THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
WARRANT AGREEMENT
This WARRANT AGREEMENT (this "Agreement") dated as of July 2, 2001, is
entered into by and between GenesisIntermedia, Inc., a Delaware corporation (the
"Company") and Riverdale LLC, a New York limited liability company (together
with its successors and assigns, the "Holder").
WHEREAS to induce Holder to enter into an acquisition financing facility
and investment banking commitment letter (the "Commitment Letter") dated the
date hereof among the Holder, the Company and the other parties named therein,
and in consideration of the payment of $1.00 and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company has agreed to issue Warrants to the Holder providing for the purchase of
shares of Common Stock of the Company in the manner hereinafter provided.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. FORM OF WARRANT CERTIFICATES. There shall be three series of
Warrants, denominated as Series IA, IB and IC (each a the "Warrant" and
collectively, the "Warrants"). The certificates evidencing the Warrants (the
"Warrant Certificates") (and the form of election to purchase shares of Common
Stock and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit A hereto and may have such letters,
numbers or other marks of identification or designation or 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 to conform to usage. Each Warrant
Certificate shall be dated as of the date of issuance thereof, whether upon
initial issuance or upon transfer or exchange, and each Warrant initially shall
entitle Holder thereof to purchase an aggregate of one share of Common Stock,
but the number of such shares and the Exercise Price (as defined in Section
3(c)) shall be subject to adjustments as provided herein.
SECTION 2. COMMON STOCK AND WARRANT COMMON STOCK. As hereinafter used in
this Agreement, "Common Stock" shall mean the Common Stock, $0.001 par value, of
the Company as authorized at the date hereof and stock of any other class into
which such presently authorized Common Stock may hereafter be changed, and
"Warrant Common Stock" shall mean the Common Stock issuable upon exercise of
Warrants. In case, by reason of the operation of Section 4, the Warrants shall
entitle Holder thereof to purchase any other shares of stock or other securities
or property of the Company or of any other corporation, any reference in this
Agreement to the exercise of Warrants shall be deemed to refer to and include
the purchase of such other shares of stock or other securities or property upon
such exercise.
SECTION 3. TERM OF WARRANTS; EXERCISE PRICE OF WARRANTS. (a) Warrants, and
corresponding Warrant Certificates, shall be issued to Holder within five
business days after the execution and delivery of the Credit Agreement by Holder
and the Company, entitling the Holder to purchase the number of shares set forth
below on the conditions set forth in this Agreement and the Warrant Certificate.
Aggregate Number of Shares Series of Warrants Subject to Warrants
IA 1,000,000
IB 1,000,000
IC 2,000,000
(b) Holder may exercise the Warrants evidenced by a Warrant Certificate, in
whole or in part and in accordance with the provisions of this Section 3, at any
time after the date of this Agreement,. To exercise Warrants, Holder shall
surrender to the Company at its principal executive office the Warrant
Certificate with the form of election to purchase duly executed, together with
payment of the Exercise Price (as defined below) then in effect for each share
of Warrant Common Stock issuable upon exercise of a Warrant, or, alternatively,
to receive a lesser number of shares through a Cashless Exercise (as defined
below), at or prior to 5:00 p.m. (Pacific Time) on July 1, 2005 (the "Expiration
Date"), at which time all rights evidenced by the Warrant Certificates shall
cease and the Warrants shall become void.
(c) The purchase price for each share of Common Stock pursuant to the
exercise of a Warrant (the "Exercise Price") shall be as follows: Series IA -
$2.00 per share; Series IB - $4.00 per share; and Series IC - $9.00 per share;
and shall be subject to adjustment as provided in Section 4 hereof. The Exercise
Price shall be payable in lawful money of the United States of America, except
as provided in clause (d)(2) below.
(d) Warrants may be exercised by either of the following methods:
(1) Cash Exercise. If Holder desires to exercise Warrants for cash, Holder
must elect and sign the "Cash Exercise" election on the reverse side of the
Warrant Certificate and deliver to the Company (x) the Warrant Certificate or
Certificates representing the Warrants to be exercised and (y) cash or a
certified or official bank check payable to the Company for the Exercise Price
for such Warrant (a "Cash Exercise").
