THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
UNDER ANY APPLICABLE LAW OR REGULATION OF ANY STATE. THIS COMMON
STOCK WARRANT MAY NOT BE SOLD, OFFERED, ASSIGNED OR TRANSFERRED
UNLESS THE WARRANT IS REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR UNLESS SUCH OFFERS, SALES,
ASSIGNMENTS AND TRANSFERS ARE MADE PURSUANT TO THE AVAILABLE
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
CANMAX INC.
COMMON STOCK PURCHASE WARRANT
DATED: January 30, 1998
Number of Common Shares: 1,000,000 Holder: Xxxxx X. Xxxxxx
Purchase Price: $2.00 per share 00000 Xxxxx Xxxx, Xxxxx 0000
Expiration Date: Five (5) years Xxxxx, XX 00000
from date of vesting
For identification only. The governing terms of this Warrant are set forth below.
CANMAX INC., a Wyoming corporation (the "Company"), hereby
certifies that, for value received, Xxxxx X. Xxxxxx (the
"Holder"), is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time prior
to the earlier of (a) five (5) years following the date of the
vesting, if ever, of the Warrant Shares or (b) the date of the
termination of the employment of Xxxxx X. Xxxxxx ("Xxxxxx") under
the Employment Contract of even date herewith among Xxxxxx, the
Company and USC either (i) by the Company or USC for "cause" (as
defined therein), or (ii) by Xxxxxx voluntarily (the "Exercise
Period"), at the Purchase Price hereinafter set forth, One
Million (1,000,000) fully paid and nonassessable shares of Common
Stock (as hereinafter defined) of the Company. The number and
character of such shares of Common Stock and the Purchase Price
are subject to adjustment as provided herein.
The purchase price per share of Common Stock issuable upon
exercise of this Warrant (the "Purchase Price") shall initially
be $2.00; provided, however, that the Purchase Price shall be
adjusted from time to time as provided herein.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" means Canmax Inc. and any
entity that shall succeed or assume the obligations of such
corporation hereunder.
(b) The term "Common Stock" means the Company's common
stock, no par value per share.
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(c) The term "Fair Market Value" means the closing
price of the shares of Common Stock on the date of delivery
of any Notice of Exercise as reported on the Nasdaq SmallCap
Market (or other exchange on which the Common Stock is
traded or, if not traded on any exchange, then the closing
bid price as of such date on the over-the-counter market or,
if not quoted on the over-the-counter market, then as
determined by the Board of Directors).
(d) The term "Tax Withholding Liability" means all
federal and state income taxes, social security taxes and
other taxes applicable to compensation income arising from
the exercise of this Warrant required by applicable law to
be withheld by the Company.
(e) The term "USC" means USCommunication Services,
Inc., a Delaware corporation and wholly owned subsidiary of
the Company.
(f) The term "Warrant Shares" means as of any date
during the Exercise Period, that number of shares of Common
Stock which shall be exercisable (subject to any vesting
requirements) by the Holder hereof pursuant to the terms of
this Warrant.
1. VESTING AND EXERCISE OF WARRANT.
1.1. VESTING. Holder's right to purchase any Warrant Shares
hereunder shall not vest unless the business operations of USC
generate after tax earnings (calculated in accordance with
generally accepted accounting principles) of at least the Target
Earnings (as defined below) for any fiscal year of the Company
ending during the three (3) year period following the date
hereof. As used herein, the term "Target Earnings" shall mean
the product of (a) $1.00 multiplied by (b) the sum of 5.0 million
plus the number of any Acquisition Shares (as defined below); and
the term "Acquisition Shares" shall mean the number of shares of
Common Stock issued in connection with the acquisition (by stock
or asset purchase, merger, business combination or otherwise) of
the business of any person or entity (i) that is similar or
complimentary to the business of USC at the time of acquisition
(as determined in good faith by Holder and the Board of Directors
of the Company), and (ii) the profits and losses from which are
included in determining the after tax earnings of USC for
purposes of this Section 1.1. The Company shall use its best
efforts to cause the business operations of USC to be accounted
for separately from the other business operations of Company and
its subsidiaries for the purpose of making the calculations set
forth in this Section 1.1. Holder shall not have any right to
acquire any Warrant Shares pursuant to this Warrant prior to the
vesting of such rights as set forth in this Section 1.1, and such
right must vest, if at all, within such three (3) year period.
