Warrant and Registration Rights Agreement
____, 1997
NATIONAL SECURITIES CORPORATION
As Representative of the Several Underwriters
c/o National Securities Corporation
0000 Xxxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
Western Country Clubs Inc., a corporation organized under the laws the
State of Colorado (the "Company"), hereby agrees to sell to the several
underwriters (the "Underwriters") named in Schedule I to that certain
Underwriting Agreement (herein so called) of even date herewith by and among you
and the Company, and you hereby agree, as representative of the Underwriters,
that the Underwriters will purchase from the Company, at a purchase price of
$100.00, warrants (the "Underwriter Warrants") to purchase 40,000 shares of the
Company's Series A Cumulative Convertible Redeemable Preferred Stock (the
"Preferred Stock") and 120,000 Series A Redeemable Common Stock Purchase
Warrants (the "Warrants") issued in accordance with the terms of a warrant
agreement dated as of __________, 1997 between the Company and American
Securities Transfer and Trust, Inc. as Warrant Agent. The Underwriter Warrants
will be exercisable by the holders thereof as to all or any lesser number of
shares of Preferred Stock or Warrants covered thereby, at the Purchase Price per
share and per Warrant (as defined below) at any time and from time to time on
and after the first anniversary of the date hereof and ending at 5:00 p.m. on
the fifth anniversary of the date hereof.
1. DEFINITIONS.
As used herein the following terms, unless the context otherwise
requires, shall have for all purposes hereof the following meanings:
(a) The term " Common Stock " refers to the common stock of the Company
pursuant to the Articles of Incorporation of the Company, as amended.
(b) The term "Preferred Stock" refers to the Series A Cumulative
Convertible Redeemable Preferred Stock of the Company pursuant to the
Articles of Incorporation of the Company as amended.
(c) The term "Warrants" refers to the Series A Redeemable Common Stock
Purchase Warrants of the Company which entitle the holder thereof to
purchase one share of Common Stock of the Company anytime prior to
____________,2002, as authorized by the Board of Directors of the
Company, the terms of which are governed by a Warrant Agreement with
the Warrant Agent dated ____________, 1997
(d) The term "Other Securities" refers to any stock (other than the
Preferred Stock) and other securities of the Company or any other
person (corporate or otherwise) which the holders of the Underwriter
Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Underwriter Warrants, in lieu of or
in addition to Preferred Stock and Warrants, or which at any time
shall be issuable or shall have been issued in exchange for or in
replacement of Preferred Stock or Other Securities pursuant to Section
6 below or otherwise.
(e) The term "Purchase Price" refers to the purchase price of the
Underlying Preferred Stock and Underlying Warrants subject to this
Agreement. The Purchase Price shall equal 120% of the offering price
per share of Preferred Stock and per Warrant as set forth in the
Registration Statement. The Purchase Price is subject to adjustment as
provided in Section 6 below.
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(f) The term "Registration Statement" refers to the Registration Statement
on Form SB-2 (File No. 333-21547 filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Act").
(g) The term "Underlying Securities" refers to the Underlying Preferred
Stock and the Underlying Warrants.
(h) The term "Underlying Preferred Stock" refers to the Preferred Stock
issued or issuable upon the exercise, in whole or in part, of the
Underwriter Warrants.
(i) The term "Underlying Warrants" refers to the Warrants, which are
issued or issuable upon the exercise, in whole, or in part, of the
Underwriter Warrants.
(j) The term "Warrant Stock" refers to shares of Common Stock issued or
issuable upon the exercise of the Underlying Warrants.
The purchase and sale of the Underwriter Warrants shall take place, and the
purchase price therefore shall be paid by delivery of your check payable to the
Company on the Closing Date (as defined in the Underwriting Agreement).
2. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to you as follows:
(a) Corporate Action. The Company has all requisite corporate power and
authority, and has taken all necessary corporate action, to execute
and deliver this Agreement, to issue and deliver the Underwriter
Warrants and certificates evidencing same, and to authorize and
reserve for issuance, and upon payment from time to time of the
Purchase Price to issue and deliver, the Underlying Preferred Stock,
the Underlying Warrants and the Warrant Stock.
(b) No Violation. Neither the execution nor delivery of this Agreement,
the consummation of the actions herein contemplated nor compliance
with the terms and provisions hereof will conflict with, or result in
a breach of, or constitute a default or an event permitting
acceleration under, any of the terms, provisions or conditions of the
Articles of Incorporation or Bylaws of the Company or any indenture,
mortgage, deed of trust, note, bank loan, credit agreement, franchise,
license, lease, permit, judgment, decree, order, statute, rule or
regulation or any other agreement, understanding or instrument to
which the Company is a party or by which it is bound.
3. COMPLIANCE WITH THE ACT.
(a) Transferability of Underwriter Warrants. You agree that the
Underwriter Warrants may not be transferred, sold, assigned or
hypothecated, except to (i) persons who are officers of you or any
successor of you; (ii) a successor to you in a merger or
consolidation; (iii) a purchaser of all or substantially all of your
assets; (iv) your shareholders in the event you are liquidated or
dissolved; (v) broker-dealers participating in the Company's public
offering, and (vi) persons who are officers or partners of such
participating broker-dealers.
