310020 v.1 [6N7_01!.WPD]
Exhibit 10.1
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS OF ANY STATE (THE "ACTS") AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACTS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. W-1 Date: September 23, 1999
WARRANT TO PURCHASE COMMON STOCK
OF
▇▇▇▇▇▇.▇▇▇, INC.
This certifies that, for value received, Atlantis Equities, Inc., a
Delaware corporation, or its registered assignee ("Holder"), is entitled,
subject to the terms set forth below, to purchase from ▇▇▇▇▇▇.▇▇▇, INC. (the
"Company"), a Delaware corporation (a) 7,819,092 shares (the "shares") of the
Common Stock of the Company ("Common Stock"), representing 80% of the fully
diluted Common Stock of the Company as constituted on the date hereof after
giving effect to the exercise of this Warrant (the "Warrant Issue Date"), except
for options to purchase 190,516 shares of Common Stock at $2.50 per share (the
"Outstanding Options"), and (b) options (the "Options") exercisable for 762,064
shares of Common Stock at $2.50 per share and expiring December 31, 2000,
representing 80% of the shares of Common Stock underlying the Outstanding
Options, with the Notice of Exercise attached hereto duly exercised, and
simultaneous payment therefor in lawful money of the United States, at the
Exercise Price as set forth in Section 2 below. The number, character and
Exercise Price of such shares of Common Stock are subject to adjustment as
provided below.
1. Term of Warrant and Price of Warrant.
This Warrant shall be exercisable, in whole or in part, during the
period commencing on the date hereof and ending on September 29, 1999, provided,
however, that if the Company receives a $50,000 loan from Holder or a source
arranged by ▇▇▇▇▇▇ on or before September 29, 1999 such exercise period shall be
extended to October 30, 1999 and provided, further, that if the Company enters
into an agreement for a merger or acquisition (the "Acquisition") on or prior to
October 30, 1999, the period during which this Warrant may be exercised shall be
extended to the earlier of the closing or termination of the Acquisition, and
provided, further, that if the Company has not closed a merger or acquisition by
October 30, 1999, the Warrant shall expire unless the Company receives, by
November 1, 1999, an additional $50,000 loan from Holder or a source arranged by
▇▇▇▇▇▇.
2. Exercise Price and Number of Shares.
2.1 Exercise Price. The exercise price at which this Warrant may be exercised
shall be an aggregate of $1,000,000 (the "Exercise Price").
2.2 Number of Shares and Options. The number of shares of Common Stock which may
be purchased pursuant to this Warrant shall equal 7,819,092, or 80% of the
fully-diluted capital stock, except for the Outstanding Options, as adjusted
from time to time pursuant to Section 11 hereof. The number of Options which
shall be received upon exercise in full of this Warrant shall equal 762,064 and
represent 80% of the total of the Outstanding Options which can be exercised at
$2.50 each and shall expire on December 31, 2000 and shall otherwise be on the
same terms as such Options.
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310020 v.1 [6N7_01!.WPD]
3. Exercise of Warrant.
(a) The purchase rights represented by this Warrant are exercisable
by the Holder in whole or in part at any time during the term of this Warrant,
or from time to time, by the surrender of this Warrant and the Exercise Form.
(b) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise, as
provided above, and the person entitled to receive the shares of Common Stock
and Options issuable upon such exercise shall be treated for all purposes as the
holder of record of such shares and Options as of the close of business on such
date. As promptly as practicable on or after such date, the Company at its
expense shall issue and deliver to the person or persons entitled to receive the
same a certificate or certificates for the number of shares and Options issuable
upon such exercise. In the event that this Warrant is exercised in part, the
Company at its expense will execute and deliver a new Warrant of like tenor
exercisable for the number of shares and Options for which this Warrant may then
be exercised.
(c) If this Warrant is exercised in part this Warrant must be
exercised for a number of whole shares of the Common Stock.
4. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft destruction or mutilation of this Warrant and, in the
case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor and amount.
5. Rights of Stockholders. The Holder shall not be entitled to vote or receive
dividends or be deemed the holder of Common Stock, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value, or change of
stock to no par value, consolidation, merger, conveyance or otherwise) or to
receive notice of meetings, or to receive dividends or subscription rights or
otherwise until and to the extent the Warrant shall have been exercised as
provided herein.
6. Transfer of Warrant.
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6.1 Exchange of Warrant Upon a Transfer. Upon delivery by the transferee of a
written agreement to be bound by the terms of this Warrant and surrender of this
Warrant for exchange, properly endorsed and transferred in accordance with this
Section 6, the Company at its expense shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, of the number of shares issuable upon exercise hereof.