(2) Cashless Exercise. If Holder desires to exercise Warrants without
delivering cash, Holder must elect and sign the "Cashless Exercise" election on
the reverse side of the Warrant Certificate and deliver to the Company the
Warrant Certificate or Certificates representing the Warrants to be exercised (a
"Cashless Exercise"). Upon a Cashless Exercise, Holder shall be entitled to a
number of shares of Warrant Common Stock determined by using the following
formula:
2
X = Y(A-B)
------
A
Where: X = the number of shares of Warrant Common Stock
to be issued to the Holder under the
provisions of this Section 3(d)(2)
Y = the number of shares of Warrant Common Stock
that would otherwise be issued upon an
exercise of the Warrants to be exercised if
they were exercised for cash
A = the Current Market Price per share of Common
Stock calculated as of the date of exercise
B = the Exercise Price then in effect
SECTION 4. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The Exercise Price and the number of shares purchasable upon exercise of
a Warrant (other than in connection with any securities issued or issuable
pursuant to that certain acquisition transaction that has been identified to
Holder) shall be subject to adjustment as follows:
(a) Change in Common Stock. If the Company shall, at any time or from time
to time after the date hereof, (i) issue any shares of Common Stock as a stock
dividend to holders of Common Stock, (ii) subdivide or combine the outstanding
shares of Common Stock into a greater or lesser number of shares or (iii) issue
any shares of its capital stock in a reclassification or reorganization of the
Common Stock (any such issuance, subdivision, combination, reclassification or
reorganization being herein called a "Change of Shares"), then (A) in the case
of the events referred to in clauses (i) and (ii) above, the number of shares of
Common Stock that may be purchased upon the exercise of a Warrant shall be
adjusted to the number of shares of Common Stock that the Holder of a Warrant
would have owned or have been entitled to receive after the happening of such
event for each series of Warrant, had a Warrant been exercised immediately prior
to the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to the
nearest 100th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction, the numerator of which shall be
the number of shares of Common Stock purchasable with a Warrant immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock purchasable with a Warrant after the adjustment referred to
above and (B) in the case of the events referred to in clause (iii) above,
paragraph (b) below shall apply. An adjustment made pursuant to clause (A) of
this paragraph (a) shall become effective retroactively immediately after the
record date in the case of such dividend and shall become effective immediately
after the effective date in other cases, but any shares of Common Stock issuable
solely as a result of such adjustment shall not be issued prior to the effective
date of such event.
(b) Common Stock Distribution. If the Company shall, at any time or from
time to time after the date hereof, issue, sell or otherwise distribute
(including by way of deemed distributions pursuant to paragraphs (c) and (d)
below) any shares of Common Stock (other than pursuant to (A) a Change of Shares
or (B) the exercise or conversion, as the case may be, of any Option,
Convertible Security (each as defined in paragraph (c) below) or Warrant issued
after the date of this Warrant) (any such event, including any deemed
distributions described in paragraphs (c) and (d), being herein called a "Common
Stock Distribution"), for a consideration per share less than the greater of the
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Exercise Price or the Market Dilution Price in effect on the date of such Common
Stock Distribution, then, effective upon such Common Stock Distribution, the
Exercise Price for each affected series of Warrants shall be reduced to the
price (calculated to the nearest 100th of one cent) determined by multiplying
the Exercise Price in effect immediately prior to such Common Stock Distribution
by a fraction that is the lesser (arithmetically nearer to zero) of the
following two fractions: (i) a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Common Stock Distribution multiplied
by the Current Market Price in effect immediately prior to such Common Stock
Distribution, plus (B) the consideration, if any, received by the Company upon
such Common Stock Distribution, and the denominator of which shall be the
product of (C) the total number of shares of Common Stock issued and outstanding
immediately after such Common Stock Distribution multiplied by (D) the Current
Market Price in effect immediately prior to such Common Stock Distribution and
(ii) a fraction, the numerator of which shall be the sum of (A) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Common Stock Distribution multiplied by the Exercise
Price in effect immediately prior to such Common Stock Distribution, plus (B)
the consideration, if any, received by the Company upon such Common Stock
Distribution, and the denominator of which shall be the product of (C) the total
number of shares of Common Stock issued and outstanding immediately after such
Common Stock Distribution multiplied by (D) the Exercise Price in effect
immediately prior to such Common Stock Distribution.
(1) If any Common Stock Distribution shall require an adjustment to the
Exercise Price pursuant to the provisions of this paragraph (b), including by
operation of paragraph (c) or (d) below, then, effective at the time such
adjustment is made, the number of shares of Common Stock purchasable upon the
exercise of each affected series of Warrant shall be increased to a number
determined by multiplying the number of shares for each affected series of
Warrant so purchasable immediately prior to such Common Stock Distribution by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment. In computing
adjustments under this paragraph, fractional interests in Common Stock shall be
taken into account to the nearest 100th of a share.
(2) The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise Price or
reduce the number of shares of Common Stock purchasable upon the exercise of the
Warrants, except by operation of paragraph (j) or (k) below.
