Exhibit 4.2
THIS OPTION AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS OPTION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.
WHITEWING ENVIRONMENTAL CORP.
FORM OF
PLACEMENT AGENT UNITS PURCHASE OPTION
September 30, 2003
This PLACEMENT AGENT UNITS PURCAHSE OPTION (the "Option") of Whitewing
Environmental Corp., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "Company"), is being issued pursuant to a
private offering (the "Offering") of up to 250,000 units ("Units") at an
offering price of $8.00 per Unit, each Unit consisting of one (1) share of the
Company's Series A Convertible Preferred Stock, par value $.001 per share
("Series A Stock") and forty (40) Class A Common Stock Purchase Warrants
("Warrants");
FOR VALUE RECEIVED, the Company hereby certifies that Maxim Group, LLC
("Maxim") and its successors and assigns (the "Holder") is entitled to purchase
from the Company up to _______________ (_________)Units, at a purchase price per
Unit equal to $10.00 (the "Unit Price"), subject to the terms, conditions and
adjustments set forth below in this Option.
1. Vesting of Option. This Option shall vest and become exercisable
immediately upon issuance.
2. Expiration of Option. This Option shall expire on September 30, 2008
(the "Expiration Date").
3. Exercise of Option. This Option shall be exercisable pursuant to the
terms of Section 3 hereof.
3.1 Manner of Exercise. This Option may only be exercised by
the Holder hereof, in accordance with the terms and conditions hereof, in whole
or in part with respect to any portion of the Option, during normal business
hours on any day other than a Saturday or a Sunday or a day on which commercial
banking institutions in New York, New York are authorized by law to be closed (a
"Business Day") on or prior to the Expiration Date with respect to such portion
of the Option, by surrender of this Option to the Company at its office
maintained pursuant to Section 11.2(a) hereof, accompanied by an exercise notice
in substantially the form attached as Exhibit A to this Option (or a reasonable
facsimile thereof) duly executed by the Holder, together with the payment of the
Unit Price. The Option must be
accompanied by payment in full of the Unit Price in cash or by check for the
amount of Units being purchased. The Unit Price may also be paid in full or in
part at the election of the Holder: (i) in the form of Series A Stock owned by
the Holder (based on the Fair Market Value (as defined below) of the shares of
common stock, par value $.001, of the Company (the "Common Stock") into which
such shares of Series A Stock are convertible on the trading day before the
Option is exercised), (ii) in the form of shares of Series A Stock withheld by
the Company from the shares of Series A Stock otherwise to be received upon
exercise of this Option having a Fair Market Value (based on the shares Common
Stock into which such shares of Series A Stock are convertible) on the date of
exercise equal to the Unit Price of the Option, or (iii) by a combination of the
foregoing, provided that the combined value of all cash and cash equivalents and
the Fair Market Value of any shares surrendered to the Company is at least equal
to such Unit Price.
For purposes of this Option, the term "Fair Market Value"
means the closing price of publicly traded shares of the Common Stock on the
principal securities exchange on which shares of Common Stock are listed (if the
shares of Common Stock are so listed), or as determined by the Holder and the
Company in a fair manner.
Alternatively, the Unit Price may be paid through a special
sale and remittance procedure pursuant to which the Holder shall concurrently
provide irrevocable instructions: (i) to a Company-designated brokerage firm to
effect the immediate sale of the purchased shares and to remit to the Company,
out of the sale proceeds available on the settlement date, sufficient funds to
cover the aggregate Unit Price payable for the purchased securities plus all
applicable Federal, state and local income taxes required to be withheld by the
Company by reason of such exercise, if any, and (ii) to the Company to deliver
the certificates for the purchased securities directly to such brokerage firm in
order to complete the sale.
3.2 When Exercise Effective. Each exercise of this Option
shall be deemed to have been effected immediately prior to the close of business
on the Business Day on which this Option shall have been surrendered to the
Company as provided in Section 3.1 hereof, and, at such time, the corporation,
association, partnership, organization, business, individual, government or
political subdivision thereof or a governmental agency (a "Person" or the
"Persons") in whose name or names any certificate or certificates for shares of
Series A Stock and Warrants shall be issuable upon exercise as provided in
Section 3.3 hereof shall be deemed to have become the holder or holders of
record thereof.
