WESTSTAR ENVIRONMENTAL, INC.
And
XXXXXXX XXXXXXXX SECURITIES CORPORATION
UNDERWRITERS
WARRANT AGREEMENT
UNDERWRITER'S WARRANT AGREEMENT dated as of _____________, 2000 by and
between WESTSTAR ENVIRONMENTAL, INC. (the "Company") and XXXXXXX DAVIDSON
SECURITIES CORPORATION ("Underwriter" or "Xxxxxxx") individually (the
"Underwriter").
W I T N E S S E T H:
--------------------
WHEREAS, the Company proposes to issue to the Underwriter 100,000 warrants
(each an "Underwriter's Warrant"), each to purchase a share of the Company's
common stock, par value $.001 per share (the "Common Stock").
WHEREAS, the Underwriter has agreed, pursuant to the underwriting agreement
(the "Underwriting Agreement") dated ___________, by and between the Underwriter
and the Company, to act as the Underwriter in connection with the Company's
proposed public offering (the "Public Offering") of 1,000,000 shares of Common
Stock (the "Offering Securities"); and
WHEREAS, the Underwriter's Warrants to be issued pursuant to this Agreement
will be issued on Closing Date I (as such term is defined in the Underwriting
Agreement) by the Company to the Underwriter in consideration for, and as part
of, the Underwriter's compensation in connection with the Underwriter's acting
as the Underwriter pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of One Hundred ($100.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder (as defined in Section 3 below) is hereby granted the
right to purchase, at any time from _____________, 2001 until 5:00 p.m., New
York time, _____________, 2005, up to 100,000 shares of Common Stock, at an
initial purchase price (subject to adjustment as provided in Section 8 hereof)
of $___ per share of Common Stock (___of the per share public offering price),
subject to the terms and conditions of this Agreement. The securities issuable
upon exercise of the Underwriter's Warrant are sometimes referred to herein as
the "Underwriter's Securities."
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2. Warrant Certificates. The warrant certificate (the "Underwriter's
Warrant Certificate") to be delivered pursuant to this Agreement shall be in the
form set forth in Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Underwriter's Warrant.
(a) The Underwriter's Warrant is exercisable during the term set forth in
Section 1 hereof payable by certified or cashier's check or money order in
lawful money of the United States. Upon surrender of Underwriter's Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Purchase Price (as hereinafter defined) for the
Underwriter's Securities (and such other amounts, if any, arising pursuant to
Section 4 hereof) at the Company's principal office currently located at 0000
Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, the registered holder of
a Underwriter's Warrant Certificate ("Holder" or "Holders") shall be entitled to
receive a certificate or certificates for the Underwriter's Securities so
purchased. The purchase rights represented by each Underwriter's Warrant
Certificate are exercisable at the option of the Holder or Holders thereof, in
whole or in part as to Underwriter's Securities. The Underwriter's Warrant may
be exercised to purchase all or any part of the Underwriter's Securities
represented thereby. In the case of the purchase of less than all the
Underwriter's Securities purchasable on the exercise of the Underwriter's
Warrant represented by a Underwriter's Warrant Certificate, the Company shall
cancel the Underwriter's Warrant Certificate represented thereby upon the
surrender thereof and shall execute and deliver a new Underwriter's Warrant
Certificate of like tenor for the balance of the Underwriter's Securities
purchasable thereunder.
(b) In lieu of the payment of cash upon exercise of the Underwriter's
Warrant as provided in Section 3(a), the Holder may exercise the Underwriter's
Warrant by surrendering the Underwriter's Warrant Certificate at the principal
office of the Company, accompanied by a notice stating (i) the Holder's intent
to effect such exercise by an exchange, (ii) Common Stock to be issued upon the
exchange, (iii) whether Underwriter's Warrants are to be surrendered in
connection with the exchange, and (iv) the date on which the Holder requests
that such exchange is to occur. The Purchase Price for the Underwriter's
Securities to be acquired in the exchange shall be paid by the surrender as
indicated in the notice, of Underwriter's Warrants, having a "Value", as defined
below, equal to the Purchase Price. "Value" as to each Underwriter's Warrant
shall mean the difference between the "Market Price", as hereinafter defined, of
a share of Common Stock and the then Purchase Price for a share of Common Stock.
