Void after 5:00 p.m., New York Time on June 28, 1998
Warrant to Purchase 500,000 Shares of Common Stock
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WARRANT TO PURCHASE COMMON STOCK
OF
ATC CAPITAL GROUP LTD.
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THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED UNDER THE ACT OR AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
FOR VALUE RECEIVED, ATC Capital Group Ltd., a Delaware
corporation (the "Company"), grants the following rights to Chris F. Brown., an
individual residing at One East 62nd Street, New York, NY, or his assigns
("Holder").
ARTICLE 1. DEFINITIONS. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the common stock, par value
$.0002 per share, of the Company.
(b) "Corporate Office" shall mean the office of the
Company (or its successor) at which at any particular time its principal
business shall be administered, which office is located at the date hereof at
245 Park Avenue, 40th Floor, New York, NY 10167.
(c) "Exercise Price" shall mean $4.50 per share of Common
Stock to be purchased upon exercise of this Warrant in accordance with the terms
hereof, subject to adjustment as provided herein.
(d) "Expiration Date" shall mean 5:00 p.m. (New York time)
on June 28, 1998.
(e) "Transfer Agent" shall mean Corporate Stock Transfer,
as the Company's transfer agent, or its authorized successor, as such.
ARTICLE 2. EXERCISE.
2.1 Exercise of Warrant. This Warrant shall entitle Holder to
purchase up to 500,000 shares of Common Stock (the "Shares") at the Exercise
Price. This Warrant shall be exercisable at any time and from time to time prior
to the Expiration Date (the "Exercise Period"), provided that Holder agrees that
during each ninety (90) day period commencing on the date hereof, Holder will
not offer for sale or sell more than an aggregate of 25% of the Shares. This
Warrant and the right to purchase Shares hereunder shall expire and become void
at the Expiration Date.
2.2 Manner of Exercise.
(a) Holder may exercise this Warrant at any time and from
time to time during the Exercise Period, in whole or in part (but not in
denominations of fewer than 25,000 shares, except upon an exercise of this
Warrant with respect to the remaining balance of shares purchasable hereunder at
the time of exercise), by delivering to the Company at its Corporate Office (i)
a duly executed Notice of Exercise in substantially the form attached as
Appendix 1 hereto, (ii) a check for the aggregate Exercise Price of the shares
of Common Stock being purchased, and (iii) a written opinion of counsel, in form
and substance satisfactory to the Company, to the effect that the Warrant and
the Shares delivered upon exercise hereof, have been registered under the
Securities Act of 1933, as amended, or are exempt from registration thereunder.
(b) From time to time, until the Expiration Date, upon
exercise of this Warrant, in whole or part, in accordance with its terms, the
Transfer Agent will countersign and deliver stock certificates to the Holder
representing the number of Shares being purchased pursuant to such exercise,
subject to adjustment as described herein.
(c) Promptly following any exercise of this Warrant, if
the Warrant has not been fully exercised and has not expired, the Company will
deliver to the Holder a new Warrant for the balance of the Shares covered
hereby.
2.3 Termination. All rights of the Holder in this Warrant, to the
extent they have not been exercised, shall terminate on the Expiration Date.
2.4 No Rights Prior to Exercise. Prior to its exercise pursuant
to Section 2.2 above, this Warrant shall not entitle the Holder to any voting or
other rights as holder of shares of Common Stock.
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2.5 Anti-dilution Adjustments. In case of any reclassification,
capital reorganization or other change of outstanding shares of Common Stock, or
in case of any consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares or Common Stock),
or in case of any sale or conveyance to another corporation of the property of
the Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and number of shares of stock or
other securities or property (including cash) receivable upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance by a holder of the number of shares of Common Stock (or other
appropriate securities) which would have been issued to the Holder had the
Holder exercised the Warrant immediately before such reclassification, capital
reorganization or other change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
2.5. The foregoing provisions shall similarly apply to successive
reclassifications, capital reorganizations and other changes of outstanding
shares of Common Stock and to successive consolidations, mergers, sales or
conveyances.
