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EXHIBIT 10.5
Execution Copy
THIS WARRANT AGREEMENT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS
HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH
ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER, ANY SUCH STATE SECURITIES
LAWS OR THE PROVISIONS OF THIS WARRANT AGREEMENT.
WARRANT AGREEMENT
for the
Purchase of Common Stock
By and Between
XXXXXXX EXPLORATION COMPANY
and
SOCIETE GENERALE,
Southwest Agency
Dated as of
July 19, 1999
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TABLE OF CONTENTS
Page
1. DEFINITIONS.............................................................................................2
2. ISSUANCE AND EXERCISE OF WARRANTS.......................................................................6
2.1 Issuance of Warrants...........................................................................6
2.2 Manner of Exercise.............................................................................6
2.3 Payment of Taxes...............................................................................8
2.4 Fractional Shares..............................................................................8
2.5 Continued Validity.............................................................................8
3. TRANSFERS, DIVISION AND COMBINATION.....................................................................8
3.1 Transfer.......................................................................................8
3.2 Division and Combination.......................................................................9
3.3 Expenses.......................................................................................9
3.4 Maintenance of Books...........................................................................9
4. ADJUSTMENTS.............................................................................................9
4.1 Stock Dividends, Subdivisions and Combinations.................................................9
4.2 Certain Other Distributions...................................................................10
4.3 Issuance of Additional Shares of Stock........................................................11
4.4 Issuance of Warrants or Other Rights..........................................................11
4.5 Issuance of Convertible Securities............................................................12
4.6 Superseding Adjustment........................................................................13
4.7 Other Provisions Applicable to Adjustments Under This Section.................................13
4.8 Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets..............14
5. NOTICES TO WARRANT HOLDERS.............................................................................15
5.1 Notice of Adjustments.........................................................................15
5.2 Notice of Certain Corporate Action............................................................16
6. REPRESENTATIONS AND WARRANTIES.........................................................................16
7. CERTAIN COVENANTS......................................................................................17
7.1 No Impairment.................................................................................17
7.2 Reservation and Authorization of Common Stock; Registration with, or Approval of, any
Governmental Authority........................................................................18
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.....................................................18
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9. RESTRICTIONS ON TRANSFERABILITY........................................................................18
9.1 Restrictive Legend............................................................................18
9.2 Notice of Proposed Transfers; Requests for Registration.......................................19
9.3 Incidental Registration.......................................................................19
9.4 Registration Procedures.......................................................................20
9.5 Expenses......................................................................................21
9.6 Indemnification and Contribution..............................................................22
9.7 Termination of Restrictions...................................................................24
9.8 Listing on Securities Exchange................................................................25
10. SUPPLYING INFORMATION..................................................................................25
11. LOSS OR MUTILATION.....................................................................................25
12. OFFICE OF THE ISSUER...................................................................................25
13. APPRAISAL..............................................................................................26
14. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER......................................................26
15. MISCELLANEOUS..........................................................................................26
15.1 Non-waiver and Expenses.......................................................................26
15.2 Notice Generally..............................................................................26
15.3 Indemnification...............................................................................27
15.4 Remedies......................................................................................27
15.5 Successors and Assigns........................................................................28
15.6 Complete Agreement; Amendment.................................................................28
15.7 Severability..................................................................................28
15.8 Headings......................................................................................28
15.9 Governing Law; Consent to Jurisdiction and Venue..............................................28
15.10 Consent to Jurisdiction and Venue.............................................................28
15.11 Counterparts..................................................................................29
EXHIBITS:
Exhibit A -Form of Warrant Certificate...................................................................Exh. A-1
Exhibit B -Form of Cashless Conversion Notice............................................................Exh. B-1
SCHEDULES:
Schedule A -Capital Stock of the Issuer, Including Shares Subject to
Outstanding Warrants, Options, Conversion Rights, Etc.........................................Sch. A-1
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THIS WARRANT AGREEMENT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANTS
HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH
ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER, ANY SUCH STATE SECURITIES
LAWS OR THE PROVISIONS OF THIS WARRANT AGREEMENT.
WARRANT AGREEMENT
THIS WARRANT AGREEMENT, dated as of July 19, 1999 (this "Agreement"), is entered
into by and between Xxxxxxx Exploration Company, a Delaware corporation
("Issuer"), and Societe Generale, Southwest Agency, a bank organized under the
laws of the Republic of France acting through its Southwest Agency (the "Warrant
Holder" or "Societe Generale").
W I T N E S S E T H:
WHEREAS, Xxxxxxx Oil & Gas, L.P., a limited partnership formed under
the laws of the State of Delaware (the "Borrower"), the financial institutions
party to the Credit Agreement referred to below (each a "Lender" and
collectively, the "Lenders"), and the Bank of Montreal, as agent for Lenders
under the Credit Agreement (in such capacity, the "Agent"), are parties to that
certain Credit Agreement, dated as of January 26, 1998, as amended by that
certain First Amendment to Credit Agreement, dated as of August 20, 1998, and
that certain Second Amendment to Credit Agreement, dated as of March 26, 1999
(as so amended, the "Credit Agreement"); and
WHEREAS, the Borrower advised the Lenders and the Agent that it desired
to amend certain provisions of the Credit Agreement, and the Borrower requested
that the Lenders and the Agent agree to various amendments to certain provisions
of the Credit Agreement; and
WHEREAS, the Lenders and the Agent have agreed to so amend certain
provisions of the Credit Agreement upon the terms and subject to the conditions
and limitations of the Third Amendment to the Credit Agreement dated as of July
19, 1999 (the "Third Amendment");
WHEREAS, the Issuer has guaranteed the obligations of the Borrower to
the Lenders and the Agent;
WHEREAS, as a consequence of the contractual relationships between the
Borrower and the Lenders, the Issuer has and will continue to receive
substantial benefits from the Lenders;
WHEREAS, in order to induce the Lenders to enter into the Third
Amendment, the Issuer has agreed to execute and deliver this Agreement and to
issue to Societe Generale the warrants herein described;
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NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby stipulate and agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms have the respective
meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Issuer after the Closing Date, other than Warrant
Stock.
"Affiliate" shall mean as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition,
"control" (including the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or by contract or otherwise; and the terms "controlled" and
"controlling" have the meanings correlative to the foregoing.
"Appraised Value" shall mean, in respect of any share of Common Stock
on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i)
a minority interest or (ii) any lack of liquidity of the Common Stock
or to the fact that the Issuer may have no class of equity registered
under the Exchange Act) as of the last day of the most recent fiscal
month to end within 60 days prior to such date specified, based on the
value of the Issuer, as determined by an investment banking firm
(selected pursuant to the terms of Section 13 of this Agreement) in
accordance with such firm's customary practices, divided by the number
of Outstanding shares of Common Stock, after giving pro forma effect to
the exercise or conversion of all exercisable or Convertible Securities
(including the Warrants) for Common Stock and the payment of the
exercise or conversion price therefor.
"Book Value" shall mean, in respect of any share of Common Stock on any
date herein specified, the consolidated book value of the Issuer as of
the last day of any month immediately preceding such date, divided by
the number of Outstanding shares of Common Stock, after giving pro
forma effect to the exercise or conversion of all exercisable or
Convertible Securities (including the Warrants) for Common Stock and
the payment of the exercise or conversion price therefor, as determined
in accordance with GAAP by any firm of independent certified public
accountants of recognized national standing selected by the Issuer and
reasonably acceptable to the Required Holders.
"Business Day" shall mean any day that is not a Saturday or Sunday or a
day on which banks are required or permitted to be closed in the State
of New York or California.
"Cashless Conversion" shall have the meaning set forth in Section
2.2(b)(ii) hereof.
"Cashless Conversion Notice" shall have the meaning set forth in
Section 2.2(b)(ii) hereof.
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"Closing Date" shall mean the date hereof.
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean the common stock, $0.01 par value per share,
of the Issuer, as constituted on the Closing Date, and any capital
stock into which such Common Stock may thereafter be changed, and shall
also include (i) capital stock of the Issuer of any other class
(regardless of how denominated) issued to the holders of shares of
Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of
the Issuer and which is not subject to redemption and (ii) shares of
common stock of any successor or acquiring corporation (as defined in
Section 4.8 of this Agreement) received by or distributed to the
holders of Common Stock of the Issuer in the circumstances contemplated
by Section 4.8 of this Agreement.
