CYCLO3PSS CORPORATION
WARRANT AGREEMENT
Dated as of November 5, 1997
INTERWEST TRANSFER COMPANY, INC.
(Warrant Agent)
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WARRANT AGREEMENT
THIS WARRANT AGREEMENT dated as of November 5, 1997, is between CYCLO3PPS
CORPORATION, a Delaware corporation (the "Company"), and INTERWEST TRANSFER
COMPANY, INC. (the "Warrant Agent").
RECITALS:
WHEREAS, the Company has issued, in a private securities offering (the
"Offering"), 1,000,000 Units of its securities, each Unit consisting of one
share of common stock ("Share"), one redeemable Class "A" Common Stock Purchase
Warrant ("Class "A" Warrant") and one redeemable Class "B" Common Stock Purchase
Warrant ("Class "B" Warrant"); and
WHEREAS, the Company desires to enter into this Agreement to establish the
terms and conditions of the Warrants, to set forth the rights of the registered
holders of the Warrants (the "Warrant Holders"), and to provide for the
issuance, transfer, and exercise of the Warrants and other matters; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company; and the Warrant Agent is willing to so act under the terms of this
Agreement;
NOW THEREFORE, in consideration of the mutual agreements stated in this
Agreement, the Company and the Warrant Agent agree:
Section 1. Warrants
1.1. Subject to the provisions of this Agreement, each Class "A" Warrant
shall entitle the Warrant Holder to purchase from the Company one fully-paid and
nonassessable Share at a price of $2.60 per Share (the "Exercise Price"). The
Class "A" Warrant will be exercisable at any time during the twelve (12) month
period beginning on the date that the Shares issuable upon the exercise of the
Class "A" Warrants are registered with the Securities and Exchange Commission.
The actual time of expiration of the Class "A" Warrants is hereafter called the
"Expiration Date." At the time of expiration of the Class "A" Warrants, any
unexercised Class "A" Warrant will become void, and all rights of the Warrant
Holders under the terms of the Warrant Certificates, this Agreement, and
otherwise shall cease. The period in which the Warrants may be exercised is
hereafter called the "Exercise Period."
1.2. Subject to the provisions of this Agreement, each Class "B" Warrant
shall entitle the Warrant Holder to purchase from the Company one fully-paid and
nonassessable Share at a price of $2.75 per Share (called the "Exercise Price").
The Class "B" Warrant will be exercisable at any time during the three year
period beginning on the termination date of the Offering. The actual time of
expiration of the Warrants being called the "Expiration Date." At the time of
expiration of the "B" Warrants, any unexercised "B" Warrant will become void,
and all rights of the Warrant Holders
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under the terms of the Warrant Certificates, this Agreement, and otherwise
shall cease. The period in which the Warrants may be exercised is hereafter
called the "Exercise Period."
Section 2. Warrant Transferable
Subject to compliance with the registration requirements of federal and
state securities laws the Warrants may be transferred by a holder. The
transferree shall be entitled to the rights and shall be subject to the
limitations as the original holder.
Section 3. Warrant Certificates
3.1. The Warrant Certificates shall be in registered form only. The text
of the Warrant Certificate, including the forms of exercise and assignment shall
be substantially in the form set forth in Exhibit A attached to this Agreement.
Warrant Certificates shall be signed by, or shall bear the facsimile signatures
of, the president or a vice president of the Company, the secretary or assistant
secretary of the Company, and shall bear a facsimile of the Company's corporate
seal. If any person whose facsimile signature has been placed upon any Warrant
Certificate as the signature of an officer of the Company shall have ceased to
be such officer before such Warrant Certificate is countersigned, issued, and
delivered, such Warrant Certificate may be countersigned, issued, and delivered
with the same effect as if such person had not ceased to be such officer. Any
Warrant Certificate may be signed by, or may bear the facsimile signature of,
any person who at the actual date of the preparation of such Warrant Certificate
shall be a proper officer of the Company to sign such Warrant Certificate even
though such person was not such an officer upon the date of this Agreement.
3.2. Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent is hereby authorized to countersign and deliver to, or in
accordance with the instructions of any Warrant Holder, any Warrant Certificate
which is properly issued under the terms of this Agreement.