3.3 Delivery of Series A Stock Certificates and Warrants. As
soon as practicable after each exercise of this Option, in whole or in part, and
in any event within three (3) Business Days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder hereof or, subject to
Section 10 hereof, as the Holder (upon payment by the Holder of any applicable
transfer taxes) may direct:
(a) a certificate or certificates (with appropriate
restrictive legends, as applicable) for the number of duly authorized, validly
issued, fully paid and nonassessable shares of Series A Stock and Warrants to
which the Holder shall be entitled upon exercise plus, in lieu
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of any fractional share to which the Holder would otherwise be entitled, all
issuances of Series A Stock shall be rounded up to the nearest whole share; and
for the number of Warrants to which the Holder is entitled upon exercise
thereof.
(b) in case exercise is in part only, a new Option of
like tenor, dated the date hereof and calling in the aggregate on the face
thereof for the number of Units on the face of this Option minus the number of
Units designated by the Holder upon exercise as provided in Section 3.1 hereof
(without giving effect to any adjustment thereof).
3.4 Company to Reaffirm Obligations. The Company will, at the
time of each exercise of this Option, upon the written request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to the Holder
all rights (including without limitation any rights to registration of the
shares of Series A Stock issuable or issued upon exercise of this Option and the
Warrants contained therein) to which the Holder shall continue to be entitled
after exercise in accordance with the terms of this Option; provided, however,
that if the Holder shall fail to make a request, the failure shall not affect
the continuing obligation of the Company to afford the rights to such Holder.
4. Adjustment of Series A Stock and Warrants Issuable Upon Exercise.
The number shares of Common Stock into which the shares of Series A Stock are
convertible and which are issuable upon the exercise of the Warrants shall be
subject to be adjusted and re-adjusted from time to time as provided for in,
respectively, the certificate of designations of the Series A Stock and the
Warrant Certificate, each of which is attached as an exhibit to the confidential
private offering memorandum of the Company, dated September 10, 2003 (the
"PPM"), which PPM describes the Offering.
5. Adjustments for Consolidation, Merger, Sale of Assets or
Reorganization. In case the Company after the date hereof: (a) shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
corporation following the consolidation or merger, or (b) shall permit any other
Person to consolidate with or merge into the Company and the Company shall be
the continuing or surviving Person but, in connection with the consolidation or
merger, the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, or (c) shall
transfer all or substantially all of its properties or assets to any other
Person, or (d) shall effect a capital reorganization or reclassification of the
Common Stock, then, and in the case of each such transaction, proper provision
shall be made so that, upon the basis and the terms and in the manner provided
in this Option, the Holder, upon the exercise hereof at any time after the
consummation of the transaction, shall be entitled to receive (at the aggregate
Unit Price in effect at the time of such consummation for all Common Stock and
Warrants issuable upon exercise immediately prior to the consummation), in lieu
of the Series A Stock and Warrants issuable upon exercise prior to the
consummation, the greatest amount of securities, cash or other property to which
the Holder would actually have been entitled as a common stockholder upon such
consummation if the Holder had exercised the rights represented by this Option
and the securities thereunder immediately prior thereto, subject to adjustments
(subsequent to the consummation) as nearly equivalent as possible to the
adjustments provided for in Sections 4 hereof.
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6. No Dilution or Impairment.
6.1 The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, 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 of
the terms and in the taking of all actions necessary or appropriate in order to
protect the rights of the Holder. Without limiting the generality of the
foregoing, the Company: (a) will not permit the par value of any shares of
Series A Stock receivable upon the exercise of this Option (or the shares of
Common Stock thereunder) to exceed the amount payable therefor upon exercise,
(b) will take all actions necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Series A Stock
(or the shares of Common Stock thereunder) on the exercise of the Option and (c)
will not take any action which results in any adjustment of the Unit Price if
the total number of shares of Series A Stock (or the shares of Common Stock
thereunder) issuable after the action upon the exercise of the Option would
exceed the total number of shares of Series A Stock or Common Stock then
authorized by the Company's certificate of incorporation and available for the
purpose of issuance upon exercise.
6.2 The number of shares of Series A Stock issuable upon
exercise of the Option may increase substantially in certain circumstances. The
Company acknowledges that its obligation to issue shares of Series A Stock (or
the shares of Common Stock thereunder) issuable upon exercise of the Option is
binding upon it and enforceable regardless of the dilution that such issuance
may have on the ownership interests of other stockholders.