By way of example of the application of the formula, assume that the Market
Price of the Common Stock is $20.00, the Purchase Price of the Underwriter's
Warrant is $16.50. On such assumptions, the Value of a Underwriter's Warrant is
$3.50 ($20.00-$16.50) and therefore for each three Underwriter's Warrants
surrendered, the Holder could acquire one share of Common Stock in the exchange.
Notwithstanding the example, the Holder shall not be limited to exchanging
Underwriter's Warrants for Common Stock.
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The Warrant Exchange shall take place on the date specified in the notice
or if the date the notice is received by the Company is later than the date
specified in the notice, on the date the notice is received by the Company.
4. Issuance of Certificates. Upon the exercise of the Underwriter's Warrant
and payment of the Purchase Price therefor, the issuance of certificates
representing the Underwriter's Securities or other securities, properties or
rights underlying such Underwriter's Warrant, shall be made forthwith (and in
any event within five (5) business days thereafter) without further charge to
the Holder thereof, and such certificates shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder, and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Underwriter's Warrant Certificates and the certificates representing the
Underwriter's Securities or other securities, property or rights (if such
property or rights are represented by certificates) shall be executed on behalf
of the Company by the manual or facsimile signature of the then present Chairman
or Vice Chairman of the Board of Directors or President or Vice President of the
Company, attested to by the manual or facsimile signature of the then present
Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of the
Company. The Underwriter's Warrant Certificates shall be dated the date of
issuance thereof by the Company upon initial issuance, transfer or exchange.
5. Restriction On Transfer of Underwriter's Warrant. The Holder of an
Underwriter's Warrant Certificate (and its Permitted Transferee, as defined
below), by its acceptance thereof, covenants and agrees that the Underwriter's
Warrant may be sold, transferred, assigned, hypothecated or otherwise disposed
of, in whole or in part, until November__, 2000 (one year following the
effective date of the Public Offering), only to officers and partners (not
directors) of the Underwriter, or any Public Offering selling group member and
their respective officers and partners, ("Permitted Transferees"). Thereafter
the Underwriter's Warrant may be transferred, assigned, hypothecated or
otherwise disposed of in compliance with applicable law.
6. Purchase Price.
(a) Initial and Adjusted Purchase Price. Except as otherwise provided in
Section 8 hereof, the initial purchase price of the Underwriter's Securities
shall be $_____ per share of Common Stock (______% of the per share public
offering price). The adjusted purchase price shall be the price which shall
result from time to time from any and all adjustments of the initial purchase
price in accordance with the provisions of Section 8 hereof.
(b) Purchase Price. The term "Purchase Price" herein shall mean the initial
purchase price or the adjusted purchase price, depending upon the context.
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7. Registration Rights.
(a) Registration Under the Securities Act of 1933 as amended ("Act"). The
Underwriter's Warrant may have not been registered under the Act. The
Underwriter's Warrant Certificates may bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and
may not be offered for sale or sold except pursuant to (i) an
effective registration statement under the Act, or (ii) an
opinion of counsel, if such opinion and counsel shall be
reasonably satisfactory to counsel to the issuer, that an
exemption from registration under the Act is available.
(b) Demand Registration. (1) At any time commencing on the first
anniversary of and expiring on the fifth anniversary of the effective date of
the Company's Registration Statement relating to the Public Offering (the
"Effective Date"), the Holders of a Majority (as hereinafter defined) in
interest of the Underwriter's Warrant, or the Majority in interest of the
Underwriter's Securities (assuming the exercise of all of the Underwriter's
Warrant) shall have the right, exercisable by written notice to the Company, to
have the Company prepare and file with the U.S. Securities and Exchange
Commission (the "Commission"), on one (1) occasion, a registration statement on
Form XX-0, X-0 or other appropriate form, and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale, of the Underwriter's Securities by
such Holders and any other Holders of the Underwriter's Warrant and/or the
Underwriter's Securities who notify the Company within fifteen (15) business
days after receipt of the notice described in Section 7(b)(2). The Holders of
the Underwriter's Warrant may demand registration prior to exercising the
Underwriter's Warrant, and may pay such exercise price from the proceeds of such
public offering.