2.6 Fractional Shares. No fractional Shares shall be issuable
upon exercise or conversion of this Warrant and the number of Shares to be
issued shall be rounded down to the nearest whole Share. If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the closing bid price of a
full share of the Company's Common Stock on the date of the Notice of Exercise.
ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY.
3.1 Representations and Warranties. The Company hereby represents
and warrants to the Holder as follows:
(a) All Shares which may be issued upon the exercise of
the purchase right represented by this Warrant shall, upon issuance, be duly
authorized, validly issued, fully-paid and nonassessable, and free of any liens
and encumbrances except for restrictions on transfer provided for herein or
under applicable federal and state securities laws, and not subject to any
pre-emptive rights.
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(b) The Company is a corporation duly organized and
validly existing under the laws of the state of Delaware, and has the full power
and authority to issue this Warrant and to comply with the terms hereof. The
execution, delivery and performance by the Company of its obligations under this
Warrant, including, without limitation, the issuance of the Shares upon any
exercise of the Warrant have been duly authorized by all necessary corporate
action. This Warrant has been duly executed and delivered by the Company and is
a valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting enforceability of
creditors' rights generally and except as the availability of the remedy of
specific enforcement, injunctive relief or other equitable relief is subject to
the discretion of the court before which any proceeding therefor may be brought.
(c) The Company is not subject to or bound by any
provision of any certificate or articles of incorporation or by-laws, mortgage,
deed of trust, lease, note, bond, indenture, other instrument or agreement,
license, permit, trust, custodianship, other restriction or any applicable
provision of any law, statute, rule, regulation, judgment, order, writ,
injunction or decree of any court, governmental body, administrative agency or
arbitrator which could prevent or be violated by or under which there would be a
default (or right of termination) as a result of the execution, delivery and
performance by the Company of this Warrant.
ARTICLE 4. REGISTRATION UNDER THE ACT.
(a) On or before August 1, 1996, the Company agrees,
subject to applicable law, to file with the Securities and Exchange Commission
(the "SEC") a registration on form S-8 so as to permit the public offer and sale
of the Shares. The Company will not be required to take any action with respect
to or make any filing under state "Blue sky" laws. If an S-8 registration
statement shall be unavailable to the Company with respect to the Shares, the
Company shall, upon receipt a written request therefore (the "Demand Request")
given on or after December 28, 1996, from any record holder or holders of an
aggregate of more than 50% of this Warrant, then, the Company shall prepare and
file with the SEC a registration statement under the Act covering this Warrant
(or any warrant or warrants issued in substitution or exchange therefor) and the
Common Stock issuable upon exercise of this Warrant (or any warrant or warrants
issued in substitution or exchange therefor) (collectively, the "Registrable
Securities") which are the subject of such request and shall use its best
efforts to cause such registration statement to become effective. In addition,
upon the receipt of such request, the Company shall promptly give written notice
to all other record holders of the Registrable Securities that such registration
is to be effected. The Company shall include in such registration statement such
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Registrable Securities for which it has received written requests to register by
such other record holders within thirty (30) days after the delivery of the
Company's written notice to such other record holders. All record holders from
whom the Company shall have received requests to register Registrable Securities
as provided herein are hereinafter referred to as the "Requesting Holders."
If at the time of the Demand Notice the Company is in the
process of preparing a registration statement under the Act relating to an
underwritten public offering, then no holder of securities of the Company,
including Requesting Holders may include securities in such registration if in
the good faith judgment of the managing underwriter of such public offering the
inclusion of such securities would interfere with the successful marketing of
the securities being underwritten. Securities to be excluded from an
underwritten public offering shall be selected in a manner provided in paragraph
(b) below. To the extent only a portion of the Registrable Securities held by a
Requesting Holder is included in the underwritten public offering, a
registration statement covering those Registrable Securities which are excluded
from the underwritten public offering will be filed within 120 days of the
consummation of the underwritten public offering.