Section 4. Registration of Transfer and Exchanges
4.1. Until the Expiration Date, the Warrant Agent shall from time to time
register the transfer of any outstanding Warrant Certificate upon records to be
maintained by the Warrant Agent for such purpose, upon surrender of such Warrant
Certificate to the Warrant Agent for transfer, accompanied by appropriate
instruments of transfer in form satisfactory to the Company and the Warrant
Agent and duly executed by the Warrant Holder or a duly authorized attorney.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued in the name of and to the transferee, and the surrendered Warrant
Certificate shall be canceled.
4.2. Until the Expiration Date, any outstanding Warrant Certificate may be
surrendered by the Warrant Holder to the Warrant Agent in exchange for other
Warrant Certificates of like tenor, subject to any adjustment under Section 11.
Warrant Certificates so surrendered for exchange shall be canceled.
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Section 5. Redemption of Warrants.
Class "A" Warrants are redeemable by the Company at $.005 per Redeemable
Warrant on 10 days prior written notice, provided that the average closing bid
price of the Common Stock equals or exceeds $2.85 per share for 10 consecutive
trading days ending within 10 days prior to the notice of redemption. Class "B"
Warrants are redeemable by the Company at $.005 per Redeemable Warrant on 30
days prior written notice, provided that the average closing bid price of the
Common Stock equals or exceeds $3.25 per share for 10 consecutive trading days
ending within 10 days prior to the notice of redemption.
Section 6. Exercise of Warrants.
6.1. Subject to the existence of a current registration statement covering
the Warrant Shares, any whole number or all of the Warrants evidenced by any
Warrant Certificate may be exercised during the Exercise Period. A Warrant shall
be exercised by:
A. The Warrant Holder by surrendering to the Warrant Agent a Warrant
Certificate evidencing such number of Warrants, with the exercise form
duly completed and executed, and paying to the Warrant Agent, in lawful
money in the United States of America payable to the order of the Warrant
Agent, the Exercise Price for each Share to be purchased; or
B. The Warrant Holder, the Company and a registered broker-dealer
entering into an Agreement providing for the exercise of the Warrants
through the sale of the shares in a market transaction.
6.2. If the exercise method set forth in Section 6.1 (a) above is elected
by the Warrant Holder, then upon receipt of the Warrant Certificates with the
exercise form thereon duly executed, together with payment in full of the
Exercise Price for the Shares for which Warrants are then being exercised, the
Warrant Agent shall escrow the money received for a period of seven days. After
each seven day period, the Warrant Agent shall pay to the Company all funds
cleared during the period. The Warrant Agent shall then requisition from any
transfer agent for the Shares, and upon receipt shall make delivery of
certificates evidencing the total number of whole shares for which Warrants are
then being exercised, in such names and denominations as required for delivery
to or in accordance with the instructions of the Warrant Holder. Such
certificates for the Shares shall be deemed to be issued, and the person to whom
such Shares are issued of record shall be deemed to have become a holder of
record of such Shares, as of the date of the surrender of such Warrant
Certificates and payment of the Exercise Price, whichever shall last occur,
provided that if the books of the Company with respect to the Shares shall be
closed as of such date, the certificates for such Shares shall be deemed to be
issued, and the person to whom such Shares are issued of record shall be deemed
to have become a record holder of such Shares, as of the date on which such
books shall next be open (whether before, on or after the Expiration Date) but
at the Exercise Price and upon the other conditions in effect upon the date of
surrender of the Warrant Certificate and payment of the Exercise Price,
whichever shall have last occurred, to the Warrant Agent.
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6.3. If less than all of the Warrants evidenced by a Warrant Certificate
are exercised upon a single occasion, a new Warrant Certificate for the balance
of the Warrants not so exercised shall be issued and delivered to, or in
accordance with transfer instructions properly given by, the Warrant Holder.
6.4. All Warrant Certificates surrendered upon exercise of Warrants shall
be canceled.
Section 7. Payment of Taxes.
The Company shall not pay taxes attributable to the initial issuance of
Shares upon exercise of Warrants nor shall the Company be required to pay any
tax which may be payable in respect of any transfer involved in the issue of any
Warrant Certificate or in the issuer of any certificates for Shares in a name
other than that of the Warrant Holder upon the exercise of any Warrant.
Section 8. Mutilated or Missing Warrant Certificates.