(2) The Company covenants and agrees to give written notice of any
registration request under this Section 7(b) by any Holders to all other
registered Holders of the Underwriter's Warrant and the Underwriter's Securities
within ten (10) calendar days from the date of the receipt of any such
registration request.
(3) For purposes of this Agreement, the term "Majority" in reference to the
Holders of the Underwriter's Warrant or Underwriter's Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Underwriter's Warrant or
Underwriter's Securities that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith, or (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act.
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(c) Piggyback Registration. (1) If, at any time within the period
commencing on the first anniversary and expiring on the sixth anniversary of the
Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or other
business combination transaction or pursuant to Form S-8), it will give written
notice at least twenty (20) calendar days prior to the filing of each such
registration statement to the Underwriter and to all other Holders of the
Underwriter's Warrant and/or the Underwriter's Securities of its intention to do
so. If an Underwriter or other Holders of the Underwriter's Warrant and/or the
Underwriter's Securities notify the Company within fifteen (15) calendar days
after receipt of any such notice of its or their desire to include any
Underwriter's Securities in such proposed registration statement, the Company
shall afford the Underwriter and such Holders of the Underwriter's Warrant
and/or Underwriter's Securities the opportunity to have any such Underwriter's
Securities registered under such registration statement. Notwithstanding the
provisions of this Section 7(c)(1) and the provisions of Section 7(d), the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7(c)(1) (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
(2) If the managing underwriter of an offering to which the above piggyback
rights apply, in good faith and for valid business reasons, objects to such
rights, such objection shall preclude such inclusion.
(d) Covenants of the Company With Respect to Registration. In connection
with any registrations under Sections 7(b) and 7(c) hereof, the Company
covenants and agrees as follows:
(1) The Company shall use its best efforts to file a registration statement
within thirty (30) calendar days of receipt of any demand therefor pursuant to
Section 7(b); provided, however, that the Company shall not be required to
produce audited or unaudited financial statements for any period prior to the
date such financial statements are required to be filed in a report on Form
10-KSB or Form 10-QSB, as the case may be. The Company shall use its best
efforts to have any registration statement declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Underwriter's
Securities such number of prospectuses as shall reasonably be requested.
(2) The Company shall pay all costs (excluding fees and expenses of
Holders' counsel and any underwriting discounts or selling fees, expenses or
commissions), fees and expenses in connection with any registration statement
filed pursuant to Sections 7(b) and 7(c) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses.
(3) The Company will use its best efforts to qualify or register the
Underwriter's Securities included in a registration statement for offering and
sale under the securities or blue sky laws of such states as reasonably are
requested by the Holders, provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
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(4) The Company shall indemnify the Holders of the Underwriter's Securities
to be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934 (the "Exchange Act"), against all
loss, claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim whatsoever)
to which any of them may become subject under the Act, the Exchange Act or
otherwise, arising from such registration statement, but only to the same extent
and with the same effect as the provisions pursuant to which the Company has
agreed to indemnify the Underwriter contained in Section 8 of the Underwriting
Agreement.
(5) The Holders of the Underwriter's Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall indemnify the
Company, its officers and directors and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage or expense or liability to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 8 of the
Underwriting Agreement pursuant to which the Underwriter has agreed to indemnify
the Company.
(6) Nothing contained in this Agreement shall be construed as requiring the
Holders to exercise their Underwriter's Warrant prior to the initial filing of
any registration statement or the effectiveness thereof, provided that such
Holders have made arrangements reasonably satisfactory to the Company to pay the
exercise price from the proceeds of such offering.
(7) The Company shall furnish to each Underwriter for the offering, if any,
such documents as such Underwriter may reasonably require.
(8) The Company shall as soon as practicable after the effective date of
the registration statement, and in any event within 15 months thereafter, make
"generally available to its security holders" (within the meaning of Rule 158
under the Act) an earnings statement (which need not be audited) complying with
Section 11(a) of the Act and covering a period of at least 12 consecutive months
beginning after the effective date of the registration statement.
(9) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence described below and any managing
Underwriter copies of all correspondence between the Commission and the Company,
its counsel or auditors with respect to the registration statement and permit
each Holder and Underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any such Holder shall reasonably request.
