private Placement Class A Warrants and
the Private Placement Class B Warrants prior to November 14,
1997.
<TABLE>
<CAPTION>
Lock-Up Period Percentage Eligible for Resale
<S> <C>
Prior to March 15, 1997 . . . None
Period from March 15, 1997
to July 15, 1997 . . . . . 50%
After July 15, 1997 . . . . . 100%
</TABLE>
<TABLE>
IPO Class A Warrants
<CAPTION>
Number of IPO Number of
Class A Warrants
Warrants Owned Offered by
at Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
George T. Barton & Nancy L.
Barton 58,480 58,480
John S. Fok and Alice J. Fok 52,632 52,632
Farrell C. Gay 3,655 3,655
Arnold D. Flam, DDS & Harvey
Glicker, DDS Profit Sharing
Trust 29,240 29,240
Jay B. Gutkin 14,620 14,620
Bruce A. Herman 29,240 29,240
Sheela Idnani 14,620 14,620
James W. Johnson 14,620 14,620
Robert Klein 29,240 29,240
John E. Milne 14,620 14,620
Stephen Osman 29,240 29,240
J. Lindsey Roberts, Sr. 29,240 29,240
David Scannell 14,620 14,620
Steven Sklow 14,620 14,620
Kaytaro G. Sugahara 29,240 29,240
Seymour H. Zisook 29,240 29,240
Terry Clark 29,240 29,240
Dr. Harvey Glicker 58,480 58,480
Stanley D. Hoffmann 29,240 29,240
William G. Hylind &
Patricia B. Hylind 58,480 58,480
William Marginson &
Rose Marginson 14,620 14,620
John A. McNett 14,620 14,620
John Muller 29,240 29,240
Melvin Paradise 14,620 14,620
Retail Advisory Group 14,620 14,620
Robert H. Vonderohe &
Mardelle Vonderohe 14,620 14,620
Andrew Bressman 13,451 13,451
The Chana Shasha Foundation 29,240 29,240
Chesed Congregation of America 116,960 116,960
Joel D. Fedder 14,620 14,620
Andrew Holder 14,620 14,620
Lechaim Investment Corp. 14,620 14,620
Thomas A. Masci., Jr, 14,620 14,620
Joan Radocchio 14,620 14,620
Moshe M. Rothkopf and
Bongja K. Rothkopf 14,620 14,620
Eugene Silverman 5,848 5,848
Aaron Wolfson 29,240 29,240
Abraham Wolfson 29,240 29,240
Rubin Organization(1) 29,240 29,240
Robert H. Lenz(2) 317,457 317,457
Stephen G. Bowen(3) 14,620 14,620
Harvey S. Wilson(4) 8,203 8,203
Tendrel, Inc.(5) 3,655 3,655
Total 1,369,821 1,369,821
<FN>
____________
(1) Rubin Organization is a mall developer and operator of one
of the first four malls in which Cafe USA was installed and
broadcast.
(2) Mr. Lenz is the Chairman of the Board of Directors of the
Company.
(3) Mr. Bowen served as President, Chief Executive Officer and
Director of the Company from May, 1993 to November, 1996.
(4) Mr. Wilson served as Executive Vice President and Director
of the Company from October, 1993 to June, 1996. Mr. Wilson
also served as Secretary of the Company from April, 1995 to
June, 1996.
(5) Tendrel, Inc. is a financial consulting company that
previously provided financial advisory services to the
Company.
</TABLE>
<TABLE>
Furman Selz Warrants
<CAPTION>
Number of Number of
Warrants Warrants
Owned at Offered by
Commencement the Selling
Selling Securityholder of Offering Securityholder
<S> <C> <C>
Furman Selz LLC(1) 401,321 401,321
<FN>
____________
(1) On December 16, 1996, the Company and Furman Selz entered
into a financial advisory agreement pursuant to which Furman
Selz will provide financial advisory services to the Company
for approximately 18 months. See "Recent Developments."
</TABLE>
<PAGE>
DESCRIPTION OF SECURITIES
General
The Company's authorized capital stock consists of
200,000,000 shares of Series A Common Stock, $.01 par value per
share, 1,250,000 shares of Series B Common Stock, $.01 par value
per share, and 5,000,000 shares of undesignated Preferred Stock.
As of the date of this Prospectus, there were issued and
outstanding, 6,950,714 shares of Series A Common Stock and
1,075,715 shares of Series B Common Stock. The Series A Common
Stock and Series B Common Stock are held of record by
approximately 173 and 6 stockholders, respectively.
Units
Each Unit consists of one share of Series A Common Stock,
one Class A Warrant and one Class B Warrant. Each Class A
Warrant entitles the holder thereof to purchase one share of
Series A Common Stock and one Class B Warrant, and each Class B
Warrant entitles the holder thereof to purchase one share of
Series A Common Stock. The Series A Common Stock, the Class A
Warrants and the Class B Warrants included in the Units are
transferable separately.
Common Stock
The Series A Common Stock and Series B Common Stock are
substantially identical except that holders of Series A Common
Stock have the right to cast one vote for each share held of
record and holders of Series B Common Stock have the right to
cast five votes for each share held of record on all matters,
submitted to a vote of the holders of Common Stock. The Series A
Common Stock and Series B Common Stock vote together as a single
class on all matters on which stockholders may vote, including
the election of directors, except when class voting is required
by applicable law. Holders of Common Stock do not have
cumulative voting rights.
Holders of the Series A Common Stock and Series B Common
Stock have equal ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of
Directors and are entitled to share ratably, as a single class,
in all of the assets of the Company available for distribution to
holders of shares of Common Stock upon the liquidation,
dissolution or winding up of the affairs of the Company. Holders
of Series A Common Stock or Series B Common Stock do not have
preemptive, subscription or conversion rights except that the
Series B Common Stock will be automatically convertible into an
equivalent number of fully paid and non-assessable shares of
Series A Common Stock upon the sale or transfer of such shares by
the record holder thereof except to another holder of Series B
Common Stock. Each share of Series B Common Stock will also be
convertible at any time upon the option of the holder into one
share of Series A Common Stock. No redemption or sinking fund
provisions exist for the benefit of the Series A Common Stock or
Series B Common Stock. All outstanding shares of Series A and
Series B Common Stock are, and those shares of Series A Common
Stock offered hereby, will be validly issued, fully paid and non-
assessable. The Series B Common stockholders have the power to
retain control over the Company, until substantial exercise of
the Warrants are effected.
The difference in voting rights described above increases
the voting power of the Series B Common stockholders and
accordingly has an anti-takeover effect. The existence of the
Series B Common Stock may make the Company a less attractive
target for a hostile takeover bid or render more difficult or
discourage a merger proposal, an unfriendly tender offer, a proxy
contest, or the removal of incumbent management, even if such
transactions were favored by the stockholders of the Company
other than the Series B Common stockholders. Thus, the
stockholders may be deprived of an opportunity to sell their
shares at a premium over prevailing market prices in the event of
a hostile takeover bid. Those seeking to acquire the Company
through a business combination will be compelled to consult first
with the Series B Common Stockholders in order to negotiate the
terms of such business combination. Any such proposed business
combination will have to be approved by the Board of Directors,
which may be under the control of the Series B Common
stockholders, and if stockholder approval is required, the
approval of the Series B Common stockholders will be necessary
before any such business combination can be consummated.
Redeemable Warrants
Class A Warrants. The holder of each Class A Warrant is
entitled, upon payment of the exercise price of $5.13 to purchase
one share of Series A Common Stock and one Class B Warrant.
Unless previously redeemed, the Class A Warrants are presently
exercisable at any time and until 5:00 p.m. (New York time) on
October 11, 2000, except the Private Placement Class A Warrants
can be exercised by the Selling Securityholders only between
November 14, 1997 and 5:00 p.m. (New York time) on October 11,
2000. The Class A Warrants included in the Units are immediately
transferable separately from the Series A Common Stock and the
Class B Warrants issued with such Class A Warrants as part of the
Units. The Class A Warrants are subject to redemption, as
described below.
Class B Warrants. The holder of each Class B Warrant is
entitled to purchase one share of Series A Common Stock at an
exercise price of $6.85. Unless previously redeemed, the Class B
Warrants are presently exercisable at any time and until
5:00 p.m. (New York time) on October 11, 2000, except the Private
Placement Class B Warrants can be exercised by the Selling
Securityholders only between November 14, 1997 and 5:00 p.m. (New
York time) on October 11, 2000. The Class B Warrants included in
the Units are immediately transferable separately from the
Series A Common Stock and the Class A Warrants issued with such
Class B Warrants as part of the Units. The Class B Warrants
underlying the Class A Warrants will be transferable separately
from the Series A Common Stock received upon exercise of the
Class A Warrants. The Class B Warrants are subject to
redemption, as described below.
Redemption. The Warrants are subject to redemption by the
Company, upon 30 days' written notice, at a price of $.05 per
Warrant if the average closing bid price of the Series A Common
Stock for any 30 consecutive business days ending within five
days of the date on which the notice of redemption is given shall
have exceeded $9.00 per share with respect to the Class A
Warrants and $12.00 per share with respect to the Class B
Warrants. Holders of Warrants will automatically forfeit their
rights to purchase the shares of Series A Common Stock issuable
upon exercise of such Warrants unless the Warrants are exercised
before the close of business on the business day immediately
prior to the date set for redemption. All of the outstanding
Warrants of a class, except for those underlying the Unit
Purchase Options, must be redeemed if any of that class are
redeemed. The Warrants underlying the Unit Purchase Options are
not subject to redemption by the Company unless, on the date
fixed for redemption, the Unit Purchase Options have been
exercised and the underlying warrants are outstanding. A notice
of redemption shall be mailed to each of the registered holders
of the Warrants by first class mail, postage prepaid, upon
30 days' notice before the date fixed for redemption. The notice
of redemption shall specify the redemption price, the date fixed
for redemption, the place where the Warrant certificates shall be
delivered and the redemption price to be paid, and that the right
to exercise the Warrants shall terminate at 5:00 p.m. (New York
City time) on the business day immediately preceding the date
fixed for redemption.
General. The Warrants may be exercised upon surrender of
the certificate(s) therefor on or prior to the expiration or the
redemption date (as explained above) at the offices of the
Company's warrant agent (the "Warrant Agent") with the form of
"Election to Purchase" on the reverse side of the certificate(s)
completed and executed as indicated, accompanied by payment (in
the form of certified or cashier's check payable to the order of
the Company) of the full exercise price for the number of
Warrants being exercised.
The Warrants contain provisions that protect the holders
thereof against dilution by adjustment of the exercise price per
share and the number of shares issuable upon exercise thereof
upon the occurrence of certain events, including issuances of
Series A Common Stock (or securities convertible, exchangeable or
exercisable into Series A Common Stock) at less than market
value, stock dividends, stock splits, mergers, a sale of
substantially all of the Company's assets, and for other
extraordinary events; provided, however, that no such adjustment
shall be made upon, among other things, (i) the issuance or
exercise of options or other securities under the Company's stock
option plans or other employee benefit plans, or (ii) the sale or
exercise of outstanding options or warrants.
The Company is not required to issue fractional shares of
Series A Common Stock, and in lieu thereof will make a cash
payment based upon the current market value of such fractional
shares. A holder of Warrants will not possess any rights as a
stockholder of the Company unless and until the Warrants are
exercised.
Furman Selz Warrants
The holder of each Furman Selz Warrant is entitled, upon
payment of the exercise price of $2.00 to purchase one share of
Series A Common Stock. The Furman Selz Warrants are presently
exercisable at any time and until 5:00 p.m. (New York time) on
December 16, 2001.
The Furman Selz Warrants are subject to redemption by the
Company, upon 30 days' written notice, at a price of $.05 per
Warrant if the average closing bid price of the Series A Common
Stock for any 30 consecutive business days ending within five
days of the date on which the notice of redemption is given shall
have exceeded $9.00 per share. Holders of Furman Selz Warrants
will automatically forfeit their rights to purchase the shares of
Series A Common Stock issuable upon exercise of such Warrants
unless the Warrants are exercised before the close of business on
the business day immediately prior to the date set for
redemption. All of the outstanding Furman Selz Warrants must be
redeemed if any are redeemed. A notice of redemption shall be
mailed to each of the registered holders of the Furman Selz
Warrants by first class mail, postage prepaid, upon 30 days'
notice before the date fixed for redemption. The notice of
redemption shall specify the redemption price, the date fixed for
redemption, the place where the Warrant certificates shall be
delivered and the redemption price to be paid, and that the right
to exercise the Furman Selz Warrants shall terminate at 5:00 p.m.
(New York City time) on the business day immediately preceding
the date fixed for redemption.
The Furman Selz Warrants may be exercised upon surrender of
the certificate(s) therefor on or prior to the expiration or the
redemption date (as explained above) at the offices of the
Warrant Agent with the form of "Election to Purchase" on the
reverse side of the certificate(s) completed and executed as
indicated, accompanied by payment (in the form of certified or
cashier's check payable to the order of the Company) of the full
exercise price for the number of Furman Selz Warrants being
exercised.
The Warrants contain provisions that protect the holders
thereof against dilution by adjustment of the exercise price per
share and the number of shares issuable upon exercise thereof
upon the occurrence of certain events, including issuances of
Series A Common Stock (or securities convertible, exchangeable or
exercisable into Series A Common Stock) at less than market
value, stock dividends, stock splits, mergers, a sale of
substantially all of the Company's assets, and for other
extraordinary events; provided, however, that no such adjustment
shall be made upon, among other things, the issuance or exercise
of options or other securities under the Company's stock option
plans or other employee benefit plans.
A holder of Furman Selz Warrants will not possess any
rights as a stockholder of the Company unless and until the
Warrants are exercised.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of
undesignated Preferred Stock ("Undesignated Preferred Stock").
Undesignated Preferred Stock. The Undesignated Preferred
Stock may be issued in series, and shares of each series will
have such rights and preferences as are fixed by the Board of
Directors in the resolutions authorizing the issuance of that
particular series. In designating any series of Undesignated
Preferred Stock, the Board of Directors may, without further
action by the holders of Common Stock, fix the number of shares
constituting that series and fix the dividend rights, dividend
rate, conversion rights, voting rights (which may be greater or
lesser than the voting rights of the Common Stock), rights and
terms of redemption (including any sinking fund provisions), and
the liquidation preferences of the series of Undesignated
Preferred Stock. The holders of any series of Undesignated
Preferred Stock, when and if issued, are expected to have
priority claims to dividends and to any distributions upon
liquidation of the Company, and they may have other preferences
over the holders of the Common Stock.
The Board of Directors may issue series of Undesignated
Preferred Stock without action by the stockholders of the
Company. Accordingly, the issuance of Undesignated Preferred
Stock may adversely affect the rights of the holders of the
Common Stock. In addition, the issuance of Undesignated
Preferred Stock may be used as an "anti-takeover" device without
further action on the part of the stockholders. Issuance of
Undesignated Preferred Stock may dilute the voting power of
holders of Common Stock (such as by issuing Undesignated
Preferred Stock with super-voting rights) and may render more
difficult the removal of current management, even if such removal
may be in the stockholders' best interest.