"Convertible Securities" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or
exchangeable, with or without payment of additional consideration in
cash or property, for Additional Shares of Common Stock, either
immediately or upon the occurrence of a specified date or a specified
event.
"Current Market Price" shall mean, in respect of any share of Common
Stock on any date herein specified, (a) if there shall then be a public
market for the Common Stock, the average Price per share for the 20
trading days preceding such date; or (b) at any time that there is no
public market for the Common Stock, the fair market value per share of
Common Stock on such date as determined reasonably and in good faith by
the board of directors of the Issuer (determined without giving effect
to any discount for a minority interest, any restrictions on
transferability or any lack of liquidity of the Common Stock or to the
fact that the Issuer has no class of equity registered under the
Exchange Act), such fair market value to be determined by reference to
the cash price that would be paid between a fully informed buyer and
seller under no compulsion to buy or sell, provided that (i) if Current
Market Price is being determined in connection with an issuance of
shares of Common Stock, solely to one or more Affiliates of the Issuer,
then if so requested by the Required Holders, Current Market Price
shall be the Appraised Value; and (ii) Current Market Price shall never
be less than Book Value.
"Current Warrant Price" shall mean, in respect of a share of Common
Stock at any date herein specified, two and 25/100 dollars ($2.25) per
share of Common Stock, subject to adjustment from time to time as
provided in this Agreement.
"Demanding Security Holder" shall have the meaning set forth in Section
9.3.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from
time to time.
"Exercise Period" shall mean the period during which the Warrants are
exercisable pursuant to Section 2.2.
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"Expiration Date" shall mean July 19, 2004.
"GAAP" shall mean generally accepted accounting principles in the
United States of America, as from time to time in effect.
"Material Adverse Effect" shall mean, as to the Issuer, any material
adverse effect on the business, assets, operations, prospects or
financial or other condition of the Issuer and its Subsidiaries, taken
as a whole.
"NASD" shall mean the National Association of Securities Dealers, Inc.,
or any successor thereto.
"Other Property" shall have the meaning set forth in Section 4.8.
"Outstanding" shall mean, when used with reference to Common Stock, at
any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by
or for the account of the Issuer or any Subsidiary, and shall include
all shares issuable in respect of outstanding scrip or any certificates
representing fractional interests in shares of Common Stock.
"Permitted Issuances" shall mean (i) the issuance of shares of Common
Stock upon exercise of the Warrants, (ii) the issuance of shares
relating to any benefit plan, stock option plan or any other
compensation plan offered solely to the Issuer's officers, directors
and/or employees, (iii) the issuance of shares of Common Stock as
consideration for the purchase of any property, stock, business or
securities from any Person who is not an Affiliate of the Issuer or any
Subsidiary immediately prior to such transaction whether such shares
are issued directly by the Issuer or a Subsidiary of the Issuer in
connection with any merger, consolidation or other business
combination, (iv) if there shall then be a public market for the Common
Stock, the issuance of shares of Common Stock upon receipt by the
Issuer of the Current Market Price therefor as described in clause (a)
of the definition of "Current Market Price" and (v) if there shall then
be no public market for the Common Stock, the issuance of shares of
Common Stock, warrants or Convertible Securities on terms that are at
least as favorable to the Issuer as terms that could be obtained in an
arm's length transaction with third Persons not Affiliates of the
Issuer or any Subsidiary and for consideration equal to the fair value
of such shares as determined in good faith by a majority of
disinterested members of the board of directors of the Issuer.
"Person(s)" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, limited liability company,
incorporated organization, association, corporation, institution,
public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
"Price" means the average of the "high" and "low" prices as reported in
The Wall Street Journal's listing for such day (corrected for obvious
typographical errors) or if such shares are not reported in such
listing, the average of the reported "high" and "low" sales prices on
the largest national securities exchange (based on the aggregate dollar
value of
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securities listed) on which such shares are listed or traded, or if
such shares are not listed or traded on any national securities
exchange, then the average of the reported "high" and "low" sales
prices for such shares in the over-the-counter market, as reported on
the National Association of Securities Dealers Automated Quotations
System, or, if such prices shall not be reported thereon, the average
of the closing bid and asked prices so reported, or, if such prices
shall not be reported, then the average of the closing bid and asked
prices reported by the National Quotations Bureau Incorporated. The
"average" Price per share for any period shall be determined by
dividing the sum of the Prices determined for the individual trading
days in such period by the number of trading days in such period.
"Registrable Securities" shall mean, at any particular time and as to
each Warrant Holder, (i) all shares of common stock issuable upon the
exercise of such Warrant Holder's Warrants and (ii) all of such Warrant
Holder's issued and outstanding Warrant Stock.
"Registration Expenses" shall have the meaning set forth in Section 9.5
of this Agreement.
"Registration Statement" shall have the meaning set forth in Section
9.4 of this Agreement.
"Required Holders" shall mean the Warrant Holders of Warrants
exercisable for an amount exceeding 50% of the aggregate number of
shares of Common Stock then purchasable upon exercise of all Warrants,
whether or not exercisable.
"Requirement of Law" shall mean, as to any Person, any requirement
contained in any certificate of incorporation, bylaws, or other
organizational or governing documents of such Person, and any law,
treaty, rule or regulation or determination of an arbitrator or a court
or other governmental authority, in each case applicable to or binding
such Person or any of the property or to which such Person or any of
its property is subject.
"Restricted Common Stock" shall mean shares of Common Stock which are,
or which upon their issuance on the exercise of a Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1 of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Subsidiary" shall mean any Person of which an aggregate of more than
50% of the outstanding sock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other managers of such Person (irrespective of whether, at the time,
stock or other ownership interests of any other class or classes of
such Person shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by the Issuer and/or one or more
Subsidiaries of the Issuer.
"Transfer Notice" shall have the meaning set forth in Section 9.2 of
this Agreement.
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"Warrant Certificate" shall mean a certificate evidencing one or more
Warrants, substantially in the form of Exhibit A hereto, with such
changes therein as may be required to reflect any adjustments made
pursuant to Section 4 of this Agreement.
"Warrant Holder" shall mean such Person in whose name the Warrants are
registered on the books of the Issuer maintained for such purpose or
each Person holding any Warrant Stock. As of the Closing Date, the
Societe Generale is the Warrant Holder hereof.
"Warrant Price" shall mean, for any exercise of Warrants pursuant to
Section 2.2 of this Agreement, an amount equal to (i) the number of
shares of Common Stock being purchased upon such exercise multiplied by
(ii) the Current Warrant Price for each share of Common Stock as of the
date of such exercise.
"Warrant Stock" shall mean the shares of Common Stock purchased by the
Warrant Holders upon the exercise thereof.
"Warrants" shall mean the Warrants issued pursuant to this Agreement
and all Warrants issued upon transfer, division or combination of, or
in substitution for, such Warrants. All Warrants shall at all times be
identical as to terms and conditions and date, except as to the number
of shares of Common Stock for which they may be exercised. A Warrant
shall entitle the record holder thereof to purchase from the Issuer one
share of Common Stock (subject to adjustment as provided in Section 4
of this Agreement).
2. ISSUANCE AND EXERCISE OF WARRANTS
2.1 Issuance of Warrants. The Issuer hereby agrees to issue to the Warrant
Holder on the Closing Date, THREE HUNDRED THIRTY-EIGHT THOUSAND FOUR
HUNDRED SIXTY-TWO (338,462) Warrants. On the Closing Date, the Issuer
shall deliver to the Warrant Holder Warrant Certificates evidencing the
Warrants issued to the Warrant Holder.
2.2 Manner of Exercise.
(a) The Warrant Holder may, from and after the Closing Date until
5:00 p.m., New York City time on the Expiration Date, exercise
the Warrants evidenced by a Warrant Certificate, on any
Business Day, for all or part of the number of shares of
Common Stock purchasable thereunder.
