This Warrant and the Securities issuable upon exercise hereof have not been
registered under the Securities Act of 1933, as amended (the "Act") or
applicable state securities laws and may not be offered for sale, sold,
transferred or otherwise disposed of in the absence of an effective registration
statement for such Securities under the Act, or an opinion of counsel,
satisfactory to the Issuer hereof, to the effect that registration is not
required under the Act.
WARRANT TO PURCHASE
COMMON STOCK OF
BOOTS & XXXXX INTERNATIONAL WELL CONTROL, INC.
Date of Issuance: May __, 2000 Warrant No. ______
This certifies that, for value received, Boots & Xxxxx International Well
Control, Inc., a Delaware corporation (the "Company"), grants to _________, or
registered assigns (the "Registered Holder"), the right to subscribe for and
purchase from the Company, at the price of $______ per share, as such price may
be adjusted from time to time (the "Exercise Price"), from and after 9:00 a.m.,
Houston time, on May ___, 2000 (the "Exercise Commencement Date") and to and
including 5:00 p.m., Houston time on May ______, 2005 (the "Expiration Date"),
_________ shares, as such number of shares may be adjusted from time to time
(the "Warrant Shares"), of the Company's common stock, par value $0.00001 per
share (the "Common Stock"), subject to the provisions and upon the terms and
conditions herein set forth. The Exercise Price and the number of Warrant
Shares purchasable upon exercise of this Warrant are subject to adjustment from
time to time as provided in Section 7 hereof.
Section 1. Registration. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the "Warrant
Records"), in the name of the Registered Holder, the Company may deem and treat
the Registered Holder as the absolute owner of this Warrant for the purpose of
any exercise hereof or any distribution, to the Registered Holder, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
Section 2. Registration of Transfers and Exchanges. (a) Subject to
Section 11 hereof, the Company shall register the transfer of this Warrant, in
whole or in part, upon records to be maintained by the Company for that purpose,
upon surrender of this Warrant, with the Form of Assignment attached hereto
completed and duly endorsed by the Registered Holder, to the Company at the
office specified in or pursuant to Section 3(b). Upon any such registration of
transfer, a new Warrant, in substantially the form of this Warrant, evidencing
the Common Stock purchase rights so transferred shall be issued to the
transferee and a new Warrant, in similar form, evidencing the remaining Common
Stock purchase rights not so transferred, if any, shall be issued to the
Registered Holder.
(b) This Warrant is exchangeable, upon the surrender hereof by the
Registered Holder in the name of the Company specified in or pursuant to Section
3(b) hereof, for new Warrants, in substantially the form of this Warrant
evidencing, in the aggregate, the right to purchase the number of Warrant Shares
which may then be purchased hereunder, each of such new Warrants to be dated the
date of such exchange and to represent the right to purchase such number of
Warrant Shares as shall be designated by the Registered Holder at the time of
such surrender.
Section 3. Duration and Exercise of this Warrant. (a) This Warrant
shall be exercisable by the Registered Holder, in whole, or from time to time in
part, on any business day before 5:00 p.m., Houston time, during the period
beginning on the Exercise Commencement Date and ending on the Expiration Date.
At 5:00 p.m., Houston time, on the Expiration Date Expiration Date, this
Warrant, to the extent not previously exercised, shall become void and of no
further force or effect.
(b) Subject to Sections 4 and 11(a) hereof, upon exercise or surrender
of this Warrant, with the Form of Election to Purchase attached hereto completed
and duly endorsed by the Registered Holder, to the Company at its office at 000
Xxxx Xxx Xxxx., Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive
Officer, or at such other address as the Company may specify in writing to the
Registered Holder, and upon payment of the Exercise Price multiplied by up to
the number of Warrant Shares then issuable upon exercise of this Warrant in
lawful money of the United States of America (except as otherwise provided for
in Section 3(c) hereof), all as specified by the Registered Holder in the form
of Election to Purchase, the Company shall promptly issue and cause to be
delivered to or upon the written order of the Registered Holder, and in such
name or names as the Registered Holder may designate, a certificate for the
Warrant Shares issued upon such exercise. Any person so designated in the Form
of Election to Purchase, duly endorsed by the Registered Holder, as the person
to be named on the certificates for the Warrant Shares, shall be deemed to have
become holder of record of such Warrant Shares, evidenced by such certificates,
as of the Date of Exercise (as hereinafter defined) of such Warrant.
(c) The Registered Holder may pay the applicable Exercise Price
pursuant to Section 3(b), at the option of the Registered Holder, either (i) in
cash or by cashier's or certified bank check payable to the Company in an amount
equal to the product of the Exercise Price multiplied by the number of Warrant
Shares being purchased upon such exercise (the "Aggregate Exercise Price"), (ii)
by wire transfer of immediately available funds to the account which shall be
indicated in writing by the Company to the Registered Holder, or (iii) by
written notice to the Company that the Registered Holder is exercising this
Warrant and is authorizing the Company to withhold from the issuance to such
Registered Holder that number of Warrant Shares which when multiplied by the
Market Price (as hereinafter defined) for the Common Stock for the ten (10)
consecutive trading days immediately preceding the Date of Exercise is equal to
the Aggregate Exercise Price. Any Warrant Shares withheld by the Company in
connection with an exercise of this Warrant pursuant to clause (iii) of this
Section 3(c) shall no longer be issuable under this Warrant and this Warrant
shall be deemed to be automatically amended to reduce the number of Warrant
Shares issuable hereunder by an amount equal to the amount of such withheld
Warrant Shares.
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(d) The "Date of Exercise" of any Warrant means the date on which the
Company shall have received (1) this Warrant, with the Form of Election to
Purchase attached hereto appropriately completed and duly endorsed, and (ii)
payment in full of the Aggregate Exercise Price as provided herein.
(e) This Warrant shall be exercisable either as an entirety or, from
time to time, for part only of the number of Warrant Shares which are issuable
hereunder. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificates for the Warrant Shares issued
pursuant to such exercise, deliver to the Registered Holder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which Warrant
shall be substantially in the form of this Warrant.