(b) Registration of Underlying Preferred Stock and Underlying Warrants.
The Underlying Preferred Stock and Underlying Warrants issuable upon
the exercise of the Underwriter Warrants have been registered under
the Act. However, you agree not to make any sale or other disposition
of the Underlying Preferred Stock and Underlying Warrants, except
pursuant to a post-effective amendment to the Registration Statement
or a new registration statement which has become effective under the
Act, setting forth the terms of such offering, the underwriting
discount and the commissions and any other pertinent data with respect
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thereto, unless you have provided the Company with an opinion of
recognized counsel reasonably acceptable to the Company that such
registration is not required under the Act and applicable state
securities laws.
(c) Inclusion in Registration of Other Securities. If at any time after
the first anniversary of the effective date hereof but prior to the
fifth anniversary of the effective date hereof, the Company shall
propose the registration on an appropriate form under the Act of any
shares of Preferred Stock, Warrants or Other Securities (other than in
connection with a merger or acquisition or an employee benefit plan),
the Company shall at least 30 days prior to the filing of such
registration statement give you written notice of such proposed
registration and, upon written notice given to the Company within 10
business days after your receipt of such notice from the Company,
shall include or cause to be included in any such registration
statement all or such portion of the Underlying Securities and the
Warrant Stock as you may request, provided, however, that the Company
may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding
with the registration of such Preferred Stock, Warrants, or such Other
Securities originally proposed to be registered.
Notwithstanding any provision of this Agreement to the contrary, if
any holder of any of the Underwriter Warrants exercises his
Underwriter Warrants but shall not have included all the Underlying
Securities or Warrant Stock in a registration statement which complies
with Section 10(a)(3) of the Act, which has been effective for at
least 30 calendar days following the exercise of the Underwriter
Warrants, the registration rights set forth in this Subsection 3(c)
shall be extended until such time as (i) the registration statement
has been effective for at least 30 calendar days, or (ii) in the
opinion of counsel satisfactory to you and the Company, registration
is not required under the Act or under applicable state laws for
resale of the Underlying Securities or Warrant Stock in the manner
proposed.
(d) Company's Obligations in Registration. In the event you timely elect
to participate in an offering by including your Underwriter Warrants,
the Underlying Securities or the Warrant Stock in a registration
statement pursuant to Subsection 3(c) above, the Company shall:
(i) Notify you as to the filing thereof and of all amendments or
supplements thereto filed prior to the effective date thereof;
(ii) Comply with all applicable rules and regulations of the
Commission;
(iii)Notify you immediately, and confirm the notice in writing, (1)
when the registration statement becomes effective, (2) of the
issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceedings for that
purpose, (3) of the receipt by the Company of any notification
with respect to the suspension of qualification of the Preferred
Stock, the Warrants or Warrant Stock for sale in any jurisdiction
or of the initiation, or the threatening, of any proceedings for
that purpose and (4) of the receipt of any comments, or requests
for additional information, from the Commission or any state
regulatory authority. If the Commission or any state regulatory
authority shall enter such a stop order or order suspending
qualification at any time, the Company will make every reasonable
effort to obtain the lifting of such order as promptly as
practicable.
(iv) During the time when a registration statement is required to be
delivered under the Act during the period required for the
distribution of the Underlying Securities or the Warrant Stock,
comply so far as it is able with all requirements imposed upon it
by the Act, as hereafter amended, and by the rules and
regulations promulgated thereunder, as from time to time in
force, so far as necessary to permit the continuance of sales of
the Underlying Securities and the Warrant Stock, as applicable.
If at any time when a registration statement relating to the
Underlying Securities or the Warrant Stock is required to be
delivered under the Act any event shall have occurred as a result
of which, in the opinion of counsel for the Company or your
counsel, the registration statement relating to the Underlying
Securities or the Warrant Stock as then amended or supplemented
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includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary
at any time to amend such registration statement to comply with
the Act, the Company will promptly prepare and file with the
Commission an appropriate amendment or supplement (in form
satisfactory to you).
(v) Endeavor in good faith, in cooperation with you, at or prior to
the time the registration statement becomes effective, to qualify
the Underlying Securities and/or the Warrant Stock, as applicable
for offering and sale under the securities laws relating to the
offering or sale of the Underlying Securities and/or the Warrant
Stock, as applicable in such jurisdictions as you may reasonably
designate and to continue the qualifications in effect so long as
required for purposes of the sale of the Underlying Securities
and/or the Warrant Stock, as applicable; provided that no such
qualification shall be required in any jurisdiction where, as a
result thereof, the Company would be subject to service of
general process, or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such
qualification shall be effected, the Company will, unless you
agree that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or
may reasonably be required by the laws of such jurisdiction. For
the purposes of this paragraph, "good faith" is defined as the
same standard of care and degree of effort as the Company will
use to qualify its securities other than the Underlying
Securities and the Warrant Stock.