(b) In order to exercise the Warrants, in whole or in part, the
Warrant Holder shall either:
(i) deliver to the Issuer at its principal office at 0000
Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxx 0, Xxxxx 000, Xxxxxx,
Xxxxx 00000, Attention: President, or at the office
or agency designated by the Issuer pursuant to
Section 12 of this Agreement (the "Principal
Office"), (x) a written notice duly executed by the
Warrant Holder or its agent or attorney,
substantially in the form of the form of election to
purchase appearing at the end of the Warrant
Certificate as Exhibit A thereto, of such Warrant
Holder's election to
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exercise the Warrants, which notice shall specify the
number of shares of Common Stock to be purchased, (y)
payment of the Warrant Price in the manner provided
below, and (z) the Warrant Certificate or Warrant
Certificates evidencing the Warrants. Upon receipt
thereof, the Issuer shall, as promptly as
practicable, and in any event within three (3)
Business Days thereafter, execute or cause to be
executed and deliver or cause to be delivered to such
Warrant Holder a certificate or certificates
representing the aggregate number of full shares of
Common Stock issuable upon such exercise, together
with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent
possible, in such denomination or denominations as
such Warrant Holder shall request in the notice and
shall be registered in the name of the Warrant Holder
or, subject to Section 9 of this Agreement, such
other name as shall be designated in the notice. The
Warrants shall be deemed to have been exercised and
such certificate or certificates shall be deemed to
have been issued, and such Warrant Holder or any
other Person so designated to be named therein shall
be deemed to have become a holder of record of such
shares for all purposes, as of the date the notice,
together with payment of the Warrant Price and the
Warrant Certificate or Warrant Certificates, are
received by the Issuer as described above and all
taxes required to be paid by such Warrant Holder, if
any, pursuant to Section 2.3 of this Agreement prior
to the issuance of such shares have been paid. If the
Warrants evidenced by a Warrant Certificate shall
have been exercised, the Issuer shall, at the time of
delivery of the certificate or certificates
representing the Warrant Stock, deliver to the
Warrant Holder a new Warrant Certificate evidencing
the rights of the Warrant Holder to purchase the
unpurchased shares of Common Stock represented by the
old Warrant Certificate, which new Warrant
Certificate shall in all other respects be identical
to the old Warrant Certificate. Payment of the
Warrant Price shall be made in cash in an amount
equal to the Warrant Price; or
(ii) deliver to the Issuer on any Business Day at the
Principal Office the Cashless Conversion Notice in
substantially the form attached hereto as Exhibit B
duly executed by the Warrant Holder and setting forth
such Warrant Holder's election to receive the number
of shares of Common Stock specified in the Cashless
Conversion Notice ("Cashless Conversion"). Such
presentation and surrender shall be deemed a waiver
of the Warrant Holder's obligation to pay all or any
portion (as the case may be) of the Warrant Price in
connection with such Cashless Conversion. In the
event of a Cashless Conversion, the Issuer shall
deliver to the Warrant Holder (without payment by the
Warrant Holder of any Warrant Price) that number of
shares of Common Stock equal to: the number of shares
of Common Stock for which the Warrant Holder hereof
desires to exercise the Warrants multiplied by a
fraction, (x) the numerator of which shall be the
Current Market Price on the date of such exercise
less the Current Warrant Price on the date of such
exercise and (y) the
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denominator of which shall be the Current Market
Price on the date of such exercise. The number of
shares of Common Stock "into which each Warrant is
exercisable" shall be one share, subject to
adjustment as provided in Section 4 hereof. The
Warrant Holder may exercise its Cashless Conversion
rights, at any time or from time to time, prior to
the Expiration Date. The Cashless Conversion Notice
shall also specify a place and date not less than one
nor more than 20 Business Days from the date of the
Cashless Conversion Notice for the closing of such
purchase.
2.3 Payment of Taxes. The Issuer shall pay all expenses in connection with,
and all transfer taxes and other governmental charges that may be
imposed with respect to, the issuance or delivery of Warrant Stock. The
Issuer shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any
certificate for shares of Warrant Stock issuable upon exercise of
Warrants in any name other than that of Warrant Holder, and in such
case the Issuer shall not be required to issue or deliver any stock
certificate until such tax or other charge has been paid or it has been
established to the satisfaction of the Issuer that no such tax or other
charge is due.
2.4 Fractional Shares. The Issuer shall not be required to issue a
fractional share of Common Stock upon the exercise of Warrants as
provided in Section 2(b)(i) and (ii). As to any fraction of a share
which the Warrant Holder would otherwise be entitled to purchase upon
such exercise, the Issuer shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the Current
Market Price per share of Common Stock on the date of exercise. If the
determination of Current Market Price for purposes of this Section 2.4
would otherwise require an appraisal to be made by an investment
banking firm, then Current Market Price for purposes of this Section
2.4 only shall mean Book Value per share of Common Stock on the date of
exercise, unless a determination of Appraised Value shall have been
made within six months prior to such date in which case such Appraised
Value shall be utilized for the purposes of determining Current Market
Price.
2.5 Continued Validity. A Warrant Holder of shares of Warrant Stock (other
than a holder who acquires such shares after the same have been
publicly sold pursuant to a Registration Statement under the Securities
Act) shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Warrant Holder under
Sections 9, 10 and 15 of this Agreement. The Issuer will, at the time
of each exercise of Warrants or upon the request of the Warrant Holder
of the shares of Warrant Stock issued upon the exercise thereof,
acknowledge in writing, in form reasonably satisfactory to such Warrant
Holder, its continuing obligation to afford to such Warrant Holder all
such rights; provided, however, that if such Warrant Holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Issuer to afford to such Warrant Holder all such
rights.
3. TRANSFERS, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 9 of this Agreement,
transfer of Warrants, in whole or in part, shall be registered on the
books of the Issuer to be maintained for
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such purposes, upon surrender of the Warrant Certificate representing
such Warrants at the principal office of the Issuer referred to in
Section 2.2 of this Agreement or the office or agency designated by the
Issuer pursuant to Section 12 of this Agreement, together with a
written assignment substantially in the form of Exhibit B to the
Warrant Certificate and a written agreement, in form reasonably
satisfactory to the Issuer, setting forth the new Warrant Holder's
agreement to be bound by all of the terms of this Agreement each duly
executed by the Warrant Holder or its agent or attorney, and funds
sufficient to pay any transfer taxes payable by such Warrant Holder
upon the making of such transfer. Upon such surrender and, if required,
such payment, the Issuer shall, subject to Section 9 of this Agreement,
execute and deliver a new Warrant Certificate or Warrant Certificates
in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue to the
assignor a new Warrant Certificate or Warrant Certificates evidencing
the portion of the old Warrant Certificate not so assigned, and the old
Warrant Certificate shall promptly be canceled. A Warrant, if properly
assigned in compliance with Section 9 of this Agreement, may be
exercised by a new Warrant Holder for the purchase of shares of Warrant
Stock without having a new Warrant Certificate or new Warrant
Certificates issued.
3.2 Division and Combination. Subject to the provisions of Section 9 of
this Agreement, any Warrant Certificate may be divided or combined with
other Warrant Certificates upon presentation thereof at the aforesaid
office or agency of the Issuer, together with a written notice
specifying the names and denominations in which new Warrant
Certificates are to be issued, signed by a Warrant Holder or its agent
or attorney. Subject to compliance with Section 3.1 of this Agreement
as to any transfer which may be involved in such division or
combination, the Issuer shall execute and deliver a new Warrant
Certificate or Warrant Certificates in exchange for the Warrant
Certificate or Warrant Certificates to be divided or combined in
accordance with such notice.
3.3 Expenses. The Issuer shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant Certificate or
Warrant Certificates provided for under this Section 3.
3.4 Maintenance of Books. The Issuer agrees to maintain, at its aforesaid
office or agency, books for the registration of, and the registration
of transfer of, the Warrants.
4. ADJUSTMENTS
The number of shares of Warrant Stock for which Warrants are
exercisable, and the price at which such shares may be purchased upon
exercise of Warrants, shall be subject to adjustment from time to time
as set forth in this Section 4. The Issuer shall give each Warrant
Holder notice of any event described below which requires an adjustment
pursuant to this Section 4 within three (3) Business Days after such
event.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Issuer shall:
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(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or
other distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which a
Warrant is exercisable immediately after the occurrence of any
such event shall be adjusted to equal the number of shares of
Common Stock which a record holder of the same number of
shares of Common Stock for which a Warrant is exercisable
immediately prior to the occurrence of such event would own or
be entitled to receive after the happening of such event, and
(ii) the Current Warrant Price shall be adjusted to equal the
Current Warrant Price multiplied by a fraction, the numerator
of which shall be the number of shares of Common Stock for
which a Warrant is exercisable immediately prior to the
adjustment and the denominator of which shall be the number of
shares for which a Warrant is exercisable immediately after
such adjustment.
