EXHIBIT 4.3
TRANS ENERGY, INC.
AND
X. X. XXXX, INC.
UNDERWRITER'S
WARRANT AGREEMENT
UNDERWRITER'S WARRANT AGREEMENT dated as of __________, 1996 by and
between TRANS ENERGY, INC., a Nevada corporation (the "Company"), and
X. X. XXXX, INC., (hereinafter referred to variously as the "Holder" or
the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Underwriter warrants
("Warrants") to purchase up to ___ shares of common stock, $.001 par value, of
the Company ("Common Stock") and ___ redeemable warrants to purchase one share
of Common Stock (the "Redeemable Warrants"); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated __________ 1996 by and
between the Underwriter and the Company to act as the underwriter in connection
with the Company's public offering of up to ____ shares of Common Stock and ___
Redeemable Warrants (each a "Security" and collectively, the
"Securities"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the
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Underwriter in consideration for, and as part of the Underwriter's compensation
in connection with, the Underwriter's acting as the underwriter pursuant to the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of ten dollars ($10.00), the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Holder is hereby granted the right to purchase, at
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any time from ___________, 1997 until 5:00 p.m., New York time, on
_______________, 2001, up to ten percent (10%) of the Secuerities sold
by the Underwriter in the Public Offering at an initial exercise price (subject
to adjustment as provided in Article 8 hereof) of $_____ per Security
(165% of the Public Offering price per Security), subject to the terms
and conditions of this Agreement. The Redeemable Warrants constined within
the Underwriter's Warrant shall be exerciseable at a price equal to 165% of the
exercise price of the Redeemable Warrants being offerind to the public.
2. Warrant Certificates. The warrant certificates (the "Warrant
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Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrants. The Warrants are exercisable
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during the term set forth in Section 1 hereof at the Exercise Price per unit set
forth in Section 6 hereof payable by certified or cashier's check or money order
payable in lawful money of the United States, subject to adjustment as provided
in Article 8 hereof. Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Security (and such other
amounts, if any, arising pursuant to Section 4 hereof) at the Company's
principal offices located at 000 Xxxxxx Xxxxxx, P. X. Xxx 000, Xx. Xxxxx, Xxxx
Xxxxxxxx 00000, the registered holder of a Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or certificates for the
securities comprising the units so purchased. The purchase rights represented
by each Warrant Certificate are exercisable at the option of the Holder thereof,
in whole or in part (but not as to fractional units). The Warrants may be
exercised to purchase all or part of the units represented thereby. In the case
of the purchase of less than all the units purchasable on the exercise of
Warrants represented by a Warrant Certificate, the Company shall cancel the
Warrant Certificate represented thereby upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the Securities purchasable thereunder.
4. Issuance of Certificates. Upon the exercise of the Warrants and
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payment of the Exercise Price therefor, the issuance of certificates for the
Common Stock, Redeemable Warrants or other
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securities, properties or rights underlying such Warrants shall be made
forthwith (and in any event within three (3) business days thereafter) without
further charge to the Holder thereof, and such certificates shall (subject to
the provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; 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 issuance and delivery of any such certificates in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid. The Warrant certificates and the certificates representing
the Common Stock or other securities, property or rights (if such property or
rights are represented by certificates) shall be executed on behalf of the
Company by the manual or facsimile signature of the then present Chairman or
Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary or
Treasurer or Assistant Treasurer of the Company. Warrant Certificates shall be
dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of
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a Warrant Certificate (and its Permitted Transferee, as defined below), by its
acceptance thereof, covenants and agrees that the Warrants are being acquired as
an investment and not with a view to the distribution thereof; that during the
life of the Warrants, such Warrants and underlying securities may not be sold,
transferred, assigned, hypothecated or otherwise disposed of, in whole or in
part except to officers and directors of the Underwriter, and any co-
underwriter, selling group member and their respective officers and directors in
accordance with the provisions of the Securities Act of 1933, as amended (the
"Act");
6. Exercise Price.
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a. Initial and Adjusted Exercise Price. Except as otherwise provided
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in Section 8 hereof, the initial exercise price of each Warrant shall be $_____
per Share. The adjusted exercise price shall be the price which shall result
from time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
b. Exercise Price. The term "Exercise Price" herein shall mean the
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initial exercise price or the adjusted exercise price, depending upon the
context.