(vi) Make generally available to its security holders as soon as
practicable, but not later than the first day of the eighteenth
full calendar month following the effective date of the
registration statement, an earnings statement (which need not be
certified by independent public or independent certified public
accountants unless required by the Act or the rules and
regulations promulgated thereunder, but which shall satisfy the
provisions of Section 11(a) of the Act) covering a period of at
least twelve months beginning after the effective date of the
registration statement.
(vii)After the effective date of such registration statement,
prepare, and promptly notify you of the proposed filing of, and
promptly file with the Commission, each and every amendment or
supplement thereto or to any registration statement forming a
part thereof as may be necessary to make any statements therein
not misleading in any material respect; provided that no such
amendment or supplement shall be filed if you shall object
thereto in writing promptly after being furnished a copy thereof.
(viii) Furnish to you, as soon as available, copies of any such
registration statement, including all preliminary or final
registration statements, or supplement or amendment prepared
pursuant thereto, all in such quantities as you may from time to
time reasonably request;
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(ix) Make such representations and warranties to any underwriter of
the Underlying Securities or the Warrant Stock, as applicable,
and use your best efforts to cause Company counsel to render such
usual and customary opinions to such underwriter, as such
underwriter may reasonably request; and
(x) Pay all costs and expenses incident to the performance of the
Company's obligations under Subsection 3 (c) above and under this
Subsection 3 (f), including without limitation the fees and
disbursements of Company auditors and legal counsel, of legal
counsel for you and of legal counsel responsible for qualifying
the Underlying Securities and/or the Warrant Stock under blue sky
laws, all filing fees and printing expenses, all expenses in
connection with the transfer and delivery of the Underlying
Securities and/or Warrant Stock, and all expenses in connection
with the qualification of the Underlying Securities and/or the
Warrant Stock under blue sky laws provided, however, that the
Company shall not be responsible for indemnity discounts and
commissions.
(e) Agreements by Warrant Holder. In connection with the filing of a
registration statement pursuant to Subsection 3(c) above, if you
participate in the offering of the Underlying Securities and/or
Warrant Stock by including securities owned by you, you agree:
(i) To furnish the Company all material information requested by the
Company concerning yourself and your holdings of securities of
the Company and the proposed method of sale or other disposition
of the Underlying Securities and/or Warrant Stock and such other
information and undertakings as shall be reasonably required in
connection with the preparation and filing of any such
registration statement covering all or a part of the Underlying
Securities and/or Warrant Stock and in order to ensure full
compliance with the Act; and
(ii)To cooperate in good faith with the Company and its underwriters,
if any, in connection with such registration, including placing
the shares of Underlying Securities and/or Warrant Stock to be
included in such registration statement in escrow or custody to
facilitate the sale and distribution thereof.
(f) Indemnification. The Company shall indemnify and hold harmless you and
each of the other Underwriters, each of your and their officers and
directors, and each person, if any, who respectively controls you or
any such Underwriter within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against any loss, liability, claim, damage and
expense whatsoever (including but not limited to any and all expense
whatsoever reasonably incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any
claim whatsoever), joint or several, to which any of you or any such
Underwriter or such controlling person becomes subject, under the Act
or otherwise, insofar as such loss, liability, claim, damage and
expense (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in (i) a registration statement covering any Underlying
Security or Warrant Stock, in the prospectus contained therein, or in
an amendment or supplement thereto or (ii) in any application or other
document or communication (in this Subsection collectively called
"application") executed by or on behalf of the Company or based upon
written information furnished by or on behalf of the Company filed in
any jurisdiction in order to qualify the Underlying Securities and/or
Warrant Stock under the securities laws thereof or filed with the
Commission, or arise out of or 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 not misleading
provided, however, that the Company shall not be obligated to
indemnify in any such case to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in reliance upon, and in conformity with, written information
respectively furnished by you or any such Underwriter or such
controlling person for use in the registration statement, or any
amendment or supplement thereto, or any application, as the case may
be.
If any action is brought against a person in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
person shall promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of the action, including the
employment of counsel (satisfactory to the indemnified person in its reasonable
judgment) and payment of expenses. The indemnified person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such indemnified person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of the action or the Company shall not have
employed counsel to have charge of the defense of the action or the indemnified
person shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of the action on behalf of the indemnified person), in any of which
events these fees and expenses shall be borne by the Company. Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any claim or action effected without its consent. The
Company's indemnity agreements contained in this Subsection shall remain in full
force and effect regardless of any investigation made by or on behalf of any
indemnified person, and shall survive any termination of this Agreement. The
Company agrees promptly to notify you of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the registration statement pursuant to Subsection 3(c) above.
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If you choose to include all or a part of the Underlying Securities or
Warrant Stock in a public offering pursuant to Subsection 3(c), then you agree
to indemnify and hold harmless the Company and each of its directors and
officers who have signed any such registration statement, and any underwriter
for the Company (as defined in the Act), and each person, if any, who controls
the Company or such underwriter within the meaning of the Act, to the same
extent as the indemnity by the Company in this Subsection 3(f) but only with
respect to statements or omissions, if any, made in such registration statement,
or any amendment or supplement thereto, or in any application in reliance upon,
and in conformity with, written information furnished by you to the Company for
use in the registration statement, or any amendment or supplement thereto, or
any application, as the case may be. In case any action shall be brought in
respect of which indemnity may be sought against you, you shall have the rights
and duties given to the Company, and the persons so indemnified shall have the
rights and duties given to you by the provisions of the first paragraph of this
Subsection.
