<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION ON DECEMBER 29, 1999
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CLEARWORKS.NET, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 76-0576542
- --------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2450 FONDREN, SUITE 200, HOUSTON, TEXAS 77063
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
CLEARWORKS.NET, INC.
1999 LONG-TERM INCENTIVE PLAN
AND
1998 STOCK WARRANT PLAN
- --------------------------------------------------------------------------------
(Full titles of the plans)
Michael T. McClere, Chief Executive Officer
ClearWorks.net, Inc.
2450 Fondren, Suite 200
Houston, Texas 77063
- --------------------------------------------------------------------------------
(Name and address of agent for service)
(713) 334-2595
- --------------------------------------------------------------------------------
(Telephone number, including area code, of agent for service)
Copy to:
Alan L. Talesnick, Esq.
Patton Boggs LLP
1660 Lincoln Street, Suite 1900
Denver, Colorado 80264
(303) 830-1776
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Title Of Securities To Amount To Be Proposed Proposed Amount Of
Be Registered Maximum Maximum Registration Fee
Offering Price Aggregate
Registered (1) Per Unit Offering Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 10,000,000 shares (2) $2.5156 $25,156,000 (3) 6,700
$.001 par value
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par 1,000,000 shares (4) $3.00 $3,000,000 792
value, underlying Class
A Warrants
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par 1,000,000 shares (5) $6.00 $6,000,000 1,584
value, underling Class B
Warrants
============================================================================================================================
</TABLE>
(1) Pursuant to Rule 416(c) under the Securities Act of 1933, this registration
statement also covers an indeterminate amount of interests to be offered or
sold pursuant to the 1999 Long-Term Incentive Plan (the "Incentive Plan").
(2) Consists of 10,000,000 shares, in whole or in part, of authorized and
unissued shares or treasury shares pursuant to our Incentive Plan.
(3) The Proposed Maximum Aggregate Offering Price was calculated using the
exercise price of the options and warrants previously granted for the
shares underlying such options, and, pursuant to Rule 457(h), using the
average of the high and low reported sales prices of the Company's common
stock on the OTC Bulletin Board on December 28, 1999, which is within five
business days of the date of filing (December 29, 1999) of this
registration statement, for shares for which the exercise price is unknown
because options or warrants representing those shares have not yet been
granted.
(4) Consists of 1,000,000 shares underlying Class A Warrants issuable pursuant
to our 1998 Stock Warrant Plan (the "Stock Warrant Plan").
(5) Consists of 1,000,000 shares underlying Class B Warrants issuable pursuant
to our Stock Warrant Plan.
2
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
This registration statement relates to two separate prospectuses.
Items 1 and 2 hereof, and the documents incorporated herein by
reference pursuant to Part II, Item 3 hereof, constitutes the first prospectus
relating to offers by our employees and consultants of 10,000,000 shares of
common stock to be issued pursuant to our Incentive Plan and of 2,000,000 shares
of common stock to be issued pursuant to our Stock Warrant Plan. Pursuant to the
requirements of Form S-8 and Rule 428, the information specified in Part I of
Form S-8 will be sent or given to Plan participants as specified by Rule
428(b)(1). The second prospectus, referred to as the re-offer prospectus,
relates to the re-offer or resale of any shares which are deemed to be "control
securities" or "restricted securities" under the Securities Act of 1933, as
amended.
3
<PAGE>
REOFFER PROSPECTUS
CLEARWORKS.NET, INC.
12,000,000 SHARES OF COMMON STOCK
This prospectus relates to the transfer of up to 12,000,000 shares
of common stock of ClearWorks.net, Inc. by the selling stockholders
identified in this prospectus. The shares have been, or will be, acquired by
the selling stockholders through awards granted under and upon the exercise
of options and warrants granted under our 1999 Long-Term Incentive Plan and
1998 Stock Warrant Plan. We will not receive any of the proceeds from the
sale of the shares by the selling stockholders. However, we will receive
proceeds from the exercise of options and warrants to purchase shares of
common stock that may be granted under the Plans.
The selling stockholders have not entered into any underwriting
arrangements. The prices for the common stock may be the market prices
prevailing at the time of transfer, prices related to the prevailing market
prices, or negotiated prices. Brokerage fees or commissions may be paid by
the selling stockholders in connection with sales of our shares. We will not
receive any of the proceeds from the sale of the shares.
OUR COMMON STOCK IS TRADED ON THE OTC BULLETIN BOARD UNDER THE
SYMBOL "CLWK". ON DECEMBER 28, 1999, THE CLOSING PRICE OF THE COMMON STOCK
WAS $2.3125 PER SHARE.
INVESTING IN OUR SHARES INVOLVES CERTAIN RISKS. SEE THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is December 29, 1999
<PAGE>
----------------------------------------
TABLE OF CONTENTS
----------------------------------------
PROSPECTUS SUMMARY............................................................3
RISK FACTORS..................................................................4
THE COMPANY...................................................................6
SELLING STOCKHOLDERS..........................................................8
PLAN OF DISTRIBUTION..........................................................9
LEGAL MATTERS.................................................................9
EXPERTS.......................................................................9
INDEMNIFICATION..............................................................10
WHERE YOU CAN FIND MOREINFORMATION...........................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................11
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS INFORMATION CONTAINED IN THIS
PROSPECTUS. IT MAY NOT BE COMPLETE AND MAY NOT CONTAIN ALL THE INFORMATION THAT
YOU SHOULD CONSIDER BEFORE INVESTING IN THE COMMON STOCK. YOU SHOULD READ THIS
ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK FACTORS" SECTION.
THE COMPANY We provide voice, data and video services
for both commercial and residential
customers. We also provide structured
wiring and computer hardware and software
integration services to residential,
commercial and education customers. We
operate and provide our services in
Houston, Texas and San Antonio, Texas and
have a small office in Las Vegas, Nevada.
THE OFFERING The selling stockholders may sell a total
of 12,000,000 shares of common stock. The
shares have been or will be acquired by the
selling stockholders pursuant to our 1999
Long-Term Incentive Plan and 1998 Stock
Warrant Plan.
The shares may be sold at market prices or
other negotiated prices. The selling
stockholders have not entered into any
underwriting arrangements for the sale of
the shares.