If any Warrant Certificate is mutilated, lost, stolen, or destroyed, the
Company and the Warrant Agent may, on such terms as to indemnify them or as they
may otherwise in their discretion impose (which shall, in the case of a
mutilated Warrant Certificate, include the surrender thereof), and upon receipt
of evidence satisfactory to the Company and the Warrant Agent of such loss,
theft or destruction, issue a substitute Warrant Certificate of like
denomination and tenor as the Warrant Certificate so mutilated, lost, stolen or
destroyed, and the Warrant Holder desires to exercise any Warrants evidenced
thereby, the Company and the Warrant Agent may authorize such exercise upon
receipt of such evidence and indemnity in lieu of issuing any substitute Warrant
Certificate to evidence the Warrants so exercised.
Section 9. Reservation of Shares
The Company will at all times reserve and keep available, free from
pre-emptive rights, the full number of Shares issuable upon the exercise of all
outstanding Warrants.
Section 10. Obtaining of Governmental Approvals and Stock Exchange Listings
Within 45 days after the termination of the Offering, the Company will in
good faith and as expeditiously as possible endeavor to secure registration of
the shares underlying the warrants with federal and state securities agencies or
to take such other action, as to allow the Shares to be issued as non-restricted
Shares. In no event shall Shares be issued until such registration or
qualifications shall have been obtained or such other action shall have been
taken.
Section 11. Adjustments of Exercise Price and Either Shares Purchasable or
Number of Warrants
The Exercise Price and either the number of Shares purchasable upon
exercise of each Warrant or the number of Warrants outstanding shall be subject
to adjustment from time to time as provided in this section.
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11.1. In case, prior to the expiration of the Warrants by exercise or by
their terms, the Company shall issue any shares of its Common Stock as a stock
dividend or shall subdivide the number of outstanding shares of its Common Stock
into a greater number of shares, then, the applicable purchase price per share
of the Shares of Common Stock purchasable pursuant to the Warrants shall be
proportionately reduced and the number of Shares at that time purchasable
pursuant to the Warrants shall be proportionately increased; and, conversely, in
the event that the Company shall reduce the number of outstanding shares of
Common Stock by combining such Shares into a smaller number of Shares, then, the
applicable purchase price per Share of the Shares of Common Stock purchasable
pursuant to the Warrants shall be proportionately increased and the number of
Shares of Common Stock at that time purchasable pursuant to the Warrants shall
be proportionately decreased. Any dividend paid or distributed upon the Common
Stock in stock of any other class or securities convertible into shares of
Common Stock shall be treated as a dividend paid in Common Stock to the extent
that shares of Common Stock are issuable upon the conversion thereof.
11.2. In case, prior to the expiration of the Warrants by exercise or by
their terms, the Company shall be recapitalized or in case the Company or a
successor corporation shall consolidate or merge with or convey all or
substantially all of its, or of any successor corporation's property and assets
to any other corporation or corporations (any such other corporation being
included within the meaning of the term "successor corporation" hereinbefore
used in the event of any consolidation or merger of any such other corporation
with, or the sale of all or substantially all of the property of any such other
corporation to, another corporation or corporations), then, as a condition of
such recapitalization, consolidation, merger of conveyance, lawful and adequate
provision shall be made whereby the holders of the Warrants shall thereafter
have the right to purchase, upon the terms and conditions specified in the
Warrants, in lieu of the shares of Common Stock of the Company theretofore
purchasable upon the exercise of the Warrants had such recapitalization,
consolidation, merger or conveyance not taken place; and in any such event, the
rights of the holders of the Warrants to any adjustment in the number of shares
of Common Stock purchasable upon the exercise of the Warrants, as hereinbefore
provided, shall continue and be preserved in respect of any stock which the
holders become entitled to purchase.
11.3. Anything in this Section 11 to the contrary notwithstanding, the
Company shall not be required to give effect to any adjustment in the exercise
price unless and until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the exercise price by at least
$.005, but when the cumulative net effect of more than one adjustment so
determined shall be to change the actual exercise price by at least $.005, such
change in the exercise price shall thereupon be given effect.
11.4. For purposes of this Section 11, no adjustment shall be made by
virtue of the issuance of shares of Common Stock or convertible securities or
rights or options to purchase such Common Stock or convertible securities
pursuant to any stock purchase plan, stock option plan, employee savings or
profit sharing plan, other incentive or benefit plan of the Company or as a
result of the issuance of Shares for any reason except as specifically set forth
in this Section 11.