The Company further agrees that, if the indemnity provisions of the
foregoing paragraphs are held to be unenforceable, any holder of an Underwriter
Warrant or controlling person of such a holder may recover contribution from the
Company in an amount which, when added to contributions such holder or
controlling person has theretofore received or concurrently receives from
officers and directors of the Company or controlling persons of the Company,
will reimburse such holder or controlling person for all losses, claims, damages
or liabilities and legal or other expenses; provided, however, that if the full
amount of the contribution specified in this Subsection 3(f) is not permitted by
law, then such holder or controlling person shall be entitled to contribution
from the Company and its officers, directors and controlling persons to the full
extent permitted by law.
4. EXERCISE OF UNDERWRITER WARRANTS; PARTIAL EXERCISE.
(a) Exercise in Full. Each Underwriter Warrant may be exercised in full by
the holder thereof by surrender of the related Warrant Certificate,
with the form of subscription at the end thereof duly executed by such
holder, to the Company at its principal office, accompanied by
payment, in cash or by certified or bank cashiers check payable to the
order of the Company, in the respective amount obtained by multiplying
the number of Underlying shares of Preferred Stock or Underlying
Warrants represented by the Warrant Certificate (after giving effect
to any adjustment therein as provided in Section 6 below) by the
Purchase Price per share of Preferred Stock or per Warrant.
(b) Partial Exercise. Each Underwriter Warrant may be exercised in part by
surrender of the related Warrant Certificate in the manner and at the
place provided in Subsection 4(a) above, accompanied by payment, in
cash or by certified or bank cashiers check payable to the order of
the Company, in the respective amount obtained by multiplying the
number of Underlying shares of Preferred Stock or Underlying Warrants
designated by the holder in the form of subscription attached to the
Warrant Certificate by the Purchase Price per share of Preferred Stock
or per Warrant (after giving effect to any adjustment therein as
provided in Section 6 below). Upon any such partial exercise, the
Company at its expense will forthwith issue and deliver to or upon the
order of the purchasing holder, a new Warrant Certificate or
Certificates of like tenor, in the name of the holder thereof or as
such holder (upon payment by such holder of any applicable transfer
taxes) may request calling in the aggregate for the purchase of the
number of shares of Preferred Stock or Warrants equal to the number of
such shares of Preferred Stock or Warrants called for on the face of
the original Warrant Certificate (after giving effect to any
adjustment therein as provided in Section 6 below) minus the number of
such shares of Preferred Stock or Warrants (after giving effect to
such adjustment) designated by the holder in the aforementioned form
of subscription.
(c) Company to Reaffirm Obligations. The Company will, at the time of any
exercise of any Underwriter Warrant, upon the request of the holder
thereof, acknowledge in writing its continuing obligation to afford to
such holder any rights (including without limitation any right to
registration of the Underlying Securities and Warrant Stock) to which
such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Agreement; provided, however,
that if the holder of an Underwriter Warrant shall fail to make any
such request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
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5. DELIVERY OF CERTIFICATES, ETC., ON EXERCISE.
As soon as practicable after the exercise of any Underwriter Warrant in
full or in part, and in any event within twenty days thereafter, the Company at
its expense (including the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the purchasing holder
thereof, a certificate or certificates for the number of shares of Underlying
Preferred Stock or Underlying Warrants to which such holder shall be entitled
upon such exercise, plus in lieu of any fractional share or Warrant to which
such holder would otherwise be entitled, cash in an amount determined pursuant
to Section 7(g), together with any other stock or other securities and property
(including cash, where applicable) to which such holder is entitled upon such
exercise pursuant to Section 6 below or otherwise.
6. ANTI-DILUTION PROVISIONS.
The Underwriter Warrants are subject to the following terms and conditions
during the term thereof:
(a) Stock Distributions and Splits. In case (i) the outstanding shares of
Preferred Stock (or Other Securities) shall be subdivided into a
greater number of shares, or (ii) a dividend in Preferred Stock (or
Other Securities) shall be paid in respect of Preferred Stock (or
Other Securities), the Purchase Price per share of Preferred Stock in
effect immediately prior to such subdivision or at the record date of
such dividend or distribution shall simultaneously with the
effectiveness of such subdivision or immediately after the record date
of such dividend or distribution be proportionately reduced; and if
outstanding shares of Preferred Stock (or Other Securities) shall be
combined into a smaller number of shares thereof, the Purchase Price
per share of Preferred Stock in effect immediately prior to such
combination shall simultaneously with the effectiveness of such
combination be proportionately increased. Any dividend paid or
distributed on the Preferred Stock (or Other Securities) in stock or
any other securities convertible into shares of Preferred Stock (or
Other Securities) shall be treated as a dividend paid in Preferred
Stock (or Other Securities) to the extent that shares of Preferred
Stock (or Other Securities) are issuable upon the conversion thereof.
