EXHIBIT 10.1
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE
SECURITIES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND SUCH APPLICABLE STATE SECURITIES LAWS,
OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
TO THE EFFECT THAT REGISTRATION UNDER SUCH ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
Dated: July 1, ββββ
βββββββ�
βββββββ� INDUSTRIES, INC.
Expiring June 30, 2008
THIS IS TO CERTIFY THAT, for value received, Mayo Foundation for
Medical Education and Research (the "Holder") is entitled, subject to certain
conditions set forth in Sections 1.1 and 1.2 hereof, to purchase from Gateway
Industries, Inc., a Delaware corporation (the "Company"), at the Company's
principal executive office, at the Exercise Price, up to 100,000 shares (the
"Warrant Shares") of Common Stock, $.001 par value per share ("Common Stock"),
all subject to adjustment and upon the terms and conditions as hereinafter
provided, and is entitled also to exercise the other appurtenant rights, powers
and privileges hereinafter described.
Certain terms used in this Warrant are defined in Article IV hereof.
ARTICLE I
METHOD OF EXERCISE
1.1 TIME OF EXERCISE; SUBSIDIARY CHANGE OF CONTROL. Subject to the
provisions of Sections 1.2 and 1.3 hereof, this Warrant shall become exercisable
in four (4) equal annual installments on July 1 of each year beginning July 1,
2004 (each, an "Installment Date") and prior to the Expiration Time as long as
Oaktree Systems, Inc., a subsidiary of the Company ("Oaktree") and the Holder
continue to be parties to that certain Master Services Agreement effective
November 15, 2002 or any other replacement or substitute agreement between
Oaktree and the Holder (the "Master Agreement"). Each annual installment shall
become exercisable only if subscriptions to any consumer health information
publication intended for sale to the general public now or in the future
produced by the Holder (the "Consumer Health Subscription Business") that are
managed and fulfilled by Oaktree under the Master Agreement account for at least
ninety percent (90%) of the Holder's total gross revenues derived from the
Consumer Health Subscription Business during the twelve (12) month period
preceding the applicable Installment Date. Upon the termination of the Master
Agreement for any reason other than material breach by Oaktree which is not
timely cured, this Warrant will immediately terminate and shall no longer be
exercisable.
Upon a Subsidiary Change of Control, this Warrant, to the extent not
previously exercised, shall become exercisable in full for a period of ninety
(90) days from the occurrence of such Subsidiary Change of Control. At the end
of such ninety (90) day period, this Warrant will immediately terminate.
1.2 CERTIFICATION OF REVENUES FROM CONSUMER HEALTH SUBSCRIPTION
BUSINESS; RIGHT TO AUDIT. During the term of this Warrant, within forty-five
(45) days following each Installment Date, the Holder shall deliver to the
Company a certificate from the principal financial or accounting officer of the
Holder setting forth revenues generated from the Consumer Health Subscription
Business for the twelve (12) month period preceding the applicable Installment
Date (each, a "Certification"). The Company shall have the right to retain an
independent accounting firm selected by the Company to audit, at the Company's
expense, the Holder's books and records to determine the accuracy of any
Certification, in accordance with generally accepted accounting principles, by
delivering a written notice to the Holder within thirty (30) days following the
Company's receipt of the Certification in question. If such audit results in a
discrepancy then the Company and the Holder shall for a thirty (30) day period
seek to resolve such discrepancy. If not resolved, the dispute shall be
submitted to an independent accounting firm mutually acceptable to the Holder
and the Company whose determination shall be binding. The Company and the Holder
shall split equally the fees of such independent accounting firm. Failure by the
Holder to deliver any Certification within the prescribed time period shall not
be deemed a breach of this Warrant if cured within ten (10) days of written
demand from the Company.
1.3 METHOD OF EXERCISE. To exercise this Warrant in whole or in
part, the Holder shall deliver to the Company, at the Company's principal
executive office, (a) this Warrant, (b) a written notice of such Holder's
election to exercise this Warrant in the form attached hereto and (c) payment of
the Exercise Price with respect to such shares. Such payment may be made, at the
option of the Holder, in cash, by certified or bank cashier's check, money order
or wire transfer, in the manner specified in the next succeeding paragraph, or
in any other manner consented to in writing by the Company, or any combination
thereof.