6.2 Restrictions on Transfer; Compliance with Securities Laws.
(a) The Holder of this Warrant, by acceptance hereof, acknowledges
that this Warrant and the shares of Common Stock and Options to be issued upon
exercise hereof are being acquired solely for the Holder's own account and not
as a nominee for any other party, and for investment and agrees to comply with
the transfer restrictions contained in this Section 6.2. The Holder will not
offer, sell or otherwise dispose of this Warrant or any shares of Common Stock
or Options to be issued upon exercise hereof ("Securities"), except under
circumstances that will not result in a violation of applicable federal and
state securities laws. Prior to offering, selling or otherwise disposing of the
Securities, the holder hereof or thereof will give the Company a written notice
describing the manner and circumstances of the transfer accompanied by, if
requested by the Company, a written opinion of legal counsel satisfactory to the
Company to the effect, as amended, that the proposed transfer may be effected
without registration under the Securities Act of 1933 or any state blue sky law.
Any Securities transferred in violation of applicable federal and state
securities laws shall be void and not recognized by the Company. Any transferee
of this Warrant or Shares shall execute an agreement agreeing to be bound by the
terms of this Section 6.
(b) All shares of Common Stock or Options issued upon exercise
hereof shall be stamped or imprinted with a legend in substantially the
following form (in addition to any legend required by state securities laws):
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
UNITED STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR
VALUE, DIRECTLY OR INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED
ON THE BOOKS OF THE COMPANY, WITHOUT REGISTRATION OF SUCH SECURITIES
UNDER ALL APPLICABLE UNITED STATES FEDERAL SECURITIES LAWS OR
COMPLIANCE WITH AN APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE
AT THE OPTION OF THE COMPANY, TO BE EVIDENCED BY AN OPINION OF
SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE COMPANY, THAT NO
VIOLATION OF SUCH REGISTRATION PROVISIONS WOULD RESULT FROM ANY
PROPOSED TRANSFER OR ASSIGNMENT."
7. Registration Rights.
7.1 Certain Definitions.
As used in this Section 7, the following terms shall have the
following respective meanings:
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"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Form S-1" shall mean Form S- I issued by the Commission or any substantially
similar form then in effect.
"Form S-2" shall mean Form S-2 issued by the Commission or any substantially
similar form then in effect.
"Form S-3" shall mean Form S-3 issued by the Commission or any substantially
similar form then in effect.
"Holder" shall mean the record owner or owners of Registrable Securities.
"Material Adverse Event" shall mean an occurrence having a consequence that
either (a) is materially adverse as to the business, properties, prospects or
financial condition of the Company taken as a whole or (b) is reasonably
foreseeable, has a reasonable likelihood of occurring and, if it were to occur,
would materially adversely affect the business, properties, prospects or
financial condition of the Company taken as a whole.
The terms "Register" "Registered" and "Registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act ("Registration Statement"), and the declaration or ordering of
the effectiveness of such Registration Statement.
"Registrable Securities" shall mean all Common Stock not previously sold to the
public and issued to the Holder pursuant to the exercise of this Warrant, or
Common Stock issued or Options with respect to such shares pursuant to stock
splits, stock dividends and similar distributions with respect to such shares,
provided, however, that shares of Common Stock which are Registrable Securities
shall cease to be Registrable Securities at such time, and for so long as, such
shares are eligible for sale pursuant to Rule 144(k) under the Securities Act.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Section 7(b) of this Agreement, including, without limitation,
all federal and state registration, qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Company, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration, but shall not include Selling Expenses.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
7.2 Piggyback Registration.
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7.2.1 Notice of Piggyback Registration and Inclusion of Registrable
Securities. Subject to the terms of this Agreement, in the
event the Company decides to Register any of its Common Stock
for cash (either for its own account or the account of a
security holder), other than pursuant to (i) a Registration
Statement which exclusively relates to the Registration of
securities under an employee stock option, purchase, bonus or
other benefit plan, or (ii) a Registration relating solely to
a transaction under Rule 145 promulgated by the Commission,
then at any time following an Initial Public Offering and for
so long as the Holder holds Registrable Securities, the
Company will: (1) promptly give the Holder written notice
thereof (which shall include a list of the jurisdictions in
which the Company intends to attempt to qualify such
securities under the applicable Blue Sky or other state
securities laws) and (2) include in such Registration (and any
related qualification under Blue Sky laws or other
compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request
delivered to the Company by the Holder within 10 days after
delivery of such written notice from the Company.