(f) Definition of Market Price. As used in this Warrant, the term
"Market Price" shall mean the average of the daily closing prices per share of
the Common Stock for the ten (10) consecutive trading days immediately preceding
the day as of which Market Price is being determined. The closing price for
each day shall be the last reported sale price or, in case no such sale takes
place on such day, the average of the reported closing bid and asked prices, in
either case on the American Stock Exchange, or, if the shares of the Common
Stock are not listed or admitted to trading on the American Stock Exchange, on
the principal national securities exchange on which the shares are listed or
admitted to trading, or, if the shares are not so listed or admitted to trading,
the average of the highest reported bid and lowest reported asked prices as
furnished by the National Association of Securities Dealers, Inc. (the "NASD")
through NASDAQ or through a similar organization if NASDAQ is no longer
reporting such information or as reported on the NASD's OTC Electronic Bulletin
Board ("OTC"). If shares of the Common Stock are not listed or admitted to
trading on any exchange or quoted through NASDAQ or any similar organization or
reported on OTC, the Market Price shall be deemed to be the higher of (A) the
book value of a share of the Common Stock as determined by any firm of
independent public accountants selected by the Board of Directors of the Company
and reasonably acceptable to the Registered Holder, as of the end of the most
recent fiscal quarter preceding the date as of which the determination is to be
made, or (B) the fair value thereof determined in good faith by the Company's
Board of Directors as expressed by a resolution of such board as of a date which
is within fifteen (15) days of the date as of which the determination is to be
made. The fees and expenses of any accounting firm engaged pursuant to
subclause (A) of this Section 3(f) shall be paid by the Company.
Section 4. Payment of Taxes and Expenses. (a) The Company will pay all
expenses and taxes (other than any federal or state income tax or similar
obligations of the Registered Holder) and other governmental charges
attributable to the preparation, execution, issuance and delivery of this
Warrant, any new Warrant and the Warrant Shares; provided, however, that the
Company shall not be required to pay any tax in respect of the transfer of this
Warrant or the Warrant Shares, or the issuance or delivery of certificates for
Warrant Shares upon the exercise of this Warrant, to a person or entity other
than a Registered Holder or an Affiliate (as hereinafter defined) of such
Registered Holder.
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(b) An "Affiliate" of any person or entity means any other person or
entity directly or indirectly controlling, controlled by or under direct or
indirect common control with such person or entity.
Section 5. Mutilated or Missing Warrant Certificate. If this Warrant
shall be mutilated, lost, stolen or destroyed, upon request by the Registered
Holder, the Company will, issue, in exchange for and upon cancellation of the
mutilated Warrant, or in substitution for the lost, stolen or destroyed Warrant,
a new Warrant, in substantially the form of this Warrant, of like tenor, but, in
the case of loss, theft or destruction, only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of this Warrant
and, if requested by the Company, indemnity also reasonably satisfactory to it.
Section 6. Reservation, Listing and Issuance of Warrant Shares. (a)
The Company will at all times have authorized, and reserve and keep available,
free from preemptive rights, for the purpose of enabling it to satisfy any
obligation to issue Warrant Shares upon the exercise of the rights represented
by this Warrant, the number of Warrant Shares deliverable upon exercise of this
Warrant. If for any reason whatsoever, the Company does not at any time have
authorized and reserved a number of shares necessary to be delivered upon
exercise of this Warrant, together with the warrant shares and common shares to
be issued as contemplated by that certain Letter dated April 12, 2000 of the
Company to Maroon Bells Capital Partners, Inc., VenBanc, Inc. and Interra
Ventures (the "April 12, 2000 Letter"), it shall, at its sole cost and expense,
promptly and in any event no later than the date of the annual shareholders
meeting next following the date of this Warrant take all necessary action to
cause such shares to be authorized and reserved, including without limitation
the causing to occur of a meeting of the shareholders of the Company to consent
to such authorization. The Company will, at its expense, use its best efforts
to cause such shares to be included in or listed on (subject to issuance or
notice of issuance of Warrant Shares) all markets or stock exchanges in or on
which the Common Stock is included or listed not later than the date on which
the Common Stock is first included or listed on any such market or exchange and
will thereafter maintain such inclusion or listing of all shares of Common Stock
from time to time issuable upon exercise of this Warrant.
(b) Before taking any action which could cause an adjustment pursuant
to Section 7 hereof reducing the Exercise Price below the par value of the
Warrant Shares, the Company will take any corporate action which may be
necessary in order that the Company may validly and legally issue at the
Exercise Price, as so adjusted, Warrant Shares that are fully paid and
non-assessable.
(c) The Company covenants that all Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be (i) duly authorized, fully paid
and nonassessable, and (ii) free from all taxes with respect to the issuance
thereof and from all liens, charges and security interests.
(d) Notwithstanding the terms and provisions otherwise herein
contained, in the event that for any reason whatsoever, at the time of exercise
of this Warrant, the Company shall not have authorized the number of Warrant
Shares deliverable upon such exercise, the Company shall, at its sole cost and
expense, take all such action as the holder of this Warrant shall require in
order to produce the economic result (determined in the sole judgment of the
holder hereof) contemplated by the April 12, 2000 Letter for the benefit of all
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of the beneficiaries thereof, including without limitation the preparation and
delivery of stock appreciation rights agreements or phantom stock participation
plans with the holder of this Warrant and the other beneficiaries of the
agreements contained in the April 12, 2000 Letter, on terms satisfactory to such
holder, permitting the holder of this Warrant and such other beneficiaries to
share in the appreciation of the value of such Warrant Shares and other warrant
shares and/or common shares, as the case may be, as if such shares had been
issued on the date of exercise of this Warrant.
Section 7. Adjustments of Exercise Price and Number of Warrant Shares.
(a) The Exercise Price at which Warrant Shares may be purchased hereunder, and
the number of Warrant Shares to be purchased upon exercise hereof, are subject
to change or adjustment from time to time as hereinafter provided. Upon each
resulting adjustment of such Exercise Price, the number of Warrant Shares
issuable upon the exercise of this Warrant shall be adjusted to the nearest full
Warrant Share by multiplying the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(b) Adjustment of Exercise Price upon certain Issuances of Common
Stock. If and whenever after the date hereof (specifically excluding any
warrants or options, or similar Convertible Securities, issued by the Company
prior to the date hereof and excluding any portion of which that has not been
exercised as of the date hereof) the Company shall issue or sell any shares of
Common Stock for a consideration per share less than $_______ (as adjusted from
time to time for subdivisions or combinations of the Common Stock), then
forthwith upon such issue or sale, the Exercise Price shall be reduced to a
price (calculated to the nearest cent) determined as follows: by dividing (A)
an amount equal to the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such issuance or sale multiplied by the then
existing Exercise Price, and (2) the 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.
No adjustment of any Exercise Price, however, shall be made in an amount
less than one cent per share, but any such lesser adjustment shall be carried
forward and shall be made at the time of, and together with, the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to one cent per share or more.