1.2. METHOD OF EXERCISE. This Warrant may be exercised
(subject to the vesting requirements set forth above) by the
Holder hereof in whole or in part (but not as to a
fractional share of Common Stock), at any time and from time
to time during the Exercise Period for up to, but not more
than, the number of vested Warrant Shares at such time, by
delivery to the Company at its principal office of (i) a
notice of exercise (a
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"Notice of Exercise") substantially in the form attached
hereto as Exhibit A, (ii) evidence satisfactory to the
Company of the authority of the person executing such Notice
of Exercise, (iii) this Warrant, and (iv) payment of (A) the
Purchase Price multiplied by the number of shares of Common
Stock for which this Warrant is being exercised (the
"Exercise Price") and (B) Tax Withholding Liability.
Payment of the Exercise Price and Tax Withholding Liability
shall be made by (a) check or bank draft payable to the
order of the Company or by wire transfer to the account of
the Company, (b) Holder's surrender to the Company of a
number of shares of Common Stock owned by Holder for at
least six (6) months having an aggregate Fair Market Value
equal to the Exercise Price and Tax Withholding Liability,
(c) Holder's authorization for the Company to withhold from
the Warrant Shares a number of shares of Common Stock having
an aggregate Fair Market Value equal to the Exercise Price
and Tax Withholding Liability, or (d) any combination of the
foregoing. The shares so purchased shall be deemed to be
issued as of the close of business on the date on which the
Company shall have received from the Holder payment in full
of the Exercise Price and Tax Withholding Liability and the
other documents referred to herein (the "Exercise Date").
1.3. REGULATION D RESTRICTIONS. The Holder hereof
represents and warrants to the Company that it has acquired
this Warrant and anticipates acquiring the shares of Common
Stock issuable upon exercise of the Warrant solely for its
own account for investment purposes and not with a view to
or for distributing such securities unless such distribution
has been registered with the Securities and Exchange
Commission or an applicable exemption is available therefor.
At the time this Warrant is exercised, the Company may
require the Holder to state in the Notice of Exercise such
representations concerning the Holder as are necessary or
appropriate to assure compliance by the Holder with the
Securities Act.
2. DELIVERY OF STOCK CERTIFICATES, ETC., ON
EXERCISE. As soon as practicable after the exercise of
this Warrant, the Company will cause to be issued in the
name of and delivered to the Holder a certificate for the
number of fully paid and nonassessable shares of Common
Stock to which the Holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which
the Holder would otherwise be entitled, cash equal to such
fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and
property (including cash, where applicable) to which the
Holder is entitled upon such exercise pursuant to Section 1
or otherwise.
3. ADJUSTMENTS ON CERTAIN CAPITAL TRANSACTIONS. On the
occurrence of any of the following events, the following
adjustments to the rights granted under this Warrant shall be
made:
3.1. In case the number of outstanding shares of Common
Stock of the Company shall be increased by way of a stock
dividend, stock split, recapitalization, or other similar means,
the number of unexercised shares of Common Stock covered by this
Warrant shall be increased by the amount that a like number of
shares of outstanding Common Stock shall have been increased as a
result of such stock increase and the
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Purchase Price shall be adjusted by multiplying the Purchase
Price in effect immediately prior to such stock increase by
a fraction, the numerator of which shall be the number of
unexercised shares covered by this Warrant immediately prior
to such stock increase and the denominator of which shall be
the number of unexercised shares of Common Stock covered by
this Warrant as adjusted for such stock increase.
3.2. In case the number of outstanding shares of Common
Stock of the Company shall be reduced by recapitalization,
reverse stock split or otherwise, the number of unexercised
shares covered by this Warrant shall be reduced by the
amount that a like number of shares of outstanding Common
Stock shall have been reduced as a result of such stock
reduction and the Purchase Price shall be adjusted by
multiplying the Purchase Price in effect immediately prior
to such stock reduction by a fraction, the numerator of
which shall be the number of unexercised shares covered by
this Warrant immediately prior to such stock reduction and
the denominator of which shall be the number of unexercised
shares covered by this Warrant as adjusted for such stock
reduction.
3.3. In case the Company shall consolidate with or
merge into another corporation, the holder of this Warrant
will thereafter receive, upon the exercise thereof in
accordance with the terms of this Warrant, the securities or
property to which the holder of the number of shares of
Common Stock then deliverable upon the exercise of this
Warrant would have been entitled upon such consolidation or
merger ("Other Securities") and the Company shall take such
steps in connection with such consolidation or merger as may
be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in
relation to any securities or property thereafter
deliverable upon the exercise of this Warrant.
