THIS OPTION AND THE SHARES OF COMMON STOCK TRANSFERABLE UPON THE EXERCISE
HEREOF HAVE BEEN ISSUED AND SOLD WITHOUT REGISTRATION IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "1933
ACT"), AND THE APPLICABLE SECURITIES LAWS OF OTHER JURISDICTIONS. SUCH
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN (i)
PURSUANT TO AN EFFECTIVE REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE
1933 ACT AND THE APPLICABLE SECURITIES LAWS OF ANY OTHER JURISDICTION, AND
(ii) UPON RECEIPT BY THE ISSUER OF EVIDENCE REASONABLY SATISFACTORY TO IT
OF COMPLIANCE WITH THE 1933 ACT AND THE APPLICABLE SECURITIES LAWS OF ANY
OTHER JURISDICTION. THE ISSUER SHALL BE ENTITLED TO REQUIRE AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO IT WITH RESPECT TO COMPLIANCE WITH SUCH
LAWS.
OPTION TO PURCHASE 200,000 SHARES OF
COMMON STOCK
OF WASTEMASTERS, INC.
Not Transferable or Exercisable Except
Upon Conditions Herein Specified
Void After 5:00 O'clock p.m.,
EST, November 13, 2002
WasteMasters, Inc., a Maryland corporation (the "Company") hereby grants to
Xxxxx Xxxxxx-XxXxxxx, (hereinafter the "Holder"), an option to purchase Two
Hundred Thousand (200,000) shares (the "Shares") of the common stock of the
Company (the "Common Stock") at the purchase price of Twenty Cents ($.20)
per Share (the "Exercise Price") (the number of Shares and Exercise Price
being subject to adjustment, as hereinafter provided) upon the terms and
conditions herein set forth.
1. Exercise of Option.
(a) Subject to subsection (b) of this Section 1, this Option
may be exercised upon presentation and surrender of this Option
Certificate, with the attached Purchase Form (Exhibit A) duly executed, at
the principal office of the Company, at 000 Xxxxx Xxxxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, or at such other place as the Company may
designate by notice to the Holder, together with a certified bank or
cashier's check payable to the order of WasteMasters, Inc. in the amount of
the Exercise Price times the number of Shares being purchased. This Option
may be exercised in whole or in part. In case of exercise hereof in part
only, the Company, upon surrender hereof, will deliver to the Holder a new
Option Certificate of like tenor entitling the Holder to purchase the
number of Shares as to which this Option has not been exercised.
(b) This Option to purchase the "unregistered," "restricted"
common stock of the Company may be exercised in whole or in part at any
time prior to 5:00 o'clock p.m., EST, on November 13, 2002.
2. Purchased and Underlying Shares.
(a) Upon surrender of this Option Certificate and payment of
the Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to the Holder, a certificate or
certificates for the number of full shares of Common Stock comprising the
applicable number of Shares so purchased upon the exercise of this Option
(the "Purchased Shares"), together with cash, as provided in Section 9
hereof, in respect of any fractional Shares otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have been
issued, and any person named therein shall be deemed to have become a
holder of record of such Shares, as of the date of surrender of this Option
and payment of the Exercise Price, as aforesaid, notwithstanding that the
certificates representing such Shares shall not actually have been
delivered or that the transfer shall not have been reflected on the stock
transfer books of the Company.
(b) The Company shall at all times keep reserved so long as
this Option remains outstanding, out of its authorized shares of Common
Stock, such number of Shares as shall continue to be subject to purchase
under this Option (the "Underlying Shares"). Every transfer agent for the
Common Stock issuable upon the exercise of this Option shall be irrevocably
authorized and directed at all times to reserve such number of authorized
Shares as shall be requisite for such purpose.
3. Rights and Obligations of Option Holder.
(a) The Holder of this Option shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or in
equity. The rights of the Holder of this Option are limited to those
expressed herein and the Holder of this Option, by its acceptance hereof,
consents to and agrees to be bound by and to comply with all the provisions
of this Option Certificate, including, without limitation, all the
obligations imposed upon the Holder by Section 5 hereof.