(c) For the purposes of subsection (b) of this Section 7, the following
provisions shall also be applicable:
(i) Issuance of Rights, Options or Warrants. In case at any time the
Company shall grant (whether directly or by assumption in a merger or
otherwise) any rights to subscribe for or to purchase, or any options or
warrants for the purchase of, Common Stock or any stock or securities
convertible into or exchangeable for Common Stock (such convertible or
exchangeable stock or securities being herein called "Convertible
Securities") whether or not such rights or options or warrants or the right
to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable
upon the exercise of such right or options or warrants or upon conversion
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or exchange of such Convertible Securities (determined as provided below)
shall be less than the Exercise Price in effect immediately prior to the
time of the granting of such rights or options or warrants, then the total
maximum number of shares of Common Stock issuable upon the exercise of such
rights or options or warrants or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of
such rights or options or warrants shall (as of the date of granting of
such rights or options or warrants) be deemed to be outstanding and to have
been issued for such price per share. Except as provided in clause (iii) of
this subsection, no further adjustments of any Exercise Price shall be made
upon the actual issue of such Common Stock or of such Convertible
Securities upon the exercise of such rights or options or warrants or upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities. For the purposes of this clause (i), the price per
share for which Common Stock is issuable upon the exercise of any such
rights or options or warrants or upon conversion or exchange of any such
Convertible Securities shall be determined by dividing (A) the total
amount, if any, received or receivable by the Company as consideration for
the granting of such rights or options or warrants, plus the minimum
aggregate amount of additional consideration payable to the Company upon
the exercise of all such rights or options or warrants, plus, in the case
of such rights or options or warrants which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon
the conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock issuable upon the exercise of such rights or options
or warrants or upon the conversion or exchange of all such Convertible
Securities issuable upon the exercise of such rights or options or
warrants.
(ii) Issuance of Convertible Securities. In case the Company shall
issue (whether directly or by assumption in a merger or otherwise) or sell
any Convertible Securities, whether or not the rights to exchange or
convert thereunder are immediately exercisable, and the price per share for
which Common Stock is issuable upon conversion or exchange of such
Convertible Securities (determined as provided below) shall be less than
the Exercise Price in effect immediately prior to the time of such issue or
sale, then the total maximum number of shares of Common Stock issuable upon
conversion or exchange of all such Convertible Securities shall (as of the
date of the issue or sale of such Convertible Securities) be deemed to be
outstanding and to have been issued for such price per share, provided that
(1) except as provided in clause (iii) of this subsection, no further
adjustments of any Exercise Price shall be made upon the actual issue of
Common Stock upon conversion or exchange of such Convertible Securities,
and (2) if any such issue or sale of such Convertible Securities is made
upon the exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which adjustments of
any Exercise Price have been or are to be made pursuant to other provisions
of this subsection (c), no further adjustment of any Exercise Price shall
be made by reason of such issue or sale. For the purposes of this clause
(ii), the price per share for which Common Stock is issuable upon
conversion or exchange of Convertible Securities shall be determined by
dividing (A) the total amount received or receivable by the Company as
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consideration for the issue or sale of such Convertible Securities, plus
the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (B) the total
maximum number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities.
(iii) Change in Option Price or Conversion Rate. If the purchase price
provided for in any rights or options or warrants referred to in clause (i)
above, or the additional consideration, if any, payable upon the conversion
or exchange of Convertible Securities referred to in clause (i) or (ii)
above, or the rate at which any Convertible Securities referred to in
clause (i) or (ii) above are convertible into or exchangeable for Common
Stock, shall change (other than under or by reason of provisions designed
to protect against dilution), then the Exercise Price in effect at the time
of such change shall forthwith be readjusted to the Exercise Price which
would have been in effect at such time had such rights or options or
warrants or Convertible Securities still outstanding provided for such
changed purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold; and on the
expiration of any such right or option or warrant or the termination of any
such right to convert or exchange such Convertible Securities, the Exercise
Price then in effect hereunder shall forthwith be readjusted to the
Exercise Price which would have been in effect at the time of such
expiration or termination had such right, option, warrant or Convertible
Security, to the extent outstanding, immediately prior to such expiration
or termination, never been issued, and the Common Stock issuable thereunder
shall no longer be deemed to be outstanding.
(iv) Stock Dividends. In case the Company shall declare a dividend or
make any other distribution upon any security of the Company payable in
Common Stock or Convertible Securities, such issue of Common Stock or
Convertible Securities, as the case may be, shall be deemed to have been
made without consideration.
(v) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights or options or warrants to purchase any
such Common Stock or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to be the amount
received by the Company therefor, without deduction therefrom of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any shares of
Common Stock or Convertible Securities or any rights or options or warrants
to purchase any such Common Stock or Convertible Securities shall be issued
or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to be
the fair value of such consideration, as determined, in good faith and in
the exercise of reasonable business judgment, by the Board of Directors of
the Company, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or
any rights or options or warrants to purchase such shares of Common Stock
or Convertible Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation (other than
any consolidation or merger in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the
stock or other securities of another corporation), the amount of
consideration therefor shall be deemed to be the fair value, as determined,
in good faith and in the exercise of reasonable business judgment, by the
Board of Directors of the Company, of such portion of the assets and
business of the non-surviving corporation as such board may determine to be
attributable to such shares of Common Stock, Convertible Securities, rights
or options or warrants, as the case may be. In the event of any
consolidation or merger of the Company, in which the Company is not the
surviving corporation or in which the previously outstanding shares of
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Common Stock of the Company shall be changed into or exchanged for the
stock or other securities of another corporation or in the event of any
sale of all or substantially all of the assets of the Company for stock or
other securities of any corporation, the Company shall be deemed to have
issued a number of shares of its Common Stock for stock or securities or
other property of the other corporation computed on the basis of the actual
exchange ratio on which the transaction was predicted and for a
consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the other
corporation, and if any such calculation results in adjustment of the
Exercise Price, the determination of the number of shares of Common Stock
issuable upon exercise of the Warrants immediately prior to such merger,
consolidation or sale, for purposes of Section 7(e), shall be made after
giving effect to such adjustment of the Exercise Price.
(vi) Record Dates. In case the Company shall take a record of the
holders of Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock or in Convertible
Securities, or (ii) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the
date of issue or sale of the shares of Common Stock deemed to have been
issued upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(vii) Treasury Stock. The number of shares of Common Stock outstanding
at any given time shall include shares owned or held by or for the account
of the Company, and the disposition of any such shares so owned or held
shall not be considered an issue of Common Stock.