7.2.2 Underwriting in Piggyback Registration. If the Registration of
which the Company gives notice is a Registered public offering
involving an underwriting, the Company shall so advise the
Holder as a part of the written notice given pursuant to
Subsection 7.2.1. In such event the right of the Holder to
Registration shall be conditioned upon such underwriting and
the inclusion of a Holder's Registrable Securities in such
underwriting to the extent provided in this Section 7.2. The
Holder shall, together with the Company, enter into an
underwriting agreement with the Underwriter's Representative
for such offering. The Holder shall have no right to
participate in the selection of the underwriters for an
offering pursuant to this Section.
7.2.3 Marketing, Limitation in Piggyback Registration. In the event
the Underwriter's Representative advises the Company and the
Holder engaged in a Registration under Subsection 7.2.1 in
writing that market factors (including, without limitation,
the aggregate number of shares of Common Stock requested
to be Registered, the general condition of the market and
the status of the persons proposing to sell securities
pursuant to the Registration) require a limitation of the
number of shares to be underwritten, the Underwriter's
Representative (subject to the allocation priority set forth
in clause (iii) below) may exclude some or all of the
Registrable Securities from such Registration and
underwriting.
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7.2.4 Allocation of Shares in Piggyback Registration. In the event
that the Underwriter's Representative limits the number of
shares to be included in a Registration pursuant to Subsection
7.2.1, the Holder shall be entitled to include a portion of
the Registrable Securities requested to be included in such
Registration pro rata (based on the number of shares
requested to be included) with all other persons currently
holding similar written piggyback registration rights
requesting Registration. Unless all Registrable Securities
and such other piggybacking shares requested to be included
in such Registration are so included, no other securities may
be included in the Registration Statement in addition to
those securities being sold on behalf of the Company.
7.2.5 Withdrawal in Piggyback Registration. If the Holder
disapproves of the terms of any such underwriting, it may
elect to withdraw therefrom by written notice to the Company
and the underwriter delivered at least seven days prior to the
effective date of the Registration Statement. Any Registrable
Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such Registration.
7.3 Demand Registration.
Subject to Section 7.5.3 below, if, the Company shall receive
a written request (specifying that it is being made pursuant
to this Section 7(c)) from persons holding more than fifty
percent (50%) of the Registrable Securities that the Company
file a registration statement or similar document under the
Securities Act, then the Company shall promptly notify in
writing all other Holders holding Registrable Securities of
such request and shall use its best efforts to cause all
Registrable Securities that Holders have requested be so
registered within 20 days after written notice from the
Company of the proposed registration to be registered under
the Securities Act. Notwithstanding the foregoing, if the
Company shall furnish to such Holders a certificate signed by
the President of the Company stating that in good faith
judgment of the Company's Board of Directors it would be
seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future, then
the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to
exceed four (4) months; provided, however, that the Company
shall not obtain such a deferral more than once in any
12-month period.
The Company shall be obligated to effect only two
registrations pursuant to this Section 7.3.
7.4 Form S-3 Registration Rights.
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In the event the Company is eligible to register securities on
Form S-3 and receives from Holders holding more than 50
percent (50%) of the Registrable Securities a written request
that the Company effect a registration statement on Form S-3
for an offering of Registrable Securities covering the
registration of not less than 50 percent (50%) of the
Registrable Securities held by all holders of Registrable
Securities, the expected aggregate price to the public of
which exceeds $1,000,000, net of any underwriting discounts
and commissions, then the Company will promptly give written
notice of the proposed Form S-3 registration to all Holders of
Registrable Securities and will, as soon as practicable, use
its best efforts to effect registration of the Registrable
Securities on Form S-3, together with all or such portion of
the Registrable Securities of any holder joining in such
request as are specified in a written request delivered to the
Company within 20 days after written notice from the Company
of the proposed registration.
These rights are in addition to, and not in lieu of, the
rights granted under Sections 7.2 and 7.3 hereof.
7.5 Obligations of the Company and Holders.
7.5.1 Obligations of the Company. Whenever required under Section
7.3 or Section 7.4 to use its best efforts to the effect the
registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
7.5.1.1 Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become and
remain effective until the contemplated distribution is over.
7.5.1.2 Prepare and file with the Commission, in a timely manner, such
amendments and supplements to such registration statement and
the prospectus used in connection with such registration
statement as may be necessary to comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such registration statement.
7.5.1.3 Furnish to the Holders and deliver as directed such numbers of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and
such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned
by them.
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7.5.1.4 Use its best efforts to register and qualify the securities
covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities
covered by the registration statement, provided that the
Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions, and further provided that (anything in this
Agreement to the contrary notwithstanding with respect to the
bearing of expenses) if any jurisdiction in which the
securities shall be qualified shall require that expenses
incurred in connection with the qualification of the
securities in that jurisdiction be borne by selling
shareholders, then such expenses shall be payable by selling
shareholder pro rata, to the extent required by such
jurisdiction.