WE WILL NOT RECEIVE ANY PROCEEDS FROM THE
SALE OF COMMON STOCK BY THE SELLING
STOCKHOLDERS. HOWEVER, WE WILL RECEIVE
PROCEEDS FROM THE EXERCISE OF OPTIONS AND
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
GRANTED UNDER THE PLANS.
COMPANY OFFICES Our offices are located at 2450 Fondren,
Suite 200, Houston, Texas 77063, telephone
number (713) 334-2595.
3
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE
OTHER INFORMATION HEREIN, THE FOLLOWING FACTORS THAT AFFECT US.
WE HAVE HAD OPERATING LOSSES IN THE PAST.
We had net losses of $252,316 for the fiscal year ended December 31,
1998 and of $757,000 for the nine-month period ended September 30, 1999.
Although we did have net earnings of $8,338 for the fiscal year ended
December 31, 1997, there is no assurance that our future operations will
again be profitable.
WE DEPEND ON KEY EMPLOYEES.
We are highly dependent on the services of Michael T. McClere, our
Chairman of the Board and Chief Executive Officer, and Shannon D. McLeroy,
our President and Secretary. The loss of either or both of Mr. McClere or Mr.
McLeroy could hurt our business. We do not carry "key man" life insurance on
Mr. McClere or Mr. McLeroy, and there is no guarantee that we could replace
either at an affordable compensation level.
WE MAY NEED ADDITIONAL CAPITAL.
We have incurred capital expenditures for construction of operating
facilities, equipment and office furniture used in our operations and
leasehold improvements for our executive offices. Capital expenditures during
the year ended December 31, 1998, totaled $210,000 and for the nine months
ended September 30, 1999, totaled $1,871,000. We estimate that we will need
approximately $3,000,000 over the next twelve months to construct
communications facilities in order to deliver our Bundled Digital Services sm
to our customers. On December 13, 1999, we closed a $5,000,000 private
placement agreement which will provide the capital over the next twelve
months to provide construction of communication facilities.
HISTORICALLY, WE DEPENDED ON JUST A FEW MAJOR CUSTOMERS.
Although we have many customers, including oil and gas companies,
real estate developers, home builders, multiple unit developers, and
individuals, each of Enron Corp. and Exxon Chemical Americas represented more
than ten percent of our revenues last year. Specifically, for the year ended
December 31, 1998, Enron Corp. accounted for 20.36% of our revenues and Exxon
Chemical Americas accounted for 10.35% of our revenues. However, it is
currently anticipated that neither of these companies will represent 10% or
more of our revenues for 1999.
WE DEPEND ON THE AVAILABILITY OF SKILLED LABOR.
The Company is growing rapidly, and we believe that our future
success will depend to a significant extent upon our ability to attract,
train and retain skilled technical, management, sales, marketing and
consulting personnel. Competition for skilled personnel is intense, and if we
fail to attract or retain such personnel our business could suffer.
4
<PAGE>
WE FACE STRONG COMPETITION.
Our Bundled Digital Services-SM- business is in intense competition
with many cable, telephone and Internet companies, and such competition is
expected to increase. Our ability to compete depends upon many factors, some
of which are beyond our control, including the timing of introduction of new
products and enhancements to existing products that we and our competitors
have developed, customer service and support, sales and marketing efforts,
and the performance, price and reliability of the Company's products.
Our competition includes Internet service providers,
telecommunications companies and cable television companies that have longer
operating histories, longer customer relationships, and substantially greater
financial, management, technical development, sales, marketing, and other
resources. We currently represent less than 1% of the domestic cable,
telecommunications, and Internet market.
We believe that our strengths in attracting customers include:
referrals from existing customers; our sales and marketing efforts, including
establishment of strategic relationships within the residential and
commercial real estate markets; customer service; and the overall
cost-effectiveness of our products. We believe that these strengths will
assist our efforts to attract a share of the ever-increasing market of
customers who are requiring that their telephone, video and Internet services
be provided by a single company. However, this trend also could cause greater
competition, resulting in increased pricing pressures which could negatively
affect our business, results of operations and financial condition.
NEW GOVERNMENT REGULATION COULD INCREASE OUR COSTS.
Our telecommunication and cable services are regulated by the
federal, state and local governments. We are generally required to obtain
regulatory approvals in connection with providing telephone and cable
television services. For example, the cable and satellite television industry
is regulated by the Congress and the Federal Communications Commission (the
"FCC"), and various legislative and regulatory proposals under consideration
from time to time may substantially affect the Company's business.
There is no guarantee that new laws or regulations will not affect
our products or that appropriate regulatory approvals will continue to be
obtained.
WE ARE GROWING RAPIDLY AND INTEND TO CONTINUE THAT GROWTH.
Because of the Company's small size, we desire to continue to grow
rapidly in order to achieve certain economies of scale. Although there is no
assurance that this rapid growth will occur, to the extent that it does occur
it will place a significant strain on the Company's financial, technical,
operational and administrative resources. If we fail to continue to upgrade
our technical, administrative, operating and financial control systems, or if
unexpected difficulties occur, the Company's business, financial condition
and results of operations could be negatively affected.
5
<PAGE>
WE MAY HAVE POTENTIAL CONFLICTS OF INTEREST WITH OUR OFFICERS AND DIRECTORS.
Potential conflicts of interest may arise between us and our
officers and directors. Each officer and director may engage in other
business activities in addition to the individual's involvement with us. As a
result, conflicts of interest may arise in the area of corporate
opportunities or the area of conflicting time commitments. Conflicts of
interest also may develop with respect to contractual relationships that we
may enter into with our officers and directors.
THE COMPANY
We provide voice, data and video services for commercial,
educational and residential customers. We operate and provide services in
Houston, Texas, San Antonio, Texas and have a small office in Las Vegas,
Nevada.
Our vision is to become an industry leader in integrated voice, data
and video solutions. We are pursuing this vision by integrating technology
and technology based companies into our organization focused on the delivery
of a suite of digital services to our clients. We are taking advantage of the
convergence of telephone, cable TV, satellite TV, telecommunications and
Internet technology to accomplish our objectives. Additionally, we intend to
take advantage of the deregulation of the telecommunications industry based
on the passage by the US Congress of the Telecommunications Act of 1996.