7. Registration Rights.
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a. Registration Under the Securities Act of 1933. The Warrants have
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not been registered under the Act. The Warrant certificates shall bear the
following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the "Act"),
and may not be offered for sale or sold except
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pursuant to (i) an effective registration statement under the Act, or
(ii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
b. Demand Registration. (1) At any time commencing one (1) year
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and expiring four (4) years after the effective date of the Company's
Registration Statement relating to the Public Offering (the "Effective Date"),
the Underwriter shall have the right, exercisable by written notice to the
Company, to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission"), on one (1) occasion, a registration or offering
statement on Form S-1 and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Underwriter and the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale, for a period of nine (9) months, of
the shares underlying the Warrants ("Warrant Securities") by such Holders and
any other Holders of the Warrants and/or Warrant Securities who notify the
Company within fifteen (15) business days after receipt of the notice described
above. The Underwriter may demand registration on behalf of the Holders without
exercising the Underwriter's Warrants, and are never required to exercise same.
(2) The Company covenants and agrees to give written notice of
any registration request under this Section 7(b) by the Underwriter to all other
registered Holders of the Warrants and the Warrant Securities within ten (10)
days from the date of
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the receipt of any such registration request.
c. Piggyback Registration. If, at any time within the three
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(3) year period commencing one (1) year and expiring four (4) years after the
Effective Date, the Company should file a registration statement with the
Commission under the Act (other than in connection with a merger or pursuant to
Forms S-4 or S-8) it will give written notice by registered mail, at least
thirty (30) days prior to the filing of each such registration statement, to the
Underwriter and to all other Holders of the Warrants and/or the Warrant
Securities of its intention to do so. If the Underwriter or other Holders of
the Warrants and/or the Warrant Securities notify the Company within twenty (20)
days after receipt of any such notice of its or their desire to include any such
securities in such proposed registra tion statement, the Company shall afford
the Underwriter and such Holders of the Warrants and/or Warrant Securities the
opportunity to have any such Warrant Securities registered under such
registration statement. Notwithstanding the provisions of this Section 7(c),
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7(c) (irrespective of whether a written request
for inclusion of any such securities have shall have been made) to elect not to
file any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof. If a subsequent underwriter
objects to the above piggy-back rights, such objection would preclude such
inclusion. However, in such
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event, the Company will, within six (6) months of completion of such subsequent
underwriting, file at its sole expense a registra tion statement relating to
such excluded securities, which shall be in addition to any registration
statement required to be filed pursuant to Section 7(b).
d. Covenants of the Company With Respect to Registration. In
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connection with any registration under Sections 7(b) and 7(c) hereof, the
Company covenants and agrees as follows:
(1) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested.
(2) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting discounts or selling fees, expenses
or commissions), fees and expenses in connection with any registration statement
filed pursuant to Sections 7(b) and 7(c) hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses. If the Company shall fail to comply with the provisions of Section
7(d)(1), the Company shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all incidental, special and
consequential damages and damages due to loss of
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profit sustained by the Holder(s) requesting registration of their Warrant
Securities.
(3) The Company will take all necessary action which may be required
to qualify or register the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(4) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Underwriter contained in Section 8 of the
Underwriting Agreement, and the Holder(s) shall indemnify the Company to the
same extent and with the same effect as the provisions pursuant to which the
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Underwriter has agreed to indemnify the Company contained in Section 8 of the
Underwriting Agreement.
(5) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 8 of the Underwriting
Agreement pursuant to which the Underwriter has agreed to indemnify the Company.
(6) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(7) The Company shall not be entitled to include any securities other
than the Warrant Securities in any registration statement filed pursuant to
Section 7(b) hereof without the prior written consent of the Underwriter and the
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Holders of the Warrants and Warrant Securities representing a Majority of such
securities (assuming exercise of all of the Warrants).
(8) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and if such registration
includes an underwritten public offering, an opinion dated the date of the
Closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the Closing under the underwriting agreement) signed by the independent
public accounts who have issued a report on the Company's financial statements
included in such registration statement, in each case covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, in the case of such accountants' letter, with respect to
events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letter, with
respects to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings of securities.
