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 OPTION 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.
AMENDED AND RESTATED
OPTION AGREEMENT
This AMENDED AND RESTATED OPTION AGREEMENT (this "Agreement") effective as
of July 2, 2001, is entered into by and between Ramy El-Batrawi (the "Optionor")
and individual resident in California and the Chairman and Chief Executive
Officer of 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
Optionor has agreed to grant Options to the Holder providing for the purchase of
shares of Common Stock of the Company held by Optionor 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 OPTION CERTIFICATES. There shall be two series of
Options, denominated as Series IA and IB (each a the "Option" and collectively,
the "Options"). The certificates evidencing the Options (the "Option
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. Each Option Certificate shall be dated as of the
date of issuance thereof, whether upon initial issuance or upon transfer or
exchange, and each Option shall entitle Holder thereof to purchase one share of
Common Stock held by the Optionor, 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 OPTION 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
"Option Common Stock" shall mean the Common Stock issuable upon exercise of
Options. In case, by reason of the operation of Section 4, the Options 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 Options 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 OPTIONS; EXERCISE PRICE OF OPTIONS.
(a) Options, and corresponding Option 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
Option Certificate.
Aggregate
Number of Shares
Series of Options Subject to Options
IA 1,000,000
IB 500,000
(b) Holder may exercise the Options evidenced by an Option Certificate, in
whole or in part and in accordance with the provisions of this Section 3, at any
time and from time to time after the date of this Agreement. To exercise
Options, Holder shall surrender to the Optionor at the principal executive
office of the Company the Option Certificate with the form of election to
purchase duly executed, together with payment of the Exercise Price (as defined
below) for each share of Option Common Stock issuable upon exercise of an
Option, 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
Option Certificates shall cease and the Options shall become void.
(c) The purchase price for each share of Common Stock pursuant to the
exercise of an Option (the "Exercise Price") shall be as follows: Series IA -
$2.00 per share; and Series IB - $4.00 per share. The Exercise Price shall be
payable in lawful money of the United States of America, except as provided in
clause (d)(2) below.
(d) Options may be exercised by either of the following methods:
(1) Cash Exercise. If Holder desires to exercise Options for
cash, Holder must elect and sign the "Cash Exercise" election on
the reverse side of the Option Certificate and deliver to the
Optionor (x) the Option Certificate or Certificates representing
the Options to be exercised and (y) cash or a certified or
official bank check payable to the Optionor for the Exercise
Price for such Option (a "Cash Exercise").
(2) Cashless Exercise. If Holder desires to exercise Options
without delivering cash, Holder must elect and sign the "Cashless
Exercise" election on the reverse side of the Option Certificate
and deliver to the Optionor the Option Certificate or
Certificates representing the Options to be exercised (a
"Cashless Exercise"). Upon a Cashless Exercise, Holder shall be
entitled to a number of shares of Option Common Stock determined
by using the following formula:
X = Y(A-B)
------
A
Where: X = the number of shares of Option Common Stock to be
issued to the Holder under the provisions of this
Section 3(d)(2)
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Y = the number of shares of Option Common Stock that
would otherwise be issued upon an exercise of the
Options 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
an Option (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 an Option shall be
adjusted to the number of shares of Common Stock that the Holder of an Option
would have owned or have been entitled to receive after the happening of such
event for each series of Options, had an Option 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 an Option immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock purchasable with an Option 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 Warrant,
Convertible Security (each as defined in paragraph (c) below) or Option) (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 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
Options 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 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
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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 Options shall be increased to a number
determined by multiplying the number of shares for each affected series of
Options 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
Options, except by operation of paragraph (j) or (k) below.
(c) Issuance of Warrants. 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 (as adjusted from time to time in accordance with the terms thereof,
the "Excluded Warrants") to purchase 4,000,000 shares of Common Stock being
issued by the Company concurrently herewith (any such rights, warrants or
options being herein called "Warrants" and any such convertible or exchangeable
stock or securities being herein called "Convertible Securities"), whether or
not such Warrants 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 Warrants or 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, distribution or granting of such Warrants, plus the
minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Warrants, plus, in the case of Warrants 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 Warrants) 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 Warrants, then,
for the purposes of paragraph (b) above, the total maximum number of shares of
Common Stock issuable upon the exercise of all such Warrants or upon the
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conversion or exchange of the total maximum amount of the Convertible Securities
issuable upon the exercise of all such Warrants shall be deemed to have been
issued as of the date of the issuance, sale, distribution or granting of such
Warrants 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 Warrants or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Warrants. 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 or, to the extent applicable, pursuant
to arbitration as provided in the Warrant Agreement at the same time such
determination is made in connection with the Warrants.