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Section 12. Fractional Warrants and Fractional Shares
Notwithstanding any other provision of this Agreement or any Warrant
Certificate, the Company shall not be required to issue fractions of Warrants on
any distribution for Warrant Certificates or to distribute Warrant Certificates
which evidence fractional Warrants and no adjustments in respect of a fractional
warrant will be made.
Section 13. Notices to Warrant Holders
Upon any adjustment of the Exercise Price, the Company within 30 days
thereafter shall (a) cause to be filed with the Warrant Agent a certificate,
signed by the president or a vice president of the Company and by its treasurer
or an assistant treasurer, setting forth the Exercise Price after such
adjustment and setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based and setting forth either (1) the
number of Shares (or portion thereof) purchasable upon exercise of a Warrant
after such adjustment of the Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein, and (b)
cause written notice of such adjustments to be given to each Warrant Holders as
of the record date applicable to such adjustment. Where appropriate, such notice
may be given in advance.
Section 14. Rights of Warrant Holders
14.1. No Warrant Holders, as such, shall have any rights of a shareholder
of the Company, either at law or equity, and the rights of the Warrant Holders,
as such, are limited to those rights expressly provided in this Agreement or in
the Warrant Certificates. The Company will provide Warrant Holders with copies
of all communications provided to shareholders.
14.2. When any Warrant Certificate shall have been surrendered for
exercise accompanied by payment of the Exercise Price as provided in this
Agreement, certificates for the Shares purchased upon such exercise shall be
issuable to any person designated to be the record holder of such surrender and
payment, whichever last occurs; provided that if at such date the transfer books
for the Shares shall be closed, the certificates for the Shares shall be
issuable on the date on which such books shall next be open (whether before, on,
or after the Expiration Date) and until then the Company shall be under no duty
to deliver any certificate for such Shares; and further provided that such
books, unless otherwise required by law, shall not be closed at any one time for
a period longer than thirty (30) days.
14.3. The Company and the Warrant Agent may treat the registered Warrant
Holder in respect of any Warrant Certificate as the absolute owner thereof for
all purposes notwithstanding any notice to the contrary.
Section 15. Warrant Agent
15.1. The Company hereby appoints the Warrant Agent to act as the agent of
the Company in accordance with this Agreement, and Warrant Agent hereby accepts
such appointment.
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15.2. The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions by all of which the
Company and every Warrant Holder, by acceptance of any Warrants, shall be bound:
a. The statements contained in this Agreement and in the Warrant
Certificate shall be taken as statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken
by it.
b. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificate to be complied with by the Company.
c. The Warrant Agent shall incur no liability or responsibility to
the Company or to any Warrant Holder for any action taken in reliance on
any genuine notice, resolution, waiver, consent, order, certificate, or
other paper, document or instrument signed, sent, or presented by the
proper party or parties.
d. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, and to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the Execution of this Agreement
and not reimbursed by the Warrant Holders.
e. The Warrant Agent shall be under no obligation to institute any
action, suit, or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more Warrant Holders shall
furnish the Warrant Agent with reasonable security and indemnity for any
costs and expenses which may be incurred, but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant
Agent may consider proper, whether with or without any such security or
indemnity. All rights of action under this Agreement shall be brought in
its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the Warrant Holders as their respective rights or
interests may appear.
f. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
g. The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions
hereof.
Section 16. Merger, Consolidation or Change of Name of Warrant Agent
Any corporation into which the Warrant Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust
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business of the Warrant Agent shall be the successor to the Warrant Agent
hereunder without the execution or filing of any paper or any further act on the
part of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 17 of
this Agreement.
Section 17. Change of Warrant Agent
The Company may discharge the Warrant Agent at any time and may appoint a
successor Warrant Agent or perform the functions of the Warrant Agent itself.
