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EXHIBIT 4.1-a
WARRANT AGREEMENT
UStel, Inc., a Minnesota corporation (Company), and American Securities Transfer
& Trust, Inc. (AST), 0000 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, a
Colorado corporation (Warrant Agent), agree as follows:
1. Purpose. The Company proposes to publicly offer and issue
1,552,500 units (Units), each Unit consisting of (i) two
shares of the Company's $0.01 par value common stock (Shares)
and (ii) one warrant permitting the purchase of one Share
(Warrant).
2. Warrants. Each Warrant will entitle the registered holder of
a Warrant (Warrant Holder) to purchase from the Company one
Share at $4.00 per share (Exercise Price). A Warrant Holder
may exercise all of any number of Warrants resulting in the
purchase of a whole number of Shares.
3. Exercise Period. The Warrants may be exercised at any time
during the period commencing ____________, 1997 and ending at
3:00 p.m., Denver, Colorado time on ____________, 2002
(Expiration Date) except as changed by Section 12 of this
Agreement. After the Expiration Date, any unexercised warrants
will be void and all rights of Warrant Holders shall cease.
4. Non-Detachability. A Warrant Certificate may not be detached
from a Share certificate contained in a Unit
until after sixty days from ____________, or earlier at the
discretion of Xxxxxx & Xxxxxxx Incorporated. Until such time a
Warrant Certificate may be split up, combined, exchanged or
transferred on the books of the Warrant Agent only together
with Share Certificates. After _____________, 19___, a Warrant
Certificate may be split up, combined, exchanged or
transferred on the books of the Warrant Agent.
5. Certificates. The Warrant Certificates shall be in registered
form only and shall be substantially in the form set forth in
Exhibit A attached to this Agreement. Warrant
Certificates shall be signed by, or shall bear the facsimile
signature of, the President or a Vice President of the Company
and the Secretary or an Assistant Secretary of the Company and
shall bear a facsimile of the Company's corporate seal. If any
person, whose facsimile signature has been placed upon any
Warrant Certificate of the signature of an officer of the
Company, shall have ceased to be such officer before such
Warrant Certificate is countersigned, issued and delivered,
such Warrant Certificate shall be countersigned, issued and
delivered with the same effect as if such person had not
ceased to be such officer. Any Warrant Certificate may be
signed by, or made to bear the facsimile signature of, any
person who at the actual date of the preparation of such
Warrant Certificate shall be a proper
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officer of the company to sign such Warrant Certificate even
though such person was not such an officer upon the date of
the Agreement.
6. Countersigning. Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for
any purpose unless so countersigned. The Warrant Agent hereby
is authorized to countersign and deliver to, or in accordance
with the instructions of, any Warrant Holder any Warrant
Certificate which is properly issued.
7. Registration of Transfer and Exchanges. Subject to the
provisions of Section 4, the Warrant Agent shall from time to
time register the transfer of any outstanding Warrant
Certificate upon records maintained by the Warrant Agent for
such purpose upon surrender of such Warrant Certificate to the
Warrant Agent for transfer, accompanied by appropriate
instruments of transfer in form satisfactory to the Company
and the Warrant Agent and duly executed by the Warrant Holder
or a duly authorized attorney. Upon any such registration of
transfer, a new Warrant Certificate shall be issued in the
name of and to the transferee and the surrendered Warrant
Certificate shall be cancelled.
8. Exercise of Warrants.
a. Any one Warrant or any multiple of one Warrant
evidenced by any Warrant Certificate may be exercised
upon any single occasion on or after the Exercise
Date, and on or before the Expiration Date. A Warrant
shall be exercised by the Warrant Holder by
surrendering to the Warrant Agent the Warrant
Certificate evidencing such Warrant with the exercise
form on the reverse of such Warrant Certificate duly
completed and executed and delivering to the Warrant
Agent, by good check or bank draft payable to the
order of the Company, the Exercise Price for each
Share to be purchased.