(b) Adjustments. Whenever the Purchase Price per share of Preferred Stock
is adjusted as provided in Subsection 6(a) above, the number of
Underlying shares of Preferred Stock purchasable upon exercise of the
Underwriter Warrants immediately prior to such Purchase Price
adjustment shall be adjusted, effective simultaneously with such
Purchase Price adjustment, to equal the product obtained (calculated
to the nearest full share) by multiplying such number of Underlying
shares of Preferred Stock by a fraction, the numerator of which is the
Purchase Price per share of Preferred Stock in effect immediately
prior to such Purchase Price adjustment and the denominator of which
is the Purchase Price per share of Preferred Stock in effect upon such
Purchase Price adjustment, which adjusted number of Underlying shares
of Preferred Stock shall thereupon be the number of Underlying shares
of Preferred Stock purchasable upon exercise of the Underwriter
Warrants until further adjusted as provided herein.
(c) Reorganizations. If any consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its
assets to another corporation, shall be effected in such a way that
holders of Preferred Stock or Underlying Preferred Stock shall be
entitled to receive stock, securities or assets with respect to or in
exchange for Preferred Stock or Underlying Preferred Stock, then, as a
condition of such consolidation, merger or sale, lawful and adequate
provisions shall be made whereby the holders of Underwriter Warrants
shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Agreement and in
lieu of the shares of Preferred Stock or Underlying Preferred Stock of
the Company immediately theretofore purchasable and receivable upon
the exercise of the Underwriter Warrants, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for a number of outstanding shares of Preferred Stock or
Underlying Preferred Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise
of the rights represented by the Underwriter Warrants had such
consolidation, merger or sale not taken place, and in any such case,
appropriate provision shall be made with respect to the rights and
interests of the holders of Underwriter Warrants to the end that the
provisions hereof (including without limitation provisions for
adjustments of the Purchase Price and of the number of shares of
Preferred Stock purchasable and receivable upon the exercise of the
Underwriter Warrants) shall thereafter be applicable, as nearly as may
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be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise thereof (including an
immediate adjustment, by reason of such consolidation or merger, of
the Purchase Price to the value for the Preferred Stock or Underlying
Preferred Stock reflected by the terms of such consolidation or merger
if the value so reflected is less than the Purchase Price in effect
immediately prior to such consolidation or merger). In the event of a
merger or consolidation of the Company with or into another
corporation as a result of which the number of shares of common stock
of the surviving corporation is greater or lesser than the number of
shares of common stock of the Company outstanding immediately prior to
such merger or consolidation, assuming conversion of the Preferred
Stock, is issuable to holders of Preferred Stock or Underlying
Preferred Stock of the Company, then the Purchase Price in effect
immediately prior to such merger or consolidation shall be adjusted in
the same manner as though there were a subdivision or combination of
the outstanding shares of Preferred Stock or Underlying Preferred
Stock of the Company. The Company will not effect any such
consolidation, merger or sale, unless prior to the consummation
thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation
purchasing such assets shall assume by written instrument executed and
mailed or delivered to the registered holder hereof at the last
address of such holder appearing on the books of the Company, the
obligation to deliver to such holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such holder
may be entitled to purchase. If a purchase, tender or exchange offer
is made to and accepted by the holders of more than 50% of the
outstanding shares of common stock of the Company, the Company shall
not effect any consolidation, merger or sale with the Person having
made such offer or with any Affiliate of such Person, unless prior to
the consummation of such consolidation, merger or sale the holders of
Underwriter Warrants shall have been given a reasonable opportunity to
then elect to receive upon the exercise of Underwriter Warrants either
the stock, securities or assets then issuable with respect to the
Preferred Stock or Underlying Preferred Stock of the Company or the
stock, securities or assets, or the equivalent issued to previous
holders of Preferred Stock in accordance with such offer. The term
"Person" as used in this subparagraph shall mean and include an
individual, a partnership, a corporation, a trust, a joint venture, an
unincorporated organization and a government or any department or
agency thereof. For the purposes of this subparagraph, an "Affiliate"
of any Person shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control
with, such other Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies
of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
(d) Effect of Dissolution or Liquidation. In case the Company shall
dissolve or liquidate all or substantially all of its assets, all
rights under this Agreement shall terminate as of the date upon which
a certificate of dissolution or liquidation shall be filed with the
Secretary of the State of Colorado (or, if the Company theretofore
shall have been merged or consolidated with a corporation incorporated
under the laws of another state, the date. upon which action of
equivalent effect shall have been taken); provided, however, that (i)
no dissolution or liquidation shall affect the rights under Subsection
6(c) of any holder of an Underwriter Warrant, and (ii) if the
Company's Board of Directors shall propose to dissolve or liquidate
the Company, each holder of an Underwriter Warrant shall be given
written notice of such proposal at the earlier of (i) the time when
the Company's shareholders are first given notice of the proposal, or
(ii) the time when notice to the Company's shareholders is first
required.