(c) Issuance of Options. If the Company shall, at any time or from time to
time after the date hereof, issue, sell, distribute or otherwise grant in any
manner (including by assumption) any rights to subscribe for or to purchase, or
any warrants or options for the purchase of, Common Stock or any stock or
securities convertible into or exchangeable for Common Stock other than the
Warrants (any such rights, warrants or options being herein called "Options" and
any such convertible or exchangeable stock or securities being herein called
"Convertible Securities"), whether or not such Options or the rights to convert
or exchange such Convertible Securities are immediately exercisable, and the
price per share at which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or receivable
4
by the Company as consideration for the issuance, sale, distribution or granting
of such Options, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the exercise of all such Options, plus, in
the case of Options to acquire Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable upon the conversion or
exchange of all such Convertible Securities, by (ii) the total maximum number of
shares of Common Stock issuable upon the exercise of all such Options) shall be
less than the greater of the Exercise Price or the Market Dilution Price in
effect immediately prior to the issuance, sale, distribution or granting of such
Options, then, for the purposes of paragraph (b) above, the total maximum number
of shares of Common Stock issuable upon the exercise of all such Options or upon
the conversion or exchange of the total maximum amount of the Convertible
Securities issuable upon the exercise of all such Options shall be deemed to
have been issued as of the date of the issuance, sale, distribution or granting
of such Options and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in
paragraphs (j) and (k) below, no additional adjustment of the Exercise Price
shall be made upon the actual exercise of such Options or upon conversion or
exchange of the Convertible Securities issuable upon the exercise of such
Options. If the minimum and maximum numbers or amounts referred to in this
paragraph (c) or in paragraph (d) below cannot be calculated with certainty as
of the date of the required adjustment, such numbers and amounts shall be
determined in good faith by the Board of Directors of the Company, provided
however that if the Holder shall disagree with such determination or the
determination made by the Board of Directors under paragraphs (e) or (g) below,
Holder shall have the right to bring the matter to arbitration under the rules
of the American Arbitration Association for an expedited arbitration and the
judgment of the arbitrator shall be final and determining and unappealable.
(d) Issuance of Convertible Securities. In the event the Company shall, at
any time or from time to time after the date hereof, issue, sell or otherwise
distribute (including by assumption) any Convertible Securities (other than upon
the exercise of any Option), whether or not the rights to convert or exchange
such Convertible Securities are immediately exercisable, and the price per share
at which Common Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if any,
received or receivable by the Company as consideration for the issuance, sale or
distribution of such Convertible Securities, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange of all such Convertible Securities, by (ii) the total maximum number
of shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the greater of the Exercise Price or
the Market Dilution Price in effect immediately prior to such issuance, sale or
distribution, then, for the purposes of paragraph (b) above, the total number of
shares of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities shall be deemed to have been issued as of the date of the
issuance, sale or distribution of such Convertible Securities and thereafter
shall be deemed to be outstanding and the Company shall be deemed to have
received as consideration such price per share, determined as provided above,
therefor. Except as otherwise provided in paragraphs (j) and (k) below, no
additional adjustment of the Exercise Price shall be made upon the actual
conversion or exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company shall, at any
time or from time to time after the date hereof, distribute to holders of Common
Stock any dividend or other distribution of cash, evidences of its indebtedness,
5
other securities or other properties or assets (in each case other than (i)
dividends payable in Common Stock, Options or Convertible Securities where the
dilutionary effect of such dividends is computed in accordance with paragraphs
(b) and (c) and (d) above and (ii) any cash dividend declared and paid pursuant
to a regular dividend policy of the Company), or any options, warrants or other
rights to subscribe for or purchase any of the foregoing, then (A) the Exercise
Price shall be decreased to a price determined by multiplying the Exercise Price
then in effect by a fraction, the numerator of which shall be the Exercise Price
in effect on the record date for such distribution less the sum of (X) the cash
portion, if any, of such distribution per share of Common Stock outstanding
(exclusive of any treasury shares) plus (Y) the then fair market value (as
determined in good faith by the Board of Directors of the Company) per share of
Common Stock issued and outstanding on the record date for such distribution of
that portion, if any, of such distribution consisting of evidences of
indebtedness, other securities, properties, assets, options, warrants or
subscription or purchase rights, and the denominator of which shall be the
Exercise Price then in effect and (B) the number of shares of Common Stock
purchasable upon the exercise of a Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
the adjustment required by clause (A) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
The adjustments required by this paragraph (e) shall be made whenever any such
distribution is made and shall be retroactive to the record date for the
determination of stockholders entitled to receive such distribution.
(f) Certain Distributions. If the Company shall pay a dividend or make any
other distribution payable in Options or Convertible Securities, then, for
purposes of paragraph (b) above (including dividends or distributions by
operation of paragraph (c) or (d) above, as the case may be), such Options or
Convertible Securities shall be deemed to have been issued or sold without
consideration except for such amounts of consideration as shall have been deemed
to have been received by the Company pursuant to paragraphs (c) or (d) above,
as, appropriate.
(g) Consideration Received. If any shares of Common Stock shall be issued
and sold in an underwritten public offering or agented private placement, the
consideration received by the Company for such shares of Common Stock shall be
deemed to include the underwriting discounts and commissions realized by the
underwriters or selling agents of such offering. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration as determined in good faith by the Board of
Directors of the Company. If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been
issued, sold or distributed for such amount of consideration as shall be
allocated to such Options in good faith by the Board of Directors of the
Company.
(h) Deferral of Certain Adjustments. No adjustments to the Exercise Price
(including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of the Warrants) shall be required hereunder
unless such adjustment together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least one percent
6
of the Exercise Price; provided, however, that any adjustment which is not
required to be made by reason of this paragraph (i) shall be carried forward and
taken into account in any subsequent adjustment.