(b) The Holder of this Option, as such, shall not be entitled
to vote or receive dividends or to be deemed the holder of Shares for any
purpose, nor shall anything contained in this Option Certificate, as such,
confer upon the Holder any of the rights of a shareholder of the Company
including, but not limited to, any right to vote, give or withhold consent
to any action by the Company, whether upon any recapitalization, issue of
stock, reclassification of stock, consolidation, merger, share exchange,
conveyance or otherwise, receive notice of meetings or other action
affecting shareholders (except for the notices provided for herein),
receive dividends, receive subscription rights, or any other right until
this Option shall have been exercised and the Holder shall have become the
record holder of the Shares, as provided herein.
4. Purchased Shares. The Company covenants and agrees that all
Purchased Shares to be delivered upon proper exercise of this Option shall
be recorded on the books of the Company in the name of the Holder and shall
be duly and validly authorized and issued, fully paid and non-assessable,
and free from all preemptive rights, taxes (other than transfer taxes),
liens, charges and security interests created by the Company with respect
to the issuance thereof.
5. Disposition of Options or Shares.
(a) The Holder of this Option and/or any transferee hereof or
of the Purchased Shares by its acceptance hereof or thereof, hereby
understands and agrees that neither this Option nor the Purchased Shares
have been registered under either the 1933 Act or applicable state
securities laws (the "State Acts") and shall not be sold, pledged,
hypothecated, donated or otherwise transferred (whether or not for
consideration) except upon the issuance to the Company of a favorable
opinion of counsel or submission to the Company of such evidence as may be
reasonably satisfactory to counsel to the Company, in each such case, to
the effect that any such transfer shall not be in violation of the 1933 Act
and the State Acts. It shall be a condition to the transfer of this Option
that any transferee hereof deliver to the Company its written agreement to
accept and be bound by all of the representations, terms and conditions of
this Option Certificate. This Option shall not be assignable except upon
the express written consent of the Company.
(b) The stock certificates of the Company that will evidence
the Purchased Shares may be imprinted with a conspicuous legend in
substantially the following form:
"The securities represented by this certificate have not been registered
under either the Securities Act of 1933 or applicable state securities laws
and shall not be sold, pledged, hypothecated, donated or otherwise
transferred (whether or not for consideration) by the holder except upon
the issuance to the Company of a favorable opinion of its counsel or
submission to the Company of such other evidence as may be reasonably
satisfactory to counsel to the Company, in each such case, to the effect
that any such transfer shall not be in violation of the Securities Act of
1933 and applicable state securities laws."
The Company has not agreed to register any of the Purchased Shares for
distribution in accordance with the provisions of the 1933 Act or the State
Acts. Except as otherwise set forth herein, the Company has not agreed to
comply with any exemption from registration under the 1933 Act or the State
Acts for the resale of such Shares. Hence, it is the understanding of the
Holder that by virtue of the provisions of certain rules respecting
"restricted securities" promulgated by the U.S. Securities and Exchange
Commission, all or part of the Purchased Shares may be required to be held
indefinitely, unless and until registered under the 1933 Act and the State
Acts, or unless an exemption from such registration is available (in which
case the Holder may still be limited as to the number of such Shares that
may be sold).
6. Representations.
(a) Risk Factors. The Holder understands and acknowledges
that (i) this Option and the Purchased Shares are unregistered, restricted
securities and are not readily marketable, (ii) the Company has not
operated on a profitable basis for several years and that there can be no
assurance that it will operate profitably in the future, and (iii) there is
a significant degree of risk in investing in the Shares. The Holder agrees
that he must be able to bear the economic risk of the loss of the entire
investment in the Shares if he exercises this Option.