(9) The Company shall as soon as practicable
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after the effective date of the registration statement, and in any event within
15 months thereafter, make "generally available to its security holders" (within
the meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(10) The Company shall deliver promptly to each Holder participating
in the offering requesting the correspondence described below and any managing
underwriter copies of all correspondence between the Commission and the Company,
its counsel or auditors with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the National Association of Securities
Dealers, Inc. ("NASD"). Such investigation shall include access to books,
records and properties and opportSecurityies to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder shall
reasonably request.
(11) The Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, except
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that in connection with an offering for which the Holders have piggyback rights,
the Company shall have the sole right to select the managing underwriter. Such
underwriting agreement shall be satisfactory in form and substance to the
Company, a Majority of such Holders and such managing underwriters, and shall
contain such representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting agreement
relating to an underwritten sale of their Warrant Securities and may, at their
option, require that any or all the representations, warranties and covenants of
the Company to or for the benefit of such underwriters shall also be made to and
for the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to such Holders and their intended
methods of distribution.
(12) For purposes of this Agreement, the term "Majority" in
reference to the Holders of the Warrants or Warrant Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Warrants or Warrant
Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction there
with, or (ii) have not been resold to the public pursuant to a registration
statement filed with the Commission under the Act.
e. Repurchase of Warrants. In the event the
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Company shall fail to file the registration statement required by Section 7(b),
or such registration statement shall not be declared effective within 150 days
of the written request, then the Under writer may require the Company to
purchase, on the 151st day, the Underwriter's Warrants at a price equal to the
difference between the Exercise Price and the market price per share of Common
Stock as averaged over the mean between the "bid and "asked" price as of the
close of each business day during the two-week period immediately preceding the
151st day; provided, however, that at the time of such purchase the average
market price shall be more than $_____and further provided that the Company's
net worth, at such time, is at least five (5) times the amount of the aggregate
purchase price for such Underwriter's Warrants to be purchased.
f. Further Registrations. The Company will cooperate with the
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Holder(s) of the Warrants and Warrant Securities in preparing and signing any
registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Warrant Securities and will
supply all information required therefor, but such additional registration
statement expenses or offering statement expenses will be prorated between the
Company and the Holders of the Warrants and Warrant Securities according to the
aggregate sales price of the securities being issued. The provision of Section
7(d) other than subsection (2) shall apply to any such registration statement.
8. Adjustments to Exercise Price and Number of
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Securities.
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a. Computation of Adjusted Exercise Price. Except as hereinafter
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provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock (other than the issuances referred to in Section
8(g) hereof), including shares held in the Company's treasury and shares of
Common Stock issued upon the exercise of any options, rights or warrants, to
subscribe for shares of Common Stock and shares of Common Stock issued upon the
direct or indirect conversion or exchange of securities for shares of Common
Stock, for a consideration per share less than the Exercise Price in effect
immediately prior to the issuance or sale of such shares, then forthwith upon
such issuance or sale, the Exercise Price shall (until another such issuance or
sale) be reduced to the price (calculated to the nearest full cent) equal to the
quotient derived by dividing (A) an amount equal to the sum of (X) the product
of (a)the Exercise Price in effect immediately prior to such issuance or sale,
multiplied by (b) the total number of shares of Common Stock outstanding
immediately prior to such issuance or sale plus (Y) the aggregate of the amount
of all consideration, if any, received by the Company upon such issuance or
sale, by (B) the total number of shares of Common Stock outstanding immediately
after such issuance or sale; provided, however, that in no event shall the
Exercise Price be adjusted pursuant to this computation to an amount in excess
of the
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Exercise Price in effect immediately prior to such computation, except in the
case of a combination of outstanding shares of Common Stock, as provided by
Section 8(c) hereof.
For the purposes of this Section 8 the term "Exercise Price" shall
mean the aggregate Exercise Price per share of Common Stock set forth in Section
6 hereof, as adjusted from time to time pursuant to the provisions of this
Section 8.
For the purposes of any computation to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(1) In case of the issuance or sale of shares of Common Stock for
a consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing similar
services, or any expenses incurred in connection therewith.