(i) Changes in Options and Convertible Securities. If the exercise price
provided for in any Options referred to in paragraph (c) above, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate at
which any Convertible Securities referred to in paragraph (c) or (d) above are
convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Section 4), then the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of the Warrants shall forthwith be
readjusted (effective only with respect to any exercise of the Warrants after
such readjustment) to the Exercise Price and number of shares of Common Stock so
purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration or conversion rate, as the case may be, but only with respect to
such Options and Convertible Securities as then remain outstanding.
(j) Expiration of Options and Convertible Securities. If, at any time after
any adjustment to the number of shares of Common Stock purchasable upon the
exercise of the Warrants shall have been made pursuant to paragraph (c), (d) or
(i) above or this paragraph (j), any Options or Convertible Securities shall
have expired unexercised or, solely with respect to Options that are rights
("Rights"), are redeemed, the number of such shares so purchasable shall, upon
such expiration or such redemption, be readjusted and shall thereafter be such
as they would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common Stock deemed to have been issued, in connection with such Options or
Convertible Securities were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such Options or Convertible Securities and (ii)
such shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
Consideration, if any, actually received by the Company for the issuance, sale,
distribution or granting of all such Options or Convertible Securities, whether
or not exercised; provided, however, that (x) no such readjustment shall have
the effect of decreasing the number of shares so purchasable by an amount
(calculated by adjusting such decrease to account for all other adjustments made
pursuant to this Section 4 following the date of the original adjustment
referred to above) in excess of the amount of the adjustment initially made in
respect of the issuance, sale, distribution or granting of such Options or
Convertible Securities and (y) in the case of the redemption of any Rights,
there shall be deemed (for the purposes of paragraph (c) above) to have been
issued as of the date of such redemption for no consideration a number of shares
of Common Stock equal to the aggregate consideration paid to effect such
redemption divided by the Current Market Price of the Common Stock on the date
of such redemption.
(k) Reorganization of Company. Except for a Cash Merger (as defined in the
next paragraph), if the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person, upon
consummation of such transaction the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
Holder would have owned immediately after the consolidation, merger, transfer or
lease if Holder had exercised the Warrant immediately before the effective date
of the transaction. Concurrently with the consummation of such transaction, the
7
corporation formed by or surviving any such consolidation or merger if other
than the Company, or the person to which such sale or conveyance shall have been
made, shall enter into a supplemental Warrant Agreement with Holder so providing
and further providing for adjustments which shall be as nearly equivalent as may
be practical to the adjustments provided for in this paragraph. If the issuer of
securities deliverable upon exercise of Warrants under the supplemental Warrant
Agreement is an affiliate of the formed, surviving, transferee or lessee
corporation, that issuer shall join in the supplemental Warrant Agreement. In
the event that the Company consolidates or merges with or into, or transfers or
leases all or substantially all of its assets to, any person in a transaction in
which more than 90% of the aggregate value of the consideration to be received
by the Company's common stockholders consists of cash or cash equivalents (a
"Cash Merger"), Holder shall be entitled to (i) exercise the Warrants, effective
immediately prior to the effective date of such Cash Merger as set forth in the
preceding paragraph or (ii) receive a cash payment equal to the amount that
Holder would receive if Holder had exercised the Warrants immediately prior to
the Cash Merger less the aggregate Exercise Price.
(l) Other Adjustments. If at any time Holder shall become entitled to
receive any securities of the Company other than shares of Common Stock as
constituted on the date of issuance of the Warrants, then the number of such
other securities so receivable upon exercise of the Warrants and the Exercise
Price applicable to such exercise shall be adjusted at such time, and shall be
subject to further adjustment from time to time thereafter, in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
shares of Common Stock contained in this Section 4. No adjustment under this
Section 4 shall reduce the Exercise Price below $0.01.
(m) Voluntary Adjustment. The Company from time to time may reduce the
Exercise Price for the Warrants by any amount for any period of time if the
period is at least 20 days and if the reduction is irrevocable during the
period. Whenever the Exercise Price for the Warrants is reduced, the Company
shall cause to be mailed to Holder a notice of the reduction. Such notice shall
be mailed at least 15 days before the date the reduced Exercise Price takes
effect. The notice shall state the reduced Exercise Price and the period it will
be in effect.