4.2 Certain Other Distributions. If at any time the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive any dividend or other distribution of:
(a) cash;
(b) any evidences of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock or Convertible Securities) or any other
securities or property of any nature whatsoever (other than
cash); or
(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness (other than Convertible
Securities), any shares of its stock (other than Additional
Shares of Common Stock or Convertible Securities) or any other
securities or property of any nature whatsoever;
then (i) the number of shares of Common Stock for which a
Warrant is exercisable shall be adjusted to equal the product
obtained by multiplying the number of shares of Common Stock
for which a Warrant is exercisable immediately prior to such
adjustment by a fraction (A) the numerator of which shall be
the Current Market Price per share of Common Stock at the date
of taking such record and (B) the denominator of which shall
be such Current Market Price per share of Common Stock, minus
the amount allocable to one share of Common Stock of any such
cash so distributable and of the fair value (as determined
reasonably and in good faith by the board of directors of the
Issuer) of any and all such evidences of indebtedness, shares
of stock, other securities or property or
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warrants or other subscription or purchase rights so
distributable, and (ii) the Current Warrant Price shall be
adjusted to equal (A) the Current Warrant Price multiplied by
the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to the adjustment divided by (B)
the number of shares for which a Warrant is exercisable
immediately after such adjustment. A reclassification of the
Common Stock (other than a change in par value, or from par
value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Issuer to the holders of
its Common Stock of such shares of such other class of stock
within the meaning of this Section 4.2 and, if the Outstanding
shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the Outstanding shares of
Common Stock within the meaning of Section 4.1 of this
Agreement.
4.3 Issuance of Additional Shares of Stock.
(a) If at any time the Issuer shall (except as hereinafter
provided) issue or sell any Additional Shares of Common Stock,
other than Permitted Issuances, for consideration in an amount
per Additional Share of Common Stock less than the Current
Market Price, then the Current Warrant Price shall be adjusted
by multiplying the Current Warrant Price by a fraction, the
numerator of which shall be (A) an amount equal to the sum of
(X) the number of shares of Common Stock Outstanding
immediately prior to such issuance or sale multiplied by the
Current Market Price immediately prior to the first to occur
of (i) board action by the Issuer authorizing such action or
(ii) the public announcement of an intent to take such action,
plus (Y) the consideration, if any, received by the Issuer
upon such issuance or sale, and the denominator of which shall
be (B) the total number of shares of Common Stock Outstanding
immediately after such issuance or sale multiplied by the
Current Market Price as determined in clause (A) above.
(b) The provisions of Section 4.3(a) of this Agreement shall not
apply to any issuance of Additional Shares of Common Stock for
which an adjustment is provided under Sections 4.1 or 4.2 of
this Agreement. No adjustment of the number of shares of
Common Stock for which a Warrant shall be exercisable shall be
made under Section 4.3(a) of this Agreement upon the issuance
of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any warrants or other subscription
or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities if
any such adjustment shall previously have been made upon the
issuance of such warrants or other rights or upon the issuance
of such Convertible Securities (or upon the issuance of any
warrant or other rights therefor) pursuant to Section 4.4 or
Section 4.5 of this Agreement.
4.4 Issuance of Warrants or Other Rights. If at any time the Issuer shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of,
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or shall in any manner (whether directly or by assumption in a merger
in which the Issuer is the surviving corporation) issue or sell, any
warrants or other rights to subscribe for or purchase any Additional
Shares of Common Stock or any Convertible Securities, whether or not
the rights to exchange or convert thereunder are immediately
exercisable, and if the price per share for which Common Stock is
issuable upon the exercise of such warrants or other rights or upon
conversion or exchange of such Convertible Securities shall be less
than the Current Market Price in effect immediately prior to the time
of such distribution, issue or sale, then the Current Warrant Price
shall be adjusted as provided in Section 4.3(a) of this Agreement on
the basis that (A) the maximum number of Additional Shares of Common
Stock issuable pursuant to all such warrants or other rights or
necessary to effect the conversion or exchange of all such Convertible
Securities shall be deemed to be Outstanding immediately following such
issuance, (B) the price per share for such Additional Shares of Common
Stock shall be deemed to be the lowest possible price per share in any
range of prices per share at which such Additional Shares of Common
Stock are available to such holders, and (C) the Issuer shall be deemed
to have received all of the consideration payable therefor, if any, as
of the date of the actual issuance of such warrants or other rights. No
further adjustments of the Current Warrant Price shall be made upon the
actual issuance of such Common Stock or of such other rights or upon
exercise of such warrants or other rights or upon the actual issuance
of such Common Stock upon such conversion or exchange of such
Convertible Securities.
4.5 Issuance of Convertible Securities. If at any time the Issuer shall
take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner
(whether directly or by assumption in a merger in which the Issuer is
the surviving corporation) issue or sell, any Convertible Securities,
whether or not the rights to exchange or convert thereunder are
immediately exercisable, and if the price per share for which Common
Stock is issuable upon such conversion or exchange shall be less than
the Current Market Price in effect immediately prior to the time of
such issue or sale of Convertible Securities, then the Current Warrant
Price shall be adjusted as provided in Section 4.3(a) of this Agreement
on the basis that (A) the maximum number of Additional Shares of Common
Stock necessary to effect the conversion or exchange of all such
Convertible Securities shall be deemed to be Outstanding immediately
following such issuance, (B) the price per share of such Additional
Shares of Common Stock shall be deemed to be the lowest possible price
in any range of prices at which such Additional Shares of Common Stock
are available to such holders, and (C) the Issuer shall be deemed to
have received all of the consideration payable therefor, if any, as of
the date of actual issuance of such Convertible Securities. No
adjustment of the Current Warrant Price shall be made under this
Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor if any such adjustments shall previously
have been made upon the issuance of such warrants or other rights
pursuant to Section 4.4 of this Agreement. No further adjustments of
the Current Warrant Price shall be made upon the actual issue of such
Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon
exercise of any warrant or other right to purchase any such Convertible
Securities for which adjustments of the Current Warrant Price have been
or are to be made pursuant to other provisions of this
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Section 4, no further adjustments of the Current Warrant Price shall be
made by reason of such issue or sale.
4.6 Superseding Adjustment. If, at any time after any adjustment of the
Current Warrant Price shall have been made pursuant to Section 4.4 or
Section 4.5 of this Agreement as the result of any issuance of
warrants, options, rights or Convertible Securities, and such warrants,
options or rights, or the right of conversion or exchange in such other
Convertible Securities, shall expire, and all or a portion of such
warrants, options or rights, or the right of conversion or exchange
with respect to all or a portion of such other Convertible Securities,
as the case may be, shall not have been exercised, then such previous
adjustment shall be rescinded and annulled and, if applicable, the
Current Warrant Price shall be recalculated as if all such expired and
unexercised warrants, options, rights or Convertible Securities had
never been issued.
4.7 Other Provisions Applicable to Adjustments Under This Section. The
following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which a Warrant is
exercisable provided for in this Section 4:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock shall be issued for cash
consideration, the consideration received by the Issuer
therefor shall be the amount of the cash received by the
Issuer therefor, or, if such Additional Shares of Common Stock
are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering
price (in any such case subtracting any amounts paid or
receivable for accrued interest or accrued dividends, but not
subtracting any compensation, discounts or expenses paid or
incurred by the Issuer for and in the underwriting of, or
otherwise in connection with, the issuance thereof). To the
extent that such issuance shall be for a consideration other
than cash, then, except as herein otherwise expressly
provided, the amount of such consideration shall be deemed to
be the fair value of such consideration at the time of such
issuance as determined reasonably and in good faith by a
majority of the disinterested members of the board of
directors of the Issuer.