(d) Subdivisions or Combinations of Stock. In case the Company shall
at any time subdivide the outstanding shares of Common Stock into a greater
number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced; and conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall
be proportionately increased.
(e) Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc. In case the Company (i) consolidates with or mergers into
any other corporation and is not the continuing or surviving corporation of such
consolidation of merger, or (ii) permits any other corporation to consolidate
with or merge into the Company and the Company is the continuing or surviving
corporation but, in connection with such consolidation or merger, the Common
Stock is changed into or exchanged for stock or other securities of any other
corporation or cash or any other assets, or (iii) transfers all or substantially
all of its properties and assets to any other corporation, or (iv) effects a
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capital reorganization or reclassification of the capital stock of the Company
in such a way that holders of Common Stock shall be entitled to receive stock,
securities, cash and/or assets with respect to or in exchange for Common Stock,
then, and in each such case, proper provision shall be made so that, upon the
basis and upon the terms and in the manner provided in this subsection (e), the
Registered Holder, upon the exercise of this Warrant at any time after the
consummation of such consolidation, merger, transfer, reorganization or
reclassification, shall be entitled to receive (at the aggregate Exercise Price
in effect for all shares of Common Stock issuable upon such exercise immediately
prior to such consummation as adjusted to the time of such transaction), in lieu
of shares of Common Stock issuable upon such exercise prior to such
consummation, the stock and other securities, cash and/or assets to which such
holder would have been entitled upon such consummation if the Registered Holder
had so exercised this Warrant immediately prior thereto (subject to adjustments
subsequent to such corporate action as nearly equivalent as possible to the
adjustments provided for in this Section).
(f) Notice of Adjustment. Upon any adjustment of the Exercise Price,
then and in each case the Company shall promptly deliver a notice to the
Registered Holder and either (i) a certificate of the chief financial officer of
the Company or (ii) upon the request of the Registered Holder, the opinion of a
firm of independent certified public accountants (which may be the regular
auditors of the Company) of recognized national standing selected by the Board
of Directors, which notice or opinion shall state the Exercise Price resulting
from such adjustment and the increase or decrease, if any, in the number of
shares purchasable at such price upon the exercise of this Warrant, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based.
(g) Other Notices. In case at any time:
(i) the Company shall declare any cash dividend on its Common Stock;
(ii) the Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends)
to the holders of its Common Stock;
(iii) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights;
(iv) the Company shall authorize the distribution to all holders of
its Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of earnings or earned
surplus or dividends payable in Common Stock);
(v) there shall be any capital reorganization, or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with another corporation (other than a subsidiary of the Company in which
the Company is the surviving or continuing corporation and no change occurs
in the Company's Common Stock), or sale of all or substantially all of its
assets to another corporation;
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(vi) there shall be a voluntary or involuntary dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, or
winding up of the Company; or
(vii) the Company proposes to take any other action or an event occurs
which would require an adjustment of the Exercise Price pursuant to
subsection (h) of this Section 7;
then, in any one or more of said cases the Company shall give written notice,
addressed to the Registered Holder at the address of such Registered Holder as
shown on the books of the Company, of (1) the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights, or (2) the date (or, if not then known, a reasonable
approximation thereof by the Company) on which such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up or other action,
as the case may be, shall take place. Such notice shall also specify (or, if
not then known, reasonably approximate) the date as of which the holders of
Common Stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation,
bankruptcy, assignment for the benefit of creditors, winding up, or other
action, as the case may be. Such written notice shall be given at least thirty
(30) days prior to the action in question and not less than thirty (30) days
prior to the record date or the date on which the Company's transfer books are
closed in respect thereto. Such notice shall also state that the action in
question or the record date is subject to the effectiveness of a registration
statement under the Act, or to a favorable vote of stockholders, if either is
required.
(h) Certain Events. If any event occurs as to which in the reasonable
opinion of the Registered Holder, in good faith, the other provisions of this
Section 7 are not strictly applicable but the lack of any adjustment would not
in the opinion of the Registered Holder fairly protect the Registered Holder in
accordance with the basic intent and principles of such provisions, or if
strictly applicable would not fairly protect the purchase rights of the
Registered Holder in accordance with the basic intent and principles of such
provisions, then the Registered Holder shall give written notice thereof to the
Company. If the Company and the Registered Holder cannot agree with respect to
an adjustment of the Exercise Price hereof within fifteen (15) days of the
delivery of such notice by the Registered Holder to the Company, then the
Company shall appoint a firm of independent certified public accountants (which
may be the regular auditors of the Company) of recognized national standing,
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the basic intent and principles established in the other
provisions of this Section 7, necessary to preserve, without dilution, the
exercise rights of the Registered Holder. Upon receipt of such opinion, the
Company shall forthwith make the adjustments described herein. The cost of the
services performed by the firm of independent certified public accountants shall
be borne by the Company; provided, however, that if in the opinion of such firm
no adjustment is necessary, then the cost of such firm shall be borne by the
Registered Holder.
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Section 8. Certain Dividends and Distributions. In the event that the
Company shall at any time prior to the exercise of this Warrant declare a
dividend (other than a dividend consisting solely of shares of Common Stock or a
cash dividend or distribution payable out of current or retained earnings) or
otherwise distribute to its stockholders any monies, assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another person or entity, or any other thing
of value, the Registered Holder shall thereafter be entitled, in addition to the
shares of Common Stock receivable upon the exercise of the Warrant, to receive,
upon he exercise of the Warrant, the same monies, property, assets, rights,
evidences of indebtedness, securities or any other thing of value that the
Registered Holder would have been entitled to receive at the time of such
dividend or distribution had the Registered Holder been an owner of record of
the shares of Common Stock into which the Warrant is then being exercised as of
the record date or other date of determination for such dividend or distribution
and an appropriate provision (which provision may include without limitation,
the establishment of an escrow agreement in favor of the Registered Holder in
which the portion of the dividend or distribution attributable to the Warrant is
held) shall be made a part of any such dividend or distribution.
Notwithstanding any provision herein to the contrary, no adjustment under this
Section 8 shall be made with respect to any cash dividend or distribution
payable solely out of current or retained earnings of the Company.