Notwithstanding any provisions herein in the contrary, in lieu of
exercising this Warrant as hereinabove permitted, the Holder may elect to
exercise this Warrant or a portion hereof and to pay for the Warrant Shares
issuable upon such exercise by way of cashless exercise (a) by delivery of
shares of Common Stock or other securities of the Company already owned by the
Holder with an aggregate Fair Market Value on the date of exercise equal to the
2
aggregate Exercise Price, subject, however, to the provisions of Section 16(b)
of the Exchange Act or (b) by surrendering this Warrant at the principal
executive office of the Company, together with the Notice of Exercise, in which
event the Company shall issue to the Holder that number of Warrant Shares
computed using the following formula:
X= Y x (A-B)
---------
A
Where:
X equals the number of Warrant Shares to be issued to the Holder;
Y equals the number of Warrant Shares purchasable under the
Warrant or, if only a portion of the Warrant is being exercised,
the portion of the Warrant being exercised (at the date of such
calculation);
A equals the Fair Market Value (at the date of such calculation)
of one share of Common Stock; and
B equals the Exercise Price.
The Company shall, as promptly as practicable after receipt of the
items required by the preceding paragraphs of this Section 1.3, execute and
deliver or cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of Warrant Shares
specified in such notice. The share certificate or certificates so delivered
shall be in such denominations as shall be specified in such notice and shall be
issued in the name of the Holder or such other name as shall be designated in
such notice; provided, in an opinion of counsel reasonably acceptable to the
Company, the issuance in such other name is permitted under the Act and
applicable state securities laws. Such certificate or certificates shall be
deemed to have been issued, and such Holder or Holders or any other person so
designated to be named therein shall be deemed for all purposes to have become a
Holder of record of such shares, as of the date the aforementioned notice is
received by the Company. If this Warrant shall have been exercised only in part,
the Company shall, at the time of delivery of the certificate or certificates,
deliver to the Holder a new Warrant evidencing the right to purchase the
remaining Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical to this Warrant, or, at the request of the
Holder, appropriate notations may be made on this Warrant which shall then be
returned to the Holder. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of
share certificates and new Warrants, except that, if share certificates or new
Warrants shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all transfer taxes, if any, payable as a result
of such transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
3
1.4 RESERVATION OF SHARES; SHARES TO BE FULLY PAID AND
NONASSESSABLE. The Company shall at all times reserve and keep available out of
its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the exercise of this Warrant, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the full exercise
hereof; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the full exercise hereof, in
addition to such other remedies as shall be available to the Holder, the Company
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes, including, without
limitation, engaging in best efforts to obtain the requisite stockholder
approval of any necessary amendment to these provisions. All Warrant Shares
issued upon the exercise of this Warrant shall be duly and validly issued, fully
paid and nonassessable.
1.5 NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be
required to issue fractions of Warrant Shares upon exercise of this Warrant. If
any fractions of a share would, but for this Section, be issuable upon any
exercise of this Warrant, in lieu of such fractional share the Company shall pay
to the Holder, in cash, an amount equal to the same fraction of the Fair Market
Value of one share of Common Stock.
1.6 SHARE LEGEND. Each certificate for Warrant Shares issued upon
exercise of this Warrant, unless at the time of exercise such shares are
registered under the Act, shall bear a legend substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH
RESPECT TO THE SECURITIES EVIDENCED BY THIS CERTIFICATE,
FILED AND MADE EFFECTIVE UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND SUCH APPLICABLE STATE SECURITIES LAWS, OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
REGISTRATION UNDER SUCH ACT AND SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
Any certificate issued at any time in exchange or substitution for
any certificate bearing such legend (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Act) shall also bear such legend unless, in the opinion of counsel
reasonably acceptable to the Company, the securities represented thereby need no
longer be subject to restrictions on resale under the Act.
4
ARTICLE II
REPLACEMENTS OF WARRANT CERTIFICATES
2.1 LOSS, THEFT OR DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security from the Holder satisfactory
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of the Warrant, the Company will make and deliver, in lieu of such
lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of Warrant Shares.
2.2 CHANGE OF PRINCIPAL EXECUTIVE OFFICE. In the event the Company
shall change the address of its principal executive office, the Company shall
give the Holder notice of any such change within a reasonable time. Any
correspondence from the Company to the Holder with an address printed on the
Company's letterhead shall fulfill this requirement.
ARTICLE III
ANTIDILUTION PROVISIONS
3.1 ADJUSTMENTS GENERALLY. The Exercise Price and the number of
shares of Common Stock (or other securities or property) issuable upon exercise
of this Warrant shall be subject to adjustment from time to time upon the
occurrence of certain events, as provided in this Article III.