We initially began developing our voice, data and video integration
capabilities to address business needs. During our early operations, we
recognized an opportunity to utilize our expertise to develop and deliver
Bundled Digital Services-SM- to residential customers directly. We have
developed a proprietary solution to deliver a digital services package
directly to consumers. Through research and development (R&D), we possess
technology that can utilize a high speed Internet connection for the delivery
of all services. We currently provide a wide array of digital solutions to
our commercial customers and began deploying our technology to residential
customers during the third quarter of 1999.
On April 27, 1998, Southeast Tire Recycling, Inc., ("Southeast"), a
publicly traded Florida corporation with no ongoing operations that
previously had been engaged in the tire recycling business, purchased the
stock of Millennium Integration Technologies, L.L.C, ("Millennium"). As a
result, Millennium became a wholly owned subsidiary of Southeast. The
exchange of shares between Millennium and Southeast was accounted for as a
recapitalization of the Millennium operations into the corporate shell of
Southeast. At the time of this transaction, Southeast was an empty corporate
shell. On May 12, 1998, Southeast merged with and into the Company.
On May 12, 1998, Southeast merged with and into ClearWorks
Technologies, Inc. (the "Company"), a Delaware corporation with no
stockholders, and the stockholders of Southeast became stockholders of
ClearWorks. The exchange of shares between Southeast and the Company was
accounted for as a second recapitalization of the Millennium operations into
the corporate shell of the Company.
We then proceeded to expand our high tech business by acquiring
InfraResources, L.L.C.
6
<PAGE>
("InfraResources") through our wholly owned subsidiary, Millennium, on May
26, 1998. We paid $40,000 cash and 80,000 shares of our restricted common
stock in exchange for all the outstanding interests of InfraResources. The
value recorded on the Company's books for the restricted common stock issued
by the Company was determined by the Company's management to be $2.06 per
share. The funding for this acquisition was derived from the Company's
revenues. InfraResources is a provider of high-end consulting services with
respect to integrated solutions for client/server based computing.
On May 29, 1998, we acquired all the outstanding shares of Team
Renaissance, Inc. ("TeamLink") in exchange for 156,250 shares of the
Company's restricted common stock. TeamLink is a provider of network
computing solutions that specializes in delivering systems integration
services, design services, and structured wiring solutions. The value
recorded on the Company's books for the restricted common stock issued by the
Company was determined by the Company's management to be $2.06 per share.
On November 19, 1998, we purchased all the assets of Vidatel
Communications ("Vidatel"), a sole proprietorship owned by Juan "John" Diaz,
which is engaged in the business of laying fiber optic and copper based
cable. The Company issued Mr. Diaz 98,039 shares of its restricted common
stock as consideration for the Vidatel assets. The value recorded on the
Company's books for the restricted common stock issued by the Company was
determined by the Company's management to be $1.53 per share. The Company
incurred no liabilities in this transaction other than assuming a note
payable to Planet Ford bearing interest at 13.46%, due $513.33 monthly until
September 2002, in the principal amount of $18,078.
On May 14, 1999, we acquired all the membership interests of
Archer-Mickelson Technologies, L.L.C. ("Archer"), and Archer became a wholly
owned subsidiary of the Company. Archer provides the integration services
described above in the description of the business of the Company. As
consideration for the purchase of Archer, we paid $50,000 and 75,000
restricted shares of its common stock. In addition, the Company agreed to pay
certain note obligations of Archer in the amount of $5,547. The value
recorded on the Company's books for the restricted common stock issued by the
Company was determined by the Company's management to be $1.00 per share. The
funding for this acquisition was derived from the Company's revenues. On June
3, 1999, Archer reorganized itself into ClearWorks Integration Services,
Inc., a Texas corporation.
On or about April 27, 1999, the Company began using the name
ClearWorks.net, Inc. By that time, ClearWorks had three wholly owned
subsidiaries:
(1) ClearWorks Integration Services, Inc. (formerly Archer-Mickelson
Technologies, L.L.C).
(2) ClearWorks Structured Wiring, Inc. (formerly Millennium
Integration Technologies, Inc.), and
(3) ClearWorks Communications, Inc. (which has two wholly owned
subsidiaries called Northpointe Telecom Services, L.L.C. and Stonegate
Telecom, L.L.C.).
The primary reason for the use of the new name, which refers to the
Internet, is that we utilize Internet Protocol technology in providing
Bundled Digital Services-SM- to our customers. Our activities also relate to the
Internet because our use of high-speed fiber optics cable is anticipated to
aid in
7
<PAGE>
reducing Internet bottlenecks.
SELLING STOCKHOLDERS
There is an aggregate of 10,000,000 shares of common stock reserved
for issuance pursuant to awards and upon the exercise of options granted
under the Incentive Plan (the "Shares") and an aggregate of 2,000,000 shares
of common stock reserved for issuance upon the exercise of warrants granted
under the Stock Warrant Plan (the "Warrants"). The Shares and the Warrants
are covered by the registration statement on Form S-8, of which this
prospectus is a part, which we filed with the SEC.
The 12,000,000 shares of common stock, the resales of which are
covered by this prospectus, consist of shares that have been or may be
acquired by certain option and warrant holders through grants under the
Incentive Plan and the Warrant Plan.
The following table sets forth the name and position of each
prospective selling stockholder; the number of shares of our shares owned as
of the date of this prospectus, including shares which may be acquired
pursuant to the exercise of outstanding options and warrants; and the number
of shares and the percentage owned assuming the sale of all the shares
covered by this prospectus.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
AFTER OFFERING
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NUMBER OF SHARES NUMBER OF SHARES
OWNED PRIOR TO COVERED BY NUMBER OF
NAME POSITION OFFERING PROSPECTUS SHARES PERCENT
- -----------------------------------------------------------------------------------------------------------------------------
Shannon D. McLeroy President and Secretary 1,775,000 1,100,000(1) 2,875,000 9.1
- -----------------------------------------------------------------------------------------------------------------------------
Michael T. McClere Chief Executive Officer,
Chairman Of The Board,
and Director 4,053,699(4) 1,852,000(2) 5,905,699 18.8
- -----------------------------------------------------------------------------------------------------------------------------
Tech Technologies Services LLC None 1,980,000(4) 480,000(3) 2,380,000 7.6
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
--------------------
(1) Includes immediately exercisable Class A warrants to purchase 300,000
shares of our common stock at an exercise price of $3.00 per share
until the warrants expire on April 24, 2003. Also includes immediately
exercisable Class B warrants to purchase 300,000 shares of our common
stock at an exercise price of $6.00 per share until the warrants
expire on April 24, 2008. Also includes immediately exercisable stock
options to purchase 500,000 shares of common stock at an exercise
price of $2.00 per share until they expire on December 9, 2004.