The obligation of the Company under this paragraph (a)
shall be limited to one registration statement. The Company shall pay the
expenses described in paragraph (c) below for the registration statement filed
pursuant to this paragraph (a), except for underwriting discounts and
commissions and legal fees of the Requesting Holders, which shall be borne by
the Requesting Holders.
(b) The number of shares of Registerable Securities
otherwise to be included in an underwritten public offering (the "Requested
Stock") may be reduced pro rata (by number of shares) among the holders thereof
requesting such registration or excluded in their entirety if so required by the
underwriter as provided herein. To the extent only a portion of the Requested
Stock is included in the underwritten public offering, those shares of Requested
Stock which are thus excluded from the underwritten public offering shall be
withheld from the market by the holders thereof for a period, not to exceed 120
days, which the managing underwriter reasonably determines is necessary in order
to effect the underwritten public offering.
(c) Registration Procedures. If and whenever the Company
is required by the provisions of paragraph (a) above to effect the registration
of Registrable Securities under the Act, the Company will:
(i) prepare and file with the SEC a registration
statement with respect to such securities, and use its best efforts to cause
such registration statement to become and
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remain effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed two years;
(ii) prepare and file with the SEC such amendments
to such registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement effective for
such period as may be reasonably necessary to effect the sale of such
securities, not to exceed two years months;
(iii) furnish to the security holders participating
in such registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities;
(iv) notify the security holders participating in
such registration, promptly after it shall receive notice thereof, of the time
when such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(v) notify such holders promptly of any request by
the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
(vi) prepare and file with the SEC, promptly upon
the request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel for such
holders (and concurred in by counsel for the Company), is required under the Act
or the rules and regulations thereunder in connection with the distribution of
Common Stock by such holder;
(vii) prepare and promptly file with the SEC and
promptly notify such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Act, any event shall have
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances in which they were made, not misleading; and
(viii) advise such holders, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the SEC suspending the effectiveness of such registration statement or the
initiation or threatening of
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any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued.
(d) Expenses.
(i) With respect to each registration requested
pursuant to paragraph (a) above, all fees, costs and expenses of and incidental
to such registration, inclusion and public offering (as specified in paragraph
(ii) below) in connection therewith shall be borne by the Company, provided,
however, that any security holders participating in such registration shall bear
their pro rata share of the underwriting discount and commissions and transfer
taxes.
(ii) The fees, costs and expenses of registration
to be borne by the Company as provided in paragraph (i) above shall include,
without limitation, all registration, filing, and NASD fees, printing expenses,
fees and disbursements of counsel and accountants for the Company. Fees and
disbursements of counsel and accountants for the selling security holders and
any other expenses incurred by the selling security holders not expressly
included above shall be borne by the selling security holders.
(e) Indemnification.
(i) The Company will indemnify and hold harmless
each holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of paragraph (a) above, its directors and
officers, and any underwriter (as defined in the Act) for such holder and each
person, if any, who controls such holder or such underwriter within the meaning
of the Act, from and against, and will reimburse such holder and each such
underwriter and controlling person with respect to, any and all loss, damage,
liability, cost and expense to which such holder or any such underwriter or
controlling person may become subject under the Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage, liability,
cost or expenses arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such holder, such underwriter or such controlling
person in writing specifically for use in the preparation thereof.
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(ii) Each holder of Registrable Securities included
in a registration pursuant to the provisions of paragraph (a) above will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any underwriter
with respect to, any and all loss, damage, liability, cost or expense to which
the Company or any controlling person and/or any underwriter may become subject
under the Act or otherwise, insofar as such losses, damages, liabilities, costs
or expenses are caused by any untrue statement or alleged untrue statement of
any material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in reliance upon
and in strict conformity with written information furnished by or on behalf of
such holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by an indemnified
party pursuant to the provisions of paragraph (i) or (ii) of this Article 4 of
notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of said
paragraph (i) or (ii), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than hereunder. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel satisfactory to such indemnified
party, provided, however, if the defendants in any action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or in addition to
those available to the indemnified party, or if there is a conflict of interest
which would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties have the right to select
separate counsel to participate in the defense of such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of said
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paragraph (i) or (ii) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (A) the indemnified party shall have
employed counsel in accordance with the provisions of the preceding sentence,
(B) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (C) the indemnifying party
has authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
The Company's agreements with respect to Warrants or the Shares
in this Article 4 shall continue in effect regardless of the exercise and
surrender of this Warrant.