The Warrant Agent may resign and be discharged from its duties under this
Agreement by giving to the Company notice in writing, and giving notice in
writing to each Warrant Holder at his address appearing in the Warrant register,
specifying a date when such resignation shall take effect, which notice shall be
sent at least thirty (30) days prior to the date so specified. If the Warrant
Agent shall resign or shall otherwise become incapable of acting, the Company
shall appoint a successor to the Warrant Agent. If the Company shall fail to
make such appointment within a period of thirty (30) days after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by any Warrant Holder, then any Warrant Holder
may apply to any court of competent jurisdiction for the appointment of a
successor to the Warrant Agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such court, the duties of the Warrant
Agent shall be carried out by the Company. Any successor Warrant Agent, whether
appointment by the Company or by such court, must be capable to performing all
of the duties of this Agreement. After appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties, and responsibilities as if
it had been originally named as Warrant Agent without further act or deed, and
the former Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act, or deed necessary for the purpose. Failure
to give any notice provided for in this section, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor Warrant Agent, as the case may
be.
Section 18. Notices
Any notice or demand authorized by this Agreement to be given or made
shall be sufficiently given or made if sent by mail, first class or registered,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
The Company
Cyclo3pss Corporation.
0000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, XX 00000
The Warrant Agent
Interwest Transfer Company, Inc.
1981 East 0000 Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
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Section 19. Supplements and Amendments
19.1. The Company and the Warrant Agent may from time to time supplement
or amend this Agreement without the approval of any Warrant Holders in order to
cure any ambiguity or to correct or supplement any provision contained herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Warrant Agent may deem necessary or desirable and
which shall not adversely affect the interests of the Warrant Holders.
19.2. With the consent of the Warrant Holders of at least two-thirds of
all remaining outstanding Warrants, given as set forth in this Subsection 19.2,
the Warrant Agent and the Company may make any other amendment in this Agreement
provided that no such change may shorten the time of exercise of any Warrant or
increase the Exercise Price without time of exercise of any Warrant or increase
the Exercise Price without the consent of all Warrant Holders. No consent of
Warrant Holders need to be obtained to amend those terms of the Warrants
described in Subsection 19.3. Consent of the Warrant Holders under this
Subsection 19.2 shall be evidenced by either (i) consents in writing to the
amendment, which consent need not set forth the specific form of amendment but
shall be sufficient if agreeing to the general substance thereof, and which
shall be executed by the Warrant Holders and notarized of acknowledged (any
consent so given in respect of a particular Warrant shall be binding upon any
subsequent owner thereof); (ii) by the affirmative vote of the requisite Warrant
Holders at a meeting of Warrant Holders called by the Company or the Warrant
Agent and held at such time and place as may be specified in a written notice of
the meeting to be mailed to each Warrant Holder not less than ten (10) days nor
more than fifty (50) days prior to the date set for the meeting. The Company or
the Warrant Holders entitled to vote at any meeting of Warrant Holder, which
record date shall be not more than fifty (50) days prior to the date of mailing
notice thereof. The Company and the Warrant Agent may make reasonable
regulations for the conduct of such meeting and for the appointment of a
chairman and a secretary thereof and of inspectors of votes. Proxies may be used
at any such meeting in the same manner as is provided in the Company's Bylaws
with respect to proxies for meetings of its stockholders.
19.3. Notwithstanding anything contained in this Agreement to the
contrary, the Company has the right, in its sole discretion, to extend the
period during which the Warrants are exercisable and to reduce the Exercise
Price without the consent of the Warrant Agent or the Warrant Holders.
Section 20. Successors
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Warrant Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 21. Termination
This Agreement shall terminate at the close of business on the Expiration
Date or such earlier date upon which all Warrants have been exercised.
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Section 22. Governing Law
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Utah and for all
purposes shall be construed in accordance with the laws of such state.
Section 23. Benefits of this Agreement
Nothing in this Agreement shall be construed to give any person or
corporation other than the Company, the Warrant Agent and the Warrant Holders
any legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Warrant Agent and the Warrant Holders.
Section 24. Agreement Available to Warrant Holders
A copy of this Agreement shall be available at all reasonable times at the
office of the Warrant Agent for inspection by any Warrant Holders. As a
condition of such inspection, the Warrant Agent may require any Warrant Holder
to submit his Warrant Certificate for inspection.
Section 25. Counterparts
This Agreement may be executed in any number of counterparts, each of such
counterparts shall for all purposes be deemed to be an original and all such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date and year first above written.
Cyclo3pss Corporation
By /s/ Xxxxxxx X. Xxxxxxxx
President
Interwest Transfer Company, Inc.
By /s/ Xxxx Xxxxxx
Duly Authorized Agent
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