(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 Warrants), 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,
other securities or other properties or assets (in each case other than (i)
dividends payable in Common Stock, Warrants or Convertible Securities 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
5
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 an Option
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 provided that, in no event shall the
denominator be less than 1/100 of $0.01. 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 Warrants 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 Warrants 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 by the Company 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, Warrants 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 Warrants 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 Warrants by the parties thereto, such Warrants shall be
deemed to have been issued, sold or distributed for such amount of consideration
as shall be allocated to such Warrants 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 Options) 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 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 Warrants and Convertible Securities. If the exercise price
provided for in any Warrants referred to in paragraph (c) above (but excluding
the Excluded Warrants), the additional consideration, if any, payable upon the
6
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 Options
shall forthwith be readjusted (effective only with respect to any exercise of
the Options 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 Warrants 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 Warrants and Convertible Securities as then remain outstanding.
(j) Expiration of Warrants and Convertible Securities. If, at any time
after any adjustment to the number of shares of Common Stock purchasable upon
the exercise of the Options shall have been made pursuant to paragraph (c), (d)
or (i) above or this paragraph (j), any Warrants or Convertible Securities shall
have expired unexercised or, solely with respect to Warrants 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 Warrants or
Convertible Securities were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such Warrants 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 Warrants 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 Warrants 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 Options 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 Options immediately before the effective date
of the transaction.
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
Options, effective immediately prior to the effective date of such Cash Merger
7
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 Options
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 Options, then the number of such other securities so
receivable upon exercise of the Options 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 Optionor
from time to time may reduce the Exercise Price for the Options 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 Options is
reduced, the Optionor 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 and the Company shall provide notice thereof to
Optionor, then in each such case, the Optionor 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 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 an Option, 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 as soon
as practicable after Optionor receives notice thereof from the Company.
Upon any adjustment of the Exercise Price pursuant to Section 4, the
Company shall promptly thereafter cause to be given to Holder and Optionor for
such purpose written notice of such adjustments by first-class mail, postage
prepaid, a certificate 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
Option Common Stock (or portion thereof) issuable after such adjustment in the
Exercise Price, upon exercise of an Option and payment of the adjusted Exercise
Price, which certificate shall be conclusive evidence of the correctness of the
8
matters set forth therein. To the extent the Options 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.
SECTION 6. EXERCISE OF OPTIONS AND STOCK CERTIFICATES
(a) Subject to the provisions of this Agreement, the Holder shall have the
right, which may be exercised as provided in such Option Certificate, to
purchase from the Optionor (and the Optionor shall transfer and sell to Holder)
all or part of the number of fully paid and nonassessable shares of Option
Common Stock specified in such Option Certificate (subject to the adjustments as
herein provided), upon a Cash Exercise or Cashless Exercise. Upon surrender of
such Option Certificate, it shall be canceled by the Optionor. The date of
exercise of any Option shall be deemed to be the date of its receipt by the
Optionor 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 regular cash dividends declared or paid on
shares of Common Stock prior to the exercise of an Option. Upon such Cash
Exercise or Cashless Exercise, the Optionor shall transfer and cause to be
delivered against receipt of payment therefor, and in such name or names as the
Holder may designate, a certificate or certificates for the number of full
shares of Option Common Stock so purchased upon the exercise of such Options. No
cash shall be paid in respect of any fraction of a share of such stock issuable
upon such surrender, as provided in Section 7 of this Agreement.
(b) Each certificate evidencing shares of Common Stock transferred upon the
exercise of Options shall have such letters, numbers or other marks of
9
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.
SECTION 7. ELIMINATION OF FRACTIONS. The Optionor shall not be required to
transfer fractional shares of Common Stock upon any exercise of Options. As to
any final fraction of a share that the Holder would otherwise be entitled to
purchase upon such exercise, no cash or other adjustment in respect of such
final fraction shall be made and it shall be disregarded for all purposes.