b. Upon receipt of a Warrant Certificate with the
exercise form thereon duly executed together with
payment in full of the Exercise Price for the Shares
for which Warrants are then being exercised, the
Warrant Agent shall requisition from any transfer
agent for the Shares, and upon receipt shall make
delivery of, certificates evidencing the total number
of whole Shares for which Warrants are then being
exercised in such names and denominations as are
required for delivery to, or in accordance with the
instructions of, the Warrant Holder. Such
certificates for the Shares shall be deemed to be
issued, and the person to whom such shares are issued
of record shall be deemed to have become a holder of
record of such Shares, as of the date for the
surrender of such Warrant Certificate and payment of
the Exercise Price, whichever shall last occur,
provided that if the books of the Company with
respect to the Shares shall be deemed to be issued,
and
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the person to whom such Shares are issued of record
shall be deemed to have become a record holder of
such Shares, as of the date on which such books shall
next be open (whether before, on or after the
Expiration Date) but at the Exercise Price, whichever
shall have last occurred, to the Warrant Agent.
c. If less than all the Warrants evidenced by A Warrant
Certificate are exercised upon a single occasion, a
new Warrant Certificate for the balance of the
Warrants not so exercised shall be issued and
delivered to, or in accordance with, transfer
instructions properly given by the Warrant Holder
until the Expiration Date.
d. All Warrant Certificates surrendered upon exercise of
the Warrants shall be cancelled.
e. Upon the exercise, or conversion of any warrant, the
Warrant Agent shall promptly deposit the payment into
an escrow account established by mutual agreement of
the Issuer and the Warrant Agent at a federally
insured commercial bank. All funds deposited in the
escrow account will be disbursed on a weekly basis to
the issuer once they have been determined by the
Warrant Agent to be collected funds. Once the funds
are determined to be collected, the Warrant Agent
shall cause the share certificate(s) representing the
exercised warrants to be issued.
f. Expenses incurred by American Securities Transfer,
Inc. while acting in the capacity as Warrant Agent
will be paid by the Company. These expenses,
including delivery of exercised share certificates to
the shareholder, will be deducted from the exercise
fee submitted prior to distribution of funds to the
Issuer. A detailed accounting statement relating to
the number of shares exercised, names of registered
warrant holder and the net amount of exercised, funds
remitted will be given to the Issuer with the payment
of each exercise amount.
g. At the time of exercise of the warrant(s), the
transfer fee is to be paid by shareholder. In the
event the shareholder must pay the fee and fails to
remit same, the fee will be deducted from the
proceeds prior to distribution to the Company.
9. Taxes. The Company will pay all taxes attributable to the
initial issuance of Shares upon exercise of Warrants. The
Company shall not, however, be required to pay any tax which
may be payable in respect to any transfer involved in any
issue of Warrant Certificates or in the issue of any
certificates of Shares in the name other than that of the
Warrant Holder upon the exercise of any Warrant.
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10. Mutilated or Missing Warrant Certificates. If any Warrant
Certificate is mutilated, lost, stolen or destroyed, the
Company and the Warrant Agent may, on such terms as to
indemnify or otherwise as they may in their discretion impose
(which shall, in the case of a mutilated Warrant Certificate,
include the surrender thereof), and upon receipt of evidence
satisfactory to the Company and the Warrant Agent of such
mutilation, loss, theft or destruction, issue a substitute
Warrant Certificate of like denomination or tenor as the
Warrant Certificate so mutilated, lost, stolen or destroyed.
Applicants for substitute Warrant Certificates shall comply
with such other reasonable regulations and pay any reasonable
charges as the Company or the Warrant Agent may prescribe.
11. Reservation of Shares. For the purpose of enabling the
Company to satisfy all obligation to issue Shares upon
exercise of Warrants, the Company will at all times reserve
and keep available free from preemptive rights, out of the
aggregate of its authorized but unissued shares, the full
number of Shares which may be issued upon the exercise of
Warrants will upon issue be fully paid and nonassessable by
the Company and free from all taxes, liens, charges and
security interests with respect to the issue thereof.
12. Governmental Restrictions. If any Shares issuable upon the
exercise of Warrants require registration or approval of any
governmental authority, the Company will endeavor to secure
such registration or approval; provided that in no event shall
such Shares be issued, and the Company shall have the
authority to suspend the exercise of all Warrants, until such
registration or approval shall have been obtained; but all
Warrants, the exercise of which is requested during any such
suspension, shall be exercisable at the Exercise Price. If any
such period of suspension continues past the Expiration Date,
all Warrants, the exercise of which have been requested on or
prior to the Expiration Date, shall be exercisable upon the
removal of such suspension until the close of business on the
business day immediately following the expiration of such
suspension.