(b) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any
adjustment to the number of shares for which the Warrants are
exercisable that would otherwise be required may be postponed
(except in the case of a subdivision or combination of shares
of the Common Stock, as provided for in Section 4.1 of this
Agreement) up to, but not beyond, the date and time of
exercise of any Warrants if such adjustment either by itself
or with other adjustments not previously made adds or
subtracts less than 1% to the number of shares of Common Stock
for which the Warrants initially issued pursuant to this
Agreement are exercisable immediately prior to the making of
such adjustment. Any adjustment representing a change of less
than such minimum amount (except as aforesaid) which is
postponed shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this
Section 4 and not previously made, would result in a minimum
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adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its
occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock resulting from
an issuance of additional Warrants to any Warrant Holder
pursuant to this Section 4 shall be taken into account to the
nearest 1/10th of a share, subject to Section 2.4 of this
Agreement.
(d) When Adjustment Not Required. If the Issuer shall take a
record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or distribution or
subscription or purchase rights and shall, thereafter and
before the distribution to stockholders thereof, legally
abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, no adjustment
shall be required by reason of the taking of such record and
any such adjustment previously made in respect thereof shall
be rescinded and annulled.
(e) Escrow of Warrant Stock. If after any property becomes
distributable pursuant to this Section 4 by reason of the
taking of any record of the holders of Common Stock, but prior
to the occurrence of the event for which such record is taken,
any Warrant Holder exercises Warrants, any Additional Shares
of Common Stock issuable upon exercise of such Warrant by
reason of such adjustment shall be deemed the last shares of
Common Stock for which such Warrant is exercised
(notwithstanding any other provision to the contrary herein),
and such shares or other property shall be held in escrow for
a Warrant Holder by the Issuer to be issued to such Warrant
Holder upon and to the extent that the event actually takes
place, upon payment of the balance, if any, of the Warrant
Price for such Warrant at such date (after taking into account
any overpayment of the Warrant Price made at any time of the
initial Warrant exercise). Notwithstanding any other provision
to the contrary herein, if the event for which such record was
taken fails to occur or is rescinded, then such escrowed
shares shall be canceled by the Issuer and escrowed property
returned.
4.8 Reorganization, Reclassification, Merger, Consolidation or Disposition
of Assets. In the event the Issuer shall reorganize its capital,
reclassify its capital stock, consolidate or merge with and into
another corporation or entity (where the Issuer is not the surviving
corporation or where there is a change in or distribution with respect
to the Common Stock of the Issuer), or sell, transfer or otherwise
dispose of all or substantially all its property, assets or business to
another corporation or entity and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition
of assets, shares of common stock of the successor or acquiring
corporation or entity, or any cash, shares of stock or other securities
or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation or entity ("Other
Property"), are to be received by or distributed to the holders of
Common Stock of the Issuer, then the Issuer shall, as a condition
precedent to such transaction, cause effective provisions to be made so
that each Warrant Holder shall have the right thereafter to receive,
upon exercise of a
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warrant, solely the number of shares of "common stock of the successor
or acquiring corporation" or of the Issuer, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition
of assets, by a holder of the number of shares of Common Stock for
which a Warrant is exercisable immediately prior to such event. In case
of any such reorganization, reclassification, merger, consolidation or
disposition of assets, such provisions shall include the express
assumption by the successor or acquiring corporation or entity (if
other than the Issuer) of the due and punctual observance and
performance of each and every covenant and condition of this Agreement
to be performed and observed by the Issuer and all the obligations and
liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the board of directors of
the Issuer) to provide for adjustments of shares of the Common Stock
for which a Warrant is exercisable which shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 4. For
purposes of this Section 4.8, "common stock of the successor or
acquiring corporation" shall include stock of such corporation of any
class which is not preferred as to dividends or assets over any other
class of stock or other securities of such corporation or entity and
which is not subject to redemption and shall also include any evidences
of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock or other
securities, either immediately or upon the arrival of a specified date
or the happening of a specified event, and any warrants or other rights
to subscribe for or purchase any such stock or securities. The
foregoing provisions of this Section 4.8 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations
or disposition of assets.
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments. Whenever the number of shares of Common Stock
for which a Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the
Warrants, shall be adjusted pursuant to Section 4, the Issuer shall
forthwith prepare a certificate to be executed by the chief financial
officer of the Issuer setting forth, in reasonable detail, the event
requiring the adjustment and the method by which such adjustment was
calculated (including a description of the basis on which the board of
directors of the Issuer determined the fair value of any evidences of
indebtedness, shares of stock, other securities or property or warrants
or other subscription or purchase rights referred to in Section 4 of
this Agreement), specifying the number of shares of Common Stock for
which a Warrant is exercisable and (if such adjustment was made
pursuant to Section 4.8 of this Agreement) describing the number and
kind of any other shares of stock or Other Property for which a Warrant
is exercisable, and any change in the purchase price or prices thereof,
after giving effect to such adjustment or change. The Issuer shall
promptly cause a signed copy of such certificate to be delivered to
each Warrant Holder in accordance with Section 15.2 of this Agreement.
The Issuer shall keep at its office or agency designated pursuant to
Section 12 of this Agreement copies of all such certificates and cause
the same to be available for inspection at said office during normal
business hours by any Warrant Holder or any prospective purchaser of a
Warrant designated by a Warrant Holder thereof.
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5.2 Notice of Certain Corporate Action. Each Warrant Holder shall be
entitled to the same rights to receive notice of corporate action as
any holder of Common Stock.
6. REPRESENTATIONS AND WARRANTIES
The Issuer makes the following representations and warranties, each and
all of which shall be true and correct as of the date of execution and
delivery of this Agreement and shall survive the execution and delivery
of this Agreement:
(a) Due Organization; Etc. The Issuer is a corporation duly
organized validly existing and in good standing under the laws
of the State of Delaware, and has the power and authority to
execute and deliver this Agreement and the Warrant
Certificates, to issue the Warrants and to perform its
obligations under this Agreement and the Warrant Certificates.
(b) Due Authorization; No Violation. The execution, delivery and
performance by the Issuer of this Agreement and the Warrant
Certificates, the issuance of the Warrants and the issuance of
the Warrant Stock upon exercise of the Warrants have been duly
authorized by all necessary corporate action and do not and
will not violate, or result in a breach of, or constitute a
default under or require any consent under, or result in the
creation of any lien or security interest upon the assets of
the Issuer pursuant to, any Requirement of Law or any
contractual obligation binding upon the Issuer.
(c) Due Execution; Etc. This Agreement has been duly executed and
delivered by the Issuer and constitutes a legal, valid and
enforceable obligation of the Issuer. When the Warrants and
the Warrant Certificates have been issued as contemplated
hereby, (i) the Warrants and the Warrant Certificates will
constitute legal, valid, binding and enforceable obligations
of the Issuer and (ii) the Warrant Stock, when issued upon
exercise of the Warrants in accordance with the terms hereof,
will be duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock with no personal
liability attaching to the ownership thereof.
(d) Capitalization. The total number of shares of all classes of
stock that the Issuer shall on the Closing Date have authority
to issue is 40,000,000 shares, consisting of (i) 30,000,000
shares of Common Stock, par value $0.01 per share, of which,
after giving effect to the transactions contemplated herein
and all other issuances of capital stock of the Issuer on or
prior to the Closing Date, 14,428,621 shares of Common Stock
will be issued and outstanding and 338,462 shares of Common
Stock will be reserved for future issuance pursuant to this
Agreement and (ii) 10,000,000 shares of Preferred Stock, par
value $0.01 per share, none of which are presently
outstanding. Schedule A sets forth a complete list of the
outstanding capital stock of the Issuer, including any
options, warrants or rights to purchase the capital stock of
the Issuer. The delivery hereunder by the Issuer to the
Warrant Holder of the Warrants issued on the Closing Date will
transfer and convey to the Warrant Holder good and marketable
title to such Warrants and,
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upon exercise of such Warrants in accordance with this
Agreement, good and marketable title to the Common Stock
purchased upon such exercise, free and clear of all preemptive
rights, liens, charges and encumbrances, except for
restrictions on transfer referred to in this Agreement, or
arising under the Federal and state securities laws. Except as
otherwise disclosed on Schedule A, the Issuer does not have
outstanding any stock or securities convertible into or
exchangeable for any shares of its stock, nor, except as so
set forth, does it have outstanding any agreements, rights or
options entitling any person to subscribe for or to purchase
any capital stock or securities convertible into or
exchangeable for any of its shares of stock.