(e) Notice of Change of Purchase Price. Whenever the Purchase Price per
share of Preferred Stock or per Warrant or the kind or amount of
securities purchasable under the Underwriter Warrants shall be
adjusted pursuant to any of the provisions of this Agreement, the
Company shall forthwith thereafter cause to be sent to each holder of
an Underwriter Warrant, a certificate setting forth the adjustments in
the Purchase Price per share of Preferred Stock or per Warrant and/or
in such number of shares of Preferred Stock or Warrants, and also
setting forth in detail the facts requiring such adjustments,
including without limitation a statement of the consideration received
or deemed to have been received by the Company for any additional
securities issued by it requiring such adjustment. In addition, the
Company at its expense shall within 90 days following the end of each
of its fiscal years during the term of this Agreement, and promptly
upon the reasonable request of any holder of an Underwriter Warrant in
connection with the exercise from time to time of all or any portion
of any Underwriter Warrant, cause independent certified public
accountants of recognized standing selected by the Company to compute
any such adjustment in accordance with the terms of the Underwriter
8
Warrants and prepare a certificate setting forth such adjustment and
showing in detail the facts upon which such adjustment is based.
(f) Notice of a Record Date. In the event of (i) any taking by the Company
of a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend payable out of earned surplus of
the Company) or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right, (ii) any
transfer of all or substantially all of the assets of the Company to,
or consolidation or merger of the Company with or into, any other
person or (iii) any voluntary or involuntary dissolution or
liquidation of the Company, then and in each such event the Company
will mail or cause to be mailed to each holder of an Underwriter
Warrant a notice specifying not only the date on which any such record
is to be taken for the purpose of such dividend, distribution or right
and stating the amount and character of such dividend, distribution or
right, but also the date on which any such transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and
the time, if any, as of which the holders of record of Preferred Stock
(or Other Securities) shall be entitled to exchange their shares of
Preferred Stock (or other Securities) for securities or other property
deliverable upon such transfer, consolidation, merger, dissolution,
liquidation or winding-up. Such notice shall be mailed at least 20
days prior to the proposed record date therein specified.
7. FURTHER COVENANTS OF THE COMPANY.
(a) Reservation of Stock. The Company shall at all times reserve and keep
available, solely for issuance and delivery upon the exercise of the
Underwriter Warrants, all shares of the Underlying Preferred Stock,
Underlying Warrants and Warrant Stock from time to time issuable upon
the exercise of the Underwriter Warrants and Underlying Warrants and
shall take all necessary actions to ensure that the par value per
share, if any, of the Underlying Preferred Stock and Warrant Stock is,
at all times equal to or less than the then effective Purchase Price
per share of Preferred Stock or per Warrant attributable to each share
of Preferred Stock as the case may be.
(b) Title to shares of Preferred Stock and Warrants. All shares of
Underlying Preferred Stock and all Warrant Stock delivered upon the
exercise of the Underwriter Warrants and the Underlying Warrants shall
be validly issued, fully paid and nonaccessible; each holder of an
Underwriter Warrant shall receive good and marketable title to the
shares of Underlying Preferred Stock, the Underlying Warrants and the
Warrant Stock free and clear of all voting and other trust
arrangements, liens, encumbrances, equities and claims whatsoever; and
the Company shall have paid all taxes, if any, in respect of the
issuance thereof.
(c) Listing on Securities Exchanges; Registration. If the Company at any
time shall list any Preferred Stock or Warrants on any national
securities exchange, the Company will, at its expense, simultaneously
list on such exchange, upon official notice of issuance upon the
exercise of the Underwriter Warrants, and maintain such listing of,
all Underlying Securities and all Warrant Stock from time to time
issuable upon the exercise of the Underwriter Warrants; and the
Company will so list on any national securities exchange, will so
register and will maintain such listing of, any Other Securities if
and at the time that any securities of like class or similar type
shall be listed on such national securities exchange by the Company.
(d) Exchange of Underwriter Warrants. Subject to Subsection 3(a) hereof,
upon surrender for exchange of any Warrant Certificate to the Company,
the Company at its expense will promptly issue and deliver to or upon
the order of the holder thereof a new Warrant Certificate or
certificates of like tenor, in the name of such holder or as such
holder (upon payment by such holder of any applicable transfer taxes)
may direct, calling in the aggregate for the purchase of the number of
shares of Preferred Stock or Warrants called for on the face or faces
of the Warrant Certificate or Certificates so surrendered.
(e) Replacement of Underwriter Warrants. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of any Warrant Certificate and, in the case of any such
loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, upon surrender and cancellation of such
9
Warrant Certificate, the Company, at the expense of the holder of such
Underwriter Warrant will execute and deliver, in lieu thereof, a new
Warrant Certificate of like tenor.
(f) Reporting by the Company. The Company agrees that, if it files a
registration statement during the term of the Underwriter Warrants, it
will use its best efforts to keep current in the filing of all forms
and other materials which it may be required to file with the
appropriate regulatory authority pursuant to the Exchange Act, and all
other forms and reports required to be filed with any regulatory
authority having jurisdiction over the Company.