SECTION 8. TRANSFER TAXES. The Holder will pay all documentary stamp taxes
attributable to the transfer of shares of Option Common Stock upon the exercise
of any Option; provided, however, that neither the Optionor nor the Company
shall 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
Option Common Stock in a name other than that of the Holder.
SECTION 9. RESERVATION OF SHARES. The Optionor shall, from the date hereof
through the date on which all Options shall have been exercised or shall have
expired, segregate and place in an escrow pursuant to an escrow agreement of
even date between Riverdale LLC, the Optionor and the Escrow Agent, a form of
which is appended hereto as Exhibit B, for the purpose of effecting the transfer
of stock upon exercise of Options, one million shares of Common Stock (and any
property or securities issued on account thereof and which are to be held by the
Optionor pursuant to the terms of this Agreement). The Holder shall have a right
to direct Optionor and Optionor hereby agrees if so directed to vote the shares
underlying the Options on any matters requiring the vote of the Company's
stockholders and relating to the issuance of securities of the Company,
amendments to the Company's charter documentation which affect the rights of
holders of Common Stock, the sale of assets of the Company, a merger or
consolidation of the Company, or any other recapitalization or reorganization of
the Company.
Optionor covenants that all shares of Option Common Stock which may be
transferred upon exercise of the Options will be fully paid, nonassessable, free
of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the transfer thereof. Optionor agrees to place the one
million shares (the "Series IA Escrow Shares") subject to the Series IA Options,
and any other shares that may become subject to such Options, as a result of the
provisions of Section 4 hereof, in escrow pursuant to an Escrow Agreement
between Optionor and the Holder dated the date hereof. In addition, in the event
that Optionor receives notice by the Holder of its intention to exercise its
Series IB Options, Optionor agrees to place the 500,000 shares (the "Series IB
Escrow Shares") subject to the Series IB Options, and any other shares which may
become subject to such Options, as a result of the provisions of Section 4
hereof, in escrow pursuant to the Escrow Agreement. If the Series IA Escrow
Shares are not placed in escrow pursuant to the Escrow Agreement on or before
July 30, 2001, Optionor shall pay to the Holder the sum of $35,000 for each
business day that the Series IA Escrow Shares are not so placed in escrow. If
the Series IB Escrow Shares are not placed in escrow pursuant to the Escrow
Agreement within seven days of the Optionor receiving notice by the Holder of
its intention to exercise its Series IB Options, Optionor shall pay to the
Holder the sum of $35,000 for each business day that the Series IB Escrow Shares
10
are not so placed in escrow. These payments shall be in addition to and not in
lieu of any other damages suffered by the Holder as a result of Optionor's
failure to deliver the Option Common Stock as required by the terms of the
Options upon exercise of the Options.
SECTION 10. SUPPLEMENTS AND AMENDMENTS. The Optionor and Holder may from
time to time make supplements or amendments to this Agreement upon their mutual
written consent.
SECTION 11. MUTILATED OR MISSING OPTION CERTIFICATES. If any Option
Certificate shall be mutilated, lost, stolen or destroyed, the Optionor shall
deliver a new Option Certificate of like tenor and denomination in exchange and
substitution therefor upon surrender and cancellation of the mutilated Option
Certificate or, in the case of a lost, stolen or destroyed Option Certificate,
upon receipt of evidence satisfactory to the Optionor of the loss, theft or
destruction of such Option Certificate and, in either case, upon receipt of such
indemnity as the Optionor may require. Holder shall also comply with such other
reasonable regulations and pay such other reasonable charges as the Optionor may
prescribe. Upon transfer of any property upon exercise of any new Option
Certificate, the replaced Option Certificate shall be void to the same extent
and it shall be the obligation of Holder to satisfy any demand for transfer of
property upon its later exercise to such extent.
SECTION 12. 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
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 Optionor,
GenesisIntermedia, Inc.
5805 Sepulveda Blvd., 8th Floor
Van Nuys, CA 91411
Attn: Ramy El-Batrawi
Fax: (818) 902-4301
with a copy to:
Sheppard Mullin Richter & Hampton, LLP
800 Anacapa Street
Santa Barbara, CA 93101
Attn: Theodore R. Maloney
Fax: (805) 568-1955
if to the Holder,
Riverdale LLC c/o Icahn Associates
767 5th Avenue, 47th Floor
New York, New York 10153
Attn: Marc Weitzen, Esq.