3.2 CERTAIN ADJUSTMENTS. The Exercise Price shall be subject to
adjustment from time to time as follows:
5
(a) STOCK SPLITS, SUBDIVISIONS.
(1) In the event the Company should at any time or from time to time
after the date first written above fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or Common Stock
equivalents without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock equivalents (including the
additional shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution, split
or subdivision if no record date is fixed), the Exercise Price shall be
appropriately decreased and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be increased in proportion to such increase in
the aggregate of shares of Common Stock outstanding and issuable with respect to
such Common Stock equivalents.
(2) If the number of shares of Common Stock outstanding at any time
after the date first written above is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Exercise Price shall be appropriately increased and the number
of shares of Common Stock issuable on exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares.
(b) RECAPITALIZATIONS. If at any time or from time to time there
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 3.2), provision shall be made so that the Holder shall thereafter
be entitled to receive upon exercise of this Warrant the number of shares of
stock or other securities or property of the Company or otherwise, to which a
holder of Common Stock deliverable upon exercise would have been entitled on
such recapitalization. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 3.2 with respect to the rights
of the Holder after the recapitalization to the end that the provisions of this
Section 3.2 (including adjustment of the Exercise Price then in effect and the
number of shares issuable upon exercise of this Warrant) shall be applicable
after that event as nearly equivalent as may be practicable.
(c) NO AVOIDANCE. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other 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 3.2 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the Holder.
(d) REORGANIZATIONS, RECLASSIFICATIONS, PARENT CHANGE OF CONTROL.
If any capital reorganization or reclassification of the capital stock of the
Company, or a Parent Change of Control, shall be effected while this Warrant is
6
outstanding in such a manner that holders of shares of Common Stock shall be
entitled to receive stock, securities or assets with respect to or in exchange
for Common Stock, then, as a condition of such reorganization or
reclassification, or Parent Change of Control, lawful and adequate provision
shall be made whereby the Holder shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in lieu of the
shares of Common Stock immediately theretofore receivable upon exercise of this
Warrant, such shares of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such Common Stock immediately theretofore
so receivable had such reorganization or reclassification, or Parent Change of
Control not taken place, and in such case appropriate provision shall be made
with respect to the rights and interests of the Holder to the end that the
provisions hereof (including, without limitation, provisions for adjustment of
the Exercise Price and of the number of shares of Common Stock issuable upon
exercise thereof) shall thereafter be applicable, as nearly as may be possible,
in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of this Warrant. Prior to or simultaneously with the
consummation of any such Parent Change of Control, the survivor or successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed or delivered to the Holder, the obligation to
deliver to such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such Holder may be entitled to
receive, and containing the express assumption of such successor corporation of
the due and punctual performance and observance of every provision of this
Warrant (as such may be amended from time to time) to be performed and observed
by the Company and of all liabilities and obligations of the Company hereunder
with respect to this Warrant.
(e) NOTICE OF RECORD DATE. In the event of any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend (other
than a cash dividend) or other distribution, any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Company shall mail to
the Holder, at least 10 days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
(f) ADJUSTMENT CERTIFICATE. Upon the occurrence of each
adjustment or readjustment of the Exercise Price or the number of Warrant Shares
pursuant to this Section 3.2, the Company, at its expense, shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
prepare and furnish to the Holder a statement, signed by its Chief Financial
Officer or other appropriate officer, setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon the written request at any time
of the Holder, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustment and readjustment, (ii) the
7
Exercise Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the exercise of this Warrant.
ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following
respective meanings:
"ACT" means the Securities Act of 1933, as amended, and any similar
or successor Federal statute, and the rules and regulations of the Commission
(or its successor) thereunder, all as the same shall be in effect at the time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" shall have the meaning set forth in the first
paragraph of this Warrant.
"COMPANY" shall have the meaning set forth in the first paragraph of
this Warrant.
"EASTERN TIME" means Eastern Daylight Time or Eastern Standard Time,
whichever is in effect on the relevant date.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and any similar or successor Federal statute, and the rules and
regulations of the Commission (or its successor) thereunder, all as the same
shall be in effect at the time.
"EXERCISE PRICE" means $1.75, subject to adjustment pursuant to the
terms of this Warrant.
"EXPIRATION TIME" means 5:00 p.m. Eastern Time on June 30, 2008,
unless earlier terminated pursuant to Section 1.1 hereof.