7. Chief Financial Officer's Report as to Adjustments. In the case of
any adjustment or re-adjustment in the shares of Series A Stock (or the shares
of Common Stock thereunder) issuable upon the exercise of this Option or the
Warrants contained therein, the Company at its expense will promptly compute the
adjustment or re-adjustment in accordance with the terms of this Option and
Warrants and, if requested by the Holder, cause its Chief Financial Officer to
certify the computation (other than any computation of the fair value of
property as determined in good faith by the Board of Directors of the Company)
and prepare a report setting forth the adjustment or re-adjustment and showing
in reasonable detail the method of calculation thereof and the facts upon which
the adjustment or re-adjustment is based, including a statement of: (a) the
number of shares of Series A Stock and Common Stock outstanding or deemed to be
outstanding and (b) the Unit Price in effect immediately prior to the deemed
issuance or sale and as adjusted and re-adjusted (if required by Section 4
hereof) on account thereof and the number of shares issuable upon exercise of
the Option. The Company will forthwith mail a copy of each report to the Holder
and will, upon the written request at any time of the Holder, furnish to the
Holder a like report setting forth the Unit Price at the time in effect and the
number of shares issuable upon exercise of the Option and showing in reasonable
detail how it was calculated. The Company will also keep copies of all reports
at its office maintained pursuant to Section 11.2(a) hereof and will cause them
to be available for inspection at the office during normal business hours upon
reasonable notice by the Holder or any prospective purchaser of the Option
designated by the Holder thereof.
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8. Reservation of Shares. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Series A Stock and
Common Stock, free from all taxes, liens and charges with respect to the issue
thereof and not be subject to preemptive rights or other similar rights of
stockholders of the Company, solely for the purpose of effecting the exercise of
the Option and Warrants contained therein (and the conversion of the Series A
Stock contained therein), such number of its shares of Common Stock as shall
from time to time be sufficient to effect the exercise of the Option, and if at
any time the number of authorized but unissued shares of Common Stock shall not
be sufficient to effect the exercise of the Option and Warrants contained
therein, in addition to such other remedies as shall be available to Holder, the
Company will take such corporate action as may, in the opinion of its counsel,
be necessary to increase the number of authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purposes,
including without limitation, using its best efforts to obtain the requisite
stockholder approval necessary to increase the number of authorized shares of
the Company's Common Stock. All shares of Series A Stock (or the shares of
Common Stock thereunder) issuable upon exercise of the Option and Warrants shall
be duly authorized and, when issued upon exercise, shall be validly issued and,
in the case of shares, fully paid and nonassessable.
9. Registration and Listing.
9.1 The Company shall file a registration statement with the
Securities and Exchange Commission (the "SEC") as soon as reasonably practicable
following the conclusion of the Offering covering the resale of the shares of
Common Stock issuable upon the conversion of the Series A Stock and the exercise
of the Warrants issuable upon the exercise of this Option. In addition, the
Company shall use reasonable efforts to have such registration statement
declared effective by the Commission by no later than March 31, 2004 (the
"Target Effective Date"), and to maintain the effectiveness of such registration
statement until the third (3rd) anniversary of the closing of this Offering. In
the event that the Company fails to have the Commission declare such
registration statement effective by the Target Effective Date, then the dividend
rate on the shares of Series A Stock receivable upon the exercise of this Option
shall increase by 2% for each whole calendar month during which such
registration statement is not declared effective by the SEC; provided however,
that in no event shall the dividend rate exceed 20%. Upon the effectiveness of
such registration statement, the dividend rate shall re-adjust to 11%. In
addition to the foregoing, the Company furthermore grants to the Holder any
additional "piggyback" or other registration rights granted to the investors in
the Offering.
9.2 The Company shall secure the listing of the Common Stock
underlying the Units upon each national securities exchange or automated
quotation system upon which shares of Common Stock are then listed (subject to
official notice of issuance) and shall maintain such listing of shares of Common
Stock issued under the terms of the Option. The Company shall at all times
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association of Securities
Dealers, Inc. and the NASDAQ SmallCap Market (or such other national securities
exchange or market on which the Common Stock may then be listed, as applicable).
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9.3 The Company will prepare and file with the SEC such
amendments and supplements to the registration statement (and the prospectus
contained therein) referred to in Section 9.1 above as may be necessary to keep
such registration statement effective until the sale of the securities
registered thereunder, and shall comply with the provisions of the Securities
Act of 1933, as amended (the "Act") with respect to the disposition of all
securities owned by the Holder that are covered by such registration statement
during such period in accordance with the intended methods of disposition by the
Holder. The Company at its own expense will furnish to the Holder such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as the Holder may request in
order to facilitate the disposition of the shares owned by the Holder.
9.4 The Company shall pay all expenses relating to the
registration and listing obligations set forth in this Section 9.