13. Adjustments. If prior to the exercise of any Warrants, the
Company shall have effected one or more stock split-ups, stock
dividends or other increases or reductions of the number of
shares of its $0.01 par value common stock outstanding without
receiving compensation therefore in money, services or
property, the number of shares of common stock subject to the
Warrant granted shall, (i) if a net increase shall have been
effected in the number of outstanding shares of the Company's
common stock, be proportionately increased, and the cash
consideration payable per share shall be proportionately
reduced, and, (ii) if a net reduction shall have been effected
in the number of outstanding shares of the Company's common
stock, be proportionately reduced and the cash consideration
payable per share be proportionately increased.
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14. Notice to Warrant Holders. Upon any adjustment as described
in Section 13, the Company within 20 days thereafter shall (i)
cause to be filed with the Warrant Agent a certificate signed
by a Company officer setting forth the details of such
adjustment, the method of calculation and the facts upon which
such calculation is based, which certificate shall be
conclusive evidence of the correctness of the matters set
forth therein, and (ii) cause written notice of such
adjustments to be given to each Warrant Holder as of the
record date applicable to such adjustment. Also, if the
Company proposes to enter into any reorganization,
reclassification, sale of substantially all of its assets,
consolidation, merger, dissolution, liquidation or winding up,
the Company shall give notice of such fact at least 20 days
prior to such action to all Warrant Holders which notice shall
set forth such facts as indicated the effect of such action
(to the extent such effect may be known at the date of such
notice) on the Exercise Price and the kind and amount of the
shares or other securities and property deliverable upon
exercise of the Warrants. Without limiting the obligation of
the Company hereunder to provide notice to each Warrant
Holder, failure of the Company to give notice shall not
invalidate corporate action taken by the Company.
15. No Fractional Warrants or Shares. The Company shall not be
required to issue fractions of Warrants upon the reissue of
Warrants, any adjustments as described in Section 13 or
otherwise; but the Company in lieu of issuing any such
fractional interest, shall round up or down to the nearest
full Warrant. If the total Warrants surrendered by exercise
would result in the issuance of a fractional share, the
Company shall not be required to issue a fractional share but
rather the aggregate number of shares issuable will be rounded
up or down to the nearest full share.
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16. Redemption.
a. The then outstanding Warrants may be redeemed, at the
option of the Company, at $0.01 per share of Common Stock
purchasable upon exercise of such Warrants, at any time after
the Daily Market Price (as defined) per share of the Common
Stock for a period of at least 20 consecutive trading days
within 30 days prior to the date notice of redemption is given
averages or exceeds $6.00, and prior to expiration of the
Warrants. The Daily Market Price of the Common Stock shall be
determined by the Company in the manner set forth in Section
16(e) as of the end of each trading day (or, if no trading in
the Common Stock occurred on such day, as of the end of the
immediately preceding trading day in which trading occurred)
and verified to the Warrant Agent before the Company may give
notice of redemption. All outstanding Warrants must be
redeemed if any are redeemed, and any right to exercise an
outstanding Warrant shall terminate at 3:00 p.m. (Rocky
Mountain Time) on the business day immediately preceding the
date fixed for redemption. A trading day shall mean a day in
which trading of securities occurred on the New York Stock
Exchange.
b. The Company may exercise its right to redeem the Warrants
only by giving the notice set forth in the following sentence
after the end of the applicable period of 20 consecutive
trading days referred to in Section 16 (a). In case the
Company shall exercise its right to redeem, it shall give
notice to the Warrant Agent and the registered holders of the
outstanding Warrants, by mailing to such registered holders a
notice of redemption, first class' postage prepaid, at their
addresses as they shall appear on the records of the Warrant
Agent. Any notice mailed in the manner provided herein shall
be conclusively presumed to have been duly given whether or
not the registered holder actually receives such notice.
c. The notice of redemption shall specify the redemption
price, the date fixed for redemption (which shall be between
the thirtieth and forty- fifth day after such notice is
mailed), the place where the Warrant certificates shall be
delivered and the redemption price shall be paid, and that the
right to exercise the Warrants shall terminate at 3:00 P.M.