(b) Knowledge and Experience; Financial Capability and Net
Worth. The Holder has (i) such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of
the investment in the Shares, (ii) had such risks explained to the Holder
and has determined that such investment is suitable for the Holder in view
of his financial circumstances and available investment opportunities,
(iii) sufficient net worth and income to bear the economic risk of
investment in the Purchased Shares, and (iv) no need for liquidity of the
investment and no reason to anticipate any change in the Holder's financial
circumstances which may cause or require any sale, transfer or other
distribution of the Purchased Shares.
(c) Information. The Holder agrees that it shall be his
responsibility to request such information with respect to the Company as
he and his advisors deem appropriate to evaluate the risks and merits of
investment in the Purchased Shares at the time that the Holder exercises
this Option.
7. Adjustments. The number of Shares purchasable upon the
exercise of this Option, and the Exercise Price, shall be subject to
adjustment from time to time upon the occurrence of any of the events
enumerated below at any time prior to the exercise of this Option in full.
(a) In case the Company shall: (i) pay a dividend, or make a
distribution on the Common Stock, in shares of Common Stock or any other of
its capital stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, (iii) combine its
outstanding shares of its capital stock into a smaller number of shares of
Common Stock, or (iv) issue, by reclassification of its shares of Common
Stock, any shares of capital stock (including any reclassification in
connection with a consolidation or merger in which the Company is the
continuing corporation), the amount of Shares purchasable upon the exercise
of this Option immediately prior thereto shall be adjusted so that the
Holder shall be entitled to receive upon exercise of this Option that
number of Shares (or other capital stock of the Company) which the Holder
would have owned or would have been entitled to receive after the happening
of such event had the Holder exercised this Option immediately prior to the
record date, in the case of any such dividend, or the effective date, in
the case of any such subdivision, combination or reclassification. An
adjustment made pursuant to this subsection (a) shall be made whenever any
of such events shall occur, but shall become effective retroactively after
such record date or such effective date, as the case may be, as to any
portion of this Option exercised between such record date or effective date
and the date of happening of any such event.
(b) If the Company shall issue, by reorganization or
reclassification of its Common Stock (including any such reorganization or
reclassification in connection with a consolidation or merger of the
Company with another corporation, provided the Company is the surviving
corporation) other securities or property of the Company, the Holder shall
thereafter have the right to receive upon exercise of this Option the kind
and number of shares of stock or other securities or property which he
would have been entitled to receive upon the happening of any such
reorganization or reclassification, had this Option been exercised
immediately prior thereto; and, in any case, appropriate adjustment (as
determined by the Board of Directors in good faith) shall be made in the
application of the provisions herein set forth with respect to rights and
interests thereafter of the Holder, to the end that the provisions set
forth herein shall thereafter be applicable, as near as reasonably
practical, in relation to any shares of stock or other securities or other
property thereafter deliverable upon the exercise of this Option. Any
adjustment made pursuant to this subparagraph (b) shall become effective
retroactively to the effective date of such reorganization or
reclassification.
(c) If the Company shall issue, sell, grant or distribute to
all or substantially all holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company (including, without
limitation, rights, options, warrants or convertible or exchangeable
securities entitling the holders thereof to subscribe for, purchase, or
convert or exchange securities into, shares of Common Stock, whether or not
immediately exercisable) or any property or other assets (other than cash),
and if such issuance, sale, grant or distribution does not otherwise
constitute an event requiring adjustment under this Section 7 (any such
nonexcluded event being herein called a "Special Dividend"), then,
effective upon the record date of the Special Dividend, the Holder shall be
entitled to receive, upon exercise of this Option (and the payment of the
consideration, if any, payable to the Company for such Special Dividend
under the terms of its issuance, sale, grant or distribution), the Special
Dividend which the Holder would have been entitled to receive if this
Option had been exercised immediately prior to the record date of the
Special Dividend.
(d) In case the Company shall make a distribution to all
holders of the Common Stock of stock of a subsidiary of the Company or
securities convertible into or exercisable for such stock, then in lieu of
an adjustment in the Exercise Price or the number of Shares purchasable
upon the exercise of the Option, the Holder, upon the exercise of this
Option at any time after such distribution, shall be entitled to receive
from the Company, such subsidiary or both, as the Company shall determine,
the stock or other securities to which such Holder would have been entitled
if such Holder had exercised this Option immediately prior thereto, all
subject to further adjustment as provided in this Section 7, and the
Company shall reserve, for the life of this Option, such securities of such
subsidiary.