(2) Includes Class A warrants to purchase 210,000 shares of our common
stock held by Mr. McClere and Class A warrants to purchase 250,000
shares of our common stock held by the Rachel McClere 1998 Trust and
the McClere Family Trust. The Class A warrants are immediately
exercisable at an exercise price of $3.00 per share until the warrants
expire on April 24, 2003. Also includes Class B warrants to purchase
210,000 shares of our common stock held by Mr. McClere and Class B
warrants to purchase 250,000 shares of our common stock held by the
Rachel McClere 1998 Trust and the McClere Family
8
<PAGE>
Trust. The Class B warrants are immediately exercisable at an exercise
price of $6.00 per share until the warrants expire on April 24, 2008.
Also includes immediately exercisable stock options to purchase
500,000 shares of common stock at an exercise price of $2.00 per share
until they expire on December 9, 2004.
(3) Includes immediately exercisable Class A warrants to purchase 240,000
shares of our common stock at an exercise price of $3.00 per share
until the warrants expire on April 24, 2003. Also includes immediately
exercisable Class B warrants to purchase 240,000 shares of our common
stock at an exercise price of $6.00 per share until the warrants
expire on April 24, 2008.
(4) This figure includes 1,980,000 shares. Michael T. McClere, Chief
Executive Officer and Chairman of the Board of the Company, owns 90
percent of Tech Technologies Services LLC equity shares. These shares
are included twice in the table. They are listed as being held
beneficially by both Mr. Michael T. McClere and Tech Technologies
Services LLC.
PLAN OF DISTRIBUTION
The 12,000,000 shares covered by this prospectus will be offered, if
at all, by our stockholders, and not by us. At the present time, the Company
has agreed to issue only 2,000,000 warrants, and the shares underlying the
warrants to be issued only upon exercise of the warrants. If any of these
shares are sold by a prospective selling stockholder, they will be sold on
behalf of that person and it is anticipated that the shares may be offered
pursuant to direct sales to private persons and in open market transactions.
The prospective selling stockholders may offer the shares to or through
registered broker-dealers who will be paid standard commissions or discounts
by the prospective selling stockholders. The prospective selling stockholders
have not informed us of agreements with brokers to sell any or all of the
shares which may be offered hereby.
Of the 12,000,000 shares which may be offered pursuant to this
prospectus, 2,000,000 underlie warrants that currently are outstanding.
Currently, there are 1,635,000 options issued and outstanding and 1,528,875
are currently exercisable. The Company has not issued any other shares, or
any options or warrants covering shares, which may be offered pursuant to
this prospectus. If the warrants to acquire all 2,000,000 shares are
exercised, we will receive proceeds of $9,000,000, which proceeds will be
added to our working capital. The Company does not know whether any of the
warrants will be exercised.
LEGAL MATTERS
Patton Boggs LLP, Denver, Colorado, has acted as our counsel in
connection with this offering and has rendered an opinion concerning the
validity of our shares offered by this prospectus.
EXPERTS
The audited financial statements of ClearWorks.net, Inc. appearing
in our Form 10-SB/A-3 have been examined by McManus & Co., P.C., independent
public certified accountants. These financial statements are incorporated
into this prospectus by reference in reliance upon the report of the
accountants included with the financial statements and upon the authority of
the accountants as experts in auditing and accounting.
9
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
POSITION ON CERTAIN INDEMNIFICATION
Pursuant to Delaware law, the Board of Directors has the power to
indemnify officers and directors, present and former, for expenses incurred by
them in connection with any proceeding they are involved in by reason of their
being or having been an officer or director. The person being indemnified must
have acted in good faith and in a manner he or she reasonably believed to be in
or not opposed to our best interests. Our Certificate of Incorporation and
Bylaws grant this indemnification to our officers and directors.
In addition to the general indemnification section, we have adopted a
provision under Delaware law that eliminates and limits certain personal
liability of a director for monetary damages for breaches of the director's
fiduciary duty of care under certain circumstances.
Insofar as indemnification for liability arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, we have been informed that, in the opinion
of the SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus constitutes a part of a registration statement on Form
S-8 we filed with the SEC under the Securities Act. This prospectus does not
contain all the information set forth in the registration statement and exhibits
thereto, and statements included in this prospectus as to the content of any
contract or other document referred to are not necessarily complete. For further
information, please review the registration statement and the exhibits and
schedules filed with the registration statement.
In each instance where a statement contained in this prospectus regards
the contents of any contract or other document filed as an exhibit to the
registration statement, you shall review the copy of that contract or other
document filed as an exhibit to the registration statement for complete
information. Those statements are furnished in all respects by this reference.
The Company is subject to the informational requirements of the
Exchange Act; and files reports, proxy statements and other information with the
SEC in accordance with the Exchange Act. These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, Room
1024 and at the following Regional Offices of the SEC: 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, New York,
New York 10048. Copies of such material also can be obtained at prescribed rates
by writing to the SEC, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. In addition, this material may also be inspected and
copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005. In addition, these materials filed electronically by the
Company with the SEC are available at the SEC's World Wide Web site at
http://www.sec.gov. The SEC's World Wide Web site contains reports, proxy and
information statements, and other information regarding issuers that file
electronically with the SEC. Information about the operation of the SEC's public
reference facilities may be obtained by calling the SEC at 1-800-SEC-0330.
10
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means: incorporated documents are considered part of this
prospectus; we can disclose important information to you by referring to those
documents; and information we file with the Securities And Exchange Commission
will automatically update and supersede this incorporated information.
We incorporate by reference the documents listed below, which were
filed with the SEC under the Exchange Act:
- Our Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999;
- The description of our common stock contained in our registration
statement on Form 10-SB/A-3 as filed with the SEC on October 20,
1999; and
- Any reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this prospectus and prior
to the termination of the offering made under this prospectus.
We will provide without charge to each person to whom a copy of this
prospectus has been delivered, upon request, a copy of any or all of the
documents referred to above that have been or may be incorporated in this
prospectus by reference. Requests for such copies should be directed to Glenn
Gagnon, 2450 Fondren, Suite 200, Houston, Texas 77063, (713) 334-2595.