Business Combination Provisions
The Company is subject to a Delaware statute regulating
"business combinations," defined to include a broad range of
transactions, between Delaware corporations and "interested
stockholders," defined as persons who have acquired at least 15%
of a corporation's stock. Under the law, a corporation may not
engage in any business combination with any interested
stockholder for a period of three years from the date such person
became an interested stockholder unless certain conditions are
satisfied. The statute contains provisions enabling a
corporation to avoid the statute's restrictions.
The Company has not sought to "elect out" of the statute
and, therefore, the restrictions imposed by such statute apply to
the Company.
LEGAL MATTERS
Certain legal matters relating to the Series A Common Stock
and the Warrants offered hereby have been passed upon for the
Company by Stevens & Lee, Wayne, Pennsylvania.
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Company's latest Annual Report on Form 10-KSB
have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated
in reliance upon such report given upon the authority of that
firm as experts in accounting and auditing.
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses payable by the
Company in connection with this Registration Statement. All
amounts are estimated except the SEC filing fees.
Securities and Exchange Commission filing fee . . $ 36,727
National Association of Securities Dealers, Inc.
filing fee. . . . . . . . . . . . . . . . . . . 0
Nasdaq listing fee. . . . . . . . . . . . . . . . 0
Printing and Engraving Expenses . . . . . . . . . 20,000
Accounting Fee and Expenses . . . . . . . . . . . 10,000
Legal Fees and Expenses . . . . . . . . . . . . . 10,000
Blue Sky Qualification Fees and Expenses. . . . . 0
Underwriters Expense Allowance. . . . . . . . . . 0
Transfer Agent Fees and Expenses. . . . . . . . . 0
Miscellaneous . . . . . . . . . . . . . . . . . . 5,000
Total . . . . . . . . . . . . . . . . . . . . . . $ 81,727
=======
Item 15. Indemnification of Directors and Officers.
Section 145 ("Section 145") of the Delaware General
Corporation Law (the "DGCL") permits indemnification of
directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain
limitations. Article VIII of the Company's By-laws (Exhibit 3.2
hereto) provide for the indemnification of directors, officers
and other authorized representatives of the Company to the
maximum extent permitted by the DGCL. Section 145 empowers a
corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or
completed actions, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person is or was a director, officer or agent of the corporation
or another enterprise if serving at the request of the
corporation. Depending on the character of the proceeding, a
corporation may indemnify against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred in connection with such actions, suit or
proceeding if the person indemnified acted in good faith and in a
manner such person reasonably believed to be in or not opposed
to, the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. In the case of an
action by or in the right of the corporation, no indemnification
may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such
person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 further
provides that to the extent a director or officer of a
corporation has been successful in the defense of any action,
suit or proceeding referred to above or in the defense of any
claim, issue or matter therein, such person shall be indemnified
against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith. The
Company's By-laws do not differentiate between derivative actions
and other actions.
<PAGE>
Item 16. Exhibits
Exhibits:
Number Title
- ------ -----
4.1 Specimen Form of Series A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form SB-2 (File No. 33-91054)
of Food Court Entertainment Network, Inc.)
4.2 Form of Warrant Agreement for Class A Warrants and
Class B Warrants, with Specimen Form of Class A and
Class B Warrant Certificate attached
4.3 Form of Warrant Agreement, between Food Court
Entertainment Network, Inc. and Furman Selz LLC
5.1 Opinion of Stevens & Lee*
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP
24.1 Power of Attorney (included on signature page)
_____
* To be filed by amendment.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement.
(2) That the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the Offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on
Form S-3 and authorized this registration statement to be signed
on its behalf by the undersigned in the City of New York, State
of New York on December 29, 1996.
FOOD COURT ENTERTAINMENT NETWORK, INC.
By: /s/ James N. Perkins
James N. Perkins,
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints James N.
Perkins, Darren M. Sardoff, or Stephen F. Ritner, Esquire, and
each of them, his true and lawful attorney-in-fact, as agent with
full power of substitution and resubstitution for him and in his
name, place and stead, in any and all capacity, to sign any or
all amendments to this Registration Statement and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting to such attorney-in-fact and agents full
power and authority to do and perform each and every act and this
requisite and necessary to be done in and about the premises, as
fully and to all intents and purposes as they might or could do
in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of
1933, as amended, this Registration Statement was signed below by
the following persons and in the capacities and on the dates
stated.
Signature
/s/ James N. Perkins President, Chief December 29, 1996
James N. Perkins Executive Officer,
and Director
(principal executive
officer)
/s/ Robert H. Lenz Chairman of the December 29, 1996
Robert H. Lenz Board of Directors
/s/ Gary D. Penisten Director December 26, 1996
Gary D. Penisten
/s/ Howard W. Phillips Director December 29, 1996
Howard W. Phillips
/s/ Robert J. Wussler Director December 29, 1996
Robert J. Wussler
/s/ Benjamin Frank Director December 29, 1996
Benjamin Frank
/s/ E. Donald Shapiro Director December 29, 1996
E. Donald Shapiro
/s/ Darren M. Sardoff Senior Vice December 29, 1996
Darren M. Sardoff President, Chief
Financial Officer
(principal accounting
and financial officer)
<PAGE>
EXHIBIT INDEX
Number Title
- ------ -----
4.1 Specimen Form of Series A Common Stock Certificate
(Incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form SB-2 (File
No. 33-91054) of Food Court Entertainment Network,
Inc.)
4.2 Form of Warrant Agreement for Class A Warrants and
Class B Warrants, with Specimen Form of Class A
and Class B Warrant Certificate attached
4.3 Form of Warrant Agreement, between Food Court
Entertainment Network, Inc. and Furman Selz LLC
5.1 Opinion of Stevens & Lee*
23.1 Consent of Stevens & Lee (included in Exhibit 5.1)
23.2 Consent of Richard A. Eisner & Company, LLP
24.1 Power of Attorney (included on signature page)
____
* To be filed by amendment.
EXHIBIT 4.2
WARRANT AGREEMENT
AGREEMENT, dated as of this 14th day of November, 1996,
by and among Food Court Entertainment Network, Inc., a Delaware
corporation ("Company"), American Stock Transfer & Trust Company,
as Warrant Agent (the "Warrant Agent"), and D.H. BLAIR
INVESTMENT BANKING CORP., a New York corporation (the
"Underwriter").
W I T N E S S E T H
WHEREAS, in connection with a private placement (the
"Private Placement") of a minimum of thirty (30) and a maximum of
ninety (90) units ("Units"), each unit consisting of 31,746
units identical to those sold by the Company in its initial
public offering ("IPO") in October 1995 ("IPO Units"), each IPO
Unit consisting of one (1) share of the Company's Series A Common
Stock, $.01 par value ("Series A Common Stock"), one (1)
redeemable Class A Warrant ("Class A Warrants") and one (1)
redeemable Class B Warrant ("Class B Warrants") pursuant to an
agency agreement (the "Agency Agreement") dated November 14, 1996
between the Company and Blair and the issuance to Blair or its
designees of Unit Purchase Options to purchase an aggregate of
thirty-one and one-half (31-1/2) additional Units (the "Unit
Purchase Options"), the Company may issue up to 4,341,741 Class A
Warrants and 4,336,862 Class B Warrants (the Class A Warrants and
Class B Warrants may be collectively referred to as "Warrants");
and
WHEREAS, each Class A Warrant initially entitles the
Registered Holder thereof to purchase one (1) share of Series A
Common Stock and one (1) Class B Warrant, and accordingly, the
Company may issue up to an additional 3,341,742 Class B Warrants;
and
WHEREAS, each Class B Warrant initially entitles the
Registered Holder thereof to purchase one (1) share of Series A
Common Stock; and
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing to so
act, in connection with the issuance, registration, transfer
exchange and redemption of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the
Warrants, and the rights of the Registered Holders thereof;
NOW THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth and for the purpose of
defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights
and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the
parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the
following terms shall have the following meanings, unless the
context shall otherwise require:
(a) "Aggregate Per Share Price" shall mean the
Purchase Price per share multiplied by the number of shares of
Common Stock purchasable upon the exercise of a Warrant.
(b) "Class A Aggregate Per Share Price" shall mean
$5.13.
(c) "Class B Aggregate Per Share Price" shall mean
$6.85.
(d) "Common Stock" shall mean stock of the Company of
any class, whether now or hereafter authorized, which has the
right to participate in the distribution of earnings and assets
of the Company without limit as to amount or percentage, which at
the date hereof consists of 200,000,000 shares of Series A Common
Stock, $.01 par value and 1,250,000 shares of Series B Common
Stock, $.01 par value.
(e) "Corporate Office" shall mean the office of the
Warrant Agent (or its successor) at which at any particular time
its principal business shall be administered, which office is
located at the date hereof at 40 Wall Street, New York, New York
10005.
(f) "Exercise Date" shall mean, as to any Warrant, the
date on which the Warrant Agent shall have received both (a) the
Warrant Certificate representing such Warrant, with the exercise
form thereon duly executed by the Registered Holder thereof or
his attorney duly authorized in writing, and (b) payment in cash,
or by official bank or certified check made payable to the
Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(g) "Initial Warrant Exercise Date" shall mean as to
each Class A Warrant and Class B Warrant November 14, 1996.
(h) "Purchase Price" shall mean the purchase price to
be paid upon exercise of each Class A Warrant or Class B Warrant
in accordance with the terms hereof, which price shall be $5.13
as to the Class A Warrants and $6.85 as to the Class B Warrants,
subject to adjustment from time to time pursuant to the
provisions of Section 9 hereof, and subject to the Company's
right to reduce the Purchase Price upon notice to all Registered
Holders of Warrants.
(i) "Redemption Price" shall mean the price at which
the Company may, at its option in accordance with the terms
hereof, redeem the Class A Warrants and/or Class B Warrants,
which price shall be $0.05 per Warrant.
(j) "Registered Holder" shall mean as to any Warrant
and as of any particular date, the person in whose name the
certificate representing the Warrant shall be registered on that
date on the books maintained by the Warrant Agent pursuant to
Section 6.
(k) "Transfer Agent" shall mean American Stock
Transfer & Trust Company, as the Company's transfer agent, or its
authorized successor, as such.
(l) "Warrant Expiration Date" shall mean 5:00 P.M.
(New York time) on October 11, 2000 or, with respect to Warrants
which are outstanding as of the applicable Redemption Date (as
defined in Section 8) and specifically excluding Warrants
issuable upon exercise of Unit Purchase Options if the Unit
Purchase Options have not been exercised, the Redemption Date,
whichever is earlier; provided that if such date shall in the
State of New York be a holiday or a day on which banks are
authorized or required to close, then 5:00 P.M. (New York time)
on the next following day which in the State of New York is not a
holiday or a day on which banks are authorized or required to
close. Upon notice to all Registered Holders, the Company shall
have the right to extend the Warrant Expiration Date.
SECTION 2. Warrants and Issuance of Warrant
Certificates.
(a) A Class A Warrant initially shall entitle the
Registered Holder of the Warrant Certificate representing such
Warrant to purchase one share of Series A Common Stock and one
Class B Warrant upon the exercise thereof, in accordance with the
terms hereof, subject to modification and adjustment as provided
in Section 9.
(b) A Class B Warrant initially shall entitle the
Registered Holder of the Warrant Certificate representing such
Warrant to purchase one share of Series A Common Stock upon the
exercise thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 9.
(c) The Class A Warrants and Class B Warrants included
in the offering of Units will be detachable and separately
transferable immediately from the shares of Series A Common Stock
constituting part of the IPO Units. The Class B Warrants will
also be detachable and separately transferable immediately from
the shares of Series A Common Stock issued upon exercise of the
Class A Warrants.
(d) Upon execution of this Agreement, Warrant
Certificates representing the number of Class A Warrants and
Class B Warrants sold pursuant to the Agency Agreement shall be
executed by the Company and delivered to the Warrant Agent. Upon
written order of the Company signed by its President or Chairman
or a Vice President and by its Secretary or an Assistant
Secretary, the Warrant Certificates shall be countersigned,
issued and delivered by the Warrant Agent as part of the Units.
(e) From time to time, up to the Warrant Expiration
Date, the Transfer Agent shall countersign and deliver stock
certificates in required whole number denominations representing
up to an aggregate of 13,020,344 shares of Series A Common Stock,
subject to adjustment as described herein, upon the exercise of
Warrants in accordance with this Agreement.
(f) From time to time, up to the Warrant Expiration
Date, the Warrant Agent shall countersign and deliver Warrant
Certificates in required whole number denominations to the
persons entitled thereto in connection with any transfer or
exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued on or after the Initial Warrant
Exercise Date, upon the exercise of fewer than all Warrants
represented by any Warrant Certificate, to evidence any
unexercised Warrants held by the exercising Registered Holder,
(iii) those issued upon any transfer or exchange pursuant to
Section 6; (iv) those issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to
Section 7; (v) those issued pursuant to the Unit Purchase Option;
(vi) at the option of the Company, in such form as may be
approved by the its Board of Directors, to reflect any adjustment
or change in the Purchase Price, the number of shares of Common
Stock purchasable upon exercise of the Warrants or the Target
Price(s) therefor made pursuant to Section 8 hereof; and
(vii) those Class B Warrants issued upon exercise of Class A
Warrants.
(g) Pursuant to the terms of the Unit Purchase Option,
Blair may purchase up to 999,999 IPO Units, which include up to
999,999 Class A Warrants and 1,999,998 Class B Warrants.
Notwithstanding anything to the contrary contained herein, the
Warrants underlying the Unit Purchase Option shall not be subject
to redemption by the Company except under the terms and
conditions set forth in the Unit Purchase Option.
SECTION 3. Form and Execution of Warrant
Certificates.
(a) The Warrant Certificates shall be substantially in
the form annexed hereto as Exhibit A as to the Class A Warrants
and Exhibit B as to the Class B Warrants (the provisions of which
are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may
be required to comply with any law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock
exchange on which the Class A Warrants or Class B Warrants may be
listed, or to conform to usage or to the requirements of
Section 2(d). The Warrant Certificates shall be dated the date
of issuance thereof (whether upon initial issuance, transfer,
exchange or in lieu of mutilated, lost, stolen, or destroyed
Warrant Certificates) and issued in registered form. Warrant
Certificates shall be numbered serially with the letters AW on
Class A Warrants of all denominations and the letters BW on
Class B Warrants of all denominations.
(b) Warrant Certificates shall be executed on behalf
of the Company by its Chairman of the Board, President or any
Vice President and by its Secretary or an Assistant Secretary, by
manual signatures or by facsimile signatures printed thereon, and
shall have imprinted thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be an
officer of the Company or to hold the particular office
referenced in the Warrant Certificate before the date of issuance
of the Warrant Certificates or before countersignature by the
Warrant Agent and issue and delivery thereof, such Warrant
Certificates may nevertheless be countersigned by the Warrant
Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not
ceased to be an officer of the Company or to hold such office.
After countersignature by the Warrant Agent, Warrant Certificates
shall be delivered by the Warrant Agent to the Registered Holder
without further action by the Company, except as otherwise
provided by Section 4(a) hereof.
