<PAGE>
<PAGE>
As filed with the Securities and Exchange Commission on
August 28, 1996
Registration No. _________________
================================================================================
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CYPHERCOM SOLUTIONS INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3356966
(State of incorporation) (I.R.S. Employer Identification No.)
245 Park Avenue, 40th Floor, New York, New York 10167-0034 (212)
692-1852 (Address, including zip code, and telephone number, including area
code, of registrants's principal executive offices)
Consulting Agreement, dated as of June 28, 1996, by and between
CypherCom Solutions Inc. (formerly ATC Capital Group Ltd.) and Chris F. Brown.
(Full title of the Plan)
Steven A. Saide, Esq.
Bryan Cave LLP
245 Park Avenue
New York, New York 10167-0034
(212) 692-1852
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of Securities to be Offering Aggregate Registration
to be Registered Registered Price Offering Fee*
Per Share* Price*
================================== ========== ============ ============== =====================
<S> <C> <C> <C> <C>
Common Stock, $.0002 par value
per share 1,000,000 $5.00 $5,000,000 $1,724.14
================================== ========== ============ ============== =====================
</TABLE>
* Pursuant to Rule 457(c) under the Securities Act of 1933, solely for
purposes of calculating the registration fee, the proposed maximum
offering price per share, the proposed maximum aggregate offering price
and the amount of registration fee have been computed on the basis of
the average of the closing bid and asked prices per share of CypherCom
Solutions Inc. Common Stock as reported on the National Association of
Securities Dealers, Inc.'s OTC Electronic Bulletin Board on August 27,
1996.
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans check the following box. [X]
<PAGE>
<PAGE>
PROSPECTUS
CYPHERCOM SOLUTIONS INC.
1,000,000 SHARES OF COMMON STOCK
$.0002 PAR VALUE
THE OFFERING
This Prospectus relates to a maximum of 1,000,000 shares (the
"Shares") of Common Stock, $.0002 par value per share (the "Common Stock"), of
CypherCom Solutions Inc. (the "Company"), of which 500,000 Shares of Common
Stock may be acquired upon exercise of an outstanding warrant (the "Warrant"),
at an exercise price of $4.50 per share. The Shares may be offered for sale by
the person named herein (the "Selling Shareholder"). The Shares and the Warrant
were issued by the Company to the Selling Shareholder in payment of certain
consulting services rendered and to be rendered by the Selling Shareholder to
the Company. The Company has been informed that the Shares may be offered from
time to time by the Selling Shareholder publicly through one or more
transactions, in the over-the-counter market or through one or more brokers, or
in private transactions, at prices prevailing at the time of sale.
The Common Stock of the Company is traded on the National
Association of Securities Dealers, Inc.'s OTC Bulletin Board (the "NASD Bulletin
Board") under the symbol "CYKO". On August 27, 1996, the closing bid and asked
prices of the Common Stock as reported on the NASD Bulletin Board was $4.00 and
$6.00 per share, respectively. None of the Shares were registered under the
Securities Act of 1933, as amended, prior to the filing of the Registration
Statement of which this Prospectus is a part.
The Selling Shareholder and anyone effecting sales on behalf of
the Selling Shareholder may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933, as amended, and commissions or discounts given may
be regarded as underwriting commissions or discounts under said Act.
The Company will pay the costs of preparation, reproduction and
distribution of this Prospectus and the Registration Statement of which this
Prospectus is a part, the filing fee in connection therewith and all related
accounting and legal fees and expenses (all of which individually and in the
aggregate are expected to be minimal) and the Selling Shareholder will bear all
sales commissions, underwriting discounts and other expenses, if any, in
connection with the offering and sale of the Shares. The Company will not
receive any of the proceeds from sales of the Shares by the Selling Shareholder.
The Company will receive the proceeds from the exercise of the Warrant by the
Selling Shareholder. There can be no assurance, however, that the Selling
Shareholder will exercise the Warrant.
----------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------------------------------
The date of this Prospectus is August 28, 1996
2
<PAGE>
<PAGE>
PART I
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION ...................................................... 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ............................ 3
CYPHERCOM SOLUTIONS INC .................................................... 4
SELLING SHAREHOLDER ........................................................ 4
INDEMNIFICATION OF DIRECTORS AND OFFICERS .................................. 5
EXPERTS .................................................................... 5
</TABLE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Proxy statements, reports and other
information concerning the Company can be inspected and copied at the
Commission's office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's Regional Offices in New York (7
World Trade Center, 13th Floor, New York, New York 10048) and Chicago
(Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661), and copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following
documents filed with the Securities and Exchange Commission:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
2. The Company's Form 12b-25 and the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996.
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.
4. The Company's Form 8-K dated February 26, 1996.
5. The Company's Form 8-K dated June 14, 1996.
6. The Company's Form 8-K dated June 28, 1996.
7. All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the filing of a post-effective amendment which indicates
that all of the securities offered hereby have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference into this Prospectus.
3
<PAGE>
<PAGE>
Any person receiving a copy of this Prospectus may obtain,
without charge, upon written or oral request, a copy of the documents
incorporated by reference herein, except for the exhibits to such documents.
Written requests should be mailed to CypherCom Solutions Inc., c/o Bryan Cave
LLP, 245 Park Avenue, 40th Floor, New York, New York 10167-0034, Attention:
Steven A. Saide, Esq.; telephone (212) 692-1852.
CYPHERCOM SOLUTIONS INC.
The executive office of the Company is located at 245 Park
Avenue, 40th Floor, New York, New York 10167-0034. The Company's telephone
number is (212) 692-1852.
SELLING SHAREHOLDER
The following table sets forth certain information with respect
to the beneficial ownership of the Common Stock of the Company by the Selling
Shareholder as of the date hereof and as adjusted to reflect the sale of the
Shares. Beneficial ownership has been determined for the purpose of the
following table in accordance with Rule 13d-3 of the Exchange Act, under which a
person is deemed to be the beneficial owner of securities if he or she has or
shares voting or investment power in respect of such securities or has the right
to acquire beneficial ownership within sixty (60) days.
<TABLE>
<CAPTION>
Relationship Shares Owned Shares to Shares Owned
Name to Company Prior to Offering be Sold After Offering
- ---- ------------ ----------------- ---------- --------------
<S> <C> <C> <C> <C>
Chris F. Brown Consultant 1,000,000(1) 1,000,000(1) -0-(2)
</TABLE>
- ----------
(1) Includes 500,000 Shares of Common Stock issuable to Chris F. Brown ("Mr.
Brown") upon exercise of a warrant (the "Warrant") which is currently
exercisable at an exercise price of $4.50 per share. The Warrant and 500,000
Shares of Common Stock were issued by the Company pursuant to a Consulting
Agreement, dated June 28, 1996, in consideration of certain consulting services
rendered and to be rendered to the Company by Mr. Brown.
(2) Assumes that all of the Shares are sold by the Selling Shareholder. The
Selling Shareholder may sell all or a part of the Shares offered by this
Prospectus.
4
<PAGE>
<PAGE>
INDEMNIFICATION TO DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") permits a corporation to indemnify any person who was or
is a party, or is threatened to be made a party, to any proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not
inconsistent with, the best interests of the corporation and, with respect to
any criminal action or proceeding, if he or she had no reasonable cause to
believe his or her conduct was unlawful. In the case of an action or suit by or
in the right of the corporation to procure a judgment in its favor, (i) such
indemnification is limited to expenses (including attorneys' fees) actually and
reasonably incurred by such person in the settlement of such action or suit, and
(ii) no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Delaware Court of Chancery or the court
in which such action or suit is brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter therein, Section 145 of the DGCL entitles him or her to be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation.
The indemnification and advancement of expenses permitted or
required by Section 145 of the DGCL are not exclusive of other rights to which
directors and officers of the corporation may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise. Section
145 gives a corporation power to purchase and maintain insurance on behalf of
any person who may be indemnified by a corporation against any liability
asserted against him or her in any of the capacities referred to above or
arising out of his or her status as such whether or not the corporation would
have the power to indemnify him or her against such liability under Section 145
of the DGCL.
Article Seven of the Certificate of Incorporation of the Company,
as amended, includes a provision eliminating the personal liability of directors
of the Company and its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the DGCL.
EXPERTS
The financial statements and schedules of the Company for the
years ended December 31, 1995 and 1994, incorporated herein by reference to the
Company's Form 10-K for the period ended December 31, 1995 (the "Form 10-K")
have been audited by Thomas W. Klash, certified public accountant, as set forth
in the reports included therein and incorporated herein by reference. The
financial statements and schedules of the Company for the year ended December
31, 1993, incorporated herein by reference to the Form 10-K have been audited by
Eller, Tobin, Wlosek & Braverman, L.L.C., certified public accountants, as set
forth in the reports included therein and incorporated herein by reference. Such
financial statements and schedules have been incorporated by reference in
reliance upon such reports given upon their authority as experts in accounting
and auditing.
5
<PAGE>
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
There are incorporated herein by reference the following
documents filed with the Securities and Exchange Commission:
1. The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
2. The Company's Form 12b-25 and the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996.
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.
4. The Company's Form 8-K dated February 26, 1996.
5. The Company's Form 8-K dated June 14, 1996.
6. The Company's Form 8-K dated June 28, 1996.
7. All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the filing of a post-effective amendment which indicates
that all of the securities offered hereby have been sold or which deregisters
all securities then remaining unsold shall be deemed to be incorporated by
reference into this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES
This Registration Statement relates to an aggregate of 1,000,000
shares of Common Stock, $.0002 par value per share, of the Company, 500,000 of
which may be acquired upon exercise of an outstanding warrant (the "Warrant").
Common Stock. The Certificate of Incorporation of the Company, as
amended (the "Certificate of Incorporation"), provides that holders of shares of
Common Stock are entitled to receive dividends at such time and in such amounts
as the Company's Board of Directors may deem advisable, subject to the
provisions of law and the preferences of the Preferred Stock, par value $1.00
per share, of the Company. Holders of Common Stock are not entitled to any
preemption or subscription rights.
Each share of Common Stock is entitled to one vote. Unless
otherwise provided by the General Corporation Law of the State of Delaware, the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock is required with respect to all matters submitted to a vote of the
shareholders, except that the approval of the holders of a plurality of the
outstanding shares of Common Stock is required for the election of directors.
The Certificate of Incorporation provides that the Board of Directors is
authorized to effect the elimination of shares of the Common Stock purchased or
otherwise reacquired by the Company from the authorized capital stock or number
of shares of the Company in the manner provided for in the General Corporation
Law of the State of Delaware.
In the event of a liquidation, dissolution or winding-up of the
Company, holders of Common Stock are not entitled to receive any distributions
or payments until the holders of Series A Preferred Stock receive an
II-1
<PAGE>
<PAGE>
amount equal to the stated value, plus an amount equal to any accrued but unpaid
dividends per share, whether or not declared.
The Warrant. The Warrant entitles the registered holder thereof,
at such holder's option, to purchase 500,000 shares of Common Stock, at an
exercise price of $4.50 per share, at any time and from time to time prior to
the second anniversary of its issuance. The number of shares of Common Stock for
which the Warrant may be exercised is subject to adjustment in the event of a
stock split, recapitalization or the like.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the shares of Common Stock offered hereby is
being passed upon for the Company by its counsel, Bryan Cave LLP, New York, New
York. Steven A. Saide, a partner of Bryan Cave LLP, is the Secretary and a
stockholder of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") permits a corporation to indemnify any person who was or
is a party, or is threatened to be made a party, to any proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding, if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not
inconsistent with, the best interests of the corporation and, with respect to
any criminal action or proceeding, if he or she had no reasonable cause to
believe his or her conduct was unlawful. In the case of an action or suit by or
in the right of the corporation to procure a judgment in its favor, (i) such
indemnification is limited to expenses (including attorneys' fees) actually and
reasonably incurred by such person in the settlement of such action or suit, and
(ii) no indemnification may be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the corporation
unless, and only to the extent that, the Delaware Court of Chancery or the court
in which such action or suit is brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to above, or in defense of any claim, issue
or matter therein, Section 145 of the DGCL entitles him or her to be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation.
The indemnification and advancement of expenses permitted or
required by Section 145 of the DGCL are not exclusive of other rights to which
directors and officers of the corporation may be entitled under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise. Section
145 gives a corporation power to purchase and maintain insurance on behalf of
any person who may be indemnified by a corporation against any liability
asserted against him or her in any of the capacities referred to above or
arising out of his or her status
II-2
<PAGE>
<PAGE>
as such whether or not the corporation would have the power to indemnify him or
her against such liability under Section 145.
Article Seven of the Certificate of Incorporation of the Company,
as amended, includes a provision eliminating the personal liability of directors
of the Company and its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the DGCL.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
None of the Shares, the Warrant and the Underlying Shares issued
to the Selling Shareholder were registered under the Securities Act of 1933, as
amended (the "Act"), in reliance upon the availability of an exemption from
registration afforded by Section 4(2) of the Act.
ITEM 8. EXHIBITS
<TABLE>
<S> <C>
4.1 - Consulting Agreement, dated as of June 28, 1996, by and between the Company
and Chris F. Brown
4.2 - Warrant to Purchase 500,000 Shares of Common Stock of the Company dated
June 28, 1996
5 - Opinion of Bryan Cave LLP
23.1 - Consent of Thomas W. Klash, certified public
accountant.
23.2 - Consent of Eller, Tobin, Wlosek & Braverman, L.L.C., certified public
accountants
23.3 - Consent of Bryan Cave LLP (included in Exhibit 5)
24 - Power of Attorney (included on page II-5 hereof)
</TABLE>
ITEM 9. UNDERTAKINGS.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the shares of Common Stock hereby being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Company's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-3
<PAGE>
<PAGE>
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed by the Act
and is therefore unenforceable. In the event that a claim for indemnification
against liabilities (other than the payment by the Company of expenses incurred
or paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York on August 21, 1996.
CYPHERCOM SOLUTIONS INC.
By:/s/ Dennis Charter
------------------
Dennis Charter
Chairman of the Board
Date: August 21, 1996
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby makes, constitutes and appoints Dennis Charter as true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities to sign any and all amendments to this Registration
Statement, including post-effective amendments, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature
---------
<TABLE>
<S> <C> <C>
/s/ Dennis Charter Chairman of the Board, President August 21, 1996
-------------------------------
Dennis Charter and Director (Principal Executive
Officer)
/s/ Andrew I. Patrick Chief Financial Officer and Director August 21, 1996
-------------------------------
Andrew I. Patrick (Principal Financial and Accounting
Officer)
Director August ___, 1996
-------------------------------
Rudy Pamaputera
II-5
<PAGE>
<PAGE>
INDEX TO EXHIBITS
</TABLE>
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
------- ------- ------------
<S> <C> <C>
4.1 Consulting Agreement, dated June 28, 1996, by and
between the Company and Chris F. Brown
4.2 Warrant to Purchase 500,000 Shares of Common Stock of
the Company dated June 28, 1996
5 Opinion of Bryan Cave LLP
23.1 Consent of Thomas W. Klash, certified public accountant
23.2 Consent of Eller, Tobin, Wlosek & Braverman, L.L.C.,
certified public accountants
23.3 Consent of Bryan Cave LLP (included in Exhibit 5)
24 Power of Attorney (included on page II-5 hereof)
</TABLE>
II-6
<PAGE>
<PAGE>
This CONSULTING AGREEMENT (this "Agreement") is entered into this
28th day of June, 1996, by and between ATC Capital Group Ltd., a Delaware
corporation ("ATC"), and Chris F. Brown ("Consultant").
W I T N E S S E T H :
WHEREAS, ATC recently acquired two licenses to exploit throughout
the world certain technology for use on open networks, including the Internet
(the "Licenses");
WHEREAS, Consultant rendered certain consulting services to ATC
in connection with the acquisition of the Licenses and is willing to continue to
provide consulting services to ATC on the terms and conditions set forth herein;
and
WHEREAS, ATC desires to compensate Consultant for his services
rendered to date and to engage Consultant to provide additional consulting
services on the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the parties hereto agree as follows:
1. ATC hereby engages Consultant on a non-exclusive basis for the
term specified in this Agreement to render advice and services as a consultant
to ATC regarding the establishment of strategic alliances throughout the world
with banks, telecommunications companies, credit card issuers and other related
Internet software providers, which services shall also include, when Consultant
shall deem appropriate and feasible, introductions to the foregoing. Consultant
shall provide such services and shall devote such time and attention as in the
consultant's reasonable discretion may be necessary or desirable for the
performance of his duties hereunder as a consultant when called upon to do so by
ATC, provided that (i) ATC shall not require that Consultant's services be
performed at any particular place or at any particular time, (ii) it is
expressly understood and agreed that Consultant's services are of great value to
ATC by reason of the Consultant's prior experience and knowledge and that
telephonic advice and judgements of Consultant are as valuable to ATC and its
subsidiaries as written reports or physical attendance at any particular place
or at any particular time, and (iii) in no event shall Consult be required to
devote more than ten (10) hours per month to the to the performance of his
services hereunder.
2. Consultant may employ sub-contractors who are individual
persons to assist in his duties, and may assign a portion of his compensation
hereunder to such sub-contractors, provided such assignment is made prior to the
filing of the registration statement on Form S-8 referred to in Section 7
hereof.
3. The term of Consultant's engagement hereunder shall commence
on the date hereof and shall terminate 90 days thereafter.
<PAGE>
<PAGE>
4. In consideration for all of the services heretofore rendered
by Consultant's in connection with the Licenses and to be rendered hereunder by
Consultant, ATC hereby agrees to issue to Consultant, and Consultant hereby
agrees to accept as full payment, (i) 500,000 shares (the "Shares") of par value
$.0002 per share (the "Common Stock"); and (ii) a warrant (the "Warrant") to
purchase 500,000 shares of ATC's Common Stock, at an exercise price of $4.50 per
share, exercisable at any time and from time to time after issuance until the
second anniversary thereof. The Shares and Warrant shall be delivered to
Consultant as soon as practicable following the execution of this Agreement.
5. Subject to the provisions of Section 7 hereof, the Shares, the
Warrant and the shares of Common Stock issuable upon exercise of the Warrant
(the "Underlying Shares") will not have been registered under the Securities Act
of 1933, as amended (the "Act") and may not be offered, sold or otherwise
transferred unless registered under the Act or pursuant to an available
exemption. The certificates representing the Shares and the Underlying Shares
and the Warrant will contain the customary restrictive legend.
6. Notwithstanding anything to the contrary contained herein,
Consultant agrees that during each ninety (90) day period commencing on the date
hereof, he will not offer for sale or sell (which shall exclude any assignment
as provided in Section 2 hereof) more than an aggregate of 25% of the Shares and
25% of the Underlying Shares plus any amount of the Shares and Underlying Shares
that Consultant was permitted hereunder to sell during the prior ninety day
period or periods but had not yet sold. If Consultant shall have assigned any of
his compensation hereunder as permitted under Section 2 hereof, then the
foregoing restrictions shall apply to sales made or to be made in the aggregate
by Consultant and such assignee(s).
7. On or before August 1, 1996, ATC agrees, subject to applicable
law, to file with the Securities and Exchange Commission a registration
statement on Form S-8 so as to permit the public offer and sale of the Shares
and the Underlying Shares. ATC will not be required to take any action with
respect to or make any filing under state "Blue sky" laws.
8. The parties hereto intend that Consultant will be an
independent contractor and not an employee of ATC. Therefore none of the
benefits that may be provided by ATC to its employees shall be available from
ATC to Consultant. The parties understand that it shall be Consultant's
responsibility to provide for all unemployment and other taxes, including
withholding and social security, and all estimated taxes, business licenses and
insurance (including worker's compensation insurance and public liability
insurance) arising out of or relating to this agreement.
9. Any notices or other communications or documents to be given
or permitted hereunder to any party shall be mailed first class, postage
prepaid, and if to ATC addressed to:
ATC Capital Group Ltd.
c/o Bryan Cave LLP
245 Park Avenue
New York, NY 10167
and if to Consultant, addressed to:
<PAGE>
<PAGE>
Chris F. Brown
712 Fifth Avenue, 9th Fl.
New York, NY 10019
10. If anyone or more of the provisions contained in this
Agreement shall, for any reason, be expressly held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
11. This Agreement shall be binding on Consultant's heirs, legal
representatives and assigns, and shall inure to the benefit of any successors
and assigns of ATC.
12. Any waiver of a right under or breach of a provision of this
Agreement shall not be a waiver or any other rights or subsequent breach of the
same or other provisions of this Agreement.
13. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York without regard to
its conflicts of laws principles.
14. This Agreement supersedes all previous agreements between the
parties with respect to the subject matter hereof. This Agreement constitutes
the entire agreement between the parties hereto and there are no understandings,
representations or warranties of any kind whatsoever except as herein set forth.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement in duplicate to be effective as of the date written above.
ATC CAPITAL GROUP LTD.