(2) In case of the issuance or sale (otherwise than as a dividend
or other distribution on any stock of the Company) of shares of Common Stock for
a consideration part or all of which shall be other than cash, the amount of the
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consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(3) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the deter mination of stockholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(4) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in Section 8(a)(2).
(5) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
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b. Options Rights, Warrants and Convertible and Exchangeable
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Securities. In case the Company shall at any time after the date hereof issue
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options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Exercise Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, or without consideration, the Purchase Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, or without consideration, the
Purchase Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making a computation in
accordance with the provisions of Section 8(a) hereof, provided that:
(1) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable under such options, rights or warrants shall be deemed to
be issued and outstanding at the time such options, rights or warrants were
issued, and for a consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of issuance, plus
the consideration (determined in the same manner as consideration received on
the issue or sale of shares in accordance with the terms of the Warrants), if
any, received by
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the Company for such options, rights or warrants; provided, however, that upon
the expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this Section 8(b)(1) (and for
the purposes of Section 8(a)(5) hereof) shall be reduced by such number of
shares as to which options, warrants and/or rights shall have expired or
terminated unexercised, and such number of shares shall no longer be deemed to
be issued and outstanding, and the Exercise Price then in effect shall forthwith
be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not be expired or terminated unexercised.
(2) The aggregate maximum number of shares of Common Stock issuable
upon conversion or exchange of any convertible or exchangeable securities shall
be deemed to be issued and outstanding at the time of issuance of such
securities, and for a consideration equal to the consideration (determined in
the same manner as consideration received on the issue or sale of shares of
Common Stock in accordance with the terms of the Warrants) received by the
Company for such securities, plus the minimum consideration, if any, receivable
by the Company upon the conversion or exchange thereof; provided, however, that
upon the termination of the right to convert or exchange such convertible
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or exchangeable securities (whether by reason or redemption or otherwise), the
number of shares deemed to be issued and outstanding pursuant to this Section
8(b)(2) (and for the purpose of Section 8(a)(5) hereof) shall be reduced by such
number of shares as to which the conversion or exchange rights shall have
expired or terminated unexercised, and such number of shares shall no longer be
deemed to be issued and outstanding and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of the shares actually
issued or issuable upon the conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(3) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in Section 8(b)(1), or in the
price per share at which the securities referred to in Section 8(b)(2) are
convertible or exchangeable, such options, rights or warrants or conversion or
exchange rights, as the case may be, shall be deemed to have expired or
terminated on the date when such price change became effective in respect of
shares not theretofore issued pursuant to the exercise or conversion or exchange
thereof, and the Company shall be deemed to have issued upon such date new
options, rights or warrants or convertible or exchangeable securities at the new
price in respect of the number of shares issuable upon the exercise of such
options, rights or warrants or the conversion or
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exchange of such convertible or exchangeable securities.
c. Subdivision and Combination. In case the Company shall at any time
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subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
d. Adjustment in Number of Securities. Upon each adjustment of the
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Exercise Price pursuant to the provisions of this Section 8, the number of
Securities issuable upon the exercise of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Securities issuable
upon exercise of the Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price.
e. Definition of Common Stock. For the purpose of this Agreement, the
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term "Common Stock" shall mean (i) the class of stock designated as Common Stock
in the Certificate of Incorporation of the Company as it may be amended as of
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassification of such Common Stock 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 the Company shall after the date hereof issue securities with
greater or superior voting rights than those of the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may
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receive upon exercise of any Warrant either shares of Common Stock or a like
number of such securities with greater or superior voting rights.
f. Reclassification, Merger or Consolidation. The Company will not
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merge, reorganize or take any other action which would terminate the
Underwriter's Warrant without first making adequate provision for the
Underwriter's Warrants. In case of any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a merger with a subsidiary in which merger the Company is the continuing
corporation and other than a consolidation or merger which does not result in
any reclassification or change of the outstanding Common Stock except a change
as a result of a subdivision or combination of such shares or a change in par
value, as aforesaid), the Holder of each Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of shares of Common Stock of
the Company for which such Warrant might have been exercised immediately prior
to such reclassification, consolidation, merger, sale or transfer, and in the
event of a
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consolidation, merger or sale of property, the corporation formed by such
consolidation or merger or acquired such property shall execute and deliver to
the Holder a supplemental warrant agreement to such effect. Such supplemental
warrant agreement shall provide for adjustments which shall be identical to the
adjustment to those provided in Section 8. The provisions of this Section 8(f)
shall similarly apply to successive consolidations or mergers.