7.5.2 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to
Section 7.3 or Section 7.4 that the Holders shall furnish to
the Company such information regarding them, the Registrable
Securities held by them, and the intended method of
disposition of such securities as the Company shall reasonably
request and as shall be required in connection with the action
to be taken by the Company.
7.5.3 Underwriting Requirements. In connection with any offering
involving an underwriting of shares pursuant to Sections 7.2,
7.3 or 7.4 hereof the Company shall not be required to include
any of the Holders' Registrable Securities in such
underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters
selected by it. If the managing underwriter or underwriters of
such public offering advise the Company that, in their
opinion, the amount of the Registrable Securities to be
included in any such offering pursuant to the request of the
Holders would adversely affect the success of such offering,
the Company will include in such offering on behalf of such
Holders, the amount of Registrable Securities equal to the
total amount which, in the opinion of such managing
underwriter or underwriters, can be sold without such adverse
effect, and such Registrable Securities shall be allocated on
a pro-rata basis among the Holders of the Registrable
Securities requested to be included in such offering.
7.5.4 Delay of Registration. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any
registration as the result of any controversy that might arise
with respect to the interpretation or implementation of
Section 7.3 or Section 7.4.
7.5.5 Expenses of Registration. All Registration Expenses incurred
in connection with all Registrations pursuant to Sections 7.2,
7.3 and 7.4 shall be borne by the Company, except the Holder
shall bear the underwriting discounts or commissions relating
to Registrable Securities sold by such Holder.
7.5.6 Registration Procedures. The Company will keep the Holder
advised as to the initiation and completion of such
Registration. At its expense the Company will use its best
efforts to keep such Registration effective (a) until the
registering Holder has completed the distribution described in
the Registration Statement relating thereto or (b) until the
Holder can register their Registrable Securities under Rule
144(k) of the Securities Act, whichever first occurs.
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7.6 Indemnification.
7.6.1 Company's Indemnification of the Holder. The Company will
indemnify the Holder, and each of its directors, officers,
stockholders, partners or other beneficial owners, and each
person controlling the Holder, with respect to which
Registration, qualification or compliance of Registrable
Securities has been effected pursuant to this Warrant, and
each underwriter, if any, and each person who controls any
underwriter against all claims, losses, damages or
liabilities, including reasonable legal fees and expenses (or
actions in respect thereof) to the extent such claims,
losses, damages or liabilities arise out of or are based
upon any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus or other document
(including any related Registration Statement) incident to any
such Registration, qualification or compliance, or are based
on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to
make the statements therein not misleading, or any violation
by the Company of any rule or regulation promulgated under
the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with
any such Registration, qualification or compliance; and the
Company will reimburse the Holder, each of its directors,
officers, stockholders, partners or other beneficial owners,
each such underwriter and each person who controls the Holder
or underwriter for any legal and any other expenses
reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action;
provided, however, that the indemnity contained in this
Subsection 7.6 shall not apply to amounts paid in settlement
of any such claim, loss, damage, liability or action if
settlement is effected without the consent of the Company
(which consent shall not unreasonably be withheld); and
provided, further, that the Company will not be liable in any
such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any
untrue statement or omission based upon written information
furnished to the Company by the Holder, underwriter or
controlling person and stated to be for use in connection
with the offering of securities of the Company.
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7.6.2 The Holder's Indemnification of Company. The Holder will, if
Registrable Securities held by the Holder are included in the
securities as to which such Registration, qualification or
compliance is being effected pursuant to this Warrant,
indemnify the Company, each of its directors and officers,
each legal counsel and independent accountant of the Company,
each underwriter, if any, of the Company's securities covered
by such a Registration Statement, and each person who controls
the Company or such underwriter within the meaning of the
Securities Act against all claims, losses, damages and
liabilities, including legal fees and expenses (or actions in
respect thereof), arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact
contained in any such Registration Statement, prospectus,
offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or any violation by the Holder of any rule or
regulation promulgated under the Securities Act applicable to
the Holder and relating to action or inaction required of the
Holder in connection with any such Registration, qualification
or compliance; and will reimburse the Company, such directors,
officers, partners, persons, law and accounting firms,
underwriters or control persons for any legal and any other
expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration
Statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
furnished to the Company by the Holder and stated to be
specifically for use in connection with the offering of
securities of the Company; provided, however, that the
Holders' liability under this Section 7(f)(2) shall not exceed
the Holder's proceeds from the offering of securities made in
connection with such Registration.