(e) If there shall be any consolidation or merger to which
the Company is a party, other than a consolidation or a merger in which the
Company is a continuing corporation and which does not result in any
reclassification of, or change (other than a change in respect of which an
adjustment is required under any other provision of this Section 7 or a
change in par value) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially
as an entirety (any such event being called a "Capital Reorganization"),
then, effective upon the effective date of such Capital Reorganization, the
Holder shall have the right to purchase, upon exercise of this Option, the
kind and amount of shares of stock and other securities and property
(including cash) which the Holder would have owned or have been entitled to
receive after such Capital Reorganization if this Option had been exercised
immediately prior to such Capital Reorganization (assuming the Holder
failed to exercise his rights of election, if any, as to the kind or amount
of securities, cash or other property receivable upon such Capital
Reorganization). As a condition to effecting any Capital Reorganization,
the Company or the successor or surviving corporation, as the case may be,
shall execute and deliver to the Holder and to the Company an agreement as
to the Holder's rights in accordance with this Section 7, providing for
subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Section 7. The provisions of this
subparagraph shall similarly apply to successive Capital Reorganizations.
(f) After any adjustment of the number or kind of shares or
other securities or property issuable upon exercise of this Option pursuant
to the provisions of this Section, the Exercise Price shall also be
adjusted so that the aggregate Exercise Price thereafter payable upon
exercise of this Option shall be equal to the aggregate Exercise Price
which would have been payable upon exercise of this Option immediately
prior to such adjustment.
(g) No adjustment shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
number of the Underlying Shares; provided, however, that any adjustments
which by reason of this subsection are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 7 shall be made to the nearest one-
hundredth of a Share.
(h) Whenever the number of Shares purchasable hereunder is
adjusted as herein provided, the Company shall cause to be mailed to the
Holder in accordance with the provisions of this Section a notice (i)
stating that the number of Shares purchasable upon exercise of this Option
has been adjusted, (ii) setting forth the adjusted number of Underlying
Shares, (iii) setting forth the adjusted Exercise Price, and (iv) showing
in reasonable detail the computations and the facts, including the amount
of consideration, if any, received or deemed to have been received by the
Company, upon which such adjustments are based. Such notice shall be
conclusive as to the correctness of the adjustment of the Underlying Shares
and Exercise Price unless objected to by the Holder within 30 days
following the receipt of such notice by such Xxxxxx. If the Holder objects
to the adjustment as set forth in such notice a representative of the
Company shall meet with the Holder at such mutually convenient time or
times as shall be mutually acceptable to the parties in order to agree as
to the correct adjustment. If the Company and the Holder are unable to
agree as to the correctness of the adjustment, the matter shall be
submitted to a mutually acceptable firm of independent certified public
accountants, whose determination as to the correct adjustment shall be
conclusive and binding upon the Company and the Holder.
(i) The Company shall cause written notice of any Special
Dividend to be mailed to the Holder at the earliest practicable time (and,
in any event, not less than 10 days before the date fixed as a record date
or the date of closing the transfer books for the determination of the
shareholders entitled to such Special Dividend.)
8. Liquidation or Dissolution. In case the Company dissolves or
liquidates, the Company shall make appropriate provision so that the
securities or property, as the case may be, which would be received by the
Holder upon the exercise of this Option at the time immediately prior to
the effective date of such dissolution or liquidation, will be available to
the Holder from the liquidating trust; provided that the Holder shall make
the determination as to whether to exercise this Option within six months
of the effective date of dissolution or liquidation, at which time this
Option shall be terminated and of no further force or effect and the
Holder's rights under this Option shall be automatically terminated.