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(10) The Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting by Holders holding a
Majority of the Underwriter's Securities requested to be included in such
underwriting, provided, however that such managing underwriter shall be
reasonably acceptable to the Company, except that in connection with an offering
for which the Holders have piggyback rights, the Company shall have the sole
right to select the managing underwriter or underwriters. Such underwriting
agreement shall be satisfactory in form and substance to the Company, a Majority
of such Holders (in respect of a registration under Section 7(b) only) and such
managing underwriter, and shall contain such representations, warranties and
covenants by the Company and such other terms as are customarily contained in
agreements of that type. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Underwriter's Securities.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
8. Adjustments to Purchase Price and Number of Securities.
(a) Computation of Adjusted Purchase Price. Except as hereinafter provided,
in case the Company shall at any time after the date hereof issue or sell any
shares of Common Stock (other than the issuances referred to in Section 8(g)
hereof), including shares held in the Company's treasury, for a consideration
per share less than the "Market Price" (as defined in Section 8(a)(6) hereof)
per share of Common Stock on the date immediately prior to the issuance or sale
of such shares, or without consideration, then forthwith upon any such issuance
or sale, the Purchase Price of the Common Stock shall (until another such
issuance or sale) be reduced to the price (calculated to the nearest full cent)
determined by dividing (1) the product of (a) the Purchase Price in effect
immediately before such issuance or sale and (b) the sum of (i) the total number
of shares of Common Stock outstanding immediately prior to such issuance or
sale, and (ii) the number of shares determined by dividing (A) the aggregate
consideration, if any, received by the Company upon such sale or issuance, by
(B) the Market Price, and by (2) the total number of shares of Common Stock
outstanding immediately after such issuance or sale provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock, as provided by Section 8(c) hereof.
For the purposes of this Section 8, the term "Purchase Price" shall mean
the Purchase Price of the Common Stock forming a part of the Underwriter's
Securities set forth in Section 6 hereof, as adjusted from time to time pursuant
to the provisions of this Section 8.
For the purposes of any computation to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
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(1) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be cash, the amount
of the cash consideration therefor shall be deemed to be the amount of cash
received by the Company for such shares (or, if shares of Common Stock are
offered by the Company for subscription, the subscription price, or, if such
securities shall be sold to Underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by Underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
(2) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company, and otherwise than on the exercise of
options, rights or warrants or the conversion or exchange of convertible or
exchangeable securities) of shares of Common Stock (or of other securities
deemed hereunder to involve the issuance or sale of shares of Common Stock) for
a consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(3) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(4) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be deemed to
involve the issuance of such shares of Common Stock for a consideration other
than cash immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Common Stock shall be
determined as provided in Section 8(a)(2).
(5) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares of Common Stock issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights or warrants and upon the conversion or exchange of convertible
or exchangeable securities.
(6) As used herein in the phrase "Market Price" at any date shall be deemed
to be the last reported sale price, or, in the case no such reported sale takes
place on such day, the average of the last reported sales prices for the last
three (3) trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading,
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange, the average closing bid price as furnished by the NASD
through the NASD Automated Quotation System ("NASDAQ") or similar organization
if NASDAQ is no longer reporting such information, or if the Common Stock is not
quoted on NASDAQ, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
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(b) Options, Rights, Warrant and Convertible and Exchangeable Securities.
Except in the case of the Company issuing rights to subscribe for shares of
Common Stock distributed to all the stockholders of the Company and Holders of
Underwriter's Warrant pursuant to Section 8(i) hereof, if the Company shall at
any time after the date hereof issue options, rights or warrants to purchase
shares of Common Stock, or issue any securities convertible into or exchangeable
for shares of Common Stock (other than the issuances referred to in Section 8(g)
hereof), (i) for a consideration per share less than the Market Price (including
the issuance thereof without consideration such as by way of dividend or other
distribution), or (ii) without consideration, the Purchase Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8(a) hereof, provided that:
(1) The aggregate maximum number of shares of Common Stock issuable or that
may become issuable under such options, rights or warrants (assuming exercise in
full even if not then currently exercisable or currently exercisable in full)
shall be deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum purchase
price per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as consideration
received on the issue or sale of shares in accordance with the terms of the
Underwriter's Warrant), if any, received by the Company for such options, rights
or warrants; provided, however, that upon the expiration or other termination of
such options, rights or warrants, if any thereof shall not have been exercised,
the number of shares of Common Stock deemed to be issued and outstanding
pursuant to this Section 8(b)(1) (and for the purposes of Section 8(a)(5)
hereof) shall be reduced by such number of shares as to which options, warrants
and/or rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding, and the Purchase
Price then in effect shall forthwith be readjusted and thereafter be the price
which it would have been had adjustment been made on the basis of the issuance
only of shares actually issued or issuable upon the exercise of those options,
rights or warrants as to which the exercise rights shall not be expired or
terminated unexercised.