11
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) and (b) below are incorporated by
reference in the registration statement. All documents subsequently filed by
the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in the registration statement and to be part
thereof from the date of the filing of such documents.
(a) Our Quarterly Report on Form 10-QSB for the quarter ended
September 30, 1999;
(b) The description of our common stock contained in our registration
statement on Form 10-SB/A-3 as filed with the SEC on October 20,
1999; and
(c) Any reports filed under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this prospectus and prior
to the termination of the offering made under this prospectus.
ITEM 4. DESCRIPTION OF SECURITIES.
Employees may receive "Stock Appreciation Rights" which may consist of
a right to receive a payment, in cash or common stock, equal to the excess of
the "Fair Market Value" or other specified valuation of a specified number of
shares of common stock on the date the stock appreciation rights is exercised
over specified strike price as set forth in the applicable award agreement. For
this purpose, "Fair Market Value" shall be based upon the highest and lowest
sales price per share of common stock on the consolidated transaction reporting
system for the principal such national securities exchange on that date. If no
sale was so reported on that date, "Fair Market Value" shall be determined as of
the last preceding date on which such a sale was so reported.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Delaware General Corporation Law (the "Delaware Law") provides for
indemnification by a corporation of costs incurred by directors, employees, and
agents in connection with an action, suit, or proceeding brought by reason of
their position as a director, employee, or agent. The person being indemnified
must have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation.
II-1
<PAGE>
In addition to the general indemnification section, Delaware law
provides further protection for directors under Section 102(b)(7) of the
Delaware Law. This section was enacted in June 1986 and allows a Delaware
corporation to include in its certificate of incorporation a provision that
eliminates and limits certain personal liability of a director for monetary
damages for certain breaches of the director's fiduciary duty of care, provided
that any such provision does not (in the words of the statute) do any of the
following:
"eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
section 174 of this Title [dealing with willful or negligent violation
of the statutory provision concerning dividends and stock purchases and
redemptions], or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate
or limit the liability of a director for any act or omission occurring
prior to the date when such provision becomes effective...."
With regard to employee benefit plans, the Delaware Law provides that a
director's conduct for a purpose he reasonably believed to be in the interest of
the participants and beneficiaries of the Plan is conduct satisfying the subject
indemnity provision. A director's conduct for a purpose that he did not
reasonably believe to be in the interest of the participants in or beneficiaries
of the Plan shall be deemed as not satisfying the indemnity provision.
The Board of Directors is empowered to make other indemnification as
authorized by the Certificate Of Incorporation, Bylaws or corporate resolution
so long as the indemnification is consistent with the Delaware Law. Under our
Bylaws, we are required to indemnify its directors to the full extent permitted
by the Delaware Law, common law and any other statutory provision.
We also maintain directors and officers insurance that provides
protection for our directors and officers against personal liability for
wrongful acts, including protection for certain matters for which we may not
provide indemnification, such as stockholder derivative actions.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
<TABLE>
<S> <C>
4.1 ClearWorks.net. Inc. Long-Term Incentive Plan and Stock
Warrant Plan are incorporated by reference from the Company's
Form 10-SB/A-3, filed on October 20, 1999.
4.2 Specimen Warrant Certificate.
5.1 Opinion of Patton Boggs LLP regarding legality.
23.1 Consent of Patton Boggs LLP (included in Exhibit 5).
23.2 Consent of McManus & Co., P.C.
24.1 Power of Attorney (included in Part II of this registration
statement under the caption "Signature").
</TABLE>
ITEM 9. UNDERTAKINGS.
II-2
<PAGE>
(a) The undersigned Company hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Company pursuant to Section 13 or Section 15(d) of the Exchange Act
and are incorporated by reference to the registration statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) For purposes of determining any liability under the Securities Act,
each filing of the Company's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plans annual report pursuant to Section 15(d) of the Exchange Act) that
is incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising out of the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liability (other than the payment by the Company of expenses incurred or paid by
a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
II-3
<PAGE>
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, we certify that we
have reasonable grounds to believe that we meet all of the requirements for
filing on Form S-8 and have duly caused this registration statement to be signed
on our behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 28th day of December, 1999.
CLEARWORKS.NET, INC.
By: /s/ Michael T. McClere
-------------------------------------------
Michael T. McClere, Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of the Registrant, by virtue of their signatures to this registration
statement appearing below, hereby constitute and appoint Michael T. McClere or
Shannon D. McLeroy and each or either of them, with full power of substitution,
as attorneys-in-fact in their names, place and stead to execute any and all
amendments to this registration statement in the capacities set forth opposite
their name and hereby ratify all that said attorneys-in-fact and each of them or
his substitutes may do by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Michael T. Mcclere Chief Executive Officer, Chairman Of December 28, 1999
- -------------------------- The Board and Director
Michael T. McClere
/s/ Shannon D. Mcleroy
- -------------------------- President and Secretary December 28, 1999
Shannon D. McLeroy
/s/ Carl A. Chase Chief Financial Officer, Treasurer December 28, 1999
- -------------------------- and Principal Accounting Officer
Carl A. Chase
</TABLE>
<PAGE>
Exhibit Index
<TABLE>
<S> <C>
4.1 ClearWorks.net. Inc. Long-Term Incentive Plan and Warrant Stock Plan are incorporated
by reference from our Form 10-SB/A-3, filed on October 20, 1999.
4.2 Specimen Warrant Certificate.
5.1 Opinion of Patton Boggs LLP regarding legality.
23.1 Consent of Patton Boggs LLP (included in Exhibit 5.1).
23.2 Consent of McManus & Co., P.C.
24.1 Power of Attorney (included in Part II of this registration statement under the
caption "Signature").