4. RIGHTS AS A SHAREHOLDER. Holder shall not have
any rights as a shareholder of the Company with respect to
the shares subject to this Warrant.
5. SECURITIES LAW REQUIREMENTS. Neither this Warrant nor
the Warrant Shares have been registered under the Securities Act
or any state securities or blue sky laws. Accordingly, upon (a)
any transfer of this Warrant, any transferee of this Warrant or
(b) the exercise of this Warrant in whole or in part, and if the
Warrant Shares have not been registered under the Securities Act,
Holder or any other person exercising this Warrant shall, as
applicable, represent and agree in writing satisfactory to the
Company that Holder or such other person (a) is acquiring the
shares for the purpose of investment and not with a view to
distribution thereof, (b) knows the shares have not been
registered under the Securities Act or any state securities or
blue sky laws, (c) understands that he must bear the economic
risk of said investment for an indefinite period of time until
the shares are registered under the Securities Act and applicable
state securities or blue sky laws or an exemption from such
registration is available, and (d) will not solicit any offer to
sell or sell all or any portion of the shares other than pursuant
to an opinion of counsel reasonably satisfactory to the Company.
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6. TRANSFER RESTRICTIONS. This Warrant shall be
exercisable only by Holder and any Permitted Transferees (as
defined below) and shall not otherwise be assignable or
transferable. Except as otherwise provided herein, any attempted
alienation, assignment, pledge, hypothecation, attachment,
execution or similar process, whether voluntary or involuntary,
with respect to all or any part of this Warrant or any right
hereunder, shall be null and void. Notwithstanding the
foregoing, Holder shall have the right to transfer his rights
hereunder by any testamentary or non-testamentary gift, bequest
or devise to his spouse or any of his children, or any trust
established for the benefit of such persons (collectively,
"Permitted Transferees").
7. RESERVATION OF STOCK, ETC. ISSUABLE ON EXERCISE OF
WARRANT. The Company will at all times reserve and keep
available, solely for issuance and delivery on the exercise of
this Warrant, all shares of Common Stock (or Other Securities)
from time to time issuable on the exercise of this Warrant.
8. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any
such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security satisfactory in form and
amount to the Company or, in the case of any such mutilation, on
surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new warrant
of like tenor.
9. NOTICES, ETC. All notices and other communications
hereunder shall be personally delivered, telecopied or mailed by
first class registered or certified mail, postage prepaid, at
such address of facsimile numbers as may have been furnished to
each party by the other in writing.
10. MISCELLANEOUS. This Warrant and any term 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 Warrant
shall be construed and enforced in accordance with and governed
by the internal laws of the State of Texas. The headings in this
Warrant are for purposes of reference only, and shall not limit
or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
[SIGNATURE PAGE FOLLOWS]
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DATED as of January 30, 1998.
CANMAX INC.
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Treasurer
----------------------------------
Address: 000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
HOLDER:
/s/ XXXXX X. XXXXXX
----------------------------------------
Xxxxx X. Xxxxxx
Address: 00000 Xxxxx Xxxx, Xxxxx 0000
Xxxxx, XX 00000
Fax: (000) 000-0000
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EXHIBIT A
FORM OF NOTICE OF EXERCISE - WARRANT
------------------------------------
(To be executed only upon exercise or conversion
of the Warrant in whole or in part)
To Canmax Inc.
The undersigned registered holder of the accompanying
Warrant hereby exercises such Warrant or portion thereof for, and
purchases thereunder, ______________ shares of Common Stock
(as defined in such Warrant) and herewith makes payment therefor
(including any Tax Withholding Liability) of either (a)
$__________, (b) _____________ shares of Common Stock that have
been held by Holder for no less than six (6) months and have an
aggregate Fair Market Value of $_______________, or (c) _________
shares of Common Stock issuable upon the exercise of this
Warrant, which shares are to be withheld by the Company and have
an aggregate Fair Market Value of $____________, in either such
case as of the date written below. The undersigned requests that
the certificates for such shares of Common Stock be issued in the
name of, and delivered to, ________________________ whose address
is ____________________________________________________________.
Dated: ____________________________
(Name must conform to name of
holder as specified on the face of
the Warrant)
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
Address of holder:
-----------------------------------
-----------------------------------
-----------------------------------
Date of exercise:
----------------------
________________
Insert the number of shares of Common Stock as to which the
accompanying Warrant is being exercised. In the case of a partial
exercise, a new Warrant or Warrants will be issued and delivered,
representing the unexercised portion of the accompanying Warrant,
to the holder surrendering the same.