"FAIR MARKET VALUE" on any day means (i) if shares of the Common
Stock are listed or admitted for trading on a national securities exchange, the
reported last sales price or, if no such reported sale occurs on such day, the
average of the closing bid and asked prices on such day, in each case on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, (ii) if shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the average of the closing bid
and asked prices in the over-the-counter market on such day as reported by
Nasdaq or any comparable system or, if not so reported, as reported by any New
York Stock Exchange member firm selected by the Company for such purpose or
(iii) if no such quotations are available on such day, the fair market value of
8
one share of Common Stock on such day as determined in good faith by the Board
of Directors of the Company.
"HOLDER" shall have the meaning set forth in the first paragraph of
this Warrant and "Holders" shall include any and all successors, assigns or
designees of the initial Holder with respect to this Warrant, as permitted by
this Warrant.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"PARENT CHANGE OF CONTROL" means (i) the sale of all or
substantially all of the assets of the Company in one or a series of related
transactions to any person or entity or group of persons or entities acting in
concert or (ii) the merger or consolidation of the Company with or into another
corporation with the effect that the then existing stockholders of the company
hold less than 50% of the combined voting power of the then outstanding
securities of the surviving corporation of such merger or the corporation
resulting from such consolidation or (iii) the acquisition by any person or
entity or group of persons or entities, other than Steel Partners II, L.P. or
its affiliates, acting in concert of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the outstanding
shares of the voting stock of the Company or (iv) the adoption of a plan
relating to the liquidation or dissolution of the Company.
"SUBSIDIARY CHANGE OF CONTROL" means (i) the sale of all or
substantially all of the assets of Oaktree in one or a series of related
transactions to any person or entity or group of persons or entities acting in
concert or (ii) the merger or consolidation of Oaktree with or into another
corporation with the effect that the then existing stockholders of the company
hold less than 50% of the combined voting power of the then outstanding
securities of the surviving corporation of such merger or the corporation
resulting from such consolidation or (iii) the acquisition by any person or
entity or group of persons or entities, acting in concert of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more of the outstanding shares of the voting stock of Oaktree or (iv)
the adoption of a plan relating to the liquidation or dissolution of Oaktree.
"WARRANT" and "WARRANTS" shall mean this warrant and any warrants
issued upon the partial exercise of this warrant.
"WARRANT SHARES" shall have the meaning set forth in the first
paragraph of this Warrant.
9
ARTICLE V
REDEMPTION AND CANCELLATION OF WARRANTS
5.1 REDEMPTION OF WARRANTS. The Warrants are not redeemable by the
Company and the Company has no right to purchase or otherwise
acquire the Warrants.
5.2 CANCELLATION OF WARRANTS. The Company shall cancel any Warrant
surrendered for transfer, exchange or exercise.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants, as of the date hereof,
to the Holder that:
6.1 AUTHORIZATION. This Warrant has been duly authorized, executed
and delivered by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, reorganization and moratorium laws, (ii)
other laws of general application affecting the enforcement of creditors' rights
generally and general principles of equity, (iii) the discretion of the court
before which any proceeding therefor may be brought, and (iv) as rights to
indemnity may be limited by Federal or state securities laws or by public
policy.
6.2 VALID ISSUANCE. The issuance, sale and delivery of this Warrant,
and the reservation for issuance of the shares of Common Stock issuable upon
exercise of this Warrant have been duly authorized by all required corporate
action on the part of the Company. The shares of Common Stock issuable upon
exercise of this Warrant have been duly and validly reserved for issuance and,
upon issuance in accordance with the terms of this Warrant, shall be duly and
validly issued, fully paid, and non-assessable. When issued, shares of Common
Stock issuable upon exercise of this Warrant will be free and clear from any
liens or encumbrances other than those created by, or imposed upon, the holders
thereof through no action of the Company, other than restrictions on transfer
under state and/or Federal securities laws. Issuance of this Warrant and the
shares of Common Stock issuable upon exercise of this Warrant will be free of
statutory preemptive rights.