ARTICLE 5. MISCELLANEOUS.
5.1 Transfer. This Warrant may be transferred or assigned, in
whole or in part, at any time and from time to time in the discretion of the
Holder, provided, that this Warrant may not be transferred or assigned such that
either the Holder or the transferee or assignee will, following such transfer or
assignment, hold a Warrant for the right to purchase fewer than 25,000 Shares,
and provided, further, that this Warrant and the Shares issuable upon exercise
of this Warrant may not be transferred or assigned without compliance with
applicable federal and state securities laws by the transferor and the
transferee.
5.2 Transfer Procedure. Subject to the provisions of Section 5.1,
Holder may transfer or assign this Warrant by delivering to the Company the
Assignment Form annexed hereto as Appendix 2 duly executed and funds sufficient
to pay any transfer tax, and surrendering this Warrant to the Company for
reissuance to the transferee or assignee (and the Holder, in the event of a
transfer or assignment of this Warrant in part). (Each of the Persons in whose
name any such new warrant shall be issued are herein referred to as a "Holder.")
5.3 Loss, Theft, Destruction or Mutilation. If this Warrant shall
become mutilated or defaced or be destroyed, lost or stolen, the Company shall
execute and deliver a new Warrant in exchange for and upon surrender and
cancellation of such mutilated or defaced Warrant or, in lieu of and in
substitution for such Warrant so destroyed, lost or stolen, upon the Holder
filing with the Company evidence satisfactory to it that such Warrant has been
so mutilated, defaced, destroyed, lost or stolen. However, the Company shall be
entitled, as a condition to the execution and delivery of such new Warrant, to
demand indemnity satisfactory to it and payment of expenses and charges incurred
in connection with the delivery of such new Warrant. Any Warrant so surrendered
to the Company shall be canceled.
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5.4 Notices. All notices and other communications from the
Company to the Holder or vice versa shall be deemed delivered and effective when
given personally or mailed by first-class registered or certified mail, postage
prepaid at such address as may have been furnished to the Company or the Holder,
as the case may be, in writing by the Company or such holder from time to time.
5.5 Waiver. This Warrant and any term hereof may be changed,
waived, or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
5.6 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of the Company's
incorporation, without giving effect to its principles regarding conflicts of
law.
Dated: June 28, 1996
ATC CAPITAL GROUP LTD.
Attest: /s/ Steven A. Saide By: /s/ Dennis Charter
Name: Dennis Charter
Title: Chairman
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APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to purchase ______ shares of the
Common Stock of ATC Capital Group Ltd. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned or in such other name as is specified
below:
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(Name)
----------------------
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(Address)
3. The undersigned represents it is acquiring the shares solely
for its own account and not as a nominee for any other party and not with a view
toward the resale or distribution thereof except in compliance with applicable
securities laws.
4. The undersigned represents that it is not a U.S. Person as
such term is defined in Regulation S promulgated under the Securities Act of
1933, as amended.
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(Signature)
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(Date)
APPENDIX 2
ASSIGNMENT FORM
FOR VALUE RECEIVED,______________________________________________
hereby sells, assigns and transfers unto
Name_______________________________________________
(Please typewrite or print in block letters
Address____________________________________________
Taxpayer I.D. Number_______________________________
the right to purchase shares of common stock of ATC Capital Group Ltd. (the
"Company") represented by this Warrant to the extent of ________________ shares
as to which such right is exercisable and does hereby irrevocably constitute and
appoint _____________________ Attorney to transfer the same on the books of the
Company with full power of substitution in the premises.
Date _____________,199_
Signature ____________________________________