(n) Notice of Certain Actions and Adjustments. In case the Company shall
propose (i) to pay any dividend payable in stock of any class to the holders of
its Common Stock or to make any other distribution to the holders of its Common
Stock (other than a regular cash dividend), or (ii) to offer to the holders of
its Common Stock rights to subscribe for or to purchase any additional shares of
Common Stock or shares of stock of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Common Stock (other than
a reclassification involving only the subdivision, or combination, of
outstanding shares of Common Stock), or (iv) to effect any capital
reorganization, or (v) to effect any consolidation, merger or sale, organic
change, transfer or other disposition of all or substantially all of its
property, assets or business, or (vi) to effect the liquidation, dissolution or
winding up of the Company, then in each such case, the Company shall deliver to
Holder a notice of such proposed action, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, organic change, transfer, disposition, liquidation,
dissolution, or winding up is to take place and the date of participation
8
therein by the holders of Common Stock, if any such date is to be fixed, and
shall also set forth such facts with respect thereto as shall be reasonably
necessary to indicate the effect of such action on the Common Stock and the
number and kind of any other shares of stock which will be issuable upon
exercise of a Warrant, and the Exercise Price thereof, after giving effect to
any adjustment which will be required as a result of such action. Such notice
shall be so delivered in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Common Stock for purposes of such action, and in the case of any other such
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of Common Stock, whichever
shall be the earlier.
Upon any adjustment of the Exercise Price pursuant to Section 4, the
Company shall promptly thereafter cause to be given to Holder at its address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid, a certificate of the chief financial officer
of the Company setting forth the Exercise Price after such adjustment and
setting forth in reasonable detail the method of calculation and the facts upon
which such calculations are based and setting forth the number of shares of
Warrant Common Stock (or portion thereof) issuable after such adjustment in the
Exercise Price, upon exercise of a Warrant and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the correctness of the
matters set forth therein.
In addition, no adjustment need be made for a transaction referred to in
paragraphs (a), (b), (c), (d), or (e) of this Section 4 if Holder is to
participate in the transaction on a basis and with notice which is fair and
appropriate in light of the basis and notice on which holders of Common Stock
participate in the transaction.
To the extent the Warrants become convertible into cash, no adjustment need
be made thereafter as to the cash.
SECTION 5. CURRENT MARKET PRICE; MARKET DILUTION PRICE. The "Current Market
Price" per share of Common Stock at any date shall be the average of the daily
closing prices for the 10 consecutive trading days ending on the last full
trading day on the exchange or market specified in the second succeeding
sentence, prior to the time and date as of which the Current Market Price is to
be computed. The closing price for any day shall be the last reported sale price
regular way or, if no such reported sale takes place on such day, the average of
the closing bid and asked prices regular way for such day, in each case (1) on
the principal national securities exchange on which the shares of Common Stock
are listed or to which such shares are admitted to trading or (2) if the Common
Stock is not listed or admitted to trading on a national securities exchange, in
the over-the-counter market as reported by the National Association of
Securities Dealers, Inc. Automated Quotation System ("Nasdaq") or any comparable
system or (3) if the Common Stock is not listed on Nasdaq or a comparable
system, as furnished by two members of the National Association of Securities
Dealers, Inc. ("NASD") selected from time to time in good faith by the Board of
Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any other reason the Current Market Price per share cannot
be determined pursuant to the foregoing provisions of this Section 5, the
Current Market Price per share shall be the fair market value thereof as
determined in good faith by the Board of Directors of the Company. The "Market
Dilution Price" per share of Common Stock at any date shall be the Current
Market Price on such date; provided that on any date that the Current Market
Price shall be equal to or in excess of $9.00, the Market Dilution Price shall
be the then applicable Exercise Price.
9
SECTION 6. SIGNATURE; TRANSFER AGENT.
(a) Warrant Certificates shall be executed on behalf of the Company by the
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President, by facsimile signature, and have affixed thereto a facsimile of the
Company's seal which shall be attested by the Secretary or an Assistant
Secretary of the Company by facsimile signature. In the event that any officer
of the Company who shall have signed any of the Warrant Certificates shall cease
to be such officer of the Company before issuance and delivery by the Company,
such Warrant Certificates, nevertheless, may be issued and delivered with the
same force and effect as though the person who signed such Warrant Certificates
had not ceased to be such officer of the Company; and any Warrant Certificates
may be signed on behalf of the Company by any person who, at the actual date of
the execution of such Warrant Certificates, shall be a proper officer of the
Company to sign such Warrant Certificates, although at the date of the execution
of this Warrant Agreement any such person was not such an officer.
(b) The Company will keep or cause to be kept, at its principal executive
office or at the office of the transfer agent of its Common Stock, books for
registration and transfer of the Warrant Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the
Warrant Certificates, the number of Warrants evidenced on its face by each of
the Warrant Certificates and the date of each of the Warrant Certificates.
(c) Prior to due presentment for registration of transfer of the Warrant
Certificates, the Company may deem and treat the registered holder thereof as
the absolute owner of the Warrant Certificates (notwithstanding any notation of
ownership or other writing thereon made by anyone other than the Company) for
the purpose of any exercise thereof and of any distribution to the holder
thereof and for all other purposes.