9. Fractional Shares. No fraction of a Share shall be required to
be delivered upon the exercise of this Option or any portion hereof. If
any fractional interest in a Share shall be deliverable upon the exercise
of this Option, the Company shall make an adjustment therefor in cash equal
to such fraction multiplied by the Current Market Price of the Shares on
the business day next preceding the day of exercise. For purposes of this
Option, the "Current Market Price" per share of Common Stock at any date
shall be (i) if the shares of Common Stock are listed on any national
securities exchange, the daily closing price on the date of determination;
(ii) if the shares of Common Stock are not listed on any national
securities exchange but are quoted or reported on the National Association
of Securities Dealers, Inc., Automated Quotation System ("NASDAQ"), the
last quoted price or, if not quoted, the average of the high bid and low
asked price as reported by NASDAQ, as the case may be; and (iii) if the
shares of Common Stock are neither listed on any national securities
exchange nor quoted or reported on NASDAQ, the closing bid price in the
over-the-counter market as furnished by any NASDAQ member firm that is
selected from time to time by the Company.
10. No Impairment. The Company shall not by any action including,
without limitation, amending its certificate of incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Option, but
will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase
the par value of any shares of Common Stock receivable upon the exercise of
this Option above the amount payable therefor upon such exercise
immediately prior to such increase in par value, and (b) take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common
Stock upon the exercise of this Option.
11. Remedies. The Company stipulates that the remedies at law of
the Holder in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Option
are not and will not be adequate and that, without limiting any other
remedy available at law, such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof. The rights
and remedies of the Holder are cumulative and not exclusive of any rights
or remedies which the Holder might otherwise have.
12. Loss or Destruction. Upon receipt of evidence satisfactory to
the Company of the loss, theft, mutilation or destruction of this Option
Certificate, the Company shall, upon its receipt of an indemnity agreement
or bond reasonably satisfactory in form, substance and amount to the
Company or, in the case of any such mutilation, upon surrender and
cancellation of this Option Certificate, the Company at its expense will
execute and deliver to the Holder, in lieu thereof, a new Option
Certificate of like tenor.
13. Survival. The various rights and obligations of the Holder
hereof as set forth herein shall survive the exercise of this Option at any
time or from time to time and the surrender of this Option Certificate.
14. Notices. Whenever any notice, payment of any purchase price
or other communication (any such notice, payment or other communication, a
"Delivery") is required to be given or delivered under the terms of this
Option, it shall be in writing and delivered by hand delivery or Federal
Express or registered or certified United States mail, postage prepaid and
return receipt requested, and will be deemed to have been given or
delivered on the date such notice, purchase price or other communication is
so delivered. Any Delivery to the Company, shall be addressed to 000 Xxxxx
Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000, or to such other address as
the Company may hereafter designate to the Holder in writing; any Delivery
to the Holder shall be addressed to 0 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx
19013 or to such other address as the Holder may hereafter designate to the
Company in writing.
15. Change; Waiver. Neither this Option nor any term hereof may
be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. No failure or delay of
the Holder in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such a
right or power, preclude any other or further exercise thereof or the
exercise of any other right or power.
16. Covenants to Bind Successor and Assigns. The terms of this
Option shall bind the successors and permitted assigns of the Holder and
the Company.
17. Severability. In case any one or more of the provisions
contained in this Option shall be invalid, illegal or unenforceable in any
respect, the validity, legality or enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
WasteMasters, Inc.
By:_____________________________
Name:__________________________
Title:___________________________
Date Signed: December 13, 2000
EXHIBIT A
PURCHASE FORM
TO: WASTEMASTERS, INC.
The undersigned hereby irrevocably elects to exercise the Option
evidenced by the attached Option Certificate to the extent of
___________________ (__________) shares of the Common Stock of
WASTEMASTERS, INC., and hereby makes payment of
________________________________ ($__________) in accordance with the
provisions of Section 1 of the Option Certificate in payment of the
purchase price thereof.
Name of Holder: _________________________________________
(Please type or print)
Signature of Holder: _________________________________________
Address of Holder: _________________________________________
_________________________________________