SECTION 4. Exercise.
(a) Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Exercise Date,
but not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable
Warrant Certificate. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes
as the holder of those securities upon the exercise of the
Warrant as of the close of business on the Exercise Date. As
soon as practicable on or after the Exercise Date, the Warrant
Agent shall deposit the proceeds received from the exercise of a
Warrant and shall notify the Company in writing of the exercise
of the Warrants. Promptly following, and in any event within
five days after the date of such notice from the Warrant Agent,
the Warrant Agent, on behalf of the Company, shall cause to be
issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the same, a certificate or
certificates for the securities deliverable upon such exercise,
(plus a Warrant Certificate for any remaining unexercised
Warrants of the Registered Holder) unless prior to the date of
issuance of such certificates the Company shall instruct the
Warrant Agent to refrain from causing such issuance of
certificates pending clearance of checks received in payment of
the Purchase Price pursuant to such Warrants. Notwithstanding
the foregoing, in the case of payment made in the form of a check
drawn on an account of Blair or such other investment banks and
brokerage houses as the Company shall approve in writing to the
Warrant Agent, certificates shall immediately be issued without
prior notice to the Company or any delay. Upon the exercise of
any Warrant and clearance of the funds received, the Warrant
Agent shall promptly remit the payment received for the Warrant
(the "Warrant Proceeds") to the Company or as the Company may
direct in writing, subject to the provisions of Sections 4(b) and
4(c) hereof.
(b) If, at the Exercise Date in respect of the
exercise of any Warrant, (i) the market price of the Company's
Series A Common Stock is greater than the then Purchase Price of
the Warrant, (ii) the exercise of the Warrant was solicited by a
member of the National Association of Securities Dealers, Inc.
("NASD") as designated in writing on the Warrant Certificate
Subscription Form, (iii) the Warrant was not held in a
discretionary account, (iv) disclosure of compensation
arrangements was made both at the time of the original offering
and at the time of exercise; and (v) the solicitation of the
exercise of the Warrant was not in violation of Rule 10b-6 (as
such rule or any successor rule may be in effect as of such time
of exercise) promulgated under the Securities Exchange Act of
1934, then the Warrant Agent, simultaneously with the
distribution of the Warrant Proceeds to the Company shall, on
behalf of the Company, pay from the Warrant Proceeds, a fee of 5%
(the "Blair Fee") of the Purchase Price to Blair (of which a
portion may be reallowed to the dealer who solicited the
exercise, which may also be Blair or D.H. Blair & Co., Inc.).
In the event the Blair Fee is not received within five days of
the date on which the Company receives Warrant Proceeds, then the
Blair Exercise Fee shall begin accruing interest at an annual
rate of prime plus four (4)%, payable by the Company to the Blair
at the time Blair receives the Blair Fee. Within five days after
exercise the Warrant Agent shall send to Blair a copy of the
reverse side of each Warrant exercised. Blair shall reimburse
the Warrant Agent, upon request, for its reasonable expenses
relating to compliance with this section 4(b). In addition,
Blair and the Company may at any time during business hours,
examine the records of the Warrant Agent, including its ledger of
original Warrant Certificates returned to the Warrant Agent upon
exercise of Warrants. The provisions of this paragraph may not
be modified, amended or deleted without the prior written consent
of Blair.
(c) In order to enforce the provisions of Section 4(b)
above, in the event there is any dispute or question as to the
amount or payment of the Blair Fee, the Warrant Agent is hereby
expressly authorized to withhold payment to the Company of the
Warrant Proceeds unless and until the Company establishes an
escrow account for the purpose of depositing the entire amount of
the Blair Fee, which amount will be deducted from the net Warrant
Proceeds to be paid to the Company. The funds placed in the
escrow account may not be released to the Company without a
written agreement from Blair that the required Blair Fee has been
received by Blair.
SECTION 5. Reservation of Shares; Listing; Payment of
Taxes; etc.
(a) The Company covenants that it will at all times
reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of Warrants, such
number of shares of Series A Common Stock as shall then be
issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Series A Common Stock which
shall be issuable upon exercise of the Warrants shall, at the
time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, (other than those which the Company
shall promptly pay or discharge) and that upon issuance such
shares shall be listed on each national securities exchange, on
which the other shares of outstanding Common Stock of the Company
are then listed or shall be eligible for inclusion in the Nasdaq
National Market or the Nasdaq SmallCap Market if the other shares
of outstanding Common Stock of the Company are so included.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder
require registration with, or approval of, any governmental
authority under any federal securities law before such securities
may be validly issued or delivered upon such exercise, then the
Company will in good faith and as expeditiously as reasonably
possible, endeavor to secure such registration or approval. The
Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities
laws. With respect to any such securities, however, Warrants may
not be exercised by, or shares of Series A Common Stock issued
to, any Registered Holder in any state in which such exercise
would be unlawful.
(c) The Company shall pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed
with respect to the issuance of Warrants, or the issuance or
delivery of any shares or Class B Warrants upon exercise of the
Class A Warrants, or the issuance or delivery of any shares upon
exercise of the Class B Warrants; provided, however, that if the
shares of Series A Common Stock or Class B Warrants, as the case
may be, are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any
Warrant being exercised, then no such delivery shall be made
unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto,
if any.
(d) The Warrant Agent is hereby irrevocably authorized
to requisition the Company's Transfer Agent from time to time for
certificates representing shares of Series A Common Stock
issuable upon exercise of the Warrants, and the Company will
authorize the Transfer Agent to comply with all such proper
requisitions. The Company will file with the Warrant Agent a
statement setting forth the name and address of the Transfer
Agent of the Company for shares of Common Stock issuable upon
exercise of the Warrants.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other
Warrant Certificates representing an equal aggregate number of
Warrants of the same class or may be transferred in whole or in
part. Warrant Certificates to be exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company
shall execute and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the Warrant Certificate or
Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books
in which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and the
transfer thereof in accordance with its regular practice. Upon
due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the
Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented
for registration or transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly endorsed,
or be accompanied by a written instrument or instruments of
transfer and subscription, in form satisfactory to the Company
and the Warrant Agent, duly executed by the Registered Holder or
his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant
Agent for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by
such holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise
or for exchange in case of mutilated Warrant Certificates shall
be promptly cancelled by the Warrant Agent and thereafter
retained by the Warrant Agent until termination of this Agreement
or resignation as Warrant Agent, or, with the prior written
consent of the Underwriter, disposed of or destroyed, at the
direction of the Company.
(f) Prior to due presentment for registration of
transfer thereof, the Company and the Warrant Agent may deem and
treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon
made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary. The Warrants, which are
being offered in the IPO Units with shares of Series A Common
Stock pursuant to the Agreement, will be immediately detachable
from the Series A Common Stock and transferable separately
therefrom.
SECTION 7. Loss or Mutilation. Upon receipt by the
Company and the Warrant Agent of evidence satisfactory to them of
the ownership of and loss, theft, destruction or mutilation of
any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to them, and (in the case
of mutilation) upon surrender and cancellation thereof, the
Company shall execute and the Warrant Agent shall ( in the
absence of notice to the Company and/or Warrant Agent that the
Warrant Certificate has been acquired by a bona fide purchaser)
countersign and deliver to the Registered Holder in lieu thereof
a new Warrant Certificate of like tenor representing an equal
aggregate number of Class A Warrants or Class B Warrants.
Applicants for a substitute Warrant Certificate shall comply with
such other reasonable regulations and pay such other reasonable
charges as the Warrant Agent may prescribe.
SECTION 8. Redemption.
(a) Subject to the provisions of paragraph 2(g)
hereof, on not less than thirty (30) days notice (the "Redemption
Notice"), to Registered Holders of the Warrants, the Warrants may
be redeemed, at the option of the Company, at a redemption price
of $0.05 per Warrant, provided the Market Price of the Common
Stock receivable upon exercise of such Warrants shall exceed
$9.00 with respect to the Class A Warrants and $12.00 with
respect to the Class B Warrants (the "Target Prices"), subject to
adjustment as set forth in Section 8(f), below. Market Price
shall mean (i) the average closing bid price of the Common Stock,
for thirty (30) consecutive business days ending on the
Calculation Date (as hereinafter defined) as reported by Nasdaq,
if the Common Stock is traded on the Nasdaq SmallCap Market, or
(ii) the average last reported sale price of the Common Stock,
for thirty (30) consecutive business days ending on the
Calculation Date, as reported by the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a
national securities exchange, or by Nasdaq, if the Common Stock
is traded on the Nasdaq National Market. All Warrants of a class
must be redeemed if any of that class are redeemed, provided that
the Warrants underlying the Unit Purchase Option may only be
redeemed in compliance with and subject to the terms and
conditions of the Unit Purchase Option. For purposes of this
Section 8, the Calculation Date shall mean a date within 5 days
of the mailing of the Redemption Notice. The date fixed for
redemption of the Warrants is referred to herein as the
"Redemption Date". The Class B Warrant Redemption Date may not
be earlier than thirty-one (31) days after the Class A Warrant
Redemption Date.
(b) If the conditions set forth in Section 8(a) are
met, and the Company desires to exercise its right to redeem the
Warrants, it shall request the Underwriter to mail a Redemption
Notice to each of the Registered Holders of the Warrants to be
redeemed, first class, postage prepaid, not later than the
thirtieth day before the date fixed for redemption, at their last
address as shall appear on the records maintained pursuant to
Section 6(b). Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or
not the Registered Holder receives such notice.
(c) The Redemption Notice shall specify (i) the
redemption price, (ii) the Redemption Date, (iii) the place where
the Warrant Certificates shall be delivered and the redemption
price paid, (iv) that the Underwriter will assist each Registered
Holder of a Warrant in connection with the exercise thereof and
(v) that the right to exercise the Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately
preceding the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the
validity of the proceedings for such redemption except as to a
Registered Holder (a) to whom notice was not mailed or (b) whose
notice was defective. An affidavit of the Warrant Agent or of
the Secretary or an Assistant Secretary of Blair or the Company
that notice of redemption has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately
preceding the Redemption Date. On and after the Redemption Date,
Registered Holders of the Warrants shall have no further rights
except to receive, upon surrender of the Warrant, the Redemption
Price.
(e) From and after the Redemption Date, the Company
shall, at the place specified in the Redemption Notice, upon
presentation and surrender to the Company by or on behalf of the
Registered Holder thereof of one or more Warrant Certificates
evidencing Warrants to be redeemed, deliver or cause to be
delivered to or upon the written order of such Registered Holder
a sum in cash equal to the Redemption Price of each such Warrant.
From and after the Redemption Date and upon the deposit or
setting aside by the Company of a sum sufficient to redeem all
the Warrants called for redemption, such Warrants shall expire
and become void and all rights hereunder and under the Warrant
Certificates, except the right to receive payment of the
Redemption Price, shall cease.
(f) If the shares of the Company's Common Stock are
subdivided or combined into a greater or smaller number of shares
of Common Stock, the Target Prices shall be proportionally
adjusted by the ratio which the total number of shares of Common
Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding
immediately after such event.
SECTION 9. Adjustment of Exercise Price and Number of
Shares of Common Stock or Warrants.
(a) Subject to the exceptions referred to in
Section 9(g) below, in the event the Company shall, at any time
or from time to time after the date hereof, sell any shares of
Common Stock for a consideration per share less than the Market
Price of the Common Stock (as defined in Section 8, except that
for purposes of Section 9, the Calculation Date shall mean the
date of the sale or other transaction referred to in this Section
9) on the date of the sale or issue any shares of Common Stock as
a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or
lesser number of shares (any such sale, issuance, subdivision or
combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price
in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent)
determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional
shares and the number of shares of Common Stock which the
aggregate consideration received (determined as provided in
subsection 9(f)(F) below) for the issuance of such additional
shares would purchase at the Market Price and the denominator of
which shall be the sum of the number of shares of Common Stock
outstanding immediately after the issuance of such additional
shares. Such adjustment shall be made successively whenever such
an issuance is made.
Upon each adjustment of the Purchase Price
pursuant to this Section 9, the total number of shares of Common
Stock purchasable upon the exercise of each Class A Warrant or
the total number of shares of Common Stock purchasable upon
exercise of each Class B Warrant, as applicable, shall (subject
to the provisions contained in Section 9(b) hereof) be such
number of shares (calculated to the nearest one-hundredth;
provided, however, that in no event shall the Class A Aggregate
Per Share Price or the Class B Aggregate Per Share Price as
applicable, increase as a result of such rounding calculation)
purchasable at the Purchase Price in effect immediately prior to
such adjustment multiplied by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the Purchase
Price in effect immediately after such adjustment.
(b) The Company may elect, upon any adjustment of the
Purchase Price hereunder, to adjust the number of Class A
Warrants or Class B Warrants outstanding, in lieu of the
adjustment in the number of shares of Common Stock purchasable
upon the exercise of each Warrant as hereinabove provided, so
that each Class A Warrant outstanding after such adjustment shall
represent the right to purchase one share of Common Stock and one
Class B Warrant, and each Class B Warrant outstanding after such
adjustment shall represent the right to purchase one share of
Common Stock. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become that number of
Warrants (calculated to the nearest tenth) determined by
multiplying the number one by a fraction, the numerator of which
shall be the Purchase Price in effect immediately prior to such
adjustment and the denominator of which shall be the Purchase
Price in effect immediately after such adjustment. Upon each
adjustment of the number of Warrants pursuant to this Section 9,
the Company shall, as promptly as practicable, cause to be
distributed to each Registered Holder of Warrant Certificates on
the date of such adjustment Warrant Certificates evidencing,
subject to Section 10 hereof, the number of additional Warrants
to which such Holder shall be entitled as a result of such
adjustment or, at the option of the Company, cause to be
distributed to such Holder in substitution and replacement for
the Warrant Certificates held by him prior to the date of
adjustment (and upon surrender thereof, if required by the
Company) new Warrant Certificates evidencing the number of
Warrants to which such Holder shall be entitled after such
adjustment.
(c) In case of any reclassification, capital
reorganization or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as, or substantially
as, an entirety (other than a sale/leaseback, mortgage or other
financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then
outstanding shall have the right thereafter, by exercising such
Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon
such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock that might have been purchased
upon exercise of such Warrant immediately prior to such
reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for
in this Section 9. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor (if other than the
Company) resulting from such consolidation or merger or the
corporation purchasing assets or other appropriate corporation or
entity shall assume, by written instrument executed and delivered
to the Warrant Agent, the obligation to deliver to the holder of
each Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations of the Company
under this Agreement. The foregoing provisions shall similarly
apply to successive reclassifications, capital reorganizations
and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock
purchasable upon exercise of the Warrants, the Warrant
Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2(f) hereof, continue to express
the Purchase Price per share, the number of shares purchasable
thereunder and the Redemption Price therefor as the Purchase
Price per share, and the number of shares purchasable and the
Redemption Price therefor were expressed in the Warrant
Certificates when the same were originally issued.