Section 9. No Rights or Liabilities as a Stockholder. The Registered
Holder shall not be entitled to vote or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained herein be construed to confer upon
the holder of this Warrant, as such, the rights of a stockholder of the Company
or the right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, or give or withhold consent to any
corporate action or to receive notice of meetings or other actions affecting
stockholders (except as provided herein), or to receive dividends or
subscription rights or otherwise, until the Date of Exercise shall have occurred
and then only with respect to the Warrant Shares purchased pursuant to such
exercise. No provision of this Warrant, in the absence of affirmative action by
the Registered Holder hereof to purchase shares of Common Stock, and no mere
enumeration herein of the rights and privileges of the Registered Holder, shall
give rise to any liability of such holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
Section 10. Fractional Warrant Shares. The Company shall not be
required to issue fractions of Warrant Shares upon exercise of the Warrant or to
distribute certificates which evidence fractional Warrant Shares. If any
fraction of a Warrant Share would, except for the provisions of this Section 10,
be issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay to the Registered Holder an amount in cash equal to the Market
Price as of the Date of Exercise, multiplied by such fraction.
Section 11. Transfer Restrictions; Registration of the Warrant and
Warrant Shares. (a) Neither the Warrant nor the Warrant Shares have been
registered under the Act. The Registered Holder, by acceptance hereof,
represents that it is acquiring this Warrant to be issued to it for its own
account and not with a view to the distribution thereof, and agrees not to sell,
transfer, pledge or hypothecate this Warrant, any purchase rights evidenced
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hereby or any Warrant Shares unless a registration statement is effective for
this Warrant or the Warrant Shares under the Act or, in the opinion of such
Registered Holder's counsel reasonably satisfactory to the Company, a copy of
which opinion shall be delivered to the Company, such transaction is exempt from
the registration requirements of the Act.
(b) Subject to the provisions of the following paragraph of this
Section 11, each Certificate for Warrant Shares shall be stamped or otherwise
imprinted with a legend in substantially the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or applicable state securities laws and may not be
offered for sale, sold, transferred or otherwise disposed of in
the absence of an effective registration statement for such
securities under the Act, or an opinion of counsel, satisfactory
to the issuer hereof, to the effect that registration is not
required under the Act.
(c) The restrictions and requirements set forth in the foregoing
paragraph shall apply with respect to Warrant Shares unless and until such
Warrant Shares are sold or otherwise transferred pursuant to an effective
registration statement under the Act or are otherwise no longer subject to the
restrictions of the Act, at which time the Company agrees to promptly cause such
restrictive legends to be removed and stop transfer restrictions applicable to
such Warrant Shares to be rescinded.
(d) The Company will use its best efforts to comply with the reporting
requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") (whether or not it shall be required to do so pursuant
to such Sections) and will use its best efforts to comply with all other public
information reporting requirements of the Securities and Exchange Commission
(including, without limitation, Rule 144 promulgated under the Act) from time to
time in effect and relating to the availability of an exemption from the Act for
sale of restricted securities. The Company also will cooperate with the
Registered Holder and with each holder of any Warrant Shares in supplying such
information as may be necessary for any such holders to complete and file any
information reporting forms presently or hereafter required by the Securities
and Exchange Commission as a condition to the availability of an exemption from
the Act for the sale of restricted securities.
(e) The Registered Holder, by acceptance hereof, represents that such
an "accredited investors" as defined in Regulation D promulgated under the Act,
and that the Registered Holder has been provided access to all material
information regarding the Company requested by such Registered Holder.
Section 12. Registration Rights. The Company covenants and agrees as
follows:
(a) Definitions. For purposes of this Section 12:
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(i) The term "Holder" means each of the persons who at the time holds
Registrable Securities or a warrant or warrants (including this Warrant) to
purchase Registrable Securities.
(ii) The term "Public Corporation" means a corporation which has a
class of equity securities registered pursuant to Section 12 of the 1934
Act, or which is required to file periodic reports pursuant to Section
15(d) of the 1934 Act.
(iii) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and such registration
statement or document becoming effective.
(iv) The term "Registrable Securities" means (i) the Warrant Shares
issuable upon the exercise of this Warrant and (ii) any Common Stock issued
as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with
respect to, or in exchange for or in replacement of the Warrant or the
Warrant Shares; provided, however, that any such securities shall cease to
be Registrable Securities when (i) one or more registration statements with
respect to the sale of such securities shall have become effective under
the Act and all such securities shall have been disposed of in accordance
with the plan of distribution set forth therein; (ii) such securities shall
have been disposed of in accordance with Rule 144 promulgated under the
Act, or any successor rule or regulation thereto, or any statute hereafter
adopted to replace or to establish the exemption that is now covered by
said Rule 144 ("Rule 144"); (iii) such securities may be sold by a Holder
in a transaction pursuant to the provisions of Rule 144 provided that such
rule shall be at such time available for the sale of all such securities
which the Holder at such time desires to sell; or (iv) such securities may
otherwise be sold to the public in a transaction not requiring registration
under the Act.
(v) The term "Registration Expenses" means all registration,
qualification and filing fees, printing expenses, escrow fees and blue sky
fees, fees and disbursements of counsel for the Company and of the
Company's independent certified public accountants, in each case incident
to or required by the registration under this Warrant, and any other fees
and expenses of the registration under this Warrant which are not Selling
Expenses.
(vi) The term "Selling Expenses" means all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel for any
Holder.
(vii) All other capitalized terms used in this Section that are not
defined herein shall have the meaning otherwise given in this Warrant.
(b) Demand Registration Rights.
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(i) At any time after the first anniversary of the Date of Issuance of
this Warrant, if the Company receives a written request from the owners of
a majority of shares of the Common Stock issued or issuable upon the
exercise of all warrants to purchase Common Stock issued in connection with
the delivery of this Warrant, to file a registration statement under the
Act covering such Common Stock, then the Company shall, subject to the
limitations of this Section 12(b) and Section 12(l), use its best efforts
consistent with the terms contained in this Section 12 to effect the
registration under the Act, as soon as practicable, of the number of shares
of Common Stock requested to be registered. The Company also shall use its
best efforts to facilitate the sale and distribution of all or such portion
of such Registrable Securities as are permitted to be registered pursuant
to the terms of this Section 12(b). If the Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they will so advise the Company as part of their request made
pursuant to this Section 12(b), and the managing or lead managing
underwriter of such offering shall be an investment banking firm selected
by the Company and reasonably acceptable to the Holder or Holders holding a
majority of the Registrable Securities requested to be included in the
offering. The Company shall, within ten (10) days of receipt of such
request, give written notice to all other Holders of Registrable Securities
of such requested registration.