g. No Adjustment of Exercise Price in Certain
-- ---------- -- -------- ----- -- -------
Cases. No adjustment of the Exercise Price shall be made:
-----
(1) Upon the issuance or sale of the Warrants or the
shares of Common Stock issuable upon the exercise of (i) the Warrants, or
(ii) the options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof as
described in the prospectus relating to the Public Offering; or
(2) If the amount of said adjustment shall be less
than ____ (__) cents per Share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least ____ (__) cents per Share.
h. Dividends and Other Distributions. In the event that the
--------- --- ----- -------------
Company shall at any time prior to the exercise of all the Warrants declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise
23
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether issued by
the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock and Redeemable Warrants or other securities and property receivable
upon the exercise thereof, to receive, upon the exercise of such Warrants, the
same property, assets, rights, evidences of indebtedness, securities or any
other thing of value that they would have been entitled to receive at the time
of such dividend or distribution as if the Warrants had been exercised
immediately prior to such dividend or distribution. At the time of any such
dividend or distribution, the Company shall make appropriate reserves to ensure
the timely performance of the provisions of this Section 8(h).
9. Exchange and Replacement of Warrant Certificates. Each Warrant
-------- --- ----------- -- ------- ------------
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Securities in such denominations as shall
be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or
24
destruction, of indemnity or security reasonably satisfactory to it, and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrants, if mutilated, the Company will
make and deliver a new Warrant Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
----------- -- ---------- ---------
required to issue certificates representing fractions of shares of Common Stock
or public warrants upon the exercise of the Warrant, nor shall it be required to
issue script or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests; provided, however, that if a Holder
exercises all Warrants held of record by such Holder the fractional interests
shall be eliminated by rounding any fraction up to the nearest whole number of
shares of Common Stock, Redeemable Warrants or other securities, properties or
rights.
11. Reservation and Listing of Securities. The Company shall at all
----------- --- ------- -- ----------
times reserve and keep available out of its authorized shares of Common Stock
and Redeemable Warrants, solely for the purpose of issuance upon the exercise of
the Warrants, such number of shares of Common Stock, Redeemable Warrants or
other securities, properties or rights as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Common Stock,
Redeemable Warrants and other securities issuable upon such exercise shall
25
be duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause the Common Stock
and Redeemable Warrants to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common Stock and Redeemable Warrants
issued to the public in connection herewith may then be listed or quoted on
NASDAQ.
12. Notices to Warrant Holders. Nothing contained in this Agreement
------- -- ------- -------
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
a. the Company shall take a record of the holders of its shares
of Common Stock and Redeemable Warrants for the purpose of entitling them
to receive a dividend or distribution payable otherwise than in cash, or a
cash dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
b. the Company shall offer to all the holders of
26
its Common Stock and/or Redeemable Warrants, any additional shares of
capital stock of the Company or securities convertible into or exchangeable
for shares of capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
c. a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all
or substantially all of its property, assets and business as an entirety
shall be proposed; then, in any one or more of said events, the Company
shall give written notice of such event at least fifteen (15) days prior to
the date fixed as a record date or the date of closing the transfer books
for the determi nation of the stockholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription
rights, or entitled to vote on such proposed dissolution, liquidation,
winding up or sale. Such notice shall specify such record date or the date
of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividend,
or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Notices. All notices, requests, consents and
-------
27
other communications hereunder shall be in writing and shall be deemed to have
been duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
a. If to the registered Holder of the Warrants, to the address
of such Holder as shown on the books of the Company; or
b. If to the Company to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice to
the Holders.
14. Supplements and Amendments. The Company and the Underwriter may
----------- --- ----------
from time to time supplement or amend this Agreement without the approval of any
Holders of Warrant Certi ficates (other than the Underwriter) in order to cure
any ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any provi sions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the
Company and the Underwriter may deem necessary or desirable and which the
Company and the Underwriter deem shall not adversely affect the interests of the
Holders of Warrant Certificates.