(e) After each adjustment of the Purchase Price
pursuant to this Section 9, the Company will promptly prepare a
certificate signed by the Chairman or President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after such
adjustment and, if the Company shall have elected to adjust the
number of Warrants, the number of Warrants to which the
Registered Holder of each Warrant shall then be entitled, and the
adjustment in Redemption Price resulting therefrom, and (iii) a
statement showing in detail the method of calculation and the
facts upon which such adjustment or readjustment is based,
including a statement of (a) the consideration received or to be
received by the Company for any securities issued or sold or
deemed to have been issued, (b) the number of shares of Common
Stock outstanding or deemed to be outstanding, and (c) the
Purchase Price in effect immediately prior to such issue or sale
and as adjusted and readjusted (if required by Section 9) on
account thereof. The Company will promptly file such certificate
with the Warrant Agent and furnish a copy thereof to be sent by
ordinary first class mail to Blair and to each Registered Holder
of Warrants at his last address as it shall appear on the
registry books of the Warrant Agent. No failure to mail such
notice nor any defect therein or in the mailing thereof shall
affect the validity thereof except as to the holder to whom the
Company failed to mail such notice, or except as to the holder
whose notice was defective. The Company will, upon the written
request at any time of Blair, furnish to Blair a report by
Richard A. Eisner & Company, L.L.P., or other independent public
accountants of recognized national standing (which may be the
regular auditors of the Company) selected by the Company to
verify such computation and setting forth such adjustment or
readjustment and showing in detail the method of calculation and
the facts upon which such adjustment or readjustment is based.
The Company will also keep copies of all such certificates and
reports at its principal office.
(f) For purposes of Section 9(a) and 9(b) hereof, the
following provisions (A) to (G) shall also be applicable:
(A) The number of shares of Common Stock
outstanding at any given time shall include shares of
Common Stock owned or held by or for the account of the
Company and the sale or issuance of such treasury
shares or the distribution of any such treasury shares
shall not be considered a Change of Shares for purposes
of said sections.
(B) No adjustment of the Purchase Price shall
be made unless such adjustment would require an
increase or decrease of at least $.10 in the Purchase
Price; provided that any adjustments which by reason of
this clause (B) are not required to be made shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment(s) so carried forward,
shall require an increase or decrease of at least $.10
in the Purchase Price then in effect hereunder.
(C) In case of (1) the sale by the Company for
cash (or as a component of a unit being sold for cash)
of any rights or warrants to subscribe for or purchase,
or any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common
Stock without the payment of any further consideration
other than cash, if any (such securities convertible,
exercisable or exchangeable into Common Stock being
herein called "Convertible Securities"), or (2) the
issuance by the Company, without the receipt by the
Company of any consideration therefor, of any rights or
warrants to subscribe for or purchase, or any options
for the purchase of, Common Stock or Convertible
Securities, in each case, if (and only if) the
consideration payable to the Company upon the exercise
of such rights, warrants or options shall consist of
cash, whether or not such rights, warrants or options,
or the right to convert or exchange such Convertible
Securities, are immediately exercisable, and the price
per share for which Common Stock is issuable upon the
exercise of such rights, warrants or options or upon
the conversion or exchange of such Convertible
Securities (determined by dividing (x) the minimum
aggregate consideration payable to the Company upon the
exercise of such rights, warrants or options, plus the
consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options,
plus, in the case of such Convertible Securities, the
minimum aggregate amount of additional consideration,
other than such Convertible Securities, payable upon
the conversion or exchange thereof, by (y) the total
maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible
Securities issuable upon the exercise of such rights,
warrants or options) is less than the Market Price of
the Common Stock on the date of the issuance or sale of
such rights, warrants or options, then the total
maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or
upon the conversion or exchange of such Convertible
Securities (as of the date of the issuance or sale of
such rights, warrants or options) shall be deemed to be
outstanding shares of Common Stock for purposes of
Sections 9(a) and 9(b) hereof and shall be deemed to
have been sold for cash in an amount equal to such
price per share.
(D) In case of the sale by the Company for
cash of any Convertible Securities, whether or not the
right of conversion or exchange thereunder is
immediately exercisable, and the price per share for
which Common Stock is issuable upon the conversion or
exchange of such Convertible Securities (determined by
dividing (x) the total amount of consideration received
by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount of
additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or
exchange thereof, by (y) the total maximum number of
shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities) is less than
the Market Price of the Common Stock on the date of the
sale of such Convertible Securities, then the total
maximum number of shares of Common Stock issuable upon
the conversion or exchange of such Convertible
Securities (as of the date of the sale of such
Convertible Securities) shall be deemed to be
outstanding shares of Common Stock for purposes of
Sections 9(a) and 9(b) hereof and shall be deemed to
have been sold for cash in an amount equal to such
price per share.
(E) In case the Company shall modify the
rights of conversion, exchange or exercise of any of
the securities referred to in (C) or (D) above or any
other securities of the Company convertible,
exchangeable or exercisable for shares of Common Stock,
for any reason other than an event that would require
adjustment to prevent dilution, so that the
consideration per share received by the Company after
such modification is less than the Market Price on the
date prior to such modification, the Purchase Price to
be in effect after such modification shall be
determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, of which
the numerator shall be the number of shares of Common
Stock outstanding on the date prior to the modification
plus the number of shares of Common Stock which the
aggregate consideration receivable by the Company for
the securities affected by the modification would
purchase at the Market Price and of which the
denominator shall be the number of shares of Common
Stock outstanding on such date plus the number of
shares of Common Stock to be issued upon conversion,
exchange or exercise of the modified securities at the
modified rate. Such adjustment shall become effective
as of the date upon which such modification shall take
effect. On the expiration of any such right, warrant
or option or the termination of any such right to
convert or exchange any such Convertible Securities
referred to in Paragraph (C) or (D) above, the Purchase
Price then in effect hereunder shall forthwith be
readjusted to such Purchase Price as would have
obtained (a) had the adjustments made upon the issuance
or sale of such rights, warrants, options or
Convertible Securities been made upon the basis of the
issuance of only the number of shares of Common Stock
theretofore actually delivered (and the total
consideration received therefor) upon the exercise of
such rights, warrants or options or upon the conversion
or exchange of such Convertible Securities and (b) had
adjustments been made on the basis of the Purchase
Price as adjusted under clause (a) for all transactions
(which would have affected such adjusted Purchase
Price) made after the issuance or sale of such rights,
warrants, options or Convertible Securities.
(F) In case of the sale for cash of any shares
of Common Stock, any Convertible Securities, any rights
or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or
Convertible Securities, the consideration received by
the Company therefore shall be deemed to be the gross
sales price therefor without deducting therefrom any
expense paid or incurred by the Company or any
underwriting discounts or commissions or concessions
paid or allowed by the Company in connection therewith.
(G) In case any event shall occur as to which
the provisions of Section 9 are not strictly applicable
but the failure to make any adjustment would not fairly
protect the purchase rights represented by the Warrants
in accordance with the essential intent and principles
of Section 9, then, in each such case, the Board of
Directors of the Company shall in good faith by
resolution provide for the adjustment, if any, on a
basis consistent with the essential intent and
principles established in Section 9, necessary to
preserve, without dilution, the purchase rights
represented by the Warrants. The Company will promptly
make the adjustments described therein.
(g) No adjustment to the Purchase Price of the
Warrants or to the number of shares of Common Stock purchasable
upon the exercise of each Warrant will be made, however,
(i) upon the exercise of any of the options
presently outstanding under the Company's stock option
plan for officers, directors and certain other key
personnel of the Company and the Consultants and
Advisors Stock Option Plan (the "Plan"); or
(ii) upon the issuance or exercise of any other
securities which may hereafter be granted or exercised
under the Plans or under any other employee benefit
plan of the Company; or
(iii) upon the sale or exercise of the Warrants,
including without limitation the sale or exercise of
any of the Warrants comprising the Unit Purchase Option
or upon the sale or exercise of the Unit Purchase
Option; or
(iv) upon the sale of any shares of Common
Stock or Convertible Securities in a firm commitment
underwritten public offering, including, without
limitation, shares sold upon the exercise of any
overallotment option granted to the underwriters in
connection with such offering; or
(v) upon the issuance or sale of Common Stock
or Convertible Securities upon the exercise of any
rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or
Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of the
original sale of the Warrants or were thereafter issued
or sold; or
(vi) upon the issuance or sale of Common Stock
upon conversion or exchange of any Convertible
Securities, whether or not any adjustment in the
Purchase Price was made or required to be made upon the
issuance or sale of such Convertible Securities and
whether or not such Convertible Securities were
outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold.
(h) As used in this Section 9, the term "Common Stock"
shall mean and include the Company's Common Stock authorized on
the date of the original issue of the Units and shall also
include any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon
the voluntary liquidation, dissolution or winding up of the
Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such class
designated in the Company's Certificate of Incorporation as
Common Stock on the date of the original issue of the Units or
(i), in the case of any reclassification, change, consolidation,
merger, sale or conveyance of the character referred to in
Section 9(c) hereof, the stock, securities or property provided
for in such section or (ii), in the case of any reclassification
or change in the outstanding shares of Common Stock issuable upon
exercise of the Warrants as a result of a subdivision or
combination or consisting of a change in par value, or from par
value to no par value, or from no par value to par value, such
shares of Common Stock as so reclassified or changed.
(i) Any determination as to whether an adjustment in
the Purchase Price in effect hereunder is required pursuant to
Section 9, or as to the amount of any such adjustment, if
required, shall be binding upon the holders of the Warrants and
the Company if made in good faith by the Board of Directors of
the Company.
(j) If and whenever the Company shall grant to the
holders of Common Stock, as such, rights or warrants to subscribe
for or to purchase, or any options for the purchase of, Common
Stock or securities convertible into or exchangeable for or
carrying a right, warrant or option to purchase Common Stock, the
Company shall concurrently therewith grant to each Registered
Holder as of the record date for such transaction of the Warrants
then outstanding, the rights, warrants or options to which each
Registered Holder would have been entitled if, on the record date
used to determine the stockholders entitled to the rights,
warrants or options being granted by the Company, the Registered
Holder were the holder of record of the number of whole shares of
Common Stock then issuable upon exercise (assuming, for purposes
of this Section 9(j), that exercise of Warrants is permissible
during periods prior to the Initial Warrant Exercise Date) of his
Warrants. Such grant by the Company to the holders of the
Warrants shall be in lieu of any adjustment which otherwise might
be called for pursuant to this Section 9.
SECTION 10. Registration Under The Securities Act of
1933. The Company agrees to register for resale the Warrants and
the shares of Series A Common Stock issued or issuable upon
exercise of the Warrants under the Securities Act of 1933, as
amended (the "Act") no later than March 14, 1997, as more fully
set forth in Section IV of the Subscription Agreement between the
Company and each of the investors in the Private Placement,
subject to certain contractual restrictions applicable to the
Holder.
SECTION 11. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Series A Common Stock
purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 9 hereof, the Company nevertheless shall not
be required to issue fractions of shares, upon exercise of the
Warrants or otherwise, or to distribute certificates that
evidence fractional shares. With respect to any fraction of a
share called for upon the exercise of any Warrant, the Company
shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of such fractional share,
determined as follows:
(1) If the Series A Common Stock is listed on
a national securities exchange or admitted to unlisted
trading privileges on such exchange or is traded on the
Nasdaq National Market, the current market value shall
be the last reported sale price of the Common Stock on
such exchange or market on the last business day prior
to the date of exercise of this Warrant or if no such
sale is made on such day, the average of the closing
bid and asked prices for such day on such exchange or
market; or
(2) If the Series A Common Stock is not listed
or admitted to unlisted trading privileges on a
national securities exchange or is not traded on the
Nasdaq National Market, the current market value shall
be the mean of the last reported bid and asked prices
reported by the Nasdaq SmallCap Market or, if not
traded thereon, by the National Quotation Bureau, Inc.
on the last business day prior to the date of the
exercise of this Warrant; or
(3) If the Series A Common Stock is not so
listed or admitted to unlisted trading privileges and
bid and asked prices are not so reported, the current
market value shall be an amount determined in such
reasonable manner as may be prescribed by the Board of
Directors of the Company.
SECTION 12. Warrant Holders Not Deemed Stockholders.
No holder of Warrants shall, as such, be entitled to vote or to
receive dividends or be deemed the holder of Series A Common
Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained
herein be construed to confer upon the holder of Warrants, as
such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation,
merger or conveyance or otherwise), or to receive notice of
meetings, or to receive dividends or subscription rights, until
such holder shall have exercised such Warrants and been issued
shares of Series A Common Stock in accordance with the provisions
hereof.
SECTION 13. Rights of Action. All rights of action
with respect to this Agreement are vested in the respective
Registered Holders of the Warrants, and any Registered Holder of
a Warrant, without consent of the Warrant Agent or of the holder
of any other Warrant, may, in his own behalf and for his own
benefit, enforce against the Company his right to exercise his
Warrants for the purchase of shares of Series A Common Stock in
the manner provided in the Warrant Certificate and this
Agreement.
SECTION 14. Agreement of Warrant Holders. Every
holder of a Warrant, by his acceptance thereof, consents and
agrees with the Company, the Warrant Agent and every other holder
of a Warrant that:
(a) The Warrants are transferable only on the registry
books of the Warrant Agent by the Registered Holder thereof in
person or by his attorney duly authorized in writing and only if
the Warrant Certificates representing such Warrants are
surrendered at the office of the Warrant Agent, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to
the Warrant Agent and the Company in their sole discretion,
together with payment of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and
treat the person in whose name the Warrant Certificate is
registered as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes, and
neither the Company nor the Warrant Agent shall be affected by
any notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 hereof.
SECTION 15. Cancellation of Warrant Certificates. If
the Company shall purchase or acquire any Warrant or Warrants,
the Warrant Certificate or Warrant Certificates evidencing the
same shall thereupon be delivered to the Warrant Agent and
cancelled by it and retired. The Warrant Agent shall also cancel
the Warrant Certificate or Warrant Certificates following
exercise of any or all of the Warrants represented thereby or
delivered to it for transfer or exchange.
SECTION 16. Concerning the Warrant Agent. The Warrant
Agent acts hereunder as agent and in a ministerial capacity for
the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property
delivered upon exercise of any Warrant or whether any stock
issued upon exercise of any Warrant is fully paid and
nonassessable.
The Warrant Agent shall not at any time be under
any duty or responsibility to any holder of Warrant Certificates
to make or cause to be made any adjustment of the Purchase Price
or the Redemption Price provided in this Agreement, or to
determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in
making the same. It shall not (i) be liable for any recital or
statement of facts contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate
or other document or instrument believed by it in good faith to
be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part
of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant
Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
wilful misconduct.
The Warrant Agent may at any time consult with
counsel satisfactory to it (who may be counsel for the Company)
and shall incur no liability or responsibility for any action
taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Any notice, statement, instruction, request,
direction, order or demand of the Company shall be sufficiently
evidenced by an instrument signed by the Chairman of the Board,
President, any Vice President, its Secretary, or Assistant
Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance
with such notice, statement, instruction, request, direction,
order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder and to
reimburse it for its reasonable expenses hereunder; it further
agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted
by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or wilful misconduct.