(2) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities (assuming
conversion or exchange in full even if not then currently convertible or
exchangeable in full) shall be deemed to be issued and outstanding at the time
of issuance of such securities, and for a consideration equal to the
consideration (determined in the same manner as consideration received on the
issue or sale of shares of Common Stock in accordance with the terms of the
Underwriter's Warrant) received by the Company for such securities, plus the
minimum consideration, if any, receivable by the Company upon the conversion or
exchange thereof; provided, however, that upon the expiration or other
termination of the right to convert or exchange such convertible or exchangeable
securities (whether by reason or redemption or otherwise), the number of shares
deemed to be issued and outstanding pursuant to this Section 8(b)(2) (and for
the purpose of Section 8(a)(5) hereof) shall be reduced by such number of shares
as to which the conversion or exchange rights shall have expired or terminated
unexercised, and such number of shares shall no longer be deemed to be issued
and outstanding and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price which it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued or
issuable upon the conversion or exchange of those convertible or exchangeable
securities as to which the conversion or exchange rights shall not have expired
or terminated unexercised.
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(3) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in Section 8(b)(1), or in the price
per share at which the securities referred to in Section 8(b)(2) are convertible
or exchangeable, and if a change in the Purchase Price has not occurred by
reason of the event giving rise to the change in the price per share of such
other options, rights, warrants, or convertible or exchangeable securities, such
options, rights or warrants or conversion or exchange rights, as the case may
be, to the extent not theretofore exercised, the shall be deemed to have expired
or terminated on the date when such price change became effective in respect of
shares not theretofore issued pursuant to the exercise or conversion or exchange
thereof, and the Company shall be deemed to have issued upon such date new
options, rights or warrants or convertible or exchangeable securities at the new
price in respect of the number of shares issuable upon the exercise of such
options, rights or warrants or the conversion or exchange of such convertible or
exchangeable securities.
(c) Subdivision and Combination. In case the Company shall at any time
issue any shares of Common Stock in connection with a stock dividend in shares
of Common Stock or subdivide or combine the outstanding shares of Common Stock,
the Purchase Price shall forthwith be proportionately decreased in the case of a
stock dividend or a subdivision or increased in the case of combination.
(d) Adjustment in Number of Securities. Upon each adjustment of the
Purchase Price pursuant to the provisions of this Section 8, the number of
Underwriter's Securities issuable upon the exercise of the Underwriter's Warrant
shall be adjusted to the nearest whole share by multiplying a number equal to
the Purchase Price in effect immediately prior to such adjustment by the number
of Underwriter's Securities issuable upon exercise of the Underwriter's Warrant
immediately prior to such adjustment and dividing the product so obtained by the
adjusted Purchase Price.
(e) Definition of Common Stock. For the purpose of this Agreement, the term
"Common Stock" shall mean the class of stock designated as Common Stock in the
Certificate of Incorporation, of the Company as it may be amended as of the date
hereof.
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(f) Reclassification, Merger or Consolidation. The Company will not merge,
reorganize or take any other action which would terminate the Underwriter's
Warrant without first making adequate provision for the Underwriter's Warrant.
In case of any reclassification or change of the outstanding shares of Common
Stock issuable upon exercise of the outstanding warrants (other than a change in
par value to no par value, or from nor par value to par value, or as a result of
a subdivision or combination), or in case of any consolidation of the Company
with, or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the outstanding Common Stock except a change as a result of a
subdivision or combination of such shares or a change in par value, as
aforesaid), or in the case of a sale or conveyance to another corporation or
other entity of the property of the Company as an entirety or substantially as
an entirety, the Holders of each Underwriter's Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Underwriter's Warrant) to purchase, upon exercise of such Underwriter's Warrant,
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owner of the shares of Common Stock
underlying the Underwriter's Warrant immediately prior to any such events at a
price equal to the product of (x) the number of shares issuable upon exercise of
the Underwriter's Warrant and (y) the Purchase Price in effect immediately prior
to the record date for such reclassification, change, consolidation, merger,
sale or conveyance, as if such Holders had exercised the Underwriter's Warrant.