SECTION 7. TRANSFER AND EXCHANGE. The Company (or its transfer agent)
shall, from time to time, register the transfer of any outstanding Warrant
Certificate upon the books to be maintained by the Company for that purpose,
upon surrender thereof for transfer properly endorsed or accompanied by
appropriate instruments of transfer and written instructions for transfer, duly
signed by the registered holder or holders thereof or by the duly appointed
legal representative thereof or by a duly authorized attorney, such signature to
be guaranteed by a commercial bank or trust company having an office in the
United States, by a broker or dealer that is a member of the National
Association of Securities Dealers, Inc., or by a member of a national securities
exchange. Upon any such registration of transfer, a new Warrant Certificate
shall be issued to the transferee and the surrendered Warrant Certificate shall
be canceled by the Company (or its transfer agent). After the date of this
Agreement and subject to compliance with applicable securities laws, any Warrant
Certificate may be exchanged at the option of the holder thereof, upon surrender
at the principal executive office of the Company, for or another Warrant
Certificate, or other Warrant Certificates of different denominations,
representing in the aggregate the right to purchase a like number of shares of
Common Stock, and the surrendered Warrant Certificate shall be canceled by the
Company. No fractional Warrant Certificates will be issued. In the event a
holder of warrants is entitled to a fractional warrant such fractional warrant
shall be rounded up to the nearest whole warrant. The Company may require from
the transferor payment of a sum sufficient to cover any tax or governmental
10
charge that may be imposed in connection with any transfer or exchange of
Warrant Certificates. No service charge shall be required of a transferor or
transferee in connection with any transfer or exchange of a Warrant.
SECTION 8. EXERCISE OF WARRANTS AND STOCK CERTIFICATES
(a) Subject to the provisions of this Agreement, each registered holder of
a Warrant Certificate shall have the right, which may be exercised as provided
in such Warrant Certificate, to purchase from the Company (and the Company shall
issue and sell to such registered holder) all or part of the number of fully
paid and nonassessable shares of Warrant Common Stock specified in such Warrant
Certificate (subject to the adjustments as herein provided), upon a Cash
Exercise or Cashless Exercise. Upon surrender of such Warrant Certificate, it
shall be canceled by the Company. The date of exercise of any Warrant shall be
deemed to be the date of its receipt by the Company duly and properly filled in
and signed and accompanied by proper funds as hereinafter provided. In the event
of a Cash Exercise, payment of the Exercise Price may be made in cash or by
certified or official bank check. No adjustment shall be made for any cash
dividends declared or paid on shares of Common Stock prior to the exercise of a
Warrant. Upon such Cash Exercise or Cashless Exercise, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the registered holder of such Warrants, and in such name or names as
such registered holder may designate, a certificate or certificates for the
number of full shares of Warrant Common Stock so purchased upon the exercise of
such Warrants together with cash in respect of any fraction of a share of such
stock issuable upon such surrender, as provided in Section 9 of this Agreement.
(b) Each certificate evidencing shares of Common Stock issued upon the
exercise of Warrants shall have such letters, numbers or other marks of
identification or designation or such legends (including restrictive legends),
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate 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 Common Stock may from time to time be listed,
or to conform to usage.
(c) Each person in whose name any certificate for shares of Common Stock is
issued upon the exercise of Warrants shall for all purposes be deemed to have
become holder of record of the Common Stock represented thereby on, and such
certificate shall be dated, the date upon which the Warrant Certificate
evidencing such Warrants was duly surrendered and payment of the Exercise Price
(in the case of a Cash Election) and any applicable taxes and governmental
charges was made; provided, however, that if the date of such surrender and
payment is a date upon which the Common Stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding day on which
the Common Stock transfer books of the Company are open.
SECTION 9. ELIMINATION OF FRACTIONS. The Company shall not be required to
issue fractional shares of Common Stock upon any exercise of Warrants. As to any
final fraction of a share which the same registered holder of one or more
Warrant Certificates, the rights under which are exercised in the same
transaction or series of related transactions, would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the Current
Market Price on the business day which next precedes the day of exercise.
11
SECTION 10. ISSUE TAXES. The Company will pay all documentary stamp taxes
attributable to the initial issuance of shares of Warrant Common Stock upon the
exercise of any Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for shares of Warrant
Common Stock in a name other than that of the registered holder of the Warrant
Certificate representing the Warrant in respect of which such shares are
initially issued.
SECTION 11. RESERVATION OF SHARES. The Company shall, from the date hereof
through the date on which all Warrants shall have been exercised or shall have
expired, reserve and keep available out of its authorized but unissued stock,
for the purpose of effecting the issuance of stock upon exercise or conversion
of Warrants, such number of shares of its duly authorized Common Stock as shall
from time to time be sufficient to effect the issuance of shares of Warrant
Common Stock upon exercise of all Warrants at the time outstanding. The Company
covenants that all shares of Warrant Common Stock which may be issued upon
exercise of the Warrants will, upon issue, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, liens, charges and security interests
with respect to the issue thereof.
SECTION 12. SUPPLEMENTS AND AMENDMENTS. The Company may from time to time
make supplements or amendments to this Agreement with the prior written consent
of Holders of not less than a majority of the Warrants or, if a change is made
with respect to a series of Warrants only, the holders of not less than a
majority of such series of Warrants.