(Rocky Mountain Time) on the business day immediately
preceding the date fixed for redemption.
d. Appropriate adjustment shall be made to the redemption
price and to the minimum Daily Market Price prerequisite to
redemption set forth in Section 16(a) hereof, in each case on
the same basis as provided in Section 13 hereof with respect
to adjustment of the Warrant Price.
e. For purposes of this Agreement, the term "Daily Market
Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and not in The Nasdaq National Market
nor on any national securities exchange, the
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closing bid price of the Common Stock on the trading day in
question, as reported by the Nasdaq Small Cap Market (or an
equivalent generally accepted reporting service if quotations
are not reported on The Nasdaq Small Cap Market), or (ii) if
the Common Stock is traded in The Nasdaq National Market or on
a national securities exchange, the daily per share closing
price of the Common Stock in The Nasdaq National Market or on
the principal stock exchange on which it is listed on the
trading day in question, as the case may be. For purposes of
clause (i) above, if trading in the Common Stock is not
reported by The Nasdaq Small Cap Market, the bid price
referred to in said clause shall be the lowest bid price as
reported in the Nasdaq Electronic Bulletin Board or, if not
reported thereon, as reported in the "pink sheets" published
by National Quotation Bureau, Incorporated, and, if such
Common Stock is not so reported, shall be the price of a share
of Common Stock determined by the Company's Board of Directors
in good faith. The closing price referred to in clause (ii)
above shall be the last reported sale price or, in the case no
such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case in The
Nasdaq National Market or on the national securities exchange
on which the Common Stock is then listed.
17. Rights of Warrant Holders. No Warrant Holder, as such, shall
have any rights of a shareholder of the Company, either at a
law or equity, and the rights of the Warrant Holders, as such,
are limited to those rights expressly provided in this
Agreement or in the Warrant Certificates. The Company and the
Warrant Agent may treat the registered Warrant Holder in
respect of any Warrant Certificates as the absolute owner
thereof for all purposes notwithstanding any notice to the
contrary.
18. Warrant Agent. The Company hereby appoints the Warrant Agent
to act as the agent of the Company and the Warrant Agent
hereby accepts such appointment upon the following terms and
conditions by all of which the Company and every Warrant
Holder, by acceptance of his Warrants, shall be bound:
a. Statements contained in this Agreement and in the
Warrant Certificates shall be taken as statements of
the Company. The Warrant Agent assumes no
responsibility for the correctness of any of the same
except such as describes the Warrant Agent or for
action taken or to be taken by the Warrant Agent.
b. The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the
Company's covenants contained in this Agreement or in
the Warrant Certificates.
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c. The Warrant Agent may consult at any time with
counsel satisfactory to it (who may be counsel for
the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any
Warrant Holder in respect of any action taken,
suffered or omitted by it hereunder in good faith and
in accordance with the opinion or the advise of such
counsel, provided the Warrant Agent shall have
exercised reasonable care in the selection and
continued employment of such counsel.
d. The Warrant Agent shall incur no liability or
responsibility to the Company or to any Warrant
Holder for any action taken in reliance upon any
notice, resolution, waiver, consent, order,
certificate or other paper, document or instrument
believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
e. The Company agrees to pay to the Warrant Agent
reasonable compensation for all services rendered by
the Warrant Agent in the execution of this Agreement,
to reimburse the Warrant Agent for all expenses,
taxes and governmental charges and all other charges
of any kind in nature incurred by the Warrant Agent
in the execution of this Agreement and to indemnify
the Warrant Agent and save it harmless against any
and all liabilities, including judgments, costs and
counsel fees, for this Agreement except as a result
of the Warrant Agent's negligence or bad faith.
f. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to
take any other action likely to involve expense
unless the Company or one or more Warrant Holders
shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses
which may be incurred in connection with such action,
suit or legal proceeding, but this provision shall
not effect the power of the Warrant Agent to take
such action as the Warrant Agent may consider proper,
whether with or without any such security or
indemnity. All rights of action under this Agreement
or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the
Warrant Certificates or the production thereof at any
trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant
Agent, and any recovery of judgment shall be for the
ratable benefit of the Warrant Holders as their
respective rights or interest may appear.
g. The Warrant Agent and any shareholder, director,
officer or employee of the Warrant Agent may buy,
sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily
interested in any
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transaction in which the Company may be interested,
or contact with or lend money to the Company or
otherwise act as fully and freely as though it were
not Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting
in any other capacity for the Company or for any
other legal entity.