7.6.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 7.6 of notice of the
commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying
party under this Section 7.6, notify the indemnifying party in
writing of the commencement thereof and generally summarize
such action. The indemnifying party shall have the right to
participate in and to assume the defense of such claim;
provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of such claim with
the approval of any parties entitled to indemnification, which
approval shall not be unreasonably withheld; provided further,
however, that if either party reasonably determines that there
may be a conflict between the position of the Company and the
Holders in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under
this Section 7.6, then counsel for such party shall be
entitled to conduct the defense to the extent reasonably
determined by such counsel to be necessary to protect the
interest of such party. The failure to notify an indemnifying
party promptly of the commencement of any such action, if
prejudicial to the ability of the indemnifying party to defend
such action, shall relieve such indemnifying party, to the
extent so prejudiced, of any liability to the indemnified
party under this Section 7.6, but the omission so to notify
the indemnifying party will not relieve such party of any
liability that such party may have to any indemnified party
otherwise other than under this Section 7.6.
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7.6.4 Subsequent Transferees. The provisions of this Section 7.6
applicable to the Holder shall apply with equal force and
effect to each subsequent transferee to whom any of the
Registrable Securities are transferred with the consent of the
Company.
7.7 Current Public Information.
At all times after the Company has filed a Registration
Statement pursuant to the Securities Act, the Company will
file all reports required under the Securities Act or the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, and will take such further action as
may be reasonably required to enable any Holder of "restricted
securities" (as defined in Rule 144 adopted by the Commission
under the Securities Act) to sell such securities pursuant to
Rule 144, as amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.
8. Reservation of Stock. The Company covenants that during the term that this
Warrant is exercisable, the Company will not issue or sell any Common Stock or
any options, warrants or other securities exercisable or exchangeable for, or
convertible into, Common Stock and will all of its current remaining authorized
and unissued Common Stock for purposes of this Agreement. The Company also
covenants and agrees that it shall use its best efforts to cause a sufficient
number of shares to be available to provide for the issuance of Common Stock
upon the exercise of this Warrant and the Options and, from time to time, will
take all steps necessary to amend its Certificate of Incorporation (the
"Certificate") to provide sufficient reserves of shares of Common Stock issuable
upon the exercise of the Warrant and the Options. The Company further covenants
that all shares that may be issued upon the exercise of rights represented by
this Warrant and the Options, upon exercise of the rights represented by this
Warrant and the Options and payment of the Exercise Price of this Warrant and
the Options, all as set forth herein, will be free from all taxes, liens and
charges in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously or otherwise specified herein), and will be
validly issued, fully paid and nonassessable.
9. Notices. Whenever the Exercise Price or number of shares purchasable
hereunder shall be adjusted pursuant to Section 11 hereof, the Company shall
issue a certificate signed by its Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise
Price and number of shares purchasable hereunder after giving effect to such
adjustment, and shall cause a copy of such certificate to be mailed (by
first-class mail, postage prepaid) to the Holder of this Warrant.
10. Amendments.
(a) Any term of this Warrant may be amended with the written consent
of the Company and the Holder. Any amendment effected in accordance with this
Section 10 shall be binding upon the Holder, each future Holder and the Company.
(b) No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
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312396 v.3 [6P1_03!.WPD]
11. Adjustments. The number of shares purchasable hereunder is subject to
adjustment so that at all times up to the termination of the exercise period it
shall equal 80% of all shares of the Company's capital stock outstanding or
which could become outstanding upon the exercise, conversion or exchange of any
commitment or security directly or indirectly exercisable or exchangeable for or
convertible into capital stock of the Company (including this Warrant) except
for the Outstanding Options. In addition, the number of shares of Common Stock
underlying the Options shall be adjusted so that at all times during the
exercise period such shares shall represent 80% of the number of shares of
Common Stock issuable upon the exercise of such Options and the Outstanding
Options. Upon any such adjustment, the Exercise Price shall be adjusted so that
the aggregate exercise price of $1,000,000 is allocated over the total number of
shares then purchasable.
11.1 No Impairment. The Company will not, by any voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Section 11 and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of the Holders of this Warrant against impairment.
12. Notice of Acquisition. The Company shall give Holder at least
five business days prior written notice of the closing of the Acquisition and of
its execution of an agreement as to an Acquisition.
13. Entire Understanding. This letter sets forth the entire
understanding of the parties relating to the subject matter hereof, and
supersedes and cancels the prior Warrant issued on September 22, 1999.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officers thereunto duly authorized.
Dated: September 23, 1999
▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President and CEO
ATLANTIS EQUITIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President