</TABLE>
<PAGE>
EXHIBIT 4.2
THIS WARRANT MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH SECTION 4 HEREOF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND SHALL NOT BE (1) SOLD,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR CONSIDERATION, BY THE
HOLDER, EXCEPT UPON THE ISSUANCE TO THE CORPORATION OF A FAVORABLE OPINION OF
ITS COUNSEL AND/OR THE SUBMISSION TO THE CORPORATION OF SUCH OTHER EVIDENCE AS
MAY BE SATISFACTORY TO THE COUNSEL FOR THE CORPORATION, IN EITHER CASE TO THE
EFFECT THAT ANY SUCH TRANSFER FOR CONSIDERATION SHALL NOT BE IN VIOLATION OF THE
ACT OR RULE 144 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER THE
ACT AND APPLICABLE STATE SECURITES LAW; OR (2) TRANSFERRED WITHOUT CONSIDERATION
BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE CORPORATION OF A FAVORABLE OPINION
OF ITS COUNSEL OR THE SUBMISSION TO THE CORPORATION OF SUCH OTHER EVIDENCE AS
MAY BE SATISFACTORY TO COUNSEL TO THE CORPORATION, IN EITHER CASE TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND APPLICABLE STATE
SECURITES LAW.
THIS WARRANT IS ONLY EXERCISABLE
WITHIN TEN YEARS OF THE DATE
OF ITS INITIAL ISSUANCE.
W-____ _____ Warrants to Purchase
One Share of
Common Stock
ISSUED EFFECTIVE AS OF: ______________, 1999 ("DATE OF THE INITIAL ISSUANCE")
CLEARWORKS TECHNOLOGIES, INC.
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
THIS CERTIFIES THAT for value received, ____________________ the
registered holder hereof (the "Holder") is entitled to purchase from ClearWorks
Technologies, Inc. (the "Corporation"), at the purchase price of _________
dollars ($_______) per share (the "Warrant Price"), within ten years from the
date of initial issuance of this Warrant, one share of Common Stock, .001 par
value, of the Corporation ("Common Stock") for each Warrant comprising the total
number of Warrants set forth above. The Warrant Price per share shall be subject
to adjustment from time to time as set forth herein.
<PAGE>
This Warrant is one of a duly authorized issue of ________ Warrants
evidencing the right to purchase an aggregate of up to _________ shares of
Common Stock. The shares of Common Stock to be issued upon exercise of Warrants
are referred to herein as "Warrant Shares."
1. EXPIRATION DATE. The Warrants represented hereby will expire in
their entirety and no longer be exercisable after 5:00 p.m. Central Time on the
last day of the ten year period beginning on the date of the initial issuance of
the Warrants, unless extended ("Expiration Date"). Subject to regulatory and
shareholder approval, the Board of Directors, in its sole discretion, may
establish additional periods for the exercise of the Warrants, and may extend
the Expiration Date. The appropriate terms herein shall be applicable in the
event of any such extension(s).
2. EXERCISE PERIODS. Subject to the terms of this Warrant and approval
of the issuance of these Warrants by a majority of the Corporation's
shareholders excluding the shares beneficially owned by each Holder hereof at a
meeting of Corporation's shareholders duly held pursuant to applicable state and
federal law, each Holder shall have the right, commencing on the date of initial
issuance of this Warrant and ending on the Expiration Date (the "Exercise
Period"), to purchase from the Corporation the number of full Warrant Shares
indicated on the front of this certificate, which when fully paid by Holder,
will be non-assessable. Upon request of the Holder, the Corporation will provide
Holders with the most current public financial information then available. For
purposes of this Warrant "beneficial ownership" shall have the meaning set forth
in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
3. MANNER OF EXERCISE. A Warrant may be exercised at the Corporation's
Principal Office, upon presentation and surrender hereof, together with the
Warrant Purchase Form at the end hereof, duly completed and signed, and upon
payment to the Corporation of the Warrant Price (subject to adjustment in
accordance with the provisions of Section 9 hereof), for the number of full
Warrant Shares in respect of which such Warrants are then exercised. Payment of
the aggregate Warrant Price shall only be made in cash, by check or any
combination thereof.
The Corporation shall not be required to issue fractional Warrant
Shares on the exercise of Warrants. When Warrants are presented for exercise in
full at the same time by the same Holder, the number of full Warrant Shares
which shall be issuable upon the exercise thereof shall be computed on the basis
of the aggregate number of Warrant Share purchasable on exercise of the Warrants
so presented. If any fraction of a Warrant Share would be issuable on the
exercise of any Warrants in full, the Corporation shall pay an amount in cash
equal to the then current market price per Warrant Share (as determined in the
sole discretion of the Corporation's Board of Directors) multiplied by such
fraction. When Warrants are presented for exercise as to a specified portion,
only full Warrant Shares shall be issuable and a new Warrant bearing the
original initial issuance date shall be issuable evidencing the remaining
Warrant or Warrants.
Upon such surrender of Warrants and payment of the Warrant Price as
aforesaid, the Corporation shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Holder and in such name
or names as the Holder may designate, a certificate or certificates for the
number of full Warrant Shares so purchased together with payment for any
fractional shares as provided above in this Section 3, and any person so
designated to be named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date of the surrender of such Warrants and
payment of the Warrant Price, the transfer books for the Warrant Shares or other
class of
<PAGE>
stock purchasable upon the exercise of such Warrants shall be closed, the
certificates for the Warrant Shares in respect of which such Warrants are
then exercised shall be issuable as of the date on which such books shall
next be opened (whether before or after the Expiration Date) and until such
date the Corporation shall be under no duty to deliver any certificate for
such Warrant Shares. The rights of purchase represented by the Warrants shall
be exercisable, at the election of the Holders thereof, either in full or
from time to time in part and, in the event that a Warrant is exercised in
respect of less than all of the Warrant Shares purchasable on such exercise
at any time prior to the Expiration Date of the Warrants, a new Warrant
evidencing the remaining Warrant or Warrants will be issued; provided,
however, the Corporation shall not be required to issue fractional Warrants.
All Warrants surrendered in the exercise of the rights thereby evidenced
shall be cancelled by the Corporation.