The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's
own negligence or wilful misconduct), after giving 30 days' prior
written notice to the Company. At least 15 days prior to the
date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to
the Registered Holder of each Warrant Certificate at the
Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. If the Company shall
fail to make such appointment within a period of 15 days after it
has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by
its last published report to its stockholders, of not less than
$10,000,000 or a stock transfer company that is a registered
transfer agent under the Securities Exchange Act of 1934. After
acceptance in writing of such appointment by the new warrant
agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if
for any reason it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment
the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or
any new warrant agent may be converted or merged or any
corporation resulting from any consolidation to which the Warrant
Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the
provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed to the Company and to the Registered
Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and
affiliates, and any of its or their officers or directors, may
buy and hold or sell Warrants or other securities of the Company
and otherwise deal with the Company in the same manner and to the
same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other
legal entity.
SECTION 17. Modification of Agreement. Subject to the
provisions of Section 4(b), the parties hereto and the Company
may by supplemental agreement make any changes or corrections in
this Agreement (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision
or manifest mistake or error herein contained; (ii) to reflect an
increase in the number of Class A or Class B Warrants which are
to be governed by this Agreement resulting from (a) a subsequent
public offering of Company securities which includes Class A or
Class B Warrants or (b) a subsequent private placement of Company
securities which includes Class A or Class B Warrants, in either
case having the same terms and conditions as the Class A or Class
B Warrants, respectively, originally covered by or subsequently
added to this Agreement under this Section 17, provided, however,
that in the case of a private placement, the amendment to this
Agreement will be effective only at such time as the resale of
such Warrants, as well as the securities underlying such Warrants
is covered by an effective registration statement under the Act;
or (iii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 50% of
the Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon
the exercise of any Warrant, or the Purchase Price therefor, or
the acceleration of the Warrant Expiration Date, shall be made
without the consent in writing of the Registered Holder of the
Warrant Certificate representing such Warrant, other than such
changes as are specifically prescribed by this Agreement as
originally executed or are made in compliance with applicable
law.
SECTION 18. Notices. All notices, requests, consents
and other communications hereunder shall be in writing and shall
be deemed to have been made when delivered or mailed first class
registered or certified mail, postage prepaid as follows: if to
the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the
Warrant Agent; if to the Company, at 220 East 42nd Street, New
York, New York 10017, Attention: Robert H. Lenz, or at such other
address as may have been furnished to the Warrant Agent in
writing by the Company; if to the Warrant Agent, at its Corporate
Office; if to Blair, at D.H. Blair Investment Banking Corp., 44
Wall Street, New York, New York 10005.
SECTION 19. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without reference to principles of conflict of
laws.
SECTION 20. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Company and, the
Warrant Agent and their respective successors and assigns, and
the holders from time to time of Warrant Certificates . Nothing
in this Agreement is intended or shall be construed to confer
upon any other person any right, remedy or claim, in equity or at
law, or to impose upon any other person any duty, liability or
obligation.
SECTION 21. Termination. This Agreement shall
terminate at the close of business on the earlier of the Warrant
Expiration Date or the date upon which all Warrants (including
the warrants issuable upon exercise of the Unit Purchase Option)
have been exercised, except that the Warrant Agent shall account
to the Company for cash held by it and the provisions of
Section 16 hereof shall survive such termination.
SECTION 22. Counterparts. This Agreement may be
executed in several counterparts, which taken together shall
constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
FOOD COURT ENTERTAINMENT NETWORK, INC.
By: ______________________________
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: ______________________________
Authorized Officer
D.H. BLAIR INVESTMENT BANKING CORP.
By: ______________________________
Authorized Officer
<PAGE>
EXHIBIT A
[FORM OF FACE OF CLASS A WARRANT CERTIFICATE]
No. AW Class A Warrants
VOID AFTER OCTOBER 11, 2000
CLASS A WARRANT CERTIFICATE FOR PURCHASE
OF SERIES A COMMON STOCK AND REDEEMABLE CLASS B WARRANTS
FOOD COURT ENTERTAINMENT NETWORK, INC.
This certifies that FOR VALUE RECEIVED
__________________ or registered assigns (the "Registered
Holder") is the owner of the number of Class A Warrants ("Class A
Warrants") specified above. Each Class A Warrant represented
hereby initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Warrant
Certificate and the Warrant Agreement (as hereinafter defined),
one fully paid and nonassessable share of Series A Common Stock,
$.01 value ("Common Stock"), of ) Food Court Entertainment
Network, Inc., a Delaware corporation (the "Company"), and one
Class B Warrant of the Company at any time between November 14,
1996, and the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the
Subscription Form on the reverse hereof duly executed, at the
corporate office of American Stock Transfer & Trust Company as
Warrant Agent, or its successor (the "Warrant Agent"),
accompanied by payment of $5.13 (the "Purchase Price") in lawful
money of the United States of America in cash or by official bank
or certified check made payable to Food Court Entertainment
Network, Inc.
This Warrant Certificate and each Class A Warrant
represented hereby are issued pursuant to and are subject in all
respects to the terms and conditions set forth in either the
Warrant Agreement dated October 11, 1995 or the Warrant Agreement
dated November 14, 1996, (together, the "Warrant Agreement"), in
each case by and among the Company, the Warrant Agent and D.H.
Blair Investment Banking Corp.
In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price or the number of shares
of Common Stock and Class B Warrants subject to purchase upon the
exercise of each Class A Warrant represented hereby are subject
to modification or adjustment.
Each Class A Warrant represented hereby is exercisable
at the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise of
less than all the Class A Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Class A Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New
York time) on October 11, 2000, or such earlier date as the
Class A Warrants shall be redeemed. If such date shall in the
State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any
securities pursuant to the exercise of the Class A Warrants
represented hereby unless a registration statement under the
Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed
that it will file a registration statement and will use its best
efforts to cause the same to become effective and to keep such
registration statement current while any of the Class A Warrants
are outstanding. The Class A Warrants represented hereby shall
not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office
of the Warrant Agent, for a new Warrant Certificate or Warrant
Certificates of like tenor representing an equal aggregate number
of Class A Warrants, each of such new Warrant Certificates to
represent such number of Class A Warrants as shall be designated
by such Registered Holder at the time of such surrender. Upon
due presentment with any applicable transfer fee per certificate
in addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Class A Warrant Certificate at such office, a new Warrant
Certificate or Warrant Certificates representing an equal
aggregate number of Class A Warrants will be issued to the
transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Class A Warrant
represented hereby, the Registered Holder shall not be entitled
to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided in the Warrant
Agreement.
The Class A Warrants represented hereby may be redeemed
at the option of the Company, at a redemption price of $.05 per
Class A Warrant, provided the Market Price (as defined in the
Warrant Agreement) for the Common Stock shall exceed $9.00 per
share. Notice of redemption shall be given not later than the
thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed
for redemption, the Registered Holder shall have no rights with
respect to the Class A Warrants represented hereby except to
receive the $.05 per Class A Warrant upon surrender of this
Warrant Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat the
Registered Holder as the absolute owner hereof and of each
Class A Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the
Purchase Price upon certain conditions as specified in the
Warrant Agreement upon the exercise of the Class A Warrants
represented hereby.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
Dated: By: ______________________________
By: ______________________________
[seal]
Countersigned:
_________________________________
as Warrant Agent
By ___________________________
Authorized Officer
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $_______ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably
elects to exercise _______ Class A Warrants represented by this
Warrant Certificate, and to purchase the securities issuable upon
the exercise of such Class A Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and be delivered to
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and if such number of Class A Warrants shall not be all the
Class A Warrants evidenced by this Warrant Certificate, that a
new Class A Warrant Certificate for the balance of such Class A
Warrants be registered in the name of, and delivered to, the
Registered Holder at the address stated below.
The undersigned represents that the exercise of the
Class A Warrants evidenced hereby was solicited by a member of
the National Association of Securities Dealers, Inc. If not
solicited by an NASD member, please write "unsolicited" in the
space below. Unless otherwise indicated by listing the name of
another NASD member firm, it will be assumed that the exercise
was solicited by D.H. Blair Investment Banking Corp. or D.H.
Blair & Co., Inc.
______________________________
(Name of NASD Member)
Dated: X ______________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
to transfer this Warrant Certificate on the books
of the Company, with full power of substitution in the premises.
Dated:________________ X ______________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
<PAGE>
EXHIBIT B
[FORM OF FACE OF CLASS B WARRANT CERTIFICATE]
No. BW __ Class B Warrants
VOID AFTER OCTOBER 11, 2000
CLASS B WARRANT CERTIFICATE FOR
PURCHASE OF SERIES A COMMON STOCK
FOOD COURT ENTERTAINMENT NETWORK, INC.
This certifies that FOR VALUE RECEIVED
or registered assigns (the "Registered
Holder") is the owner of the number of Class B Warrants specified
above. Each Class B Warrant represented hereby initially
entitles the Registered Holder to purchase, subject to the terms
and conditions set forth in this Warrant Certificate and the
Warrant Agreement (as hereinafter defined), one fully paid and
nonassessable share of Series A Common Stock, $.01 par value
("Common Stock"), of Food Court Entertainment Network, Inc., a
Delaware corporation (the "Company"), at any time between
November 14, 1996, and the Expiration Date (as hereinafter
defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly
executed, at the corporate office of American Stock Transfer &
Trust Company as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $6.85 (the "Purchase Price")
in lawful money of the United States of America in cash or by
official bank or certified check made payable to Food Court
Entertainment Network, Inc.
This Warrant Certificate and each Class B Warrant
represented hereby are issued pursuant to and are subject in all
respects to the terms and conditions set forth in either the
Warrant Agreement dated October 11, 1995 or the Warrant Agreement
dated November 14, 1996, (together, the "Warrant Agreement"), in
each case by and among the Company, the Warrant Agent and D.H.
Blair Investment Banking Corp.
In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Class B Warrant represented hereby are subject to modification or
adjustment.
Each Class B Warrant represented hereby is exercisable
at the option of the Registered Holder, but no fractional shares
of Common Stock will be issued. In the case of the exercise of
less than all the Class B Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or
Warrant Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Class B Warrants.
The term "Expiration Date" shall mean 5:00 P.M.
(New York time) on October 11, 2000 or such earlier date as the
Class B Warrants shall be redeemed. If such date shall in the
State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00
P.M. (New York time) the next following day which in the State
of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any
securities pursuant to the exercise of the Class B Warrants
represented hereby unless a registration statement under the
Securities Act of 1933, as amended, with respect to such
securities is effective. The Company has covenanted and agreed
that it will file a registration statement and will use its best
efforts to cause the same to become effective and to keep such
registration statement current while any of the Class B Warrants
are outstanding. The Class B Warrants represented hereby shall
not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office
of the Warrant Agent, for a new Warrant Certificate or Warrant
Certificates of like tenor representing an equal aggregate number
of Class B Warrants, each of such new Warrant Certificates to
represent such number of Class B Warrants as shall be designated
by such Registered Holder at the time of such surrender. Upon
due presentment with any applicable transfer fee per certificate
in addition to any tax or other governmental charge imposed in
connection therewith, for registration of transfer of this
Warrant Certificate at such office, a new Warrant Certificate or
Warrant Certificates representing an equal aggregate number of
Class B Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant
Agreement.
Prior to the exercise of any Class B Warrant
represented hereby, the Registered Holder shall not be entitled
to any rights of a stockholder of the Company, including, without
limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of
any proceedings of the Company, except as provided in the Warrant
Agreement.
The Class B Warrants represented hereby may be redeemed
at the option of the Company, at a redemption price of $.05 per
Class B Warrant, provided the Market Price (as defined in the
Warrant Agreement) for the Common Stock shall exceed $12.00 per
share. Notice of redemption shall be given not later than the
thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed
for redemption, the Registered Holder shall have no rights with
respect to the Class B Warrants represented hereby except to
receive the $.05 per Class B Warrant upon surrender of this
Warrant Certificate.
Prior to due presentment for registration of transfer
hereof, the Company and the Warrant Agent may deem and treat the
Registered Holder as the absolute owner hereof and of each
Class B Warrant represented hereby (notwithstanding any notations
of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 5% of the
Purchase Price upon certain conditions as specified in the
Warrant Agreement upon the exercise of the Class B Warrants
represented hereby.
This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
Dated: _________________ By: _____________________________
By: _____________________________
[seal]
Countersigned:
____________________________________
_____________________, as Warrant Agent
By: ______________________________
Authorized Officer
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably
elects to exercise Class B Warrants represented by
this Warrant Certificate, and to purchase the securities issuable
upon the exercise of such Class B Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and be delivered to
__________________________________
__________________________________
__________________________________
__________________________________
[please print or type name and address]
and if such number of Class B Warrants shall not be all the
Class B Warrants evidenced by this Warrant Certificate, that a
new Warrant Certificate for the balance of such Class B Warrants
be registered in the name of, and delivered to, the Registered
Holder at the address stated below.
The undersigned represents that the exercise of the
Class B Warrants evidenced hereby was solicited by a member of
the National Association of Securities Dealers, Inc. If not
solicited by an NASD member, please write "unsolicited" in the
space below. Unless otherwise indicated by listing the name of
another NASD member firm, it will be assumed that the exercise
was solicited by D.H. Blair Investment Banking Corp.
_________________________________
(Name of NASD Member)
Dated: X ______________________________
___________________________________
___________________________________
Address
___________________________________
Taxpayer Identification Number
___________________________________
Signature Guaranteed
___________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, hereby
sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF TRANSFEREE
__________________________________
__________________________________
__________________________________
__________________________________
[please print or type name and address]
of the Class B Warrants represented by
this Warrant Certificate, and hereby irrevocably constitutes and
appoints
Attorney to transfer
this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Dated: X _____________________________
Signature Guaranteed
______________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGE-
MENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A MEMBER
OF THE MEDALLION STAMP PROGRAM.
EXHIBIT 4.3
WARRANT AGREEMENT
AGREEMENT, dated as of this _______ day of
_______________, 1996, by and among FOOD COURT ENTERTAINMENT
NETWORK, INC., a Delaware corporation ("Company"), American Stock
Transfer & Trust Company, as Warrant Agent (the "Warrant Agent"),
and FURMAN SELZ LLC, a New York Limited Liability Company
("Furman Selz").
W I T N E S S E T H
WHEREAS, in connection with the engagement of Furman
Selz to provide financial advisory services to the Company, the
Company has agreed to grant Furman Selz 402,328 Warrants; and
WHEREAS, each Warrant initially entitles Furman Selz to
purchase one (1) share of Series A Common Stock;
WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing to so
act, in connection with the issuance, registration, exchange and
redemption of the Warrants, the issuance of certificates
representing the Warrants, the exercise of the Warrants, and the
rights of Furman Selz.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements hereinafter set forth and for the purpose
of defining the terms and provisions of the Warrants and the
certificates representing the Warrants and the respective rights
and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the
parties hereto agree as follows:
Section 1. Definitions. As used herein, the following
terms have the following meanings, unless the context shall
otherwise require:
(a) "Additional Warrants" shall mean additional
warrants issued to Furman Selz in addition to the 402, 328
Warrants initially issued resulting from the anti-dilution
provisions described in Section 9.