Fax: (212) 750-5807
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.
11
SECTION 13. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Optionor shall bind and inure to the benefit of
their respective successors and assigns hereunder.
SECTION 14. GOVERNING LAW. This Agreement and each Option 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 15. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Optionor and
Holder any legal or equitable right, remedy or claim under this Agreement.
SECTION 16. 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]
12
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Option Agreement to be executed and delivered dated September 10, 2001.
OPTIONOR:
RAMY EL-BATRAWI
-----------------------------------
HOLDER:
RIVERDALE LLC
a New York limited liability company
By: ___________________________________
Robert J. Mitchell
Manager
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 OPTION 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] OPTION CERTIFICATE
EXERCISABLE ONLY ON OR AFTER JULY 2, 2001 AND BEFORE 5:00 P.M. JULY 1, 2005
(as provided in the Option Agreement
referred to below)
OPTION NUMBER
I[A/B] _______
GENESISINTERMEDIA, INC.
This Series I[A/B] Option Certificate Certifies that
RIVERDALE LLC
is the registered holder of ______________________
Series I[A/B] Options (the "Options") expiring on the Expiration Date (as
defined in Section 3(b) of the Option 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") held by Ramy El-Batrawi (the "Optionor"). Capitalized terms not
otherwise defined herein shall have the terms prescribed in the Option
Agreement.
The Option may be exercised by either of the following methods:
(i) Cash Exercise. If Holder desires to exercise this Option for cash,
Holder must elect and sign the "Cash Exercise" election on the reverse side of
the Option Certificate and deliver to the Company (a) this certificate and (b)
cash or a certified or official bank check payable to the Optionor in the amount
of the Exercise Price.
(ii) Cashless Exercise. If Holder desires to exercise the Option without
delivering cash, Holder must elect and sign the "Cashless Exercise" election on
the reverse side of the Option Certificate and deliver to the Company the Option
Certificate or Certificates representing the Options to be exercised (a
"Cashless Exercise"). Upon a Cashless Exercise, Holder is entitled to a number
of shares of Option Common Stock as set forth in the Option Agreement.
No fractional shares shall be issued on exercise of the Option, as provided in
the Option Agreement, and that the number of kind of shares (or in certain
events other property) purchasable upon exercise of the Options and the Exercise
Price referred to on the reverse hereof may as of the date of this Option
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 Option Agreement. No
Option may be exercised after 5:00 p.m. Pacific Time on the Expiration Date.
Reference is hereby made to the further provisions of this Option 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, the undersigned has caused duly signed this Option
Certificate.
Dated:
RAMY EL-BATRAWI
--------------------------
[Reverse]
GENESISINTERMEDIA, INC.
The Options evidenced by this Option Certificate are part of a series of
Options issued pursuant to an Option Agreement dated as of July 2, 2001 (the
"Option Agreement"), duly executed and delivered by the Optionor to Holder,
which Option Agreement is hereby incorporated by reference in and made a part of
this instrument and the Optionor and the Holder (as defined in such Option
Agreement) and a copy of which Option Agreement will be available at the office
of the Secretary of the Company for inspection by Holders during normal business
hours.
The Options evidenced by this Option 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 Options evidenced hereby the number of Options exercised
shall be less than the total number of Options evidenced hereby, there shall be
issued to Holder a new Option Certificate evidencing the number of Options not
exercised.
The Option Agreement provides that upon the occurrence of certain events
the Exercise Price may, subject to certain conditions, be adjusted and under
certain circumstances the Option 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 Option Agreement provides that the number of Common
Shares purchasable upon the exercise of each Option shall be adjusted in certain
circumstances.
This Option Certificate is not transferable, in whole or in part.
ELECTION TO EXERCISE
To be executed upon exercise of Option
The undersigned hereby irrevocably elects to exercise the right,
represented by this Option 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 Option Certificate.
____ (a) Cashless Exercise: to receive ______ Shares of common stock, par
value $.001 per share, in accordance with the terms of this Option 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 Option Certificate representing the remaining
balance of such whole Shares be registered in the name of the undersigned. and
that such Option Certificate be delivered to the undersigned.
Signature: ______________________________
Date:
Signature Guaranty: