EXHIBIT 10.4
THIS COMMON STOCK PURCHASE WARRANT (THE "WARRANT") HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ACT, AS AMENDED (THE "1933
ACT") OR ANY STATE SECURITIES LAWS, AND NEITHER THE WARRANT NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
(A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (B) THE
INVESTOR SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF COUNSEL
REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY TO
THE EFFECT THAT THE WARRANTS TO BE SOLD OR TRANSFERRED MAY BE SOLD OR
TRANSFERRED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933
ACT, OR (C) IF REGISTERED UNDER THE 1933 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A STOCK PURCHASE AGREEMENT ("PURCHASE
AGREEMENT"), DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN
ADDITIONAL AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION,
PROVISIONS WHICH LIMIT THE EXERCISE RIGHTS OF THE HOLDER AND SPECIFY
MANDATORY REDEMPTION OBLIGATIONS OF THE COMPANY.
PDG ENVIRONMENTAL INC
COMMON STOCK PURCHASE WARRANT
Number of shares: 2,000,000
Holder: Xxxxxx Partners LP
c/o Xxxxxx Xxxxxx Xxxxxx
Managing Partner
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
tel 000-000-0000
fax 000-000-0000
cell 000-000-0000
xxx@xxxxxxxxxxxxxx.xxx
Expiration Date: Xxxxx 0, 0000
Xxxxxxxx Price per Share: $1.60
PDG ENVIRONMENTAL Inc, a company organized and existing under the laws of the
State of Delaware (the "COMPANY"), hereby certifies that, for value received,
Xxxxxx Partners LP, or its registered assigns (the "WARRANT HOLDER"), is
entitled, subject to the
terms set forth below, to purchase from the Company 2,000,000 shares (the
"WARRANT SHARES") of common stock, $0.02 par value (the "COMMON STOCK"), of the
Company (each such share, a "WARRANT SHARE" and all such shares, the "WARRANT
SHARES") in exchange for (a) one (1) Warrant and (b) $ 1.60 per share (as
adjusted from time to time as provided in Section 7, per Warrant Share (the
"EXERCISE PRICE"), at any time and from time to time from and after the date
thereof and through and including 5:00 p.m. New York City time on March 4, 2009
(the "EXPIRATION DATE"), and subject to the following terms and conditions:
1. REGISTRATION OF WARRANT. The Company shall register this
Warrant upon records to be maintained by the Company for that purpose (the
"WARRANT REGISTER"), in the name of the record Warrant Holder hereof from time
to time. The Company may deem and treat the registered Warrant Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise hereof or
nay distribution to the Warrant Holder, and for all other purposes, and the
Company shall not be affected by notice to the contrary.
2. INVESTMENT REPRESENTATION.
a. The Warrant Holder is (i) an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act of 1933, as amended (the "1933 ACT"), by reason of Rule 501(a)(3)
and (6), (ii) experienced in making investments of the kind described in this
Agreement and related documents, (iii) able, by reason of the business and
financial experience of its officers (if any entity) and professional advisors
(who are not affiliated with or compensated in any way by the Company or any of
its affiliates or selling agents), to protect its own interests in connection
with the transactions describe din this Agreement, and the related documents and
(iv) able to afford the entire loss of its investment in the Warrant.
b. The Warrant Holder is acquiring this Warrant and,
upon exercise thereof, the Warrant Shares for its own account or the account of
an affiliate for investment purposes only, and not with a present view to, or
for, resale, distribution or fractionalization thereof, in whole or in part,
within the meaning of the 1933 Act. The Warrant Holder understands that its
acquisition of the Warrant or, upon exercise thereof, the Warrant Shares has not
been registered under the 1933 Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of such Warrant
Holders investment intent as expressed herein. The Warrant Holder shall not,
directly or indirectly, offer, sell, pledge, transfer, or otherwise dispose of
(or solicit any offers to buy, purchase, or otherwise acquire or take a pledge
of) the Warrant or the Warrant Shares, except in compliance with the terms
hereof and the registration requirements of the 1933 Act, and the rules and
regulations promulgated thereunder, or an exemption thereunder.
c. The Warrant Holder acknowledges that the certificates
representing any Warrant Shares will bear a legend indicating that they have not
been registered under the 1933 Act or any state securities laws and neither the
Warrant Shares
nor any interest therein may be offered, sold, pledged, assigned or otherwise
transferred by the Warrant Holder unless (1) a registration statement with
respect thereto is effective under the 1933 Act and any applicable state
securities laws or (2) the Warrant Holder shall have delivered to the Company an
opinion of counsel, reasonably satisfactory in form, scope and substance to the
Company, to the effect that the Warrant Shares to be sold or transferred may be
sold or transferred pursuant to an exemption from such registration.
d. The Warrant Holder has been, upon request, furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Warrants and the
Warrant Shares. The Warrant Holder has been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. The Warrant Holder understands that such Warrant Holder's
investment in the Warrant and Warrant Shares involves a high degree of risk. The
Warrant Holder understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any recommendation
or endorsement of the Warrant or the Warrant Shares.
e. If this Warrant was acquired by the Warrant Holder
pursuant to the exemption from the registration requirements of the 1933 Act
afforded by Regulation S thereunder, the Warrant Holder acknowledges and
covenants that this Warrant may not be exercised by or on behalf of a Person
during the one year distribution compliance period (as defined in Regulation S)
following the date hereof. "PERSON" means an individual, partnership, firm,
limited liability company, trust, joint venture, association, corporation, or
any other legal entity.
3. VALIDITY OF WARRANT AND ISSUE OF SHARES. The Company
represents and warrants that this Warrant has been duly authorized and validly
issued and warrants and agrees that all of Common Stock that may be issued upon
the exercise of the rights represented by this Warrant will, when issued upon
such exercise, be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof.
The Company further warrants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved a sufficient number of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. REGISTRATION OF TRANSFERS AND EXCHANGE OF WARRANTS.
a. Subject to compliance with the legend set forth
on the face of this Warrant, the Company shall register the transfer of any
portion of this Warrant in the Warrant in the Warrant Register, upon surrender
of this Warrant with the Form of Assignment attached hereto duly completed and
signed, to the Company at the office specified in or pursuant to Section 9. As
soon as practicable following any such registration or transfer, a new warrant
to purchase Common Stock, in substantially the form of this Warrant (any such
new warrant, a "NEW WARRANT"), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant
evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Warrant Holder. The acceptance of the New
Warrant by the transferee thereof shall be deemed the acceptance of such
transferee of all of the rights and obligations of a Warrant Holder of a
Warrant.
b. This Warrant is exchangeable, upon the surrender hereof by
the Warrant Holder to the office of the Company specified in or pursuant to
Section 9 for one or more New Warrants, evidencing in the aggregate the right to
purchase the number of Warrant Shares which may then be purchased hereunder. Any
such New Warrant will be dated the date of such exchange.
5. EXERCISE OF WARRANTS.
a. Upon surrender of this Warrant with the Form of
Election to Purchase attached hereto duly completed and signed to the Company,
at its address set forth in Section 9, and upon payment and delivery of the
Exercise Price per Warrant Share multiplied by the number of Warrant Shares that
the Warrant Holder intends to purchase hereunder, in lawful money of the United
States of America, in cash or by certified or official bank check or checks, to
the Company, all as specified by the Warrant Holder in the Form of Election to
Purchase, the Company shall promptly (but in no event later than 7 business days
after the Expiration Date) issue or cause to be issued and cause to be delivered
to or upon the written order of the Warrant Holder and in such name or names as
the Warrant Holder may designate (subject to the restrictions on transfer
described in the legend set forth on the face of this Warrant), a certificate
for the Warrant Shares issuable upon such exercise, with such restrictive legend
as required by the 1933 Act. Any person so designated by the Warrant Holder to
receive Warrant Shares shall be deemed to have become holder of record of such
Warrant Shares as of the Date of Exercise of this Warrant.
b. A "DATE OF EXERCISE" means the date on which
the Company shall have received (i) this Warrant (or any New Warrant, as
applicable), with the Form of Election to Purchase attached hereto (or attached
to such New Warrant) appropriately completed and duly signed, and (ii) payment
of the Exercise Price for the number of Warrant Shares so indicated by the
Warrant Holder to be purchased.
c. This Warrant shall be exercisable at any time
and from time to time for such number of Warrant Shares as is indicated in the
attached Form of Election To Purchase. If less than all of the Warrant Shares
which may be purchased under this Warrant are exercised at any time, the Company
shall issue or cause to be issued, at its expense, a New Warrant evidencing the
right to purchase the remaining number of Warrant Shares for which no exercise
has been evidenced by this Warrant.
d. (i) Except as set forth in clause (d)(iii) below, the
holder of this Warrant may, in its sole discretion, exercise this Warrant in
whole or in part and, in lieu of making the cash payment otherwise contemplated
to be made to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon
such exercise the "NET NUMBER" of shares of Common Stock determined according to
the following formula (a "CASHLESS EXERCISE"):
Net Number = (A x (B - C))/B
(ii) For purposes of the foregoing formula:
A= the total number shares with respect to which this
Warrant is then being exercised.
B= the average of the last reported sale prices (as
reported by Bloomberg) of the Common Stock on the OTC
Bulletin Board or other publicly traded market upon
which the Common Stock is then traded ("PUBLIC
TRADING MARKET") on for the five trading days
immediately preceding the date of the Exercise
Notice.
C= the Warrant Exercise Price then in effect at the
time of such exercise.
(iii) Notwithstanding anything contained herein to the
contrary, the holder of this Warrant shall not exercise this Warrant, in whole
or in part, pursuant to a Cashless Exercise: (1) at any time prior to March 4,
2005 or (2) at any time the Warrant Shares are subject to an effective
registration statement or during which there is a Black-Out Period (as defined
in that certain Registration Rights Agreement dated March 4, 2004 between the
Company and the Holder).
6. CALL BY THE COMPANY. At any time from the date hereof until December
4, 2005 (the twenty-one month anniversary of the date hereof), the Company may
require the Holder to exercise, in part or in full, the Warrant upon the terms
contained herein if (x) the average of the last reported sales prices (as
reported on Bloomberg) of the Common Stock on the Public Trading Market is equal
to or in excess of the callable price of $2.40 for a period of ten (10)
consecutive trading days (the "CALL TRADING PERIOD") and (y) there is an
effective Registration Statement covering the shares Common Stock underlying
this Warrant during the Call Trading Period ("AUTOMATIC EXERCISE"). Upon
occurrence of the Automatic Exercise, the Company shall provide the Holder with
notice of such Automatic Conversion and the portion of the Warrant to be
exercised ("AUTOMATIC EXERCISE NOTICE"). Within ten (10) days of receipt by the
Holder of the Automatic Exercise Notice, the Holder must either (i) exercise
such portion of this Warrant as shall be requested by the Company or (ii)
subject to Section 4 of this Warrant, effect a transfer this Warrant to a
subsequent holder that will exercise such portion of this Warrant as shall be
requested within such period. In the event that this Warrant is exercised, the
Holder must deliver to the Company at its office at PDG ENVIRONMENTAL, INC.,
0000 Xxxxxx Xxxx, Xxxxxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxx
X. Xxxxx, on or before 5:00 p.m., Eastern Time, on the required date, (i) Form
of Election to Purchase properly executed and completed by Holder or an
authorized officer thereof, (ii) a check payable to the order of the Company, in
an amount
equal to the product of the Exercise Price multiplied by the number of Warrant
Shares specified in the Automatic Exercise Notice and (iii) this Warrant. If the
Holder or a subsequent holder does not exercise this Warrant within ten (10)
days from receipt of the Automatic Exercise Notice, then (i) this Warrant will
expire immediately and (ii) the Holder will immediately forfeit its registration
rights contained in the Registration Rights agreement (as defined in the Stock
Purchase agreement).
7. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
character of the shares of stock or other securities at the time issuable upon
exercise of this Warrant and the Exercise Price therefor, are subject to
adjustment upon the occurrence of the following events:
a. ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS,
RECAPITALIZATIONS, ETC. The Exercise Price of this Warrant and the number of
shares of Common Stock or other securities at the time issuable upon exercise of
this Warrant shall be appropriately adjusted to reflect any stock dividend,
stock split, combination of shares, reclassification, recapitalization or other
similar event affecting the number of outstanding shares of stock or securities.
b. ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER,
ETC. In case of any consolidation or merger of the Company with or into any
other corporation, entity or person, or any other corporate reorganization, in
which the Company shall not be the continuing or surviving entity of such
consolidation, merger or reorganization (any such transaction being hereinafter
referred to as a "REORGANIZATION"), then, in each case, the holder of this
Warrant, on exercise hereof at any time after the consummation or effective date
of such Reorganization (the "EFFECTIVE DATE"), shall receive, in lieu of the
shares of stock or other securities at any time issuable upon the exercise of
the Warrant issuable on such exercise prior to the Effective Date, the stock and
other securities and property (including cash) to which such holder would have
been entitled upon the Effective Date if such holder had exercised this Warrant
immediately prior thereto (all subject to further adjustment as provided in this
Warrant).
c. CERTIFICATE AS TO ADJUSTMENTS. In case of any
adjustment or readjustment in the price or kind of securities issuable on the
exercise of this Warrant, the Company will promptly give written notice thereof
to the holder of this Warrant in the form of a certificate, certified and
confirmed by the Board of Directors of the Company, setting forth such
adjustment or readjustment and showing in reasonable detail the facts upon which
such adjustment or readjustment is based.
8. FRACTIONAL SHARES. The Company shall not be required to issue
or cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares that shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrants
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 8, be issuable
on the exercise of this Warrant, the Company shall, at its option, (i) pay an
amount in cash equal to the Exercise Price
multiplied by such fraction or (ii) round the number of Warrant Shares issuable,
up to the next whole number.
8. NOTICE. All notices and other communications hereunder shall
be in writing and shall be deemed to have been given (i) on the date they are
delivered if delivered in person; (ii) on the date initially received if
delivered by facsimile transmission followed by registered or certified mail
confirmation; (iii) on the date delivered by an overnight courier service; or
(iv) on the third business day after it is mailed by registered or certified
mail, return receipt requested with postage and other fees prepaid as follows:
If to the Company:
PDG ENVIRONMENTAL Inc
0000 Xxxxxx Xxxx, Xxxxxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Tel: 000-000-0000
Attention: Xxxx X. Xxxxx
If to the Warrant Holder:
Xxxxxx Xxxxxx Xxxxxx
Managing Partner
Xxxxxx Partners LP
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx XX 00000
tel 000-000-0000
9. MISCELLANEOUS.
a. This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
This Warrant may be amended only in writing and signed by the Company and the
Warrant Holder.
b. Nothing in this Warrant shall be construed to give to any
person or corporation other than the Company and the Warrant Holder any legal or
equitable right, remedy or cause of action under this Warrant; this Warrant
shall be for the sole and exclusive benefit of the Company and the Warrant
Holder.
c. This Warrant shall be governed by, construed and enforced
in accordance with the internal laws of the Commonwealth of Pennsylvania without
regard to the principles of conflicts of law thereof.
d. The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
e. In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceablilty of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonably substitute therefore, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
f. The Warrant Holder shall not, by virtue hereof, be entitled
to any voting or other rights of a shareholder of the Company, either at law or
equity, and the rights of the Warrant Holder are limited to those expressed in
this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed by the authorized officer as of the date first above stated.
PDG ENVIRONMENTAL Inc
By: /s/ Xxxx X. Xxxxx
------------------------
Name: Xxxx X. Xxxxx
Title: President & CEO
FORM OF ELECTION TO PURCHASE
(To be executed by the Warrant Holder to exercise the right to purchase shares
of Common Stock under the foregoing Warrant)
To: PDG ENVIRONMENTAL INC:
In accordance with the Warrant enclosed with this Form of Election to Purchase,
the undersigned hereby irrevocably elects to purchase ______________ shares of
Common Stock ("Common Stock"), $0.02 par value, of PDG ENVIRONMENTAL Inc and
encloses one warrant and $1.60 for each Warrant Share being purchased or an
aggregate of $________________ in cash or certified or official bank check or
checks, which sum represents the aggregate Exercise Price (as defined in the
Warrant) together with any applicable taxes payable by the undersigned pursuant
to the Warrant.
The undersigned requests that certificates for the shares of Common Stock
issuable upon this exercise be issued in the name of:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print name and address)
______________________________________________________________
(Please insert Social Security or Tax Identification Number)
If the number of shares of Common Stock issuable upon this exercise shall not be
all of the shares of Common Stock which the undersigned is entitled to purchase
in accordance with the enclosed Warrant, the undersigned requests that a New
Warrant (as defined in the Warrant) evidencing the right to purchase the shares
of Common Stock not issuable pursuant to the exercise evidenced hereby be issued
in the name of and delivered to:
______________________________________________________________
______________________________________________________________
______________________________________________________________
(Please print name and address)
Dated: _________________ Name of Warrant Holder:
(Print)________________________________
(By:)__________________________________
(Name:)________________________________
(Title:)_______________________________
Signature must conform in all respects
to name of Warrant Holder as specified
on the face of the Warrant