In the event of a consolidation, merger, sale or conveyance of property, the
corporation formed by such consolidation or merger, or acquiring such property,
shall execute and deliver to the Holders a supplemental Underwriter's warrant
agreement to such effect. Such supplemental Underwriter's warrant agreement
shall provide for adjustments which shall be identical to the adjustment
provided for in this Section 8. The provisions of this Section 8(f) shall
similarly apply to successive consolidations or mergers.
(g) No Adjustment of Purchase Price in Certain Cases. No adjustment of the
Purchase Price shall be made:
(1) Upon the issuance or sale of (i) the Underwriter's Warrant or the
securities underlying the Underwriter's Warrant, (ii) the securities sold
pursuant to the Public Offering (including those sold upon exercise of the
Underwriter's over-allotment option), or (iii) the shares issuable pursuant to
the options, warrants, rights, stock purchase agreements or convertible or
exchangeable securities outstanding or in effect on the date hereof as described
in the prospectus relating to the Public Offering.
(2) If the amount of said adjustments shall aggregate less than two ($.02)
cents for one (1) share of Common Stock; provided, however, that in such case
any adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
aggregate at least two ($.02) cents for one (1) share of Common Stock. In
addition, Registered Holders shall not be entitled to cash dividends paid by the
Company prior to the exercise of any warrant or warrants held by them.
9. Exchange and Replacement of Warrant Certificates. Each Underwriter's
Warrant Certificate is exchangeable without expense, upon the surrender thereof
by the registered Holders at the principal executive office of the Company, for
a new Underwriter's Warrant Certificate of like tenor and date representing in
the aggregate the right to purchase the same number of Underwriter's Securities
in such denominations as shall be designated by the Holders thereof at the time
of such surrender.
11
10. Loss, Theft etc. of Certificates Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of any Underwriter's Warrant Certificate, and, in case of loss, theft
or destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Underwriter's Warrant Certificates, if
mutilated, the Company will make and deliver a new Underwriter's Warrant
Certificate of like tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Underwriter's Warrant, nor shall it be required to issue scrip
or pay cash in lieu of fractional interests; provided, however, that if a Holder
exercises all Underwriter's Warrant held of record by such Holder the fractional
interests shall be eliminated by rounding any fraction to the nearest whole
number of shares of Common Stock or other securities, properties or rights.
12. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Underwriter's Warrant, such
number of shares of Common Stock or other securities and properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of Underwriter's Warrant and payment of the Purchase Price
therefor, all the shares of Common Stock issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Underwriter's Warrant shall
be outstanding, the Company shall use its best efforts to cause the Common Stock
to be listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock issued to the public in connection herewith
may then be listed or quoted.
13. Notices to Underwriter's Warrant Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Underwriter's Warrant and their exercise, any of
the following events shall occur:
(a) the Company shall take a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
12
(c) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business as an entirety shall be proposed; then, in
any one or more of said events, the Company shall give written notice of such
event at least fifteen (15) calendar days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or five days after being mailed by registered or certified mail,
return receipt requested:
If to the registered Holders of the Underwriter's Warrant, to the address
of such Holders as shown on the books of the Company; or
(a) If to the Company to 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000, or to such other address as the Company may designate by notice
to the Holders, with a courtesy copy to [accts].
15. Supplements and Amendments. The Company and the Underwriter may from
time to time supplement or amend this Agreement without the approval of any
Holders of Underwriter's Warrant Certificates (other than the Underwriter) in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provision in regard to matters or questions arising hereunder
which the Company and the Underwriter may deem necessary or desirable and which
the Company and the Underwriter deem shall not adversely affect the interests of
the Holders of Underwriter's Warrant Certificates.
16. Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Underwriter, the
Holders and their respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of business on
_____________, 2005. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on the expiration of any applicable statue of limitations.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Underwriter's Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said state without giving effect to
the rules of said state governing the conflicts of laws.