ARTICLE VII
MISCELLANEOUS
7.1 NOTICES. All notices, requests and other communications provided
for herein shall be in writing, and shall be deemed to have been made or given
upon personal delivery to the party to be notified or three (3) days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party below, or at such other address as such party may
10
designate by ten (10) days' advance written notice to the other parties, with a
copy (which shall not constitute notice), in the case of notice to the Company,
to ββββββ ββββββββ Frome ββββββββββ & Wolosky LLP, βββ� ββββ ββββββ, βββ� ββββ,
βββ� ββββ βββββ�, Attention: ββββββ βββββββ�, Esq. Notices to (a) the Holder shall
be addressed to Mayo Medical Ventures, βββ� βββββ� ββββββ ββ, βββββββββ�, βββββββββ�
βββββ�, Attention: ββββββ β�. ββββββββ and (b) the Company shall be addressed to
βββ� βββββββ� ββββββ, ββββ βββββ�, βββ� ββββ, βββ� ββββ βββββ�, Attention: ββββββ
ββββββββββββ; provided, however, that notice of a change in the Company's
principal executive office in accordance with Section 2.2 hereof shall
constitute notice of a change of the Company's address for the purposes of any
notice given pursuant to this Warrant.
7.2 WAIVERS; AMENDMENTS. No failure or delay of the Holder in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof, or any abandonment or
discontinuance of steps to enforce such a right, power or privilege, preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived if, but only if,
such amendment, modification or waiver is in writing and is signed by the
Holders of a majority in interest of the Warrant Shares; provided that no
amendment, modification or waiver may change the Exercise Price (including
without limitation any adjustments or any provisions with respect to
adjustments, the expiration of or the manner of exercising the Warrants) without
the consent in writing of all of the Holders.
7.3 GOVERNING LAW. This Warrant shall be construed in accordance
with and governed by the laws of the State of New York, without regard to
conflicts of laws principles thereof.
7.4 SURVIVAL OF AGREEMENTS; REPRESENTATIONS AND WARRANTIES, ETC. All
warranties, representations and covenants made by the Company herein or in any
certificate or other instrument delivered by or on behalf of it in connection
herewith shall be considered to have been relied upon by the Holders and shall
survive the issuance and delivery of the Warrants and shall continue in full
force and effect so long as this Warrant is outstanding. All statements in any
such certificate or other instrument shall constitute representations and
warranties hereunder.
7.5 COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All the covenants,
stipulations, promises and agreements contained in this Warrant by or on behalf
of the Company shall bind its successors and assigns, whether or not so
expressed.
7.6 SEVERABILITY. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired in such jurisdiction and shall not invalidate or render illegal or
unenforceable such provision in any other jurisdiction.
11
7.7 HEADINGS. The headings used herein are for convenience of
reference only and shall not be deemed to be a part of this Warrant.
7.8 NO RIGHTS AS STOCKHOLDER. This Warrant shall not entitle the
Holder to any rights as a stockholder of the Company.
7.9 PRONOUNS. The pronouns "it" and "its" herein shall be deemed to
mean "he" and "his" or "she" and "hers," as the context requires.
7.10 TRANSFERABILITY. No portion of this Warrant may be transferred
by the Holder other than to an "affiliate" (as defined in Rule 144 of the Act)
of the initial Holder.
7.11 FURNISHING OF INFORMATION. The Company agrees to provide to the
Holder copies of all (i) public filings with the Commission, including Forms
10-K and 10-Q and Schedules 14A, promptly after such material is filed with the
Commission; and (ii) press releases, reports and financial statements that the
Company provides to its stockholders promptly after such material is made
available to the stockholders.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed in its corporate name by one of its officers thereunto duly authorized
as of the day and year first above written.
GATEWAY INDUSTRIES, INC.
By: /s/ βββββ� β�. βββββββββ�
--------------------------------------
Name: βββββ� β�. βββββββββ�
Title: President
ACKNOWLEDGED AND AGREED:
MAYO FOUNDATION FOR MEDICAL
EDUCATION AND RESEARCH
By: /s/ ββββ β�. ββββββ
---------------------------------------
Name: ββββ β�. ββββββ
Title: Assistant Treasurer
13
FORM OF NOTICE OF EXERCISE
[To be signed only upon exercise of the Warrant]
TO BE EXECUTED BY THE REGISTERED HOLDER
TO EXERCISE THE WITHIN WARRANT
The undersigned hereby exercises the right to purchase _______
shares of Common Stock which the undersigned is entitled to purchase by the
terms of the within Warrant according to the conditions thereof, and herewith
makes payment of the Exercise Price of such shares in full, as provided in the
Warrant. All shares to be issued pursuant hereto shall be issued in the name of
and the initial address of such person to be entered on the books of the Company
shall be:
The shares are to be issued in certificates of the following
denominations:
------------------------------
[Type Name of Holder]
By:___________________________
Title:_________________________
Dated:_____________________________