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WARRANT AGREEMENT
ROYAL SILVER MINES, INC., a Utah corporation (the
"Company"), and OTC STOCK TRANSFER, INC. ("OTC"), 000 Xxxx 0000
Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, a Utah corporation (the
"Warrant Agent"), agree as follows:
1. Purpose. The Company proposes to publicly offer
and issue 6,000,000 units (the "Units"), each Unit consisting one
(1) shares of Common Stock, $0.01 par value, and one (1)
Redeemable Common Stock Purchase Warrant. The Common Stock and
Redeemable Common Stock Purchase Warrants are being offered as a
Unit. The are immediately detachable and separately tradeable.
2. Warrants. Each Warrant will entitle the registered
holder of a Warrant (the "Warrant Holder") to purchase from the
Company one share of Common Stock at an exercise price of $1.40
per warrant. 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
until September 1, 2000 (the "Expiration Date") except as
provided by Section 12 of this Agreement. After the Expiration
Date, any unexercised warrants will be void and all rights of
Warrant Holders shall cease. Further, the Redeemable Warrants
are callable by the Company upon thirty (30) days written notice
provided that the bid price of the Company's Common Stock trades
above $3.00 per share for ninety (90) consecutive trading days.
4. Detachability. A Warrant Certificates are
immediately detachable from a Share certificate contained in a
Unit.
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 of the Company and the Secretary of
the Company and if such Warrant Certificate shall contain the
signature of an officer of the Company who 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 officer
of the Company to sign such Warrant Certificate even though such
person was not such an officer upon the date of the Agreement.
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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. Exercise of a Warrant is
subject to the Company maintaining an effective registration
statement with the Securities and Exchange Commission and
complying with the applicable state securities laws of the
residence of the Warrant Holder. Subject to the foregoing the
following will applicable:
a. Any one Warrant or any multiple of one Warrant
evidenced by any Warrant Certificate may be exercised on or
after the Exercise Date, an 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 from thereon fully 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
which such Shares are issued of record shall be deemed to
have become a holder of record of such Shares, as of the
date of the surrender of such Warrant Certificate any
payment of the Exercise Price, which ever shall last occur,
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provided that if the books of the Company with respect to
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 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 Company 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 to be collected,
the Warrant Agent shall cause the shares certificate(s)
representing the exercised warrants to be issued.
f. Expenses incurred by OTC Stock Transfer, Inc.
while acting in the capacity as Warrant Agent will be paid
by the Company. These expenses, including delivery of
exercised share certificate to the shareholder, will be
deducted from the exercise fee submitted prior to
distribution of funds to the Company. 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 Warrants(s),
the transfer fee is to be paid by the Company. In the event
the Warrant Holders 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 Warrants.
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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
Certificate 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 obligations 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
share 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
reissuance 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 shares, 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.
16. 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.
17. 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/her Warrants, shall be bound:
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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.
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 advice 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,
wavier, 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 charge 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 Agents'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, suite 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 endorsed by the Warrant Agent without the possession
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of any of the Warrant Certificates or the production thereof
at any trail 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
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.
18. 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 or 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.
19. Change of Warrant Agent. The Warrant Agent may
resign or be discharged by the Company from its duties under this
Agreement by 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 Salt Lake County, Utah 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,
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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 Utah or of the United States of America,
having its principal office in Salt Lake City, Utah 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 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.
20. 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:
ROYAL SILVER MINES, INC.
00000 X. Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 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:
OTC STOCK TRANSFER, INC.
000 Xxxx 0000 Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
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 Holder 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.
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21. 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 with the Company
and the Warrant Agent may deem necessary or desirable.
22. 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.
23. 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 shall survive such termination.
24. 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 Utah and for all purposes
shall be construed in accordance with the laws of said state.
25. 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 Holder
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.
26. 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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Dated this _____ day of ________________, 1997.
ROYAL SILVER MINES, INC.
(a Utah corporation)
SEAL
ATTEST: BY: __________________________________
Title: ___________________________
_________________________________
Secretary
OTC STOCK TRANSFER, INC.
(a Utah corporation)
SEAL
ATTEST: BY: __________________________________
Title: ___________________________
_________________________________
Secretary
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EXHIBIT A
WARRANTS CERTIFICATE
THIS IS TO CERTIFY that, for value received,
or registered assigns (the "Warrant Holder"), is the registered owner
of the above-indicated number of Warrants expiring at 5:00 p.m.,
Pacific Standard Time (PST), on September 1, 2000 (the "Expiration
Date"). Each full Warrant entitles the Warrant Holder to purchase
from ROYAL SILVER MINES, INC. (the "Company"), a Utah corporation,
until September 1, 0000 xxx fully paid and nonassessable share of the
Company's Common Stock ($0.01 par value per share) at the purchase
price of $1.40 (the "Exercise Price") in lawful money of the United
States of America for each full Warrant represented hereby upon
surrender of this Warrant Certificate, with the exercise form hereon
duly completed and executed, with payment of the Exercise Price at the
office of OTC Stock Transfer (herein called the "Warrant Agent"), 000
Xxxx 0000 Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000, but only subject to the
conditions set forth herein and in a Warrant Agreement dated as of
_______________, 1997 (the "Warrant Agreement") between the Company
and the Warrant Agent. The Redeemable Warrants are callable by the
Company upon thirty (30) days written notice provided that the bid
price of the Company's Common Stock trades above $3.00 per share for
ninety (90) consecutive trading days.
The Exercise Price, the number of shares purchasable upon exercise of
each Warrant, the number of Warrants outstanding and the Expiration
Date are subject to adjustments upon the occurrence of certain events
set forth in the Warrant Agreement. Reference is hereby made to the
provisions on the reverse side of this Warrant Certificate and the
provisions of the Warrant Agreement, all of which are hereby
incorporated by reference in and made a part of this Warrant
Certificate and which shall for all purposes have the same effect as
though fully set forth at this place.
Upon due presentment for registration for transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in
the aggregate a like number of Warrants, subject to any adjustments
made in accordance with the provisions of the Warrant Agreement shall
be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, upon
payment of the transfer fee and any tax or other governmental charge
imposed in connection with such transfer.
The Warrant Holder of the Warrants evidenced by this Warrant
Certificate may exercise all or any whole number of such Warrants
during the exercise period and in the manner stated hereon. Exercise
of the Warrants is subject to the Company maintaining an effective
registration statement with the Securities and Exchange Commission and
complying with the state securities laws of the residence of the
Warrant Holder. The Exercise Price shall be payable in lawful money
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of the United States of America by certified or cashier's check
payable to the order of the Company. Upon any exercise of any
Warrants evidenced by this Warrant Certificate in an amount less than
the number of Warrants so evidenced there shall be issued to the
Warrant Holder a new Warrant Certificate evidencing the number of
Warrants not so exercised. No adjustment shall be made for any
dividends on any shares issued upon exercise of this Warrant.
No Warrant may be exercised after 5:00 p.m., PST, on the Expiration
Date and any Warrant not exercised by such time shall become void.
This Warrant Certificate shall not be valid unless manually
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and by its Secretary, each by a facsimile
of his signature, and has caused a facsimile of its corporate seal to
be imprinted hereon.
Dated: _____________________________________, 199___.
ROYAL SILVER MINES, INC.
BY: ____________________________
Xxxxxx Xxxxxx, President
BY: ____________________________
Xxxxxx Xxxxxxxxxx, Secretary
Countersigned:
OTC STOCK TRANSFER, INC.
BY: ________________________________
Title: _________________________