(b) "Common Stock" shall mean stock of the
Company of any class, whether now or hereafter authorized, which
has the right to participate in the distribution of earnings and
assets of the Company without limit as to amount or percentage,
which at the date hereof consists of 200,000,000 shares of
Series A Common Stock, $.01 par value and 1,250,000 shares of
Series B Common Stock, $.01 par value.
(c) "Corporate Office" shall mean the office of
the Warrant Agent (or successor) at which at any particular time
its principal business shall be administered, which office is
located at the date hereof at 40 Wall Street, New York, New York
10005.
(d) "Exercise Date" shall mean as to any Warrant
or Additional Warrant, the date on which the Warrant Agent shall
have received both (a) the Warrant Certificate representing such
Warrant with the exercise form thereon duly executed by Furman
Selz or its attorney duly authorized in writing, and (b) payment
in cash or by official bank or certified check made payable to
the Company, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price or shares of
Series A Common Stock equal to the applicable Purchase Price as
provided in Section 4(b).
(e) "Initial Warrant Exercise Date" shall mean as
to each Warrant December 17, 1997 and as to each Additional
Warrant, one year following the date of grant.
(f) "Purchase Price" shall mean the purchase
price to be paid upon exercise of each Warrant or Additional
Warrant in accordance with the terms hereof which price shall be
$2.00 for the Warrants initially issued, subject to adjustment
from time to time pursuant to the provisions of Section 10 hereof
and subject to the Company's right to reduce the Purchase Price
upon notice to all Registered Holders of Warrants, or for
Additional Warrants issued as a result of anti-dilution
provisions in Section 9 hereof, the purchase price of which shall
be the exercise price of the Class A or Class B Warrants which
were exercised and which triggered the right to issuance of
Additional Warrants.
(g) "Redemption Price" shall mean the price at
which the Company may, at its option in accordance with the terms
hereof, redeem the Warrants or Additional Warrants, which price
shall be $0.05 per Warrant.
(h) "Transfer Agent" shall mean American Stock
Transfer & Trust Company, as the Company's transfer agent, or its
authorized successor, as such,
(i) "Warrant Expiration Date" shall mean the
earlier of 5:00 P.M. (New York time) on October 11, 2001 or, the
Redemption Date with respect to Warrants or Additional Warrants
which are outstanding as of the applicable Redemption Date (as
defined in Section 8), the Redemption Date; provided that if such
date shall in the State of New York be a holiday or a day on
which banks are authorized or required to close, then 5:00 P.M.
(New York time) on the next following day which in the State of
New York is not a holiday or a day on which banks are authorized
or required to close, upon notice to Furman Selz, the Company
shall have the right to extend the Warrant Expiration Date.
Section 2. Warrants and Issuance of Warrant
Certificates.
(a) A Warrant initially shall entitle Furman Selz
to purchase one share of Series A Common Stock upon the exercise
thereof, in accordance with the terms hereof, subject to
modification and adjustment as provided in Sections 9 and 10.
(b) Upon execution of this Agreement, Warrant
Certificates representing the number of Warrants granted pursuant
to the letter engagement agreement dated December 17, 1996 shall
be executed by the Company and delivered to the Warrant Agent.
Upon written order of the Company signed by its President or
Chairman or a Vice President and by its Secretary or an Assistant
the Warrant Certificates shall be countersigned, issued and
delivered by the Warrant Agent.
(c) From time to time, up to the Warrant
Expiration Date, the Warrant Agent shall countersign and deliver
stock certificates in required whole number denominations
representing up to in aggregate of 402,328 shares of Series A
Common Stock, subject to adjustment and issuance of Additional
Warrants as described herein, upon the exercise of Warrants in
accordance with this Agreement.
(d) From time to time, up to the Warrant
Expiration Date, the Warrant Agent shall countersign and deliver
Warrant Certificates in required whole number denominations to
the persons entitled thereto in connection with any exchange
permitted under this Agreement; provided the no Warrant
Certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued upon any exchange pursuant to
Section 6; (iii) those issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to
Section 7; (iv) at the option of the Company, in such form as may
be approved by the its Board of Directors, to reflect any
adjustment or change in the Purchase Price, the number of shares
of Common Stock purchasable upon exercise of the Warrants or the
Target Price(s) therefor made pursuant to Section 8 hereof and
(v) Additional Warrants issued upon the exercise of Class A or
Class B Warrants pursuant to Section 9.
Section 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificate shall be
substantially in the form annexed hereto as Exhibit A (the
provisions of which are hereby incorporated herein) and may have
such letters, numbers or other marks of identification or
designation and such legends, or endorsements printed,
lithographed or engraved thereon as the Company may deem
appropriate and is are not inconsistent the provisions of this
Agreement or as may be required to comply with any law or with
any rule or regulation made pursuant thereto. The Warrant
Certificates shall be dated the date of issuance thereof (whether
upon initial issuances transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates) and
issued in registered form. Warrant Certificates shall be
numbered serially with the letters FS on all Warrants or
Additional Warrants of all denominations.
(b) Warrant Certificates shall be executed on
behalf of the Company by its Chairman of the Board, President or
any Vice President and by its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of
the Company's seal. Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Warrant Certificates
shall cease to be an officer of the Company or to hold the
particular office referenced in the Warrant Certificate before
the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery
thereof, such Warrant Certificates may nevertheless be
countersigned by the Warrant Agent, issued and delivered with the
force and effect as though the person who signed such Warrant
Certificates had not ceased to be an officer of the Company or to
hold such office. After countersignature by the Warrant Agent,
Warrant Certificates shall be delivered by the Warrant Agent to
Furman Selz without further action by the Company, except as
otherwise provided by Section 4(a) hereof.
Section 4. Exercise.
(a) Each Warrant or Additional Warrant may be
exercised by Furman Selz at any time on or after the Initial
Exercise Date, but not after the Warrant Expiration Date, upon
the terms and subject to the conditions set forth herein and in
the applicable Warrant Certificate. A Warrant or Additional
Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date and the person
entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder of those
securities upon the exercise of the Warrant as of the close of
business on the Exercise Date. As soon as practicable on or
after the Exercise Date, the Warrant Agent shall deposit the
process received from the exercise of a Warrant or Additional
Warrant and shall notify the Company in any of the exercise
thereof. Promptly following, and in any event within five days
after the date of such notice from the Warrant Agent, the Warrant
Agent, on behalf of the Company, shall cause to be issued and
delivered by the Transfer Agent, to the person or persons
entitled to receive the same, a certificate or certificates for
the securities deliverable upon such exercise, (plus a Warrant
Certificate for any remaining unexercised Warrants or Additional
Warrants of Furman Selz) unless prior to the date of issuance of
such certificates the Company shall instruct the Warrant Agent to
refrain from causing such issuance of certificates pending
clearance of checks received in payment of the Purchase Price
pursuant to such Warrant or Additional Warrants.
(b) Upon the exercise of any Warrant or
Additional Warrants and clearance of the funds received the
Warrant Agent shall promptly remit the payment received for the
Warrant (the "Warrant Proceeds") to the Company or as the Company
may direct in writing. Furman Selz may remit payment in cash or
by delivery to the Company of shares of Series A Common Stock
with a fair market value equal to the aggregate Purchase Price
with respect to the Warrants or Additional Warrants exercised.
For the purposes of this Section, fair market value shall mean
the closing bid price of the Series A Common Stock as reported on
the NASDAQ SmallCap Market or such other stock market on which
the Series A Common Stock is trading on the trading day
immediately prior to the Exercise Date.
Section 5. Reservation of Shares; Listing; Payment of
Taxes, etc.
(a) The Company covenants that it will at all
times reserve and keep available out of its authorized Common
Stock, solely for the purpose of issue upon exercise of Warrants
or Additional Warrants, such number of shares of Series A Common
Stock as shall then be issuable upon the exercise of all
outstanding Warrants and Additional Warrants. The Company
covenants that all shares of Series A Common Stock which shall be
issuable upon exercise of the Warrants or Additional Warrants
shall, at the time of delivery, be duly and validly issued, fully
paid, nonassessable and free from all taxes, liens and charges
with respect to the issue thereof, (other than those which the
Company shall promptly pay or discharge,) and that upon issuance
such shares shall be listed on each national securities exchange,
on which the other share of outstanding Common Stock of The
Company are then listed or shall be eligible for inclusion in the
NASDAQ National Market or the Nasdaq SmallCap Market if the other
shares of outstanding Common Stock of the Company are so
included.
(b) The Company covenants that if any securities
to be reserved for the purpose of exercise of Warrants or
Additional Warrants hereunder require registration with, or
approval of any governmental authority under any federal
securities law before such securities may be validly issued or
delivered upon such exercise then the Company will in good faith
and as expeditiously as reasonably possible, endeavor to secure
such registration or approval. The Company will use reasonable
efforts to obtain appropriate approvals or registrations under
state "blue sky" securities laws. With respect to any such
securities, however, Warrants may not be exercised by, or shares
of Series A Common Stock issued to Furman Selz in any state in
which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp
or similar taxes and other governmental charges that may be
imposed with respect to the issuance of Warrants or Additional
Warrants, or the issuance or delivery of any shares; provided,
however, that if the shares of Series A Common Stock are to be
delivered in a name other than Furman Selz, then no such delivery
shall be made unless the person requesting the same has paid to
the Warrant Agent the amount of transfer taxes or charges
incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably
authorized to requisition Company's Transfer Agent from time to
time for certificates representing shares of Series A Common
Stock issuable upon exercise of the Warrants or Additional
Warrants, and the Company will authorize the Transfer Agent to
comply with all such proper requisitions. The Company will file
with the Warrant Agent a statement setting forth the name and
address of the Transfer Agent of the Company for shares of Common
Stock issuable upon exercise of the Warrants or Additional
Warrants.
Section 6. Exchange and Registration: Restriction on
Transfer.
(a) Warrant Certificates may be exchanged for
other Warrant Certificates representing an equal aggregate number
of Warrants of the same class. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its
Corporate Office, and upon satisfaction of the term and
provisions hereof the Company, shall execute and the Warrant
Agent shall countersign, issue and deliver in exchange therefor
the Warrant Certificate or Certificates which Furman Selz shall
be entitled to receive.
(b) The Warrant Agent shall keep at its office
books in which, subject to such reasonable regulation as it may
prescribe, it shall register Warrant Certificates in accordance
with its regular practice.
(c) With respect to all Warrant Certificates
proposed for registration or for exercise, the subscription form
on the reverse thereof shall be duly endorsed or be accompanied
by a written instrument or instruments of transfer and
subscription, in forms satisfactory to the Company and the
Warrant Agent, duly executed by an authorized representative of
Furman Selz or its attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the
Warrant Agent for any exchange of Warrant Certificate. In
addition, the Company may require payment by such holder of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in connection therewith.
(e) All Warrant Certificates surrendered for
exercise or for exchange in case of mutilated Warrant
Certificates shall be promptly cancelled by the Warrant Agent and
thereafter retained by the Warrant Agent until termination of
this Agreement or resignation as Warrant Agent, or disposed of or
destroyed, at the direction of the Company.
(f) The Warrants and Additional Warrants issued
to Furman Selz hereunder may not be sold, assigned, conveyed or
otherwise transferred. In the event Furman Selz sells, assigns,
conveys or otherwise transfers the Warrants or Additional
Warrants which are subject to this Agreement, the Warrants and
Additional Warrants shall be automatically cancelled and
terminated and of no further effect. Upon receipt by the Warrant
Agent of a Warrant Certificate to sell, assign, convey or
otherwise transfer Warrants or Additional Warrants, the Warrant
Agent shall mark the Warrant Certificate cancelled and void and
forthwith inform the Company thereof.
Section 7. Loss or Mutilation. Upon receipt by the
Company and the Warrant Agent of evidence satisfactory to them of
the ownership of and loss, theft, destruction or mutilation of
any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to them and (in the case
of mutilation) upon surrender and cancellation thereof, the
Company shall execute and the Warrant Agent shall countersign and
deliver to Furman Selz in lieu thereof a new Warrant Certificate
of like tenor representing an equal aggregate number of Warrants
or Additional Warrants. Applicants for a substitute Warrant
Certificate shall comply with such other reasonable regulations
and pay such other reasonable charges as the Warrant Agent may
prescribe.
Section 8. Redemption.
(a) On not less than thirty (30) days notice (the
"Redemption Notice"), to Furman Selz, the Warrants and Additional
Warrants may be redeemed, at the option of the Company, at a
redemption price of $0.05 per Warrant, provided the Market Price
of the Common Stock receivable upon exercise of such Warrants or
Additional Warrants shall exceed $9.00 (the "Target Price"),
subject to adjustment as set forth in Section 8(f), below.
Market Price shall mean (i) the average closing bid price of the
Common Stock, for thirty (30) consecutive days ending on the
Calculation Date (as hereinafter defined) as reported by Nasdaq,
if the Common Stock is traded on the Nasdaq SmallCap Market, or
(ii) the average last reported sale price of the Common Stock,
for thirty (30) consecutive business days ending on the
Calculation Date, as reported by the primary exchange on which
the Common Stock is traded, if the Common Stock is traded on a
national securities exchange, or by Nasdaq, if the Common Stock
is traded on the Nasdaq National Market. All Warrants and
Additional Warrants must be redeemed if any are redeemed. For
purposes of this Section 8, the Calculation Date shall mean a
date within 5 days of the mailing of the Redemption Notice. The
date fixed for redemption of the Warrants and Additional Warrants
is referred to herein as the "Redemption Date."
(b) If the conditions set forth in Section 8(a)
are met, and the Company desires to exercise its right to redeem
the Warrants and Additional Warrants, it shall mail a Redemption
Notice to Furman Selz, first class, postage prepaid, not later
than the 30th day before the date fixed for redemption, at its
last address as shall appear on the records maintained pursuant
to Section 6(b). Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or
not Furman Selz receives such notice.
(c) The Redemption Notice shall specify (i) the
redemption price, (ii) the Redemption Date, (iii) the place where
the Warrant Certificates shall be delivered and the redemption
price paid, and (iv) that the right to exercise the Warrant or
Additional Warrants shall terminate at 5:00 P.M. (New York time)
on the business day immediately preceding the Redemption Date.
No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for
such redemption except if notice was not mailed or notice was
defective. An affidavit of the Warrant Agent or of the Secretary
or an Assistant Secretary of the Company that notice of
redemption has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant or Additional
Warrant shall terminate at 5:00 p.m. (New York time) on the
business day immediately preceding the Redemption Date. On and
after the Redemption Date, Furman Selz shall have no further
rights except to receive, upon surrender of the Warrant or
Additional Warrant, the Redemption Price.
(e) From and after the Redemption Date, the
Company, shall, at the place specified in the Redemption Notice,
upon presentation and surrender to the Company by or on behalf of
Furman Selz of one or more Warrant Certificates evidencing
Warrants or Additional Warrants to be redeemed, deliver or cause
to be delivered to or upon the written order of Furman Selz a sum
in cash equal to the Redemption Price of each such Warrant or
Additional Warrant. From and after the Redemption Date and upon
the deposit or setting aside by the Company of a sum sufficient
to redeem all the Warrants called for redemption, such Warrants
and Additional Warrants shall expire and become void and all
rights hereunder and under the Warrant Certificates, except the
right to receive payment of the Redemption Price, shall cease.