15. Successors. All the covenants and provisions of this Agreement
----------
shall be binding upon and inure to the benefit of the Company, the Underwriter,
the Holders and their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of
-----------
business on _____________, 2001. Notwithstanding
28
the foregoing, the indemnification provisions of Section 7 shall survive such
termination until the close of business on the later of the expiration of any
applicable statue of limitations or ______________, ____.
17. Governing Law; Submission to Jurisdiction. This Agreement and
--------- --- ---------- -- ------------
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, the Underwriter and
the Holders hereby agree that any action, proceeding or claim against it arising
out of, or relating in any way to, this Agreement shall be brought and enforced
in the courts of the State of New York or of the Securityed States of America
for the Southern District of New York, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company, the
Underwriter and the Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to be
served upon any of the Company, the Underwriter and the Holders (at the option
of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding
29
or claim.
18. Entire Agreement; Modification. This Agreement (including the
------ --------- ------------
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof. Subject to Section 14, this Agreement may not be
modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be held to
------------
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement
--------
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
-------- -- ---- ---------
construed to give to any person or corporation other than the Company and the
Underwriter and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Underwriter and any other Holder(s) of the Warrant Certificates
or Warrant Securities.
30
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counter parts shall together constitute but one and
the same instrument.
23. Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of the Company, the Underwriter and their respective successors
and assigns and the Holders from time to time of the Warrant Certificate or any
of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
TRANS ENERGY, INC.
By:__________________________
X. X. XXXX, INC.
By:___________________________
31
EXHIBIT A
---------
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered for sale or sold except pursuant to (i) an effective registration
statement under the Act, or (ii) an opinion of counsel, if such opinion
shall be reasonably satisfactory to counsel to the issuer, that an
exemption from registration under such Act is available.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING _______________, 1997 THROUGH
5:00 P.M., NEW YORK __________, 2001
No. W-1 ______ Warrants
This Warrant Certificate certifies that X. X. Xxxx, Inc. (the
"Underwriter") or registered assigns, is the registered holder of ______
Warrants to purchase initially, at any time from _______, 1997, until 5:00 p.m.,
New York time on _________, 2001 ("Expiration Date"), up to ______shares of
common stock $.001 par value (the "Common Stock"), of Trans Energy, Inc., a
Nevada corporation (the "Company") and ____ Warrant, each Warrant to purchase
one share of Common stock (the "Redeemable Warrants"), at the exercise price of
$ per Share (the "Exercise Price"), and upon the surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of ____________, 1996 by and between the Company and the
Underwriter (the "Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or cashier's check or money order payable to the order of the
Company.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Warrants
32
evidenced hereby, unless exercised prior thereto, hereby shall thereafter be
void.
The Warrants evidenced by this Warrant Certificate are part
Underwriter's of a duly authorized issue of Warrants issued pursuant to the
Warrant Agreement between the Company and the Underwriter (the "Warrant
Agreement"), which Warrant Agreement is hereby incorporated by reference in and
made a part of this instrument and is hereby referred to for a description of
the rights, limitation of rights, obligations, duties and immSecurityies
thereunder of the Company and the holders (the words "holders" or "holder"
meaning the registered holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
33
IN WITNESS WHEREOF, the undersigned has executed this certificate
this __ day of ____________, 1996.
TRANS ENERGY, INC.
By:________________________
ATTEST:
By:_________________
Secretary
34
[FORM OF ELECTION OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED___________________________
hereby sells, assigns and transfers unto ____________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________
Attorney, to transfer the within Warrant Certificate on the books of the within-
named Company, with full power of substitution.
Dated:
Signature_____________________
(Signature must conform in all
respects to the name of holder as
specified on the face of the
Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
35
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
________ Securities
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of Trans Energy, Inc. in the amount of
$______, all in accordance with the terms hereof. The undersigned requests that
a certificate for such securities be registered in the name of
___________________________ whose address is _____________________ and that such
Certificate be delivered to _____________________________________ whose address
is ______________________________________________________________.
Dated:
Signature______________________________
(Signature must conform in all
respects to the name of holder as
specified on the face of the
Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
36