(ii) Any Holder of Registrable Securities may, within thirty (30) days
following receipt of the notice by the Company given pursuant to Section
12(b)(1) (the "Demand Notice Period") and subject to any underwriting
referred to in Section 12(b)(i), give a written notice to the Company,
specifying the number of Registrable Securities which such Holder wishes to
include in the proposed registration. Any Holder of Registrable Securities
who fails to request registration of Registrable Securities within the
Demand Notice Period shall not be permitted to register any Registrable
Securities in the registration.
(iii) The Company shall not be obligated to take any action to effect
any registration, qualification or compliance pursuant to this Section
12(b), (A) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting
such registration, unless the Company is already subject to service in such
jurisdiction and except as may be required by the Act, or (B) if, within
ten (10) days after receipt by the Company of a request for registration
pursuant to Section 12(b)(i), the Company gives notice to the Holder or
Holders so requesting such registration that it is engaged, or has a bona
fide intention to engage, within ninety (90) days of the date of such
request, in a firmly underwritten public offering as to which each Holder
is entitled to include Registrable Securities pursuant to Section 12(c)
hereof. Subject to the foregoing clauses (A) and (B) and to Section
12(b)(vii) hereof, the Company shall use its best efforts to file a
registration statement covering the Registrable Securities so requested to
be registered as soon as practicable after receipt of the requests of the
Holder or Holders pursuant to this Section 12(b).
(iv) If the Registrable Securities will be distributed by means of an
underwriting, then all Holders of Registrable Securities proposing to
distribute their securities through the registration shall enter into an
underwriting agreement with the managing or lead managing underwriter in
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the form customarily used by such underwriter with such changes thereto as
the parties thereto shall agree. If any Holder of Registrable Securities
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing or lead
managing underwriter. Any Registrable Security excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
(v) Whenever a registration is requested by a Holder or Holders
pursuant to Section 12(b)(i), unless any managing or lead managing
underwriter objects thereto, the Company may include in such registration
securities for offering by the Company and any other holder of securities
who has the right to request the Company to register securities of the
Company in such registration, it being understood, however, that the
Company's and such other holder's right of inclusion in such registration
shall be subordinated to, and not pari passu with, the rights of the
Holders under this Section 12(b).
(vi) Notwithstanding anything to the contrary contained herein, the
Company need not cause a registration statement filed pursuant to the
provisions of this Section 12(b) to become effective under the Securities
Act on more than one (1) occasion; provided, however, that any registration
requested by a Holder or Holders pursuant to this Section 12(b) which shall
not have become effective or remained effective in accordance with the
provisions of Section 12(e) hereof shall not be deemed to be a registration
for any purpose hereunder.
(vii) Notwithstanding the foregoing, if the Company shall furnish to
the Holders a certificate signed by the Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is
therefore essential to defer the filing of such registration statement, the
Company may direct that a registration pursuant to this Section 12(b) be
delayed for so long as the basis for the Board of Directors' judgment
exists; provided, however, that (i) the Company may not delay such
registration for a period of more than forty-five (45) days from the date
notice is first received by the Company from a Holder or Holders pursuant
to subsection (i) above, and (ii) the Company may not defer its obligation
in this manner more than once.
(c) Piggyback Registration Rights.
(i) If, at any time or from time to time, the Company shall determine
to register any of its Common Stock, either for its own account or for the
account of a security holder or holders, other than (A) pursuant to a
registration statement on Form S-4 or S-8, or (B) a registration governed
by Section 12(b) hereof, the Company will (X) promptly give the Holders
written notice thereof, and (Y) include in such registration (and any
related qualification under blue sky or other state securities laws), and
in any underwriting involved therein, all of the Registrable Securities
specified in a written request or requests made by a Holder or Holders
within twenty (20) days after receipt of such written notice from the
Company.
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(ii) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holder as part of the written notice given pursuant to Section
12(c)(i). In such event, the right of each Holder to registration pursuant
to this Section 12(c) shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of the Registrable Securities owned
by such Holder in the underwriting to the extent provided under this
Section 12(c). If a Holder proposes to distribute its Registrable
Securities through such underwriting it shall (together with the Company
and any other holders of securities of the Company distributing their
securities through such underwriting) enter into an underwriting agreement
with the managing or lead managing underwriter selected by the Company in
the form customarily used by such underwriter with such changes thereto as
the parties thereto shall agree. Notwithstanding any other provision of
this Section 12(c), if the managing or lead managing underwriter determines
that market factors require that the number of Registrable Securities and
other securities requested to be included in the registration be limited,
the managing or lead managing underwriter may reduce the number of
Registrable Securities and securities of any other holders of securities to
be included in the registration. If the registration includes an
underwritten primary registration on behalf of the Company, the reduction
shall be taken (i) first from and to the extent of the securities requested
to be included in the registration by the Holders and the holders of any
other securities pro rata according to the number of securities requested
by the Holders and such holders to be included in the registration, and
(ii) thereafter from the securities to be registered on behalf of the
Company. If the registration consists only of any underwritten secondary
registration on behalf of holders of securities of the Company, the
reduction shall be taken (i) first from and to the extent of the securities
requested to be included in the registration by the Holders and any other
holders of securities included in the registration other than pursuant to
demand registration right pro rata according to the number of securities
requested by the Holders and such other holders to be included in
registration and (ii) thereafter from securities, if any, to be registered
on behalf of holders of securities included in the registration pursuant to
demand registration rights. The Company shall advise any Holders and other
holders participating in such underwriting as to any such limitation and
the number of shares that may be included in the registration and
underwriting. If a Holder disapproves of the terms of such underwriting,
such Holder may elect to withdraw therefrom by written notice to the
Company and the managing or lead underwriter. Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from the
registration.
(iii) The Company may withdraw a registration for which registration
rights have been exercised pursuant to this Section 12(c) at any time prior
to the time it becomes effective. This paragraph shall not confer upon the
Company any withdrawal rights with respect to a registration for which
registration rights have been exercised pursuant to Section 12(b) hereof.
(d) Expenses of Registration. All Registration Expenses incurred in
connection with a registration pursuant to this Section 12 shall be borne by
Company. All Selling Expenses relating to the Registrable Securities registered
on behalf of a Holder shall be borne by such Holder pro rata based upon the
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total number of securities included in the registration or, if such Selling
Expenses are specifically allocable to securities held by specific holders, by
such holders to the extent related to the sale of such securities.
(e) Registration Procedures.