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19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement, to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and thereof. This Agreement may not be modified or amended
except by a writing duly signed by the Company and the Holders of a Majority in
Interest of the Underwriter's Securities (for this purpose, treating all then
outstanding Underwriter's Warrants as if they had been exercised).
20. Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holders of the Underwriter's Warrant
Certificates or Underwriter's Securities any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriter and any other Holders of
the Underwriter's Warrant Certificates or Underwriter's Securities.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
24. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Company, the Underwriter and their respective successors and
assigns and the Holders from time to time of the Underwriter's Warrant
Certificates or any of them.
[Signature on following page]
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
WESTSTAR ENVIRONMENTAL, INC.
By:
----------------------------------
Name: Xxxxxxx X. Xxxxx, President
XXXXXXX DAVIDSON SECURITIES CORP.,
By:
----------------------------------
Name: Xxxxxxx Xxxxxxx
Title: CEO
15
Schedule A
to
Underwriter's Warrant Agreement
Between
WESTSTAR ENVIRONMENTAL, INC.
AND
XXXXXXX DAVIDSON SECURITIES CORPORATION
Underwriter
Xxxxxxx Xxxxxxxx Securities Corp.
WESTSTAR ENVIRONMENTAL, INC.
WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND MAY NOT BE OFFERED FOR SALE OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
(ii) AN OPINION OF COUNSEL, IF SUCH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER
THE ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING _____________, 2001 THROUGH
5:00 P.M., NEW YORK TIME ON _______________
Warrant covering 100,000 shares of
Common Stock
No. UW-1
This Warrant Certificate certifies that Xxxxxxx Davidson Securities Corp.
or registered assigns, is the registered holder of this Warrant to purchase
initially, at any time from _____________, 2001, until 5:00 p.m., New York time
on _______________, 2005 (the "Expiration Date"), up to 100,000 shares of Common
Stock, $.001 par value (the "Common Stock") of Weststar Environmental, Inc.
("Company") exercisable to purchase one share of Common Stock at a purchase
price of $______ per share (______% of the per share public offering price) (the
"Purchase Price"), upon the surrender of this Warrant Certificate and payment of
the applicable Purchase Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Underwriter's Warrant Agreement,
dated as of __________, by and between the Company and Xxxxxxx Xxxxxxxx
Securities Corp. (the "Warrant Agreement"). Payment of the Purchase Price shall
be made by certified or cashier's check or money order payable to the order of
the Company.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrant evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrant evidenced by this Warrant Certificate is part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement between
the Company and the Underwriter, which Warrant Agreement is hereby incorporated
by reference in and made a part of this instrument and is hereby referred to for
a description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Warrant.
The Warrant Agreement provides that upon the occurrence of certain events
the Purchase Price and the type and/or number of the Company's securities
issuable upon the exercise of this Warrant, may, subject to certain conditions,
be adjusted. In such event, the Company will, at the request of the holder,
issue a new Warrant Certificate evidencing the adjustment in the Purchase Price
and the number and/or type of securities issuable upon the exercise of the
Warrant; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter, or otherwise impair,
the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrant shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this __th
day of ___________.
WESTSTAR ENVIRONMENTAL, INC.
By:_______________________________
Xxxxxxx X. Xxxxx, President
ATTEST:
By:__________________________________
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED___________________________
hereby sells, assigns and transfers unto _____________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Warrant Certificate on the books of Weststar
Environmental, Inc., with full power of substitution.
Dated:
Signature_____________________
(Signature must conform in all respects to the name of holder as specified
on the face of the Warrant Certificate.)
[Signature guarantee] ________________________________
(Insert Social Security or Other
Identifying Number of Holders)
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase ______ shares of Common Stock and herewith
tenders in payment for such securities a certified or cashier's check or money
order payable to the order of Weststar Environmental, Inc. in the amount of
$______, all in accordance with the terms hereof. The undersigned requests that
certificates for such securities be registered in the name of
___________________________ whose address is _____________________ and that such
certificates be delivered to _____________________________________ whose address
is ____________________________________________________________.
Dated:
Signature_______________________
(Signature must conform in all respects to the name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holders)
[Signature guarantee]