(e) Full Disclosure. No information contained in this Agreement,
the financial statements referred to in the Credit Agreement
or any written statement furnished by or on behalf of the
Issuer pursuant to the terms of this Agreement to the Warrant
Holder contains any untrue statement of a material fact or
omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light
of the circumstances under which made.
(f) Warrant Price. The Issuer has taken all corporate action, and
obtained all necessary authorizations or exemptions from any
public regulatory body or bodies or governmental entity or
entities having jurisdiction thereof, as may be necessary in
order that the Issuer may validly and legally issue fully paid
and non-assessable shares of Common Stock upon to exercise of
the warrants at the Warrant Price, as the same may be adjusted
pursuant hereto.
(g) Other Representations and Warranties. The Issuer hereby
affirms and reaffirms for the express benefit of the Warrant
Holders that the representations and warranties made by the
Issuer in that certain Guaranty Agreement dated as of January
26, 1998, as amended, are true and correct, as if made in
favor of the Warrant Holder on the date hereof.
7. CERTAIN COVENANTS
7.1 No Impairment. The Issuer shall not by any action including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying
out of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of each Warrant Holder
against impairment. Without limiting the generality of the foregoing,
the Issuer will use reasonable good faith efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable it to perform
its obligations under this Agreement.
Upon the request of a Warrant Holder, the Issuer will, at any time
during the period this Agreement is in effect, acknowledge in writing,
in form satisfactory to such Warrant
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Holder, the continuing validity of this Agreement and the obligations
of the Issuer hereunder.
7.2 Reservation and Authorization of Common Stock; Registration with, or
Approval of, any Governmental Authority. From and after the Closing
Date, the Issuer shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the
exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any
Warrants and payment therefor in accordance with the terms of this
Agreement, shall be duly and validly issued and fully paid and
non-assessable, and not subject to preemptive rights.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which a Warrant is exercisable or
in the Current Warrant Price, the Issuer shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies or governmental
entity or entities having jurisdiction thereof.
If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any
governmental authority under any federal or state law (otherwise than
as provided in Section 9 of this Agreement) before such shares may be
so issued, the Issuer will in good faith and as expeditiously as
possible and at its expense endeavor to cause such shares to be duly
registered.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Issuer to
the holders of its Common Stock with respect to which any provision of
Section 4 of this Agreement refers to the taking of a record of such
holders, the Issuer will in each such case take such a record as of the
close of business on a Business Day. The Issuer will not at any time,
except upon dissolution, liquidation or winding up of the Issuer, close
its stock transfer books or Warrant transfer books so as to result in
preventing or delaying the exercise or transfer of any Warrants.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred before
satisfaction of the conditions specified in this Section 9, which
conditions are intended to ensure compliance with the provisions of the
Securities Act and applicable state securities laws with respect to the
transfer of any Warrant or any Warrant Stock. Each Warrant Holder, by
entering into this Agreement and accepting the Warrants, agrees to be
bound by the provisions of this Section 9.
9.1 Restrictive Legend. Except as otherwise provided in this Section 9,
each certificate representing Warrants or Warrant Stock, shall be
stamped or otherwise imprinted with a legend in substantially the
following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH
SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN
A WARRANT AGREEMENT, DATED AS OF JULY 19, 1999, BETWEEN XXXXXXX
EXPLORATION COMPANY AND THE INITIAL HOLDERS OF SECURITIES NAMED
THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF XXXXXXX
EXPLORATION COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES
TO BE BOUND THEREBY."
9.2 Notice of Proposed Transfers; Requests for Registration. Prior to any
transfer of any Warrants or any shares of Restricted Common Stock, the
Warrant Holder of such Warrants or Restricted Common Stock shall give
five days prior written notice to the Issuer of such Warrant Holder's
intention to effect such transfer (a "Transfer Notice"). Each Warrant
Holder agrees that it will not sell, transfer or otherwise dispose of
Warrants or any shares of Restricted Common Stock, in whole or in part,
except pursuant to an effective registration statement under the
Securities Act or an exemption from registration thereunder. Each
certificate, if any, evidencing such shares of Restricted Common Stock
issued upon such transfer shall bear the restrictive legend set forth
in Section 9.1, and each Warrant Certificate issued upon such transfer
shall bear the restrictive legend set forth in Section 9.1 of this
Agreement, unless in the opinion of the transferee's or Warrant
Holder's counsel delivered to the Issuer in connection with such
transfer such legend is not required in order to ensure compliance with
the Securities Act.
The Warrant Holders of Warrants and Warrant Stock shall have the right
to request registration of such Warrant Stock pursuant to Section 9.3
of this Agreement.
9.3 Incidental Registration. If the Issuer at any time proposes to file on
its behalf and/or on behalf of any of its security holders (the
"Demanding Security Holders") a Registration Statement under the
Securities Act on any form (other than a Registration Statement (i)
filed pursuant to demand under the Company's Registration Rights
Agreement with Joint Energy Development Investments II Limited
Partnership, a Delaware limited partnership, and Enron Capital & Trade
Resources Corp., a Delaware corporation, dated August 20, 1998, as
amended, or (ii) on Form S-8 or any similar or successor form or any
other registration statement relating to an offering of securities
solely to the Issuer's existing security holders or employees) to
register the offer and sale of its Common Stock for cash, it will give
written notice to all Warrant Holders of Warrants or Warrant Stock at
least twenty (20) days before the anticipated date of initial filing
with the Commission of such Registration Statement, which notice shall
set forth the Issuer's intention to effect such a registration, the
class or series and number of equity securities proposed to be
registered and the intended method of disposition of the securities
proposed to be registered by the Issuer. The notice shall offer to
include in such filing all of the Warrant Holder's Registrable
Securities.
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Each Warrant Holder desiring to have Registrable Securities registered
under this Section 9.3 shall advise the Issuer in writing within
fifteen (15) days after the date of receipt of such offer from the
Issuer, setting forth the amount of such Registrable Securities for
which registration is requested. The Issuer shall thereupon include in
such filing the number of shares of Registrable Securities for which
registration is so requested, subject to the next sentence, and shall
use its best efforts to effect registration under the Securities Act of
such securities. If the managing underwriter of a proposed public
offering shall advise the Issuer in writing that, in its opinion, the
distribution of the Registrable Securities requested to be included in
the registration concurrently with the securities being registered by
the Issuer or any Demanding Security Holder would materially and
adversely affect the distribution of such securities by the Issuer or
such Demanding Security Holders, then all selling security holders (but
not the Issuer or the Demanding Security Holders) shall reduce the
amount of securities each intended to distribute through such offering
on a pro rata basis to the greatest aggregate amount which, in the
opinion of such managing underwriter, would not materially and
adversely affect the distribution of such securities.
Nothing in this Section 9.3 shall preclude the Issuer from
discontinuing the registration of its securities being effected on its
behalf under this Section 9.3 at any time prior to the effective date
of the registration relating thereto. Notwithstanding any provision
herein, the rights of the Warrant Holder under this Section 9.3 are
subject to the express limitations contained in registration rights
agreements in effect on the date hereof between the Issuer and other
parties; provided, however, that the Issuer shall not on or after the
date of this Agreement enter into any registration rights agreement
with respect to its securities that conflict with the registration
rights granted to the Warrant Holder herein.
9.4 Registration Procedures. If the Issuer is required by the provisions of
this Section 9 to use its best efforts to effect the registration of
any of its securities under the Securities Act, the Issuer will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement
with respect to such securities (a "Registration Statement")
and use its best efforts to cause such Registration Statement
to become and remain effective for the period described in
paragraph (b) below;
(b) prepare and file with the Commission such 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 Securities Act with respect to the sale or
other disposition of all securities covered by such
Registration Statement until the earlier of such time as all
of such securities have been disposed of in a public offering
or the expiration of 90 days;
(c) furnish to such selling security holders such number of copies
of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity
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with the requirements of the Securities Act, and such other
documents, as such selling security holders may reasonably
request;
(d) use its best efforts to register or qualify the securities
covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the
United States as each holder of such securities shall request
(provided, however, the Issuer shall not be obligated to
qualify as a foreign corporation to do business under the laws
of any jurisdiction in which it is not then qualified or to
file any general consent to service or process), and do such
other reasonable acts and things as may be required of it to
enable such holder to consummate the disposition in such
jurisdiction of the securities covered by such Registration
Statement;
(e) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the
disposition of such Registrable Securities; and
(f) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, but
not later than 18 months after the effective date of the
Registration Statement, an earnings statement covering the
period of at least 12 months beginning with the first full
month after the effective date of such Registration Statement,
which earnings statements shall satisfy the provisions of
Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of the
Issuer to take any action pursuant to this Section 9 in
respect of the securities which are to be registered at the
request of any Warrant Holder of Registrable Securities that
such Warrant Holder shall furnish to the Issuer such
information regarding the securities held by such Warrant
Holder and the intended method of disposition thereof as the
Issuer shall reasonably request and as shall be required in
connection with the action taken by the Issuer.