(f) If the shares of the Company's Common Stock
are subdivided or combined into a greater or smaller number of
shares of Common Stock, the Target Prices shall be proportionally
adjusted by the ratio which the total number of shares of Common
Stock outstanding immediately prior to such event bears to the
total number of shares of Common Stock to be outstanding
immediately after such event.
Section 9. Adjustment of Number of Warrants on
Exercise of Class A or Class B Warrants.
(a) In the event a holder of any Class A Warrant
or Class B Warrant issued by the Company on or before
December 17, 1996 exercises any such warrant and purchases
Series A Common Stock, the Company agrees to issue to Furman Selz
such number of additional Warrants ("Additional Warrants") to
maintain ownership by Furman Selz equal to five percent of the
issued and outstanding Series A and Series B Common Stock as on
December 17, 1996 plus the Series A Common Stock issued pursuant
to the exercise of any Class A or Class B Warrant.
(b) The Additional Warrants issued pursuant to
this Section 9 shall be identical to the Warrants issued
hereunder except that the exercise price shall be the same
exercise price as was paid to exercise the Class A Warrant or
Class B Warrant, as the case may be, and the initial exercise
date of the Additional Warrants shall be 12 months following the
date on which the Additional Warrants are granted to Furman Selz.
(c) Notwithstanding the foregoing, in the event
Furman Selz sells, assigns, conveys or otherwise transfers the
Warrants hereunder, the right to adjustment pursuant to this
Section 9 shall automatically extinguish and be terminated.
Section 10. Adjustment of Exercise Price and Number of
Shares of Common Stock or Warrants.
(a) Subject to the exceptions referred to in
Section 10(g) below, in the event the Company shall, at any time
or from time to time after the date hereof, sell any shares of
Common Stock for a consideration per share less than the Market
Price of the Common Stock (as defined in Section 8, except that
for purposes of Section 10, the Calculation Date shall mean the
date of the sale or other transaction referred to in this
Section 10) on the date of the sale or issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, or
subdivide or combine the outstanding shares of Common Stock into
a greater or lesser number of shares (any such sale, issuance,
subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of
Shares, the Purchase Price in effect immediately prior to such
Change of Shares shall be changed to a price (including any
applicable fraction of a cent ) determined by multiplying the
Purchase Price in affect immediately prior thereto by a fraction,
the numerator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to the issuance of
such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as
provided in subsection 10(f)(F) below) for the issuance of such
additional shares would purchase at the Market Price and the
denominator of which shall be the sum of the number of shares of
Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
Upon each adjustment of the Purchase Price
pursuant to this Section 10, the total number of shares of Common
Stock purchasable upon the exercise of each Warrant shall
(subject to the provisions contained in Section 10(b) hereof) be
such number of shares (calculated to the nearest one-hundredth;
provided, however, that in no event shall the Purchase Price
increase as a result of such rounding calculation) purchasable at
the Purchase Price in effect immediately prior to such adjustment
multiplied by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment and
the denominator of which shall be the Purchase Price in effect
immediately after such adjustment.
(b) The Company may elect, upon any adjustment of
the Purchase Price hereunder, to adjust the number of Warrants or
Additional Warrants outstanding, in lieu of the adjustment in the
number of shares of Common Stock purchasable upon the exercise of
each Warrant or Additional Warrant as hereinabove provided, so
that each Warrant outstanding after such adjustment shall
represent the right to purchase one share of Common Stock. Each
Warrant or Additional Warrant held of record prior to such
adjustment of the number of Warrants or Additional Warrants shall
become that number of Warrants or Additional Warrants (calculated
to the nearest tenth) determined by multiplying the number one by
a fraction, the numerator of which shall be the Purchase Price in
effect immediately prior to such adjustment and the denominator
of which shall be the Purchase Price in effect immediately after
such adjustment. Upon each adjustment of the number of Warrants
or Additional Warrants pursuant to this Section 10, the Company
shall, as promptly as practicable, cause to be distributed to
Furman Selz on the date of such adjustment Warrant Certificates
evidencing, subject to Section 11 hereof, the number of Warrants
or Additional Warrants to which Furman Selz shall be entitled as
a result of such adjustment or, at the option of the Company,
cause to be distributed to Furman Selz in substitution and
replacement for the Warrant Certificate held by it prior to the
date of adjustment (and upon surrender thereof, if required by
the Company) new Warrant Certificates evidencing the number of
Warrants or Additional Warrants to which Furman Selz shall be
entitled after such adjustment.
(c) In case of any reclassification, capital
reorganization or other change of outstanding shares of Common
Stock, or in case of any consolidation or merger of the Company
with or into another corporation (other than a consolidation or
merger in which the Company is the continuing corporation and
which does not result in any reconstruction, capital
reorganization or other change of outstanding shares of Common
Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as, or substantially
as, an entirety (other than a sale, lease back, mortgage or other
financing thereon), the Company shall cause effective provision
to be made so that Furman Selz shall have the right thereby, by
exercising such Warrant or Additional Warrant, to purchase the
kind and number of shares of stock or other securities or
property (including cash) receivable upon such reclassification,
capital reorganization or other change, consolidation, merger,
sale or conveyance by a holder of the number of shares of Common
Stock that might have been purchased upon exercise of such
Warrant or Additional Warrant immediately prior to such
reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments that shall be, as nearly
equivalent as may be practicable to the adjustments provided for
in this Section 10. The Company shall not effect any such
consolidation, merger or sale unless prior to or simultaneously
with the consummation thereof the successor (if other than the
Company) resulting from such consolidation or merger or the
corporation purchasing assets or other appropriate corporation or
entity shall assume, by written instrument executed and delivered
to the Warrant Agent, the obligation to deliver to Furman Selz
such shares of stock, securities or assets as, in accordance with
the foregoing provisions, Furman Selz may be entitled to purchase
and the other obligations of the Company under this Agreement.
The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of
outstanding shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(d) Respective of any adjustments or changes in
the Purchase Note or the number of shares of Common Stock
purchasable upon exercise of the Warrants or Additional Warrants,
the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant
Certificates pursuant to Section 2(d) hereof, continue to express
the Purchase Price per share, the number of shares purchasable
thereunder and the Redemption Price therefor as the Purchase
Price per share, and the number of shares purchasable and the
Redemption Price therefor were expressed in the Warrant
Certificates when the same were originally issued.
(e) After each adjustment of the Purchase Price
pursuant to this Section 10, the Company will promptly prepare a
certificate signed by the Chairman or President, and by the
Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after such
adjustment and, if the Company shall have elected to adjust the
number of Warrants and Additional Warrants, the number of
Warrants and Additional Warrants to which Furman Selz shall then
be entitled, and the adjustment in Redemption Price resulting
therefrom, and (iii) a statement showing in detail the method of
calculation and the facts upon which such adjustment or
readjustment is based, including a statement of (a) the
confederation received or to be received by the Company for any
securities issued or sold or deemed to have been issued, (b) the
number of shares of Common Stock outstanding or deemed, to be,
outstanding, and (c) the Purchase Price in effect immediately
prior to such issue or sale and as adjusted and readjusted (if
required by Section 10) on account thereof. The Company will
promptly file such certificate with the Warrant Agent and deliver
such certificate to Furman Selz. No failure to mail such notice
nor any defect therein or in the making thereof shall affect the
validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose
notice was defective.
(f) For purposes of Section 10(a) and 10(b)
hereof, the following provisions (A) to (G) shall also be
applicable:
(A) The number of shares of Common Stock
outstanding at any given time shall include shares of Common
Stock owned or held by or for the account of the Company and
the sale or issuance of such treasury shares or the
distribution of any such treasury shares shall not be
considered a Change of Shares for purposes of said sections.
(B) No adjustment of the Purchase Price
shall be made unless such adjustment would require an
increase or decrease of at least $.10 in the Purchase Price;
provided that any adjustments which by reason of this clause
(B) are not required to be made shall be carried forward and
shall be made at the time of and together with the next
subsequent adjustment which together with any adjustment(s)
so carried forward, shall require an increase or decrease of
at least $.10 in the Purchase Price then in effect
hereunder.
(C) In case of (1) the sale by the Company
for cash (or as a component of a unit being sold for cash)
of any rights or warrants to subscribe for or purchase, or
any options for the purchase of, Common Stock or any
securities convertible into or exchangeable for Common Stock
without the payment of any further consideration other than
cash, if any (such securities convertible, exercisable or
exchangeable into Common Stock being herein called
"Convertible Securities"), or (2) the issuance by the
Company, without the receipt by the Company of any
consideration therefor, of any rights or warrants to
subscribe for or purchase, or any options for the purchase
to Common Stock or Convertible Securities, in each case, if
(and only if) the consideration payable to the Company upon
the exercise of such rights, warrants or options shall
consist of cash, whether or not such rights, warrants or
options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and the
price per share for which Common Stock is issuable upon the
exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities
(determined by dividing (x) the minimum aggregate
consideration payable to the Company upon the exercise of
such rights, warrants or options, plus the confederation, if
any, received by the Company for the issuance of such
rights, warrants or options, plus, in the case of such
Convertible Securities, the aggregate amount of additional
consideration, other than such Convertible Securities,
payable upon the conversion or exchange thereof, by (y) the
total maximum number of shares of Common Stock issuable upon
the exercise of such rights, warrants or options or upon the
conversion or exchange of such Convertible Securities
issuable upon the exercise of such rights, warrants or
options) is less than the Market Price of the Common Stock
on the date of the issuance or sale of such rights, warrants
or options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of
such Convertible Securities (as of the date of the issuance
or sale of such rights, warrants or options) shall be deemed
to be outstanding shares of Common Stock for purposes of
Section 10(a) and 10(b) hereof and shall be deemed to have
been sold for cash in an amount equal to such price per
share.
(D) In case of the sale by the Company for
any Convertible Securities, whether or not the right of
conversion or exchange thereunder is immediately
exercisable, and the price per share for which Common Stock
is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the total
amount of consideration received by the Company for the sale
of such Convertible Securities, plus the minimum aggregate
amount of additional consideration, if any, other than such
Convertible Securities, payable upon the conversion or
exchange thereof by (y) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of
such Convertible Securities) is less than the Market Price
of the Common Stock on the date of the sale of such
Convertible Securities, then the total maximum number of
shares of Common Stock issuable upon the conversion or
exchange of such Convertible Securities (as of the date of
the sale of such Convertible Securities) shall be deemed to
be outstanding shares of Common Stock for purposes of
Sections 10(a) and 10(b) hereof and shall be deemed to have
been sold for cash in an amount equal to such price per
share.
(E) In case the Company shall modify the
rights of conversion, exchange or exercise of any of the
securities referred to in (C) or (D) above or any other
securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other
than an event that would require adjustment to prevent
dilution, so that the consideration per share received by
the Company after such modification is less than the Market
Price on the date prior to such modification the Purchase
Price to be in effect after such modification shall be
determined by multiplying the Purchase Price in effect
immediately prior to such event by a fraction, of which the
numerator shall be the number of shares of Common Stock
outstanding on the date prior to the modification plus the
number of shares of Common Stock which the aggregate
consideration receivable by the Company for the securities
affected by the modification would purchase at the Market
Price and of which the denominator shall be the number of
shares of Common Stock outstanding, on such date plus the
number of shares of Common Stock to be issued upon
conversion, exchange or exercise of the modified securities
at the modified rate. Such adjustment shall become
effective as of the date upon which such modification shall
take effect. On the expiration of any such right, warrant
or option or the termination of any such right to convert or
exchange any such Convertible Securities referred to in
Paragraph (C) or (D) above, the Purchase Price then in
effect hereunder shall forthwith be readjusted to such
Purchase Price as would have obtained (a) had the
adjustments made upon the issuance or sale of such rights,
warrants, options or Convertible Securities been made upon
the basis of the issuance of only the number of shares of
Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such
rights, warrants or options or upon the conversion or
exchange of such Convertible Securities and (b) had
adjustments been made on the basis of the Purchase Price as
adjusted under clause (a) for all transactions (which would
have affected such adjusted Purchase Price) made after the
issuance or sale of such rights, warrants, options or
Convertible Securities.
(F) In case of the sale for cash of any
shares of Common Stock, any Convertible Securities, any
rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company
therefore to be deemed to be the gross sales price therefor
without deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or concessions or
concessions paid or allowed by the Company in connection
therewith.
(G) In case any event shall occur as to
which the provisions of Section 10 are not strictly
Applicable but the failure to make any adjustment would not
fairly protect the purchase rights represented by the
Warrants in accordance with the essential intent and
principles of Section 10, then, in each such case, the Board
of Directors of the Company shall in good faith by
resolution provide for the adjustment, if any, on a basis
consistent with the essential intent and principles
established in Section 10, necessary to preserve, without
dilution, the purchase rights represented by the Warrants.
The Company will promptly make the adjustments described
therein.
(g) No adjustment to the Purchase Price of the
Warrants or Additional Warrants or to the number of shares of
Common Stock purchasable upon the exercise of each Warrant or
Additional Warrant will be made, however,
(i) upon the exercise of any of the options
presently outstanding under the Company's stock option plan
for officers, directors and certain other key personnel of
the Company and the Consultants and Advisors Stock Option
Plan (the "Plan"); or
(ii) upon the issuance or exercise of any
other securities which may hereafter be granted or exercised
under the Plans or under any other employee benefit plan of
the Company; or
(iii) except as set forth in Section 9, upon
the sale or exercise of other warrants, including without
limitation the sale or exercise of any of the warrants
comprising the Unit Purchase Option or upon the sale or
exercise of the Unit Purchase Option; or
(iv) Stock or Convertible Securities in a
firm commitment
underwritten public offering, including, without limitation,
shares sold upon the exercise of any overallotment option
granted to the underwriters in connection with such
offering; or
(v) upon the issuance or sale of Common
Stock or Convertible Securities upon the exercise of any
rights or warrants to subscribe for or purchase, or any
options for the purchase of, Common Stock or Convertible
Securities, whether or not such rights, warrants or options
were outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold; or
(vi) upon the issuance or sale of Common
Stock upon conversion or exchange of any Convertible
Securities, whether or not any adjustment in the Purchase
Price was made or deemed to be made upon the issuance or
sale of such Convertible Securities and whether or not such
Convertible Securities were outstanding on the date of the
original sale of the Warrants or were thereafter issued or
sold.
(h) As used in this Section 10, the term "Common
Stock" shall mean and include the Company's Common Stock
authorized on the date of this Agreement and shall also include
any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon
the voluntary liquidation, dissolution or winding up of the
Company; provided, however, that the shares issuable upon
exercise of the Warrants or Additional Warrants shall include
only shares of such class designated in the Company's Certificate
of Incorporation as Common Stock on the date of this Agreement or
(i), in the case of any reclassification, change, consolidation,
merger, sale or conveyance of the character referred to in
Section 10(c) hereof, the stock, securities or property provided
for in such section or (ii), in the case of any reclassification
or change in the outstanding shares of Common Stock issuable upon
exercise of the Warrants or Additional Warrants as a result of a
subdivision or combination or consisting of a change in par
value, or from par value to no par value, or from no par value to
par value, such shares of Common Stock as so reclassified or
changed.