(i) In connection with the registration or Registrable Securities
pursuant to this Section 12, the Company shall as expeditiously as is
reasonable:
(A) prepare and file with the SEC on any appropriate form a
registration statement with respect to such Registrable Securities and
use its best efforts to cause such registration statement to become
effective;
(B) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply
with the provisions of the Act with respect to the disposition of all
Registrable Securities and other securities covered by such
registration statement for a period of 180 days or until the Holder or
Holders have completed the distribution described in such registration
statement, whichever occurs first;
(C) furnish to each seller of such Registrable Securities such
number of conformed copies of such registration statement and of each
such amendment and supplement thereto (at least one of which shall
include all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and any summary prospectus), in conformity with the
requirements of the Act, such documents incorporated by reference in
such registration statement or prospectus, and such other documents,
as such seller may reasonably request in order to facilitate the sale
or disposition or such Registrable Securities;
(D) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement
under such other securities or "blue sky" laws of such jurisdictions
as the underwriter shall reasonably request, and do any and all other
acts and things as may be reasonably necessary to consummate the
disposition in such jurisdictions of the Registrable Securities
covered by such registration statement, except that the Company shall
not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is
not so qualified, or to subject itself to taxation in respect of doing
business in any such jurisdiction, or to consent to general service of
process in any such jurisdiction.
(E) immediately notify each seller of Registrable Securities, at
any time when a prospectus relating thereto is required to be
delivered under the Act, of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing or if it is necessary, in the opinion of
counsel to the Company, to amend or supplement such prospectus to
comply with law, and at the request of any such seller prepare and
furnish to any such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable
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Securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in
the light of the circumstances then existing and shall otherwise
comply in all material respects with law and so that such prospectus,
as amended or supplemented, will comply with law.
(F) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months, beginning with the
first month of the first fiscal quarter after the effective date of
such registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Act;
(G) use its best efforts to list such securities on each
securities exchange or over-the-counter market on which shares of
Common Stock are then listed, if such securities are not already so
listed and if such listing is then permitted under the rules of such
exchange and, if shares of Common Stock are not then listed on a
securities exchange or over-the-counter market, to use its best
efforts to cause such securities to be listed on such securities
exchange or over-the-counter market as the managing or lead managing
underwriter shall reasonably request;
(H) use its best efforts to provide a transfer agent and
registrar for such Registrable Securities not later than the effective
date of such registration statement; and
(I) issue to any underwriter to which any holder of Registrable
Securities may sell such Registrable Securities in connection with any
such registration (and to any direct or indirect transferee of any
such underwriter) certificates evidencing shares of Common Stock
without restrictive legends.
(ii) If requested by the managing or lead managing underwriter for any
underwritten offering of Registrable Securities on behalf of a Holder or
Holders of Registrable Securities, the Company will enter into an
underwriting agreement with the underwriters of such offering, such
agreement to contain such representations and warranties by the Company and
each such Holder and such other terms and conditions as are contained in
underwriting agreements
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customarily used by such managing or lead managing underwriter with such
changes as the parties thereto shall agree, including, without limitation,
provisions relating to indemnification and contribution in lieu thereof.
(iii) The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such
Holder or Holders, the Registrable Securities held by them and the
distribution proposed by such Holder or Holders as the Company may from
time to time reasonably request and as shall be reasonably required in
connection with any registration, qualification or compliance referred to
in this Agreement.
(iv) The Holder or Holders of Registrable Securities included in any
registration shall, upon request by the Company and the managing or lead
managing underwriter, execute and deliver custodian agreements and powers
of attorney in form and substance reasonably satisfactory to the Company
and such Holder or Holders and as shall be reasonably necessary to
consummate the offering.
(f) Indemnification. (i) The Company will indemnify each Holder with
respect to which a registration has been effected pursuant to this Agreement,
each of its officers and directors, if any, and each underwriter, if any, and
each person who controls the Holder or any such underwriter within the meaning
of Section 15 of the Act, against any and all losses, claims, damages,
liabilities or expenses (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement or prospectus, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading, or any violation by the Company of the Act or any rule or
regulation promulgated under the Act applicable to the Company in connection
with any such registration, and the Company will reimburse each such Holder,
each such underwriter and each person who controls such Holder or any such
underwriter, for any legal and other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating, preparing or defending
any such claims, loss, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder or underwriter and stated to be
specifically for use therein.
(ii) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, each underwriter, if
any, of the Company's securities covered by such a registration statement, each
person who controls the Company or such underwriter within the meaning of
Section 15 of the Act and each other such holder of securities included in the
registration against any and all losses, claims, damages, liabilities and
expenses (or actions in respect thereof), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such
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registration statement or prospectus, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statement therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse the Company, such holders, underwriters
or control persons for any legal or any other expenses reasonably incurred, as
such expenses are incurred, in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement or
prospectus in reliance upon and in conformity with written information furnished
to the Company by such Holder. Notwithstanding the foregoing, the liability of
each Holder under this Section 12(f) shall be limited to an amount equal to the
aggregate proceeds received by such Holder from the sale of Registrable
Securities hereunder, unless such liability arises out of or is based on willful
conduct by such Holder.
(iii) Each party entitled to indemnification under this Section 12 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnify may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claims or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (which approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such Indemnified Party's expense; provided, however, that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action. Notwithstanding the foregoing, the Indemnifying Party shall
not be entitled to assume the defense for matters as to which there is, in the
opinion of counsel to the Indemnifying Party, a conflict of interest or separate
and different defenses. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and the litigation resulting therefrom.
(g) Contribution. (i) If the indemnification provided for in Section
12(f) hereof is unavailable to the Indemnified Parties in respect of any losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to therein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statement or omission
which resulted in such losses, claims, damages, liabilities or expenses (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue statement (or alleged untrue statement), of a
material fact or the omission (or alleged omission) to state a material fact
relates to information supplied by the Indemnifying Party or the Indemnified
Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
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each Holder agree that it would not be just and equitable if contribution
pursuant to this Section 12(f) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities or expenses (or
actions in respect thereof) referred to above in this Section shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim.
(ii) Notwithstanding anything to the contrary contained herein, the
obligation of each Holder to contribute pursuant to this Section 12(g) is
several and not joint and no selling Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Holder were offered to the public exceeds the amount of any
damages which such selling Holder has otherwise been required to pay by reason
of such untrue statement (or alleged untrue statement) or omission (or alleged
omission).