9.5 Expenses. All expenses incurred in complying with this Section 9,
including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), printing
expenses, fees and disbursements of counsel for the Issuer, the
reasonable fees and expenses of one counsel for the selling security
holders (selected by the Person holding the plurality of the securities
being registered), expenses of any special audits incident to or
required by any such registration and expenses of complying with the
securities or blue sky laws of any jurisdictions pursuant to Section
9.4(d) of this Agreement (all of such expenses shall be collectively
referred to herein as "Registration Expenses"), shall be paid by the
Issuer; provided, however, the Issuer shall not be responsible for any
discount or commission or cost reimbursement to any underwriter in
respect of the securities sold by such Warrant Holder of Registrable
Securities.
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9.6 Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Securities under the Securities Act pursuant to this Section
9, the Issuer shall indemnify and hold harmless each Warrant
Holder of such Registrable Securities, such Warrant Holder's
directors and officers, each Affiliate of such Warrant Holder,
and each other Person (including each underwriter) who
participated in the offering of such Registrable Securities
and each other Person, if any, who controls such Warrant
Holder or such participating Person, if any, who controls such
Warrant Holder or such participating Person within the meaning
of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Warrant Holder or
any such director or officer or participating Person or
Affiliate or controlling Person may become subject under the
Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any
alleged untrue statement of any material fact contained, on
the effective date thereof, in any Registration Statement
under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or
(ii) any alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading, and shall reimburse such
Warrant Holder or such director, officer or participating
Person or Affiliate or controlling Person for any legal or any
other expenses reasonably incurred by such Warrant Holder or
such director, officer or participating Person or Affiliate or
controlling Person in connection with investigating or
defending any such loss, claim, damage, liability or action;
provided, however, that the Issuer shall not be liable in any
such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any alleged untrue
statement or alleged omission made in such Registration
Statement, preliminary prospectus, prospectus or amendment or
supplement in reliance upon and in conformity with written
information furnished to the Issuer by such Warrant Holder
specifically for use therein and, in the case of any
non-underwritten offering, to the extent that any such losses,
claims, damages, liabilities or expenses arise out of or are
based upon the fact that a current copy of the prospectus was
not sent or given to the Person asserting any such losses,
claims, damages, liabilities or expenses at or prior to the
written confirmation of the sale of the securities to such
Person if it is determined that it was the responsibility of
such Warrant Holder to provide such Person with a current copy
of the prospectus and such current copy of the prospectus
would have cured the defect giving rise to such losses,
claims, damages, liabilities or expenses. Such indemnity shall
remain in full force and effect regardless of any
investigation made by or on behalf of such Warrant Holder or
such director, officer or participating Person or Affiliate or
controlling Person, and shall survive the transfer of such
securities by such Warrant Holder.
(b) Each Warrant Holder of any Registrable Securities, by
acceptance thereof, agrees to indemnify and hold harmless the
Issuer, its directors and officers and each other Person, if
any, who controls the Issuer within the meaning of the
Securities Act against any losses, claims, damages or
liabilities, joint or several, to which the
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Issuer or any such director or officer or any such Person may
become subject under the Securities Act or any other statute
or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or
are based upon (i) information in writing provided to the
Issuer by such Warrant Holder of such Registrable Securities
contained, on the effective date thereof, in any Registration
Statement under which securities were registered under the
Securities Act at the request of such Warrant Holder, any
preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereto or (ii) the fact that a
current copy of the prospectus was not sent to the Person
asserting such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale
of the securities with respect to such Person if it is
determined that it was the responsibility of such Warrant
Holder to provide such Person with a current copy of the
prospectus and such current copy would have cured the defect
giving rise to such losses, claims, damages, liabilities or
expenses; provided, however, that such Warrant Holder's
obligation under this Section 9.6(b) to indemnify and hold
harmless the Issuer shall in no event exceed the lesser of (x)
the damage attributable solely to the inclusion of such
written information in such Registration Statement,
preliminary prospectus, final prospectus, or amendment or
supplement suffered by the Person or Persons whose claims gave
rise to such losses, claims, damages or liabilities and (y)
the net proceeds received by such Warrant Holder from the sale
of Registrable Securities giving rise to such indemnification.
(c) If the indemnification provided for in this Section 9 from the
indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to herein, then the
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 in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has
been made by, or related to information supplied by, such
indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party under this Section 9 as a result of the
losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
any investigation or proceeding.
The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 9.6(c)
were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph.
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Notwithstanding the provisions of this subsection (c), no
Warrant Holder shall be required to contribute any amount in
excess of the total amount received by it upon the sale of its
securities pursuant to the Registration Statement to which the
losses, claims, damages, liabilities and expenses referred to
above relate. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The obligations
of each of the Warrant Holders under this subsection (c) to
contribute are several and not joint.
(d) Conduct of Indemnification Proceedings. Any person or entity
entitled to indemnification hereunder shall (i) give prompt
written notice to the indemnifying party after the receipt by
the indemnified party of a written notice of the commencement
of any action, suit, proceeding or investigation or threat
thereof made in writing for which such indemnified party will
claim indemnification or contribution pursuant to this
Agreement; 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
Section 9.6 hereof, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice,
and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest may exist between such
indemnified and indemnifying parties with respect to such
claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the
indemnified party. If the indemnifying party is entitled to,
and does, assume the defense of such claim, the indemnified
party shall have the right to employ separate counsel and to
participate in the defense thereof, but the fees and expenses
of such counsel shall be borne by the indemnified party.
Whether or not such defense is assumed by the indemnifying
party, the indemnifying party shall not be subject to any
liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). No
indemnifying party shall be permitted to consent to the entry
of any judgment or to enter into any settlement that 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. An
indemnifying party who is not entitled to, or elects not to,
assume the defense of a claim shall not be obligated to pay
the fees and expenses of more than one counsel in any one
jurisdiction for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
9.7 Termination of Restrictions. Notwithstanding the foregoing provisions
of this Section 9, the restrictions imposed by this Section 9 upon the
transferability of the Warrants, the Warrant Stock and the Restricted
Common Stock (or Common Stock issuable upon the exercise of the
Warrants) and the legend requirement of Section 9.1 of this Agreement
shall terminate as to any particular Warrant or share of Warrant Stock
or Restricted Common Stock (or Warrant Stock) (i) when and so long as
such security shall have been
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registered under the Securities Act and disposed of pursuant thereto,
or (ii) when the Warrant Holder thereof shall have delivered to the
Issuer the written opinion of counsel to such Warrant Holder, stating
that such legend is not required in order to ensure compliance with the
Securities Act. Whenever the restrictions imposed by this Section 9
shall terminate as to any Warrants or any Restricted Common Stock, as
hereinabove provided, the Warrant Holder thereof shall be entitled to
receive from the Issuer, at the expense of the Issuer, a new Warrant
Certificate or a new certificate representing such Common Stock, as the
case may be, not bearing the restrictive legend set forth in Section
9.1 of this Agreement.
9.8 Listing on Securities Exchange. If at any time the Issuer shall list
any shares of Common Stock on any securities exchange, it will, at its
expense, use its best efforts to list thereon, maintain and, when
necessary, increase such listing of, all shares of Common Stock issued
or, to the extent permissible under the applicable securities exchange
rules, issuable upon the exercise of the Warrants so long as any shares
of Common Stock shall be so listed during the Exercise Period.