10. Restrictions on Transfer.
10.1 Restrictive Legends. This Option and each Option issued
upon transfer or in substitution for this Option pursuant to Section 11, each
certificate for Common Stock issued upon the exercise of the Option and each
certificate issued upon the transfer of any such Common Stock shall be
transferable only upon satisfaction of the conditions specified in this Section
10 and Section 11.4. Each of the foregoing securities shall be stamped or
otherwise imprinted with a legend reflecting the restrictions on transfer set
forth in Section 10 and Section 11.4 hereof and any restrictions required under
the Act.
10.2 Notice of Proposed Transfer; Opinion of Counsel. Prior to
any transfer of any securities which are not registered under an effective
registration statement under the Act ("Restricted Securities"), the Holder will
give written notice to the Company of the Holder's intention to affect a
transfer and to comply in all other respects with this Section 10.2. Each notice
(a) shall describe the manner and circumstances of the proposed transfer, and
(b) shall designate counsel for the Holder giving the notice (who may be
in-house counsel for the Holder). The Holder giving notice will submit a copy
thereof to the counsel designated in the notice. The following provisions shall
then apply:
(i) If in the opinion of counsel for the Holder
reasonably satisfactory to the Company the proposed transfer may be effected
without registration of Restricted Securities under the Act (which opinion shall
state the basis of the legal conclusions reached therein), the Holder shall
thereupon be entitled to transfer the Restricted Securities in accordance with
the terms of the notice delivered by the Holder to the Company. Each certificate
representing the Restricted Securities issued upon or in connection with any
transfer shall bear the restrictive legends required by Section 10.1 hereof.
(ii) If the opinion called for in (i) above is not
delivered, the Holder shall not be entitled to transfer the Restricted
Securities until either (x) receipt by the Company of a further notice from such
Holder pursuant to the foregoing provisions of this Section 10.2 and fulfillment
of the provisions of clause (i) above, or (y) such Restricted Securities have
been effectively registered under the Act.
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Notwithstanding any other provision of this Section
10, no opinion of counsel shall be necessary for a transfer of Restricted
Securities by the holder thereof to any Person employed by or owning equity in
the Holder, if the transferee agrees in writing to be subject to the terms
hereof to the same extent as if the transferee were the original purchaser
hereof and such transfer is permitted under applicable securities laws.
10.3 Termination of Restrictions. The restrictions imposed by
this Section 10 upon the transferability of Restricted Securities shall cease
and terminate as to any particular Restricted Securities: (a) which Restricted
Securities shall have been effectively registered under the Act, or (b) when, in
the opinions of both counsel for the holder thereof and counsel for the Company,
such restrictions are no longer required in order to insure compliance with the
Act or Section 11 hereof. Whenever such restrictions shall cease and terminate
as to any Restricted Securities, the Holder thereof shall be entitled to receive
from the Company, without expense (other than applicable transfer taxes, if
any), new securities of like tenor not bearing the applicable legends required
by Section 10.1 hereof.
11. Ownership, Transfer and Substitution of Option.
11.1 Ownership of Option. The Company may treat the person in
whose name this Option is registered to in the Option Register maintained
pursuant to Section 11.2(a) hereof as the owner and holder thereof for all
purposes, notwithstanding any notice to the contrary, except that, if and when
any Option is properly assigned in blank, the Company may (but shall not be
obligated to) treat the bearer thereof as the owner of such Option for all
purposes, notwithstanding any notice to the contrary. Subject to Section 10
hereof, this Option, if properly assigned, may be exercised by a new holder
without a new Option first having been issued.
11.2 Office; Exchange of Option.
(a) The Company will maintain its principal office as
described in the PPM or such other offices as the Company notifies the holders
of the Option.
(b) The Company shall cause to be kept at its office
maintained pursuant to Section 11.2(a) hereof an Option Register for the
registration and transfer of the Option. The names and addresses of the holder
of the Option, the transfers thereof and the names and addresses of transferees
of the Option shall be registered in such Option Register. The Person in whose
name the Option shall be so registered shall be deemed and treated as the owner
and holder thereof for all purposes of this Option, and the Company shall not be
affected by any notice or knowledge to the contrary.
(c) Upon the surrender of this Option, properly
endorsed, for registration of transfer or for exchange at the office of the
Company maintained pursuant to Section 11.2(a) hereof, the Company at its
expense will (subject to compliance with Section 10 hereof, if applicable)
execute and deliver to or upon the order of the Holder thereof a new Option
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of like tenor, in the name of such holder or as such holder (upon payment by
such holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face thereof for the number of Units called for on the face of
the Option so surrendered.