(iii) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(h) 1934 Act Registration. The Company covenants and agrees that until
such time as there shall be no Registrable Securities outstanding:
(i) it will, if required by law, maintain an effective registration
statement (containing such information and documents as the SEC shall
specify) with respect to the Common Stock under Section 12(g) of the 1934
Act and will file in a timely manner such information, documents and
reports as the SEC may require or prescribe for companies whose stock has
been registered pursuant to said Section 12(g);
(ii) it will, if a registration statement with respect to the Common
Stock under Section 12(b) or Section 12(g) of the 1934 Act is effective,
make whatever filings with the SEC or otherwise make generally available to
the public such financial and other information as may be necessary in
order to enable the Holders to sell shares of Common Stock pursuant to the
provisions of Rule 144 promulgated under the Act, or any successor rule or
regulation thereto or any statue hereafter adopted to replace or to
establish the exemption that is now covered by said Rule 144 ("Rule 144");
(iii) it will, if no longer required to file reports pursuant to
Section 12(g) of the 1934 Act, upon the request of the Registered Holder,
make publicly available the information specified in subparagraph (c)(2) of
Rule 144, and will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Holder
to sell Registrable Securities without registration under the Act within
the limitation of the exemptions provided by Rule 144 or any similar rule
or regulation hereafter adopted by the SEC; and
(iv) upon the request of any Holder, it will deliver to such Holder a
written statement as to whether it has complied with the requirements of
this Section 12(h).
The Company represents and warrants that such registration statement or any
information, documents or report filed with the SEC in connection therewith or
any information so made public shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein not misleading. The
Company agrees to indemnify and hold harmless (or to the extent the same is not
enforceable, make contribution to) the Holders, their partners, advisory
committee members, officers, directors and employees acting for any Holder in
connection with any offering or sale by such Holder of Registrable Securities or
any person, firm, corporation controlling (within the meaning of either Section
15 of the Act or Section 20 of the 1934 Act) such Holder from and against any
and all losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arising out of or resulting from any breach of the foregoing
representation or warranty, all on terms and conditions comparable to those set
forth in Section 12(f); provided, however, that the Company shall be given
written notice and an opportunity to assume on terms and conditions comparable
to those set forth in Section 12(f) the defense thereof.
(i) Limitations on Registration Rights. Notwithstanding the rights
granted to the Registered Holder pursuant to this Section 12, the Company shall
be not be obligated to file a registration statement pursuant to this Section 12
for a period of 180 days after the effective date of any registration statement
filed by the Company in which certain lenders of the Company-Main Street
Merchant Partners II, L.P. and General Associates, L.L.C.-included shares of
Common Stock.
Section 13. Notices. All notices, requests, demands and other
communications relating to this Warrant shall be in writing and shall be deemed
to have been duly given if delivered personally or sent by United States
certified or registered first-class mail, postage prepaid, return receipt
requested, to the parties hereto at the following addresses or at such other
address as any party hereto shall hereafter specify by notice to the other party
thereto:
If to the Registered Holder of this Warrant or the holder of the
Warrant Shares, addressed to the address of such Registered Holder or
holder as set forth on books of the Company or otherwise furnished by the
Registered Holder or holder to the Company.
If to the Company, addressed to:
Boots & Xxxxx International Well Control, Inc.
000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxxx Xxxxxx, Esq.
Xxxxxx Xxxxxx Xxxxx Xxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
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Section 14. Binding Effect. This Warrant shall be binding upon and
inure to the sole and exclusive benefit of the Company, its successors and
assigns, and the holder or holders from time to time of this Warrant and the
Warrant Shares.
Section 15. Survival of Rights and Duties. This Warrant shall
terminate and be of no further force and effect on the earlier of (i) 5:00 p.m.,
Houston time, on the Expiration Date and (ii) the date on which this Warrant and
all purchase rights evidenced hereby have been exercised, except that the
provisions of Sections 4, 6(c), 11 and 12 hereof shall continue in full force
and effect after such termination date.
Section 16. Governing Law. This Warrant shall be construed in
accordance with and governed by the laws of the State of Texas.
Section 17. Section Headings. The Section headings in this Warrant are
for purposes of convenience only and shall not constitute a part hereof.
Section 18. Amendment or Waiver. This Warrant and any term hereof may
be amended, waived, discharged or terminated only by and with the written
consent of the Company and the holder of this Warranty.
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In Witness Whereof, the Company has caused this Warrant to be executed under its
corporate seal by its officers thereunto duly authorized as of the date hereof.
Boots & Xxxxx International Well Control, Inc.
By: _____________________________________
Name: ___________________________________
Title: __________________________________
Attest:
By: _____________________________________
Name: ___________________________________
Title: __________________________________
-23-
FORM OF ELECTION TO PURCHASE
(To Be Executed Upon Exercise of this Warrant)
To Boots & Xxxxx International Well Control, Inc.:
The undersigned, the record holder of the attached Warrant (Warrant No.
___), hereby Irrevocably elects to exercise the right, represented by the
attached Warrant, to purchase ___________ of the Warrant Shares and herewith
tenders payment for such Warrant Shares to the order of Boots & Xxxxx
International Well Control, Inc. of $_____________ representing the full
purchase price for such shares at the price per share provided for in the
attached Warrant and the delivery of any applicable taxes payable by the
undersigned pursuant to such Warrant.
In lieu of paying the purchase price as provided in the preceding paragraph, the
undersigned will/will not (circle appropriate word(s)) make a cashless exercise
pursuant to Section 3(c) of the attached Warrant.
The undersigned requests that certificates for such shares be issued in the name
of:
___________________________________ Please insert social security or tax
identification number
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________
(Please print name and address)
In the event that not all of the purchase rights represented by the
attached Warrant are exercised, a new Warrant, substantially identical to the
attached Warrant, representing the rights formerly represented by the attached
Warrant which have not been exercised, shall be issued in the name of and
delivered to:
___________________________________
(Please print name)
___________________________________
___________________________________
(Please print address)
-24-
Dated: ______________ Name of Holder
(Print):________________________________
By:________________________________
Name:______________________________
Title:_____________________________
-25-
FORM OF ASSIGNMENT
Form Value Received, _____________ hereby sells, assigns and transfers to each
assignee set forth below all of the rights of the undersigned under the attached
Warrant (Warrant No. _____) with respect to the number of shares of Common Stock
covered thereby set forth opposite the name of such assignee unto:
Name of Assignee Address Number of Shares of
Common Stock
If the total of said purchase rights represented by the attached Warrant
shall not be assigned, the undersigned requests that a new Warrant evidencing
the purchase rights not so assigned be issued in the name of and delivered to
the undersigned.
Dated: ________________ Name of Holder (Print):________________________
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
-26-