4. LIMITATIONS ON THE TRANSFERABILITY OF WARRANTS. The Warrants
shall not be transferable unless the Holder complies with this paragraph. Any
purported transfer not in compliance with this paragraph shall be null and
void. The Warrants shall be transferable only on the books of the Corporation
maintained at its principal office, upon delivery thereof duly endorsed with
signatures properly guaranteed by a commercial bank or securities brokerage
firm or accompanied by proper evidence of succession assignment or authority
to transfer. Upon any registration of transfer, the Corporation shall deliver
a new Warrant or Warrants to the persons entitled thereto. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITES
ACT OF 1933, AS AMENDED (THE "ACT"), AND SHALL NOT BE (1) SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED FOR CONSIDERATION, BY THE HOLDER,
EXCEPT UPON THE ISSUANCE TO THE CORPORATION OF A FAVORABLE OPINION OF ITS
COUNSEL AND/OR THE SUBMISSION TO THE CORPORATION OF SUCH OTHER EVIDENCE AS
MAY BE SATISFACTORY TO COUNSEL FOR THE CORPORATION, IN EITHER CASE TO THE
EFFECT THAT ANY SUCH TRANSFER FOR CONSIDERATION SHALL NOT BE IN VIOLATION OF
THE ACT OR RULE 144 PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION
UNDER THE ACT AND APPLICABLE STATE SECURITIES LAW; OR (2) TRANSFERRED WITHOUT
CONSIDERATION BY THE HOLDER EXCEPT UPON THE ISSUANCE TO THE CORPORATION OF
FAVORABLE OPINION OF ITS COUNSEL OR THE SUBMISSION TO THE CORPORATION OF SUCH
OTHER EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL TO THE CORPORATION, IN
EITHER CASE TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF
THE ACT AND APPLICABLE STATE SECURITES LAW.
5. PAYMENT OF TAXES. The Corporation will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon
the exercise of Warrants; provided, however, that the Corporation shall not
be required to pay any tax or taxes which may be payable in respect of any
transfers involved in the issuance or delivery of any Warrants or
certificates for Warrant Shares in a name other than that of the registered
Holder of Warrants in respect of which such Warrant Shares are issued, and in
such case the Corporation shall not be required to issue or deliver any
certificate for shares of Common Stock or any Warrant until the person
requesting the same has paid to the Corporation the amount of such tax or has
established to the Corporation's satisfaction that such tax has been paid
6. MUTILATED, LOST, STOLEN OR DESTROYED. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Corporation may at its
discretion issue, upon cancellation of the mutilated Warrant, or in lieu of
and in substitution for the Warrant lost, stolen or destroyed, a new Warrant
of like tenor and representing an equivalent right or interest; but only upon
receipt of evidence satisfactory
<PAGE>
to the Corporation of such loss, theft or destruction of such Warrant, and
indemnity, if requested, also satisfactory to the Corporation. An applicant
for such a substitute Warrant shall also comply with such other reasonable
regulations as the Corporation may prescribe.
7. RESERVATION OF WARRANT SHARES. The Corporation shall at all
times, while the Warrants are exercisable, keep reserved, out of its
authorized Common Stock, a number of shares of Common Stock sufficient to
provide for the exercise of the rights of purchase represented by the
outstanding Warrants. Immediately after the Expiration Date, however, no
shares shall be subject to reservation in respect of such Warrants.
8. CANCELLATION OF WARRANTS. The Corporation shall cancel any
Warrants surrendered for exchange, substitution, transfer or exercise in
whole or in part.
9. ADJUSTMENTS. The Warrant Shares purchasable hereunder and the
Warrant Price shall be subject to adjustments from time to time upon the
happening of certain events, as hereinafter defined:
9.1. MERCHANT ADJUSTMENTS. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price shall be subject to
adjustments as follows:
(a) In case the Corporation shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii)
subdivided its outstanding shares of Common Stock into a greater number
of shares, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by
reclassification of its shares of Common Stock or capital
reorganization other securities of the Corporation, the number of
Warrant Shares purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the Holder of each Warrant
shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Corporation which the Holder would have owned
or have been entitled to receive after the happening of any of the
events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) No adjustments in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the number of
Warrant Shares purchasable upon the exercise of each Warrant; provided,
however, that any adjustments which by reason of this paragraph (b) are
not required to be made shall be carried forward and taken into account
in any subsequent adjustment. All calculations shall be made to the
nearest one-hundredth of a share.
(c) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted, as herein provided, the Warrant
Price payable upon exercise of each Warrant shall be adjusted by
multiplying the Warrant Price immediately prior to the adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of each Warrant immediately prior to
adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.
<PAGE>
(d) For the purpose of the Subsection 9.1 the term "shares of
Common Stock" shall mean (i) the class of stock designates as the
Common Stock of the Corporation at the date of this Warrant, or (ii)
any other class of stock resulting from successive changes or
reclassification of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Holder shall become entitled to
purchase any shares of the Corporation other than shares of Common
Stock, thereafter the number of such other shares so purchasable upon
exercise of each warrant and the Warrant Price of such shares shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions of Sections 1, 2 and
3 and Subsections 9.2 through 9.4, with respect to the Warrant Shares,
shall apply on like terms to any such other shares.
9.2. VOLUNTARY ADJUSTMENT BY THE CORPORATION. Subject to the
approval of the shareholders as set forth in paragraph 2 hereof, the Corporation
may at any time during the term of the Warrants, reduce the then current Warrant
Price to any amount deemed appropriate by the Board of Directors of the
Corporation, approve additional periods for exercise of the Warrants or extend
the Expiration Date to any time deemed appropriate by the Board of Directors of
the Corporation.
9.3. NOTICE OF Adjustment. Whenever the number of Warrant
Shares purchasable upon the exercise of each Warrant of the Warrant Price of
such Warrant Shares is adjusted, as herein provided, the Corporation shall cause
to be mailed by first class mail, postage prepaid, to each Holder notice of such
adjustment or adjustments setting forth the number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price of such Warrant Shares
after such adjustment, setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such adjustment was
made. Any failure by the Corporation to give notice to the Holder or any defect
therein shall not affect the validity of such adjustment or of the event
resulting in the adjustment , nor of the Holder's rights to such adjustment.
9.4. NO ADJUSTMENT FOR DIVIDENDS OF DISTRIBUTIONS. Except as
provided in Subsections 9.1 and 9.6, no adjustments in respect of any dividends
or distributions shall be made during the term of a Warrant or upon the exercise
of a Warrant.