(i) Any determination as to whether an adjustment
in the Purchase Price in effect hereunder is required pursuant to
Section 10, or as to the amount of any such adjustment if
required, shall be binding upon Furman Selz and the Company if
made in good faith by the Board of Directors of the Company.
(j) If and whenever the Company shall grant to
the holders of Common Stock, as such, rights or warrants to
subscribe for or to purchase, or any options for the purchase of,
Common Stock or securities convertible into or exchangeable for
or carrying a right, warrant or option to purchase Common Stock,
the Company shall concurrently therewith grant to Furman Selz as
of the record date for such transaction of the Warrants and
Additional Warrants then outstanding, the rights, warrants or
options to which Furman Selz would have been entitled if, on the
record date used to determine the stockholders entitled to the
rights, warrants or options being granted by the Company, Furman
Selz was the holder of record of the number of whole shares of
Common Stock then issuable upon exercise (assuming, for purposes
of this Section 10(j), that exercise of Warrants and Additional
Warrants is permissible during periods prior to the Initial
Warrant Exercise Date) of its Warrants or Additional Warrants.
Such grant by the Company to the holders of the Warrants shall be
in lieu of any adjustment which otherwise might be called for
pursuant to this Section 10.
Section 11. Registration Under the Securities Act of
1933. The Company agrees to register the shares of Series A
Common Stock issued or issuable upon exercise of the Warrants and
Additional Warrants under the Securities Act of 1933, as amended
(the "Act") no later than [April 30, 1997?].
Section 12. Fractional Warrants and Factional Shares.
(a) If the number of shares of Series A Common
Stock purchasable upon the exercise of each Warrant or Additional
Warrant is adjusted pursuant to Sections 9 or 10 hereof, the
Company nevertheless shall not be required to issue fractions of
shares, upon exercise of the Warrants of otherwise, or to
distribute certificates that evidence fractional shares. With
respect to any fraction of a share called for upon the exercise
of any Warrant or Additional Warrant, the Company shall pay to
Furman Selz an amount in cash equal to such fraction multiplied
by the current market value of such fractional share, determined
as follows:
(1) If the Series A Common Stock is listed
on a national securities exchange or admitted to unlisted
trading privileges on such exchange or is traded o the
Nasdaq National Market, the current market value shall be
the last reported sale price of the Common Stock on such
exchange or market on the last business day prior to the
date of exercise of this Warrant or Additional Warrant or if
no such sale is made on such day, the average of the closing
bid and asked prices for such day on such exchange or
market; or
(2) If the Series A Common Stock is not
listed or admitted to unlisted trading privileges on a
national securities exchange or is not traded on the Nasdaq
National Market, the current market value shall be the mean
of the last reported bid and asked prices reported by the
Nasdaq SmallCap Market or, if not traded thereon, by the
National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of this Warrant or
Additional Warrant; or
(3) If the Series A Common Stock is not so
listed or admitted to unlisted trading privileges and bid
and asked prices are not so reported, the current market
value to be an amount determined in such reasonable manner
as may be prescribed by the Board of Directors of the
Company.
Section 13. Warrant Holders Not Deemed Stockholders.
No holder of Warrants and Additional Warrants shall, as such, be
entitled to vote or to receive dividends or be deemed the holder
of Series A Common Stock that may at any time be issuable upon
exercise of such Warrant for any purpose whatsoever, nor shall
anything contained herein be construed to confer upon the holder
of Warrants or Additional Warrants, as such, any of the rights of
a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of
par value or change of stock to no par value, consolidation,
merger or conveyance or otherwise), or to receive notice of
meetings, or to receive dividends or subscription rights, until
such holder shall have exercised such Warrants or Additional
Warrants and been issued shares of Series A Common Stock in
accordance with the provisions hereof.
Section 14. Rights of Action. All rights of action
with respect to this Agreement are vested in Furman Selz, and
Furman Selz, without consent of the Warrant Agent or of any
holder of any other warrant may, in his own behalf and for his
own benefit, enforce against the Company his right to exercise
his Warrants or Additional Warrants for the purchase of shares of
Series A Common Stock in the manner provided in the Warrant
Certificate and this Agreement.
Section 15. Agreement of Warrant Holders. Furman
Selz, by its acceptance thereof, consorts and agrees with the
Company and the Warrant Agent that:
(a) The Warrants are not saleable, assignable or
otherwise transferable in any way; and
(b) The Company and the Warrant Agent may deem
and treat the person in whose name the Warrant Certificate is
registered as the holder and as the absolute, true and lawful
owner of the Warrants represented thereby for all purposes, and
neither the Company nor the Warrant Agent shall be affected by
any notice or knowledge to the contrary, except as otherwise
expressly provided in Section 7 hereof.
Section 16. Cancellation of Warrant Certificates. If
the Company shall purchase or acquire any Warrant or Additional
Warrant, the Warrant Certificate or Warrant Certificates
evidencing the same shall thereupon be delivered to the Warrant
Agent and cancelled by it and retired. The Warrant Agent shall
also cancel the Warrant Certificate or Warrant Certificates
following exercise of any or all of the Warrants represented
thereby or delivered to it for exchange.
Section 17. Concerning the Warrant Agent. The Warrant
Agent acts hereunder as agent and in a ministerial capacity for
the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and
delivering Warrant Certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or
authorization of the Warrant Certificates or the Warrants or
Additional Warrants represented thereby or of any securities or
other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant or Additional
Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under
any duty or responsibility to any holder of Warrant Certificates
to make or cause to be made any adjustment of the Purchase Price
or the Redemption Price provided in this Agreement, or to
determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in
making the same. It shall not (i) be liable for any recital or
statement of facts contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate
or other document or instrument believed by it in good faith to
be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part
of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant
Certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or
willful misconduct.
The Warrant Agent may at any time consult with
counsel satisfactory to it (who may be counsel for the Company)
and shall incur no liability or responsibility for any action
taken, suffered or omitted by it in good faith in accordance with
the opinion or advice of such counsel.
Any notice, statement, instruction, request,
direction, order or demand of the Company shall be sufficiently
evidenced by an instrument signed by the Chairman of the Board,
President, any Vice President, its Secretary, or Assistant
Secretary, (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance
with such notice, statement, instruction, request, direction,
order or demand believed by it to be genuine.
The Company agrees to pay the Warrant Agent
reasonable compensation for its services hereunder and to
reimburse it for its reasonable expenses hereunder, it further
agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted
by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a
result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder
(except liabilities arising as a result of the Warrant Agent's
own negligence or willful misconduct), after giving 30 days'
prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant
Agent shall cause a copy of such notice of resignation to be
mailed to the Registered Holder of each Warrant Certificate at
the Company's expense. Upon such resignation, or any inability
of the Warrant Agent to act as such hereunder, the Company shall
appoint a new warrant agent in writing. If the Company shall
fail to make such appointment within a period of 15 days after it
has been notified in writing of such resignation by the resigning
Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for
the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by
its last published report to its stockholders, of not less than
$10,000,000 or a stock transfer company that is a registered
transfer agent under the Securities Exchange Act of 1934. After
acceptance in writing of such appointment by the new warrant
agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities
as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if
for any reason it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same
shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment
the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or
any now warrant agent may be converted or merged or any
corporation resulting from any consolidation to which the Warrant
Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the
provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed to the Company and to the Registered
Holder of each Warrant Certificate.
The Warrant Agent, its subsidiaries and
affiliates, and any of its or their officers or directors, may
buy and hold or sell Warrants or other securities of the Company
and otherwise deal with the Company in the same manner and to the
same extent and with like effects as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other
legal entity.
Section 18. Modification of Agreement. The parties
hereto and the Company may by supplemental agreement make any
changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or manifest mistake or error herein
contained; (ii) to reflect an increase in the number of Warrants
which are to be governed by this Agreement resulting from (a) a
subsequent public offering of Company securities which includes
Warrants or (b) a subsequent private placement of Company
securities which includes Warrants, in either case having the
same terms and conditions as the Class A or Class B Warrants,
respectively, originally covered by or subsequently added to this
Agreement under this Section 18, provided, however, that in the
case of a private placement, the amendment to this Agreement will
be effective only at such time as the securities underlying such
Warrants are covered by an effective registration statement under
the Act; or (iii) that they may deem necessary or desirable and
which shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any
respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 50% of
the Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon
the exercise of any Warrant, or the Purchase Price therefor, or
the acceleration of the Warrant Expiration Date, shall be made
without the consent in writing of the Registered Holder of the
Warrant Certificate representing such Warrant, other than such
changes as are specifically prescribed by this Agreement as
originally executed or are made in compliance with applicable
law.
Section 19. Notices. All notices, requests, consents
and other communications hereunder shall be in writing and shall
be deemed to have been made when delivered or mailed first class
registered or certified mail, postage prepaid as follows: if to
the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registered books maintained by the
Warrant Agent; if to the Company, at 220 East 42nd Street,
New York, New York 10017, Attention: James N. Perkins, CEO, or
at such other address as may have been furnished to the Warrant
Agent in writing by the Company and if to the Warrant Agent at
its Corporate Office.
Section 20. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without reference to principles of conflict of
laws.
Section 21. Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Company and, the
Warrant Agent and their respective successors and assigns, and
the holders from time to time of Warrant Certificates. Nothing
in this Agreement is intended or shall be construed to confer
upon any other person any right, remedy or claim, in equity or at
law, or to impose upon any other person any duty, liability or
obligation.
Section 22. Termination. This Agreement shall
terminate at the close of business on the earlier of the Warrant
Expiration Date or the date upon which all Warrants have been
exercised, except that the Warrant Agent shall account to the
Company for cash held by it and the provisions of Section 17
hereof shall survive such termination.
Section 23. Counterparts. This Agreement may be
executed in several counterparts, which taken together shall
constitute a single document.
IN WITNESS WHEREOF, the parses hereto have, caused this
Agreement to be duly executed as of the date first above written.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
By:_______________________________
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By:_______________________________
Authorized Officer
FURMAN SELZ LLC
By:_______________________________
Authorized Officer
<PAGE>
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. FS _______ Warrants
VOID AFTER DECEMBER 17, 2001
WARRANT CERTIFICATE FOR PURCHASE
OF SERIES A COMMON STOCK
FOOD COURT ENTERTAINMENT NETWORK, INC.
This certifies that FOR VALUE RECEIVED Furman Selz LLC
(the "Registered Holder") is the owner of the number of Warrants
("Warrants") specified above. Each Warrant represented hereby
initially entitles the Registered Holder to purchase, subject to
the terms and conditions set forth in this Warrant Certificate
and the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of Series A Common Stock, $.01 value
("Common Stock"), of Food Court Entertainment Network, Inc., a
Delaware corporation (the "Company"), at any time between
December 17, 1996, and the Expiration Date (as hereinafter
defined), upon the presentation and surrender of this Warrant
Certificate with the Subscription Form attached hereto duly
executed, at the corporate office of American Stock Transfer &
Trust Company as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $2.00 (the "Purchase Price")
in lawful money of the United States of America in cash or by
official bank or certified check made payable to Food Court
Entertainment Network, Inc.
This Warrant Certificate and each Warrant represented
hereby are issued pursuant to and are subject in all respects to
the terms and conditions set forth in the Warrant Agreement (the
"Warrant Agreement"), dated January __, 1997, by and among the
Company, the Warrant Agent and Furman Selz LLC.
In the event of certain contingencies provided for in
the Warrant Agreement, the Purchase Price or the number of shares
of Common Stock subject to purchase upon the exercise of each
Warrant represented hereby are subject to modification or
adjustment.
Each Warrant represented hereby is exercisable at the
option of the Registered Holder, but no fractional shares of
Common Stock will be issued. In the case of the exercise of less
than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall
countersign, for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 P.M.
(New York time) on December 17, 2001, or such earlier date as the
Class A Warrants shall be redeemed. If such date shall in the
State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean
5:00 P.M. (New York time) the next following day which in the
State of New York is not a holiday or a day on which banks are
authorized to close.
The Company shall not be obligated to deliver any
securities pursuant to the exercise of the Warrants represented
hereby unless a registration statement under the Securities Act
of 1933, as amended, with respect to such securities is
effective. The Warrants represented hereby shall not be
exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the
surrender hereof by the Registered Holder at the corporate office
of the Warrant Agent, for a new Warrant Certificate or Warrant
Certificates of like tenor representing an equal aggregate number
of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designed by such Registered
Holder at the time of such surrender.
The Warrant may not be sold, conveyed, assigned or
otherwise transferred.
Prior to the exercise of any Warrant represented
hereby, the Registered Holder shall not be entitled to any rights
of a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends or other distributions,
and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant
Agreement.
The Warrants represented hereby may be redeemed at the
option of the Company, at a redemption price of $.05 per Warrant,
provided the Market Price (as defined in the Warrant Agreement)
for the Common Stock shall exceed $9.00 per share. Notice of
redemption shall be given not later than the thirtieth day before
the date fixed for redemption, all as provided in the Warrant
Agreement. On and after the date fixed for redemption, the
Registered Holder shall have no rights with respect to the
Warrants represented hereby except to receive the $.05 per
Class A Warrant upon surrender of this Warrant Certificate.
The Company and the Warrant Agent may deem and treat
the Registered Holder as the absolute owner hereof and of each
Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all
purposes and shall not be affected by any notice to the contrary.
This Warrant Certificate is not valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
FOOD COURT ENTERTAINMENT NETWORK,
INC.
Dated:_____________________ By:_______________________________
By:_______________________________
[SEAL]
Countersigned:
___________________________
as Warrant Agent
By:________________________
Authorized Officer
<PAGE>
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $___________ PER CERTIFICATE ISSUED
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably
elects to exercise ________ Warrants represented by this Warrant
Certificate, and to purchase the securities issuable upon the
exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_____________________
_____________________
_____________________
_____________________
[please print or type name and address]
and be delivered to
_____________________
_____________________
_____________________
_____________________
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants
evidenced by this Warrant Certificate, that a new Warrant
Certificate for the balance of such Warrants be registered in the
name of, and delivered to, the Registered Holder at the address
stated below.
The undersigned represents that the exercise of the
Warrants evidenced hereby was solicited by a member of the
National Association of Securities Dealers, Inc. If not
solicited by an NASD member, please write "unsolicited" in the
space below.
__________________________________
(Name of NASD Member)
Dated:____________________ X ________________________
__________________________________
__________________________________
Address
__________________________________
Taxpayer Identification Number
__________________________________
Signature Guaranteed
__________________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
MEMBER OF THE MEDALLION STAMP PROGRAM.
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement on Form S-3 of our report dated
January 24, 1996 (with respect to Notes F[4], G[1] and G[4],
March 19, 1996) on the financial statements included in the
annual report on Form 10-KSB of Food Court Entertainment Network,
Inc. as of December 31, 1995 and for the year then ended. We
also consent to the reference to our firm under the caption
"Experts" in the Prospectus.
/s/ Richard A. Eisner & Company, LLP
New York, New York
January 30, 1997