(g) Fractional Shares. No fractional shares of Underlying Preferred Stock,
Underlying Warrants or Warrant Stock are to be issued upon the
exercise of any Underwriter Warrant or Warrant, but the Company shall
pay a cash adjustment in respect of any fraction of a share which
would otherwise be issuable in an amount equal to the same fraction of
the highest market price per share of Underlying Preferred Stock or
Warrant Stock on the day of exercise, as determined by the Company.
(h) Reorganizations and Reclassifications. While any Underwriter Warrant
remains outstanding, the Company shall not effect any capital
reorganization of the Company, or any reclassification or
recapitalization of the capital stock of the Company; provided,
however, that the Company may re-incorporate in another state if such
re-incorporation does not involve a change in the capital structure of
the Company, and the Company may change the par value of the Preferred
Stock , subject to the anti-dilution provisions hereof.
8. OTHER HOLDERS
The Underwriter Warrants are issued upon the following terms, to all of
which each holder or owner thereof by the taking thereof consents and agrees as
follows: (a) any person who shall become a transferee, within the limitations on
transfer imposed by Subsection 3(a) hereof, of an Underwriter Warrant properly
endorsed shall take such Underwriter Warrant subject to the provisions of
Subsection 3(a) hereof and thereupon shall be authorized to represent himself as
absolute owner thereof and, subject to the restrictions contained in this
Agreement, shall be empowered to transfer absolute title by endorsement and
delivery thereof to a permitted bona fide purchaser for value; (b) each prior
taker or owner waives and renounces all of his equities or rights in such
Underwriter Warrant in favor of each such permitted bona fide purchaser, and
each such permitted bona fide purchaser shall acquire absolute title thereto and
to all rights presented thereby; (c) until such time as the respective
Underwriter Warrant is transferred on the books of the Company, the Company may
treat the registered holder thereof as the absolute owner thereof for all
purposes, notwithstanding any notice to the contrary and (d) all references to
the word "you" in this Agreement shall be deemed to apply with equal effect to
any person to whom a Warrant Certificate or Certificates have been transferred
in accordance with the terms hereof, and where appropriate, to any person
holding shares of Preferred Stock or Warrants, Underlying Securities or Warrant
Stock.
9. MISCELLANEOUS.
All notices, certificates and other communications from or at the
request of the Company to the holder of any Underwriter Warrant shall be mailed
by first class, registered or certified mail, postage prepaid, to such address
as may have been furnished to the Company in writing by such holder, or, until
an address is so furnished, to the address of the last holder of such
Underwriter Warrant who has so furnished an address to the Company, except as
otherwise provided herein. This Agreement and any of the terms hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge
or termination is sought. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Texas. The headings in
this Agreement are for reference only and shall not limit or otherwise affect
any of the terms hereof. This Agreement, together with the forms of instruments
annexed hereto as Schedule I, constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
10
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on this _____ day of ______________, 1997, in Dallas, Texas, by its proper
corporate officers thereunto duly authorized.
Western Country Clubs Inc.
By:
Xxxxx X. Xxxxxxxxx President
The above Warrant and Registration Rights Agreement is confirmed this
_____ day of __________, 1997.
National Securities Corporation
By:
11
SCHEDULE I
WESTERN COUNTRY CLUBS INC.
PREFERRED STOCK PURCHASE WARRANT
Certificate Evidencing Right to Purchase __________Shares
This is to certify that _________________________________
("_____________") or assigns, is entitled to purchase at any time or from time
to time after 9:00 A.M., Dallas, Texas time, on ____, 1998 and until 9:00 A.M.,
Dallas, Texas time, on _______________, 2002 up to the above referenced number
of shares of the Company's Series A Cumulative Convertible Redeemable Preferred
Stock (the "Shares"), of Western Country Clubs Inc., a corporation organized
under the laws of the State of Colorado, (the "Company"), for the consideration
specified in Subsection 1(e) of the Warrant and Registration Rights Agreement
dated _____________, 1997 between the Company and National Securities
Corporation, as representative of the several Underwriters (as defined therein)
(the "Warrant Agreement"), pursuant to which this Warrant is issued. All rights
of the holder of this Warrant are subject to the terms and provisions of the
Warrant Agreement, copies of which are available for inspection at the office of
the Company.
The Shares issuable upon the exercise of this Warrant have been
registered under the Securities Act of 1933, as amended (the "Act"). However,
except as provided in the Warrant Agreement, no distribution of this Warrant, or
the Shares issuable upon exercise of this Warrant may be made except pursuant to
(i) a post-effective amendment to the registration statement under the Act
covering the Warrant and the Shares, (ii) a new registration statement, or (iii)
an opinion of counsel, satisfactory to counsel for the Company, that an
exemption from registration under the Act is available.
Subject to the provisions of the Act and of the Warrant Agreement, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
offices of the Company, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant, together with the Assignment hereof
duly endorsed. Until transfer of this Warrant on the books of the Company, the
Company may treat the registered holder hereof as the owner hereof for all
purposes.
Any Preferred Stock which is acquired pursuant to the exercise of this
Warrant shall be acquired in accordance with the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on this _____ day of ___________, 1997, in Dallas, Texas, by its
proper corporate officer's thereunto duly authorized.