By: /s/ Dennis Charter
-------------------
Dennis Charter
Chairman
/s/ Chris F. Brown
------------------
Chris F. Brown
<PAGE>
<PAGE>
Void after 5:00 p.m., New York Time on June 28, 1998
Warrant to Purchase 500,000 Shares of Common Stock
--------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
ATC CAPITAL GROUP LTD.
--------------------------
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.
<PAGE>
<PAGE>
(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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<PAGE>
(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
4
<PAGE>
<PAGE>
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
5
<PAGE>
<PAGE>
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
6
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<PAGE>
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.
7
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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
10
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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:
----------------------
(Name)
----------------------
----------------------
(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.
-----------------------------
(Signature)
- ------------------------
(Date)
<PAGE>
<PAGE>
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 ____________________________________
<PAGE>
<PAGE>
[BRYAN CAVE LLP LETTERHEAD]
August 21, 1996
CypherCom Solutions Inc.
245 Park Avenue, 40th Floor
New York, New York 10167
Attention: Dennis Charter
RE: CYPHERCOM SOLUTIONS INC. REGISTRATION STATEMENT ON FORM S-8
-----------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for CypherCom Solutions Inc. (the "Company") in
connection with the preparation and filing of a Registration Statement of the
Company on Form S-8 (the "Registration Statement") for the registration of
1,000,000 shares of the Company's common stock, $.0002 par value per share (the
"Common Stock"), under the Securities Act of 1933, as amended (the "Act"). The
Registration Statement relates to the offering of shares of Common Stock by a
certain Selling Shareholder named therein (the "Selling Shareholder") who
received 500,000 shares of Common Stock (the "Shares") and a warrant to purchase
500,000 shares of Common Stock (the "Warrant") in consideration of certain
consulting services rendered or to be rendered by him in accordance with the
terms of the consulting agreement described in the Registration Statement (the
"Consulting Agreement").
We have examined and are familiar with originals or copies of such
documents certified or otherwise identified to our satisfaction, corporate
records and other instruments relating to the incorporation of the Company and
the authorization and/or issuance of the Shares, and made such investigations of
law as we have deemed necessary and advisable.
Based upon the foregoing and having due regard for such legal questions
as we have deemed relevant, it is our opinion that:
1. The Company is a corporation duly incorporated and validly existing
under the laws of the State of Delaware.
2. The Shares and the shares of Common Stock issuable upon exercise of
the Warrant (the "Underlying Shares") have been duly authorized and the Shares
have been, and upon exercise of the Warrant the Underlying Shares will be,
validly issued in accordance with the terms of the Consulting Agreement. The
Shares are, and the Underlying Shares issued upon exercise of the Warrant in
accordance with its terms will be, fully paid and nonassessable.
<PAGE>
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CypherCom Solutions Inc.
August 21, 1996
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to the firm in the Registration
Statement, in any amendments to the Registration Statement and in the Prospectus
constituting a part of such Registration Statement.
We are members of the Bar of the State of New York and do not purport to
be experts in, or to render any opinions with respect to, the laws of any state
or jurisdiction other than the Delaware corporate law and the Federal laws of
the United States of America.
Very truly yours,
/s/ Bryan Cave LLP
Bryan Cave LLP
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CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
----------------------------------------
I hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of my report dated January 17, 1996 relating to the
financial statements of CypherCom Solutions Inc., formerly known as ATC Capital
Group Ltd. as of December 31, 1995 and 1994 and for each of the years then
ended. I also consent to the reference to myself under the caption "Experts" in
the Prospectus included in the Registration Statement.
/s/ Thomas W. Klash
Thomas W. Klash
Certified Public Accountant
Hollywood, Florida
August 15, 1996
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CONSENT OF ELLER, TOBIN, WLOSEK & BRAVERMAN, L.L.C.,
----------------------------------------------------
INDEPENDENT AUDITORS
--------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our auditors' report dated January 10, 1994, with
respect to the financial statements of CypherCom Solutions Inc., formerly known
as ATC Capital Group Ltd. (the "Company") and subsidiaries for the year ended
December 31, 1993, included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995. We also consent to the reference to our firm under
the caption "Experts" in the Prospectus included in such Registration Statement.
Eller, Tobin, Wlosek & Braverman, L.L.C.
/s/ Eller, Tobin, Wlosek & Braverman, L.L.C.
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INDEPENDENT AUDITORS
Elizabeth, New Jersey
August 15, 1996
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