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
XXXXXX.XXX, 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 XXXXXX.XXX, 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 Xxxxxx 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
Xxxxxx.
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.
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.
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7.1 Certain Definitions.
As used in this Section 7, the following terms shall have the
following respective meanings:
"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.
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7.2 Piggyback Registration.
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.
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
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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.
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
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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.
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
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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.
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,
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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.
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.
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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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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
XXXXXX.XXX, INC.
By:___________________________________
Name:
Title:
ATLANTIS EQUITIES, INC.
By:___________________________________
Name:
Title:
-12-
EXERCISE FORM
TO: XXXXXX.XXX, INC.
000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: President
(1) The undersigned hereby elects to purchase _______ shares of Common
Stock and _______ Options of XXXXXX.XXX, INC. pursuant to the terms of the
attached Warrant and tenders herewith payment of the purchase price for such
securities in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock and Options are being acquired
solely for the account of the undersigned and not as a nominee for any other
party, and for investment, and that the undersigned will not offer, sell or
otherwise dispose of any such shares of Common Stock or Options except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
(3) Please issue a certificate or certificates representing said shares of
Common Stock and Options in the name of the undersigned or in such other name as
is specified below:
________________________________________
(Name)
________________________________________
(Signature)
(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:
________________________________________
(Name)
________________________________________
(Date) (Signature)
-13-