SECTION 13. MUTILATED OR MISSING WARRANT CERTIFICATES. If any Warrant
Certificate shall be mutilated, lost, stolen or destroyed, the Company shall
deliver a new Warrant Certificate of like tenor and denomination in exchange and
substitution therefor upon surrender and cancellation of the mutilated Warrant
Certificate or, in the case of a lost, stolen or destroyed Warrant Certificate,
upon receipt of evidence satisfactory to the Company of the loss, theft or
destruction of such Warrant Certificate and, in either case, upon receipt of
such indemnity as the Company may require. Applicants for substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe. Any such new Warrant
Certificate shall constitute an original contractual obligation of the Company,
whether or not the allegedly lost, stolen, mutilated or destroyed Warrant
Certificate shall be at any time enforceable by anyone.
SECTION 14. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment of
any subsequent transfer agent for shares of the Common Stock, the Company will
provide to Holder a statement setting forth the name and address of such
transfer agent.
SECTION 15. NOTICES. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier (i) the date of
transmission, if such notice or such communication is delivered via facsimile at
the facsimile telephone number specified for notice prior to 5:00 p.m., Pacific
Time, on a business day, (ii) the business day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
12
telephone number specified for notice later than 5:00 p.m., Pacific Time, on any
date and earlier than 11:59 p.m., Pacific Time, on such date, (iii) the business
day following the date of mailing, if sent by nationally recognized overnight
courier service or (iv) actual receipt by the party to whom such notice or
communication is required to be given. The addresses and facsimile numbers for
all such notices, communication and/or deliveries shall be as follows:
if to the Company,
GenesisIntermedia, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Ramy El-Batrawi
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Nida & ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Holder,
Riverdale LLC
c/o Icahn Associates
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other addresses or facsimile numbers as any party may most recently
have designated in writing to the other parties hereto by such notice. The
Company shall promptly mail by first class mail, postage prepaid, to Holder any
and all notices or other communications or deliveries required or permitted to
be provided hereunder to Holder.
SECTION 16. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 17. GOVERNING LAW. This Agreement and each Warrant issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be construed in accordance with the laws of the State
of Delaware without regard to the conflicts of laws principles thereof.
SECTION 18. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement.
13
SECTION 19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
[Signature page follows]
14
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement
to be executed and delivered as of the day and year first above written.
COMPANY:
GENESISINTERMEDIA, INC.,
a Delaware corporation
By: ___________________________________
Name:
Title:
HOLDER:
RIVERDALE LLC,
a New York limited liability company
By: ___________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Manager
EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"). THIS WARRANT SHALL NOT CONSTITUTE AN OFFER
TO SELL NOR A SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE SECURITIES ARE
"RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
ACT PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
FORM OF SERIES I[A/B/C] WARRANT CERTIFICATE
EXERCISABLE ONLY ON OR AFTER JULY 2, 2001 AND BEFORE 5:00 P.M. JULY 1, 2005
(as provided in the Warrant Agreement
referred to below)
WARRANT NUMBER
I[A/B/C] _______
GENESISINTERMEDIA, INC.
This Series I[A/B/C] Warrant Certificate Certifies that
Riverdale LLC
or registered assigns is the registered holder of ______________________
Series I[A/B/C] Warrants (the "Warrants") expiring on the Expiration Date (as
defined in Section 3(b) of the Warrant Agreement and described on the reverse
hereof) to purchase shares of the common stock (the "Common Stock"), par value
$.001 per share, of GenesisIntermedia, Inc., a Delaware corporation (the
"Company"). Capitalized terms not otherwise defined herein shall have the terms
prescribed in the Warrant Agreement. The Warrant may be exercised by either of
the following methods:
(i) Cash Exercise. If Holder desires to exercise this Warrant for cash,
Holder must elect and sign the "Cash Exercise" election on the reverse side of
the Warrant Certificate and deliver to the Company (a) this certificate and (b)
cash or a certified or official bank check payable to the Company in the amount
of the Exercise Price.
(ii) Cashless Exercise. If Holder desires to exercise the Warrant without
delivering cash, Holder must elect and sign the "Cashless Exercise" election on
the reverse side of the Warrant Certificate and deliver to the Company the
Warrant Certificate or Certificates representing the Warrants to be exercised (a
"Cashless Exercise"). Upon a Cashless Exercise, Holder is entitled to a number
of shares of Warrant Common Stock equal in amount (based upon the Current Market
Price of Common Stock) to (a) the amount by which the Current Market Price for
the number of shares of Common Stock to which such holder would be entitled in a
Cash Exercise exceeds the Exercise Price for such shares of Common Stock divided
by (b) the Current Market Price per share of Common Stock. No fractional shares
shall be issued on exercise of the Warrant and that the number of kind of shares
(or in certain events other property) purchasable upon exercise of the Warrants
and the Exercise Price referred to on the reverse hereof may as of the date of
this Warrant Certificate have been, or may after such date be, adjusted as a
result of the occurrence of certain events, as more fully provided in the
Warrant Agreement. No Warrant may be exercised after 5:00 p.m. Pacific Time on
the Expiration Date.