9.5 RIGHTS UPON CONSOLIDATION, MERGER, ETC.
(a) In case of any consolidation of the Corporation with
or merger of the Corporation into another corporation or in case of any
sale or conveyance to another corporation of the property of the
Corporation as an entirety or substantially as an entirety ("Sale"),
such successor or purchasing corporation may assume the obligations
hereunder, and may execute with the Corporation an agreement that each
Holder shall have the right thereafter upon payment of the Warrant
Price to purchase upon exercise of each Warrant the kind and amount of
shares and other securities and property (including cash) which he
would have owned or have been entitled to receive after the
consummation of such Sale had such Warrant been exercised immediately
prior to the sale. The Corporation shall mail by first class mail,
postage prepaid, to each Holder notice of the execution of any Sale
agreement. Such agreement shall provide for adjustments provided for in
this Section 9. The provisions of this Subsection 9.5 shall similarly
apply to successive consolidations, mergers, sales or conveyances.
<PAGE>
(b) The Corporation's failure to give any notice
required by this Subsection 9.5 or any defect therein shall not affect
the validity of any Sale
9.6. RIGHTS UPON LIQUIDATION. In case (i) the Corporation
shall make any distribution of its assets to holders of its shares of Common
Stock as a liquidation dividend or by way of return capital; or (ii) the
Corporation shall liquidate, dissolve or wind up its affairs (other than in
connection with a Sale); or (iii) an involuntary liquidation occurs, then the
Corporation shall cause to be mailed to each Holder, by first class mail, at
least twenty (20) days prior to applicable record date, a notice stating the
date on which such distribution, liquidation, dissolution or winding up is
expected to become effective, and the date on which it is expected that holders
of shares of Common Stock for securities or other property or assets (including
cash) deliverable upon such distribution, liquidation, dissolution or winding
up. The Corporation's failure to give the notice required by this Subsection 9.6
or any defect therein shall not affect the validity of such distribution,
liquidation, dissolution or winding up.
9.7. STATEMENT ON WARRANTS. Irrespective of any adjustments in
the Warrant Price, Warrants theretofore or thereafter issued may continue to
express the same price as is stated in the Warrants initially issued.
10. NO RIGHTS AS STOCKHOLDERS. Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote or to receive dividends or to consent or to receive notice as stockholders
in respect of any meeting of stockholders called for the election of directors
of the Corporation or any other matter, or any rights whatsoever as stockholders
of the Corporation.
11. NOTICES. Any notice pursuant to this Warrant by any Holder
to the Corporation or by the Corporation to any Holder, shall be in writing and
shall be mailed first class, postage prepaid or delivered: (i) to the
Corporation, at its office at 505 N. Belt, Suite 140, Houston, Texas 77060, or
such other address as the Corporation may designate in writing to the Holder; or
(ii) to the Holder, at the Holder's address on the books of the Corporation. The
Corporation's failure to give any notice required by this Warrant or any defect
therein shall not affect the validity of the action taken by the Corporation in
connection therewith.
12. APPLICABLE LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of Texas, to the extent not
preempted by federal law without giving effect to principles of conflict laws.
13. SECURITIES LAWS. The exercise of Warrants is prohibited
unless the issuance of the Warrant Shares has been registered or qualified under
applicable federal and state laws or unless there is an exemption available from
such requirements.
14. CAPTIONS. The captions of the sections and subsections of
this Warrant have been inserted for convenience only and shall have no
substantive effect.
Witness the facsimile seal of the Corporation and the
signatures of its duly authorized offices.
<PAGE>
ClearWorks Technologies, Inc.
a Delaware corporation
By
------------------------
PRESIDENT
By
------------------------
SECRETARY
Effective Date of Issuance:
___________, 1999
(Corporate Seal)
<PAGE>
EXHIBIT 5.1
PATTON BOGGS LLP
1660 Lincoln Street
Suite 1900
Denver, Colorado 80264
(303) 830-1776
December 28, 1999
ClearWorks.net, Inc.
2450 Fondren, Suite 200
Houston, Texas 77063
Gentlemen and Ladies:
We have acted as counsel for ClearWorks.net, Inc., a Delaware
corporation (the "Company"), in connection with preparation of the Company's
Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended, concerning registration of the transfer
of up to an aggregate of 12,000,000 shares (the "Shares"), consisting of (1)
10,000,000 shares of the Company's $.001 par value common stock (the "Common
Stock") by certain stockholders of the Company (the "Selling Stockholders")
and (2) 2,000,000 shares of Common Stock to be issued upon the exercise of
warrants to purchase Common Stock (the "Warrants"). The Shares will be
acquired by the selling stockholders pursuant to grants of share awards (the
"Awards") and warrants, respectively, under the Company's 1999 Long-Term
Incentive Plan and the 1998 Stock Warrant Plan (the "Plans").
We have examined the Plans of the Company concerning the
registration described above. In addition, we have examined such other
certificates, agreements, documents and papers, and we have made such other
inquiries and investigations of law as we have deemed appropriate and
necessary in order to express the opinion set forth in this letter. In our
examinations, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, photostatic, or
conformed copies and the authenticity of the originals of all such latter
documents. In addition, as to certain matters we have relied upon
certificates and advice from various state authorities and public officials,
and we have assumed the accuracy of the material and the factual matters
contained herein.
Subject to the foregoing and on the basis of the aforementioned
examinations and investigations, it is our opinion that the Awards and the
Shares, when issued as contemplated by the Plans and the Registration
Statement, will have been legally issued, fully paid and non-assessable.
We hereby consent (a) to all references to this firm in the
Registration Statement; and (b) to the filing of this opinion as an exhibit
to the Registration Statement.
<PAGE>
This opinion is to be used solely for the purpose of the registration
of the Common Stock and may not be used for any other purpose.
Very truly yours,
/s/ PATTON BOGGS LLP
--------------------
PATTON BOGGS LLP
IA: ALT/FBB
<PAGE>
EXHIBIT 23.2
McManus & Co., P.C.
Certified Public Accountants
INDEPENDENT AUDITORS' CONSENT
------------------------
We consent to the reference to our firm under the caption "Experts"
in the Registration Statement on Form S-8 pertaining to the 1999 Long-Term
Incentive Plan and 1998 Stock Warrant Plan. We consent to the incorporation
by reference therein of our report dated May 12, 1999 with respect to the
consolidated financial statements of ClearWorks.net, Inc. and subsidiary for
the year ended December 31, 1998 as included in its Form 10-SB2G/A-3, filed
with the Securities and Exchange Commission on October 20, 1999.
Morris Plains, New Jersey
December 28, 1999
/s/ Mcmanus & Co., P.C.
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McManus & Co., P.C.