19. Successor Warrant Agent. Any corporation into which the
Warrant Agent may be merged or converted or with which it may
be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Warrant Agent shall
be a party, or any corporation succeeding to the corporate
trust business of the Warrant Agent, shall be the successor to
the Warrant Agent hereunder without the execution or filing of
any paper of any further act of a party or the parties hereto.
In any such event or if the name of the Warrant Agent is
changed, the Warrant Agent or such successor may adopt the
countersignature of the original Warrant Agent and may
countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor
Warrant Agent.
20. Change of Warrant Agent. The Warrant Agent may resign or be
discharged by the Company from its duties under this Agreement
by the Warrant Agent or the Company, as the case may be,
giving notice in writing to the other, and by giving a date
when such resignation or discharge shall take effect, which
notice shall be sent at least 30 days prior to the date so
specified. If the Warrant Agent shall resign, be discharged or
shall otherwise become incapable of acting, the Company shall
appoint a successor to the Warrant Agent. If the Company shall
fail to make such appointment within a period of 30 days after
it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or
by any Warrant Holder or after discharging the Warrant Agent,
then any Warrant Holder may apply to the District Court for
Denver County, Colorado, for the appointment of a successor to
the Warrant Agent. Pending appointment of a successor to the
Warrant Agent, either by the Company or by such Court, the
duties of the Warrant Agent shall be carried out by the
Company. Any successor Warrant Agent, whether appointed by the
Company or by such Court, shall be a bank or a trust company,
in good standing, organized under the laws of the State of
Colorado or of the United States of America, having its
principal office in Denver, Colorado and having at the time of
its appointment as Warrant Agent, a combined capital and
surplus of at least four million dollars. After appointment,
the successor Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed
and the former Warrant Agent shall deliver and transfer to the
successor Warrant Agent any property at the time held by it
thereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for effecting the delivery
or transfer. Failure to give any notice provided for in the
section, however, or any defect
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therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment
of the successor Warrant Agent, as the case may be.
21. Notices. Any notice or demand authorized by this Agreement to
be given or made by the Warrant Agent or by any Warrant Holder
to or on the Company shall be sufficiently given or made if
sent by mail, first class, certified or registered, postage
prepaid, addressed (until another address is filed in writing
by the Company with the Warrant Agent), as follows:
UStel, Inc.
Attn: Xxxxxx X.X. Xxxxxx
0000 Xxxxx Xxxxxxx Xxxx., #000
Xxx Xxxxx, Xxxxxx 00000
Any notice or demand authorized by this Agreement to be given
or made by any Warrant Holder or by the Company to or on the
Warrant Agent shall be sufficiently given or made if sent by
mail, first class, certified or registered, postage prepaid,
addressed (until another address is filed in writing by the
Warrant Agent with the Company), as follows:
American Securities Transfer & Trust, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Any distribution, notice or demand required or authorized by
this Agreement to be given or made by the Company or the
Warrant Agent to or on the Warrant Holders shall be
sufficiently given or made if sent by mail, first class,
certified or registered, postage prepaid, addressed to the
Warrant Holders at their last known addresses as they shall
appear on the registration books for the Warrant Certificates
maintained by the Warrant Agent.
22. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement
without the approval of any Warrant Holders in order to cure
any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with
any other provisions herein, or to make any other provisions
in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable.
23. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
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24. Termination. This Agreement shall terminate at the close of
business on the Expiration Date or such earlier date upon
which all Warrants have been exercised; provided, however,
that if exercise of the Warrants is suspended pursuant to
Section 12 and such suspension continues past the Expiration
Date, this Agreement shall terminate at the close of business
on the business day immediately following expiration of such
suspension. The provisions of Section 18 shall survive such
termination.
25. Governing Law. This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under
the laws of the State of Colorado and for all purposes shall
be construed in accordance with the laws of said State.
26. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than the
Company, the Warrant Agent and the Warrant Holders any legal
or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the Warrant Holders.
27. Counterparts. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall
together constitute but one and the same instrument.
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Date: _____________________
UStel, Inc.
A __________ corporation
By: ___________________
SEAL
ATTEST:
____________________________
Secretary:
American Securities Transfer & Trust, Inc.
A Colorado corporation
By:_________________________________
Vice President:
SEAL
ATTEST:
_____________________________
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