10. SUPPLYING INFORMATION
The Issuer shall cooperate with each Warrant Holder of a Warrant and
each Warrant Holder of Restricted Common Stock in supplying such
information as may be reasonably necessary for such Warrant Holder to
complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability
of an exemption from the Securities Act for the sale of any Warrant or
Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Issuer from any Warrant Holder of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of a certificate representing Warrants or
Warrant Stock and indemnity reasonably satisfactory to it (it being
understood that the written agreement of the Warrant Holder or an
Affiliate thereof shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof or thereof, the
Issuer will execute and deliver in lieu hereof or thereof a new Warrant
or new stock certificate as the case may be, of like tenor to such
Warrant Holder; provided, in the case of mutilation, no indemnity shall
be required if the certificate representing Warrants or Warrant Stock
in identifiable form is surrendered to the Issuer for cancellation.
12. OFFICE OF THE ISSUER
As long as any of the Warrants remain outstanding, the Issuer shall
maintain an office or agency (which may be the principal executive
officers of the Issuer) where the Warrants may be presented for
exercise, registration or transfer, division or combination as provided
in this Agreement.
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13. APPRAISAL
The determination of the Appraised Value per share of Common Stock
shall be made by an investment banking firm of nationally recognized
standing mutually agreed to by the Issuer and the Required Holders. If
the investment banking firm selected by the Issuer is not acceptable to
the Required Holders and the Issuer and the Required Holders cannot
agree on a mutually acceptable investment banking firm, then the
Required Holders and the Issuer shall each choose one such investment
banking firm and the respective chosen firms shall agree on another
investment banking firm which shall make the determination. The Issuer
shall retain, at its sole cost, such investment banking firm as may be
necessary for the determination of Appraised Value required by the
terms of this Agreement.
14. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER
No provision hereof, in the absence of affirmative action by any
Warrant Holder to purchase shares of Common Stock, and no enumeration
herein of the rights or privileges of any Warrant Holder, shall give
rise to any liability of such Warrant Holder for the purchase price of
any Common Stock or as a stockholder of the Issuer, whether such
liability is asserted by the Issuer or by creditors of the Issuer.
Except as may otherwise be provided by law or by separate agreement
between a Warrant Holder and the Issuer, no Warrant Holder, as such,
shall be entitled to vote or be deemed the holder of Common Stock or
any other securities (other than Warrants) of the Issuer which may at
any time be issuable on the exercise hereof, nor shall anything
contained herein be construed to confer upon any Warrant Holder the
rights of a stockholder of the Issuer or the right to vote for the
election of directors or upon any matters submitted to stockholders at
any meeting thereof, or to 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
otherwise, until the Warrants shall have been exercised in accordance
with the terms and conditions hereof.
15. MISCELLANEOUS
15.1 Non-waiver and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of any Warrant Holder shall
operate as a waiver of such right or otherwise prejudice such Warrant
Holder's rights, powers or remedies. If the Issuer fails to comply with
any provision of this Agreement, the Issuer shall pay to the applicable
Warrant Holders such amounts as shall be sufficient to cover any costs
and expenses including, but not limited to, reasonable attorneys' fees,
including those of appellate proceedings, incurred by the Warrant
Holders in enforcing any of its rights, powers or remedies hereunder.
15.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Agreement shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, telex, telecopier or overnight air courier
guaranteeing next day delivery, addressed as follows:
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(a) If to Societe Generale, as Warrant Holder, at:
Address: 0000 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxx
Telecopier No. (000) 000-0000
(b) If to the Issuer at:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Telecopier No.: (000) 000-0000
or at such other address as may be substituted by notice given
as herein provided. The giving of any notice required
hereunder may be waived in writing by the party entitled to
receive such notice. Every notice, demand, request, consent,
approval, declaration, delivery or other communication
hereunder shall be deemed to have been duly given or served on
the date on which personally delivered, with receipt
acknowledged, or three (3) Business Days after the same shall
have been deposited in the United States mail.
15.3 Indemnification. Except to the extent otherwise provided in Section 9.6
of this Agreement, the Issuer agrees to indemnify and hold harmless
each Warrant Holder and its officers, directors, employees, agents,
attorneys and Affiliates (each an "Indemnified Party") from and against
any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or
asserted against such Indemnified Party relating to or arising out of
(i) such Warrant Holder's exercise of the Warrants and/or ownership of
any shares of Warrant Stock issued in consequence thereof, or (ii) any
litigation to which such Warrant Holder is made a party in its capacity
as a stockholder or Warrant Holder of the Issuer; provided, however,
that the Issuer will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements (A) arise solely from any violation by such Warrant
Holder of any law or regulation applicable to it or (B) are found in a
final non-appealable judgment by a court to have resulted from such
Warrant Holder's bad faith or willful misconduct or violation of law.
The procedures to be followed for claims of indemnification under this
Section 15.3 shall be as set forth in Section 9.6(d) of this Agreement.
15.4 Remedies. Each Warrant Holder of Warrants and Warrant Stock, in
addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance
of its rights under Section 9 of this Agreement. The Issuer agrees that
monetary damages would not be adequate compensation for any loss
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incurred by reason of a breach by it of the provisions of Section 9 of
this Agreement, and hereby agrees to waive any defense to the contrary
in any action for specific performance that a remedy at law would be
adequate.
15.5 Successors and Assigns. Subject to the provisions of Sections 3.1 and 9
of this Agreement, this Agreement and the rights evidenced hereby shall
inure to the benefit of and be binding upon the successor of the Issuer
and the successors and assigns of any Warrant Holder. The provisions of
this Agreement are intended to be for the benefit of all Warrant
Holders from time to time of the Warrants and Warrant Stock, and shall
be enforceable by any such Warrant Holder.
15.6 Complete Agreement; Amendment. This Agreement and the Warrant
Certificates constitute the complete agreement among the parties with
respect to the subject matter hereof. This Agreement may be modified or
amended or the provisions hereof waived only with the written consent
of the Issuer and the Required Holders, provided that no Warrant may be
modified or amended to reduce the number of shares of Common Stock for
which such Warrant is exercisable or to increase the price at which
such shares may be purchased upon exercise of such Warrant (before
giving effect to any adjustment as provided herein) or to accelerate
the Expiration Date without the prior written consent of the Warrant
Holder thereof, and any amendment of Section 9 of this Agreement shall
also require the written consent of Warrant Holders of Warrants and/or
Warrant Stock representing more than 50% of the total of (i) all shares
of Warrant Stock then subject to purchase upon exercise of all Warrants
then Outstanding, and (ii) all shares of Warrant Stock then
Outstanding.
15.7 Severability. Wherever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
15.8 Headings. The headings used in this Agreement are for the convenience
of reference only and shall not, for any purpose, be deemed a part of
this Agreement.
15.9 Governing Law; Consent to Jurisdiction and Venue. In all respects,
including all matters of construction, validity and performance, this
Agreement and the obligations arising hereunder shall be governed by,
and construed and enforced in accordance with, the laws of the State of
Texas applicable to contracts made and performed in such state, without
regard to the principles thereof regarding conflict of laws, and any
applicable laws of the United States of America.
15.10 Consent to Jurisdiction and Venue.
(a) THE ISSUER AND EACH WARRANT HOLDER HEREBY EXPRESSLY SUBMITS TO
THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS OR THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
TEXAS. FINAL JUDGMENT AGAINST SUCH
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PARTY IN ANY SUCH SUIT SHALL BE CONCLUSIVE, AND MAY BE
ENFORCED IN ANY OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
AS OTHERWISE PERMITTED BY APPLICABLE LAW, A CERTIFIED OR TRUE
COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACTS AND OF
THE AMOUNT OF ANY INDEBTEDNESS OR LIABILITY OF SUCH PARTY
THEREIN DESCRIBED; PROVIDED, HOWEVER, EACH PARTY MAY AT ITS
OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS
AGAINST THE OTHER PARTY OR ANY OF ITS ASSETS, IN THE COURTS OF
ANY COUNTRY OR PLACE WHERE SUCH PARTY OR SUCH ASSETS MAY BE
FOUND.
(b) THE ISSUER AND EACH WARRANT HOLDER HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
COURTS OF THE STATE OF TEXAS OR THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF TEXAS AND HEREBY FURTHER
IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
15.11 Counterparts: This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
XXXXXXX EXPLORATION COMPANY, as Issuer
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
SOCIETE GENERALE, Southwest Agency,
as Warrant Holder
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
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EXHIBIT A TO
Warrant Agreement
(FORM OF WARRANT CERTIFICATE