Reference is hereby made to the further provisions of this Warrant Certificate
set forth on the reverse hereof and such further provisions shall for all
purposes have the same effect as though fully set forth at this place.
IN WITNESS WHEREOF, GENESISINTERMEDIA, INC. has caused facsimile signatures
of its duly authorized officer to be printed hereon and the facsimile of its
corporate seal to be affixed hereunto.
Dated:
GENESISINTERMEDIA, INC.
By: ______________________
Its:
[Reverse]
GENESISINTERMEDIA, INC.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue and series of Warrants issued pursuant to a Warrant Agreement
dated as of July 2, 2001 (the "Warrant Agreement"), duly executed and delivered
by the Company to Holder, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and the Company and the Holder
(the words "Holders" or "Holder" meaning the registered holders or registered
holder) of the Warrants and a copy of which Warrant Agreement will be available
at the office of the Secretary of the Company for inspection by holders of
Warrants during normal business hours.
The Warrants evidenced by this Warrant Certificate may be exercised at any
time on or before the Expiration Date through a Cash Exercise or Cashless
Exercise as described on the other side of this Certificate. In the event that
upon any exercise of Warrants evidenced hereby the number of Warrants exercised
shall be less than the total number of Warrants evidenced hereby, there shall be
issued to Holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price may, subject to certain conditions, be adjusted and under
certain circumstances the Warrant may become exercisable for securities or other
assets other than the shares referred to on the face hereof. If the Exercise
Price is adjusted, the Warrant Agreement provides that the number of Common
Shares purchasable upon the exercise of each Warrant shall be adjusted in
certain circumstances.
This Warrant Certificate is transferable, in whole or in part, on the
register maintained by the Company, upon surrender of this Warrant Certificate
at the office of the Company, or at another office or agency to be maintained by
the Company, together with a written assignment of the Warrant Certificate, on
the Form of Assignment set forth hereon or in other form satisfactory to the
Company, duly executed by Holder or his duly appointed legal representative, and
together with funds to pay any applicable taxes or governmental charges payable
in connection with such transfer. Upon such surrender and payment, a new Warrant
Certificate shall be issued and delivered, in the name of the assignee and in
the denomination or denominations specified in such instrument of assignment. If
less than all of this Warrant Certificate is being transferred, a new Warrant
Certificate or Certificates shall be issued of the portion of this Warrant
Certificate not being transferred.
This Warrant Certificate may be divided or combined with other Warrant
Certificates upon surrender hereof to the Company or at another office or agency
to be maintained by the Company, together with a written notice specifying the
names and denominations in which new Warrant Certifications are to be issued,
signed by the Holder hereof or his duly appointed legal representative, and
together with the funds to pay any applicable taxes or governmental charges
payable in connection with such transfer. Upon such surrender and payment, a new
Warrant Certificate or Certificates shall be issued and delivered in accordance
with such notice.
The Company shall make no service or other charge in connection with any
such transfer or exchange of this Warrant Certificate, except for any applicable
taxes or governmental charges payable in connection therewith.
The Company may deem and treat the Holder hereof as the absolute owner of
this Warrant Certificate (notwithstanding any notation of ownership or other
writing hereon made by anyone), for the purpose of any exercise or conversion
hereof, any distribution to Holder hereof, and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
ELECTION TO EXERCISE
To be executed upon exercise of Warrant
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate:
____ (a) Cash Exercise: to receive ______ Shares of common stock, par value
$.001 per share, and herewith tenders payment for such Shares in the amount of
$___________ in accordance with the terms of this Warrant Certificate.
____ (a) Cashless Exercise: to receive ______ Shares of common stock, par
value $.001 per share, in accordance with the terms of this Warrant Certificate.
The undersigned requests that a certificate for such shares be registered
in the name of ___________________, whose address is
__________________________________________ and ____ that ____ such ____ shares
____ be ____ delivered ____ to _____ __________________________ _____ whose ____
address ____ is ______________________________________________________. If said
number of shares is less than all of the shares of common stock purchasable
hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such whole Shares be registered in the name of
_____________________, whose address is ______________________ and that such
Warrant Certificate be delivered to _____________ whose address is
___________________________________.
Signature: ______________________________
Date:
Signature Guaranty:
ASSIGNMENT
To be executed to transfer the Warrant Certificate
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfer unto
____________________________
Whose address is ____________________________________________________________
this ___ Warrant ___ Certificate, ___ together ___ with all right, ___ title and
___ interest ___ therein, ___ and does ___ hereby ___ irrevocably ___ constitute
___ and ___ appoint _________________________________________________ attorney
to transfer the within Warrant Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated:_________________________ (Signature_____________________
must conform in all respects to
name of holder as specified on
the face of the Warrant
Certificate).
----------------------------------------------------
(Insert Social Security or Taxpayer Identification Number of Holder)