11.3 Replacement of Option. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Option and, in the case of any such loss, theft or destruction
of the Option, upon delivery of indemnity reasonably satisfactory to the Company
in form and amount or, in the case of any mutilation, upon surrender of the
Option for cancellation at the office of the Company maintained pursuant to
Section 11.2(a) hereof, the Company at its expense will execute and deliver, in
lieu thereof, a new Option of like tenor and dated the date hereof.
12. No Rights or Liabilities as Stockholder. No Holder shall be
entitled to vote or receive dividends or be deemed the holder of any shares of
Series A Stock or Common Stock or any other securities of the Company which may
at any time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issuance of stock, reclassification of stock, change
of par value, consolidation, merger, conveyance, or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until the Option shall have been exercised and the shares of Common Stock
purchasable upon t1he exercise hereof shall have become deliverable, as provided
herein. The Holder will not be entitled to share in the assets of the Company in
the event of a liquidation, dissolution or the winding up of the Company.
13. Notices. Any notice or other communication in connection with this
Option shall be deemed to be given if in writing (or in the form of a facsimile)
addressed as hereinafter provided and actually delivered at said address: (a) if
to any Holder, at the registered address of such holder as set forth in the
Option Register kept at the office of the Company maintained pursuant to Section
11.2(a) hereof, or (b) if to the Company, to the attention of its Chief
Financial Officer at its office maintained pursuant to Section 11.2(a) hereof;
provided, however, that the exercise of the Option shall be effective in the
manner provided in Section 3 hereof.
14. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of shares of Common Stock underlying this Option
upon exercise of this Option; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the registration of any certificate for shares of Common Stock underlying
this Option in a name other that of the Holder. The Holder is responsible for
all other tax liability that may arise as a result of holding or transferring
this Option or receiving shares of Common Stock underlying this Option upon
exercise hereof.
15. Miscellaneous. This Option 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 the change, waiver, discharge or termination
is sought. This Option shall be construed and enforced in accordance with and
governed by the laws of the State of New York. The section headings in this
Option are for purposes of convenience only and shall not constitute a part
hereof.
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IN WITNESS WHEREOF, the Company has caused this Placement Agent Units
Purchase Option to be duly executed as of the date first above written.
WHITEWING ENVIRONMENTAL CORP.
By: ______________________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: Executive Vice President and Secretary
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EXHIBIT A
FORM OF EXERCISE NOTICE
[To be executed only upon conversion of Option]
To WHITEWING ENVIRONMENTAL CORP.:
The undersigned registered holder of the within Option hereby
irrevocably exercises the Option pursuant to Section 3.1 of the Option with
respect to __________(1) Units, at an exercise price per Unit of $____, which
the holder would be entitled to receive upon the cash exercise hereof, and
requests that the certificates for the shares and Warrants be issued in the name
of, and delivered to, whose address is:
Dated: _______________
---------------------------------------------------
Print or Type Name
---------------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of Option)
---------------------------------------------------
(Street Address)
---------------------------------------------------
(City) (State) (Zip Code)
-----------------------
(1) Insert here the number Units on the face of this Option (or, in the case of
a partial exercise, the portion thereof as to which this Option is being
exercised), in either case without making any adjustment of shares of Common
Stock or any other stock or other securities or property or cash which, pursuant
to the adjustment provisions of this Option, may be delivered upon exercise. In
the case of a partial exercise, a new Option will be issued and delivered,
representing the unconverted portion of the Option, to the holder surrendering
the Option.
EXHIBIT B
FORM OF ASSIGNMENT
[To be executed only upon transfer of Option]
For value received, the undersigned registered holder of the within
Option hereby sells, assigns and transfers unto _____________________ the right
represented by the Option to purchase __________(1) Units of WHITEWING
ENVIRONMENTAL CORP. to which the Option relates, and appoints
_____________________ Attorney to make such transfer on the books of WHITEWING
ENVIRONMENTAL CORP. maintained for the purpose, with full power of substitution
in the premises.
Dated: ________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Option)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
----------------------------------------
(Signature of Transferee)
----------------------------------------
(Street Address)
----------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
-----------------------
(1) Insert here the number Units on the face of this Option (or, in the case of
a partial exercise, the portion thereof as to which this Option is being
exercised), in either case without making any adjustment of shares of Common
Stock or any other stock or other securities or property or cash which, pursuant
to the adjustment provisions of this Option, may be delivered upon exercise. In
the case of a partial exercise, a new Option will be issued and delivered,
representing the unconverted portion of the Option, to the holder surrendering
the Option.