Western Country Clubs Inc.
By:
Xxxxx X. Xxxxxxxxx, President
ATTEST:
12
SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To Western Country Clubs Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, _________________ shares of Series A Preferred Stock (as
defined in the Warrant and Registration Rights Agreement to which the form of
this Subscription was attached) and herewith makes payment of $______________
therefor, and requests that the certificate or certificates for such shares of
Series A Preferred Stock be issued in the name of and delivered to the
undersigned.
Date: ______
_______________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
_______________________________
(Address)
Insert the number of shares of Series A Preferred Stock called for on the
face of the Warrant (or, in the case of a partial exercise, the portion thereof
as to which the Warrant is being exercised), in either case without making any
adjustment for additional shares of Series A Preferred Stock or Warrants or
other securities or property or cash which, pursuant to the adjustment
provisions of the Warrant, may be deliverable upon exercise.
13
ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers unto
_______________________________ the right represented by the enclosed Warrant to
purchase ________ shares of Series A Preferred Stock with full power of
substitution in the premises.
The undersigned represents and warrants that the transfer, in whole in or in
part, of such right to purchase represented by the enclosed Warrant is permitted
by the terms of the Warrant and Registration Rights Agreement pursuant to which
the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Assignment, represents and warrants that he is familiar with
the terms of such Warrant and Registration Rights Agreement and agrees to be
bound by the terms thereof with the same force and effect as if a signatory
thereto, including without limitation Section 3 thereof.
Date:_______
_______________________________
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant)
_______________________________
(Address)
Signed in the presence of:
_______________________________
14
SCHEDULE II
WESTERN COUNTRY CLUBS INC.
PURCHASE WARRANT
Certificate Evidencing Right to Purchase ________ Warrants
This is to certify that (" ") or assigns, is
entitled to purchase at any time or from time to time after 9:00 A.M., Dallas,
Texas time, on ,1998 and until 9:00 A.M., Dallas, Texas time, on , 2002 up to
the above referenced number of Series A Redeemable Common Stock Purchase
Warrants (the "Warrants"), of Western Country Clubs Inc., a corporation
organized under the laws of the State of Colorado, (the "Company"), for the
consideration specified in Subsection l (e) of the Warrant and Registration
Rights Agreement dated ,1997 between the Company and National Securities
Corporation, as representative of the several Underwriters (as defined therein)
(the "Warrant Agreement"), pursuant to which this Warrant is issued. All rights
of the holder of this Warrant are subject to the terms and provisions of the
Warrant Agreement, copies of which are available for inspection at the office of
the Company.
This Warrant and the Warrants issuable upon the exercise of this Warrant
have been registered under the Securities Act of 1933, as amended (the "Act").
However, except as provided in the Warrant Agreement no distribution of this
Warrant or the Warrants issuable upon exercise of this Warrant may be made
except pursuant to (i) a post-effected amendment to the registration statement
under the Act covering the Warrants and the Series A Preferred Stock, (ii) a new
registration statement, or (iii) an opinion of counsel, satisfactory to counsel
for the Company, that an exemption from registration under the Act is available.
Subject to the provisions of the Act and of the Warrant Agreement, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
offices of the Company, by the holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant, together with the Assignment hereof
duly endorsed. Until transfer of this Warrant on the books of the Company, the
Company may treat the registered holder hereof as the owner hereof for all
purposes.
Any Warrants, which are acquired pursuant to the exercise of this
Warrant, shall be acquired in accordance with the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
on this, day of ,1997, in Dallas, Texas, by its proper
corporate officer's thereunto duly authorized.
Western Country Clubs Inc.
By:
Xxxxx X. Xxxxxxxxx, President
ATTEST:
15
SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To Western Country Clubs Inc.:
The undersigned, the holder of the enclosed Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, Warrants (as defined in the Warrant and Registration Rights
Agreement to which the form of this Subscription was attached) and herewith
makes payment of $ therefor, and requests that the certificate or certificates
for such Warrants be issued in the name of and delivered to the undersigned.
Date:
Signature must conform in all respects to name of holder as specified on
the face of the Warrant)
(Address)
Insert the number of Warrants called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the Warrant
is being exercised), in either case without making any adjustment for additional
Warrants or other securities or property or cash which, pursuant to the
adjustment provisions of the Warrant, may be deliverable upon exercise.
16
ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers unto
the right represented by the enclosed Warrant to purchase Warrants with full
power of substitution in the premises.
The undersigned represents and warrants that the transfer, in whole in or in
part, of such right to purchase represented by the enclosed Warrant is permitted
by the terms of the Warrant and Registration Rights Agreement pursuant to which
the enclosed Warrant has been issued, and the transferee hereof, by his
acceptance of this Assignment, represents and warrants that he is familiar with
the terms of such Warrant and Registration Rights Agreement and agrees to be
bound by the terms thereof with the same force and effect as if a signatory
thereto, including without limitation Section 3 thereof.
Date:_______
_______________________________
(Signature must conform in all respects to name of holder as specified on
the face of the Warrant)
_______________________________
(Address)
Signed in the presence of-.
_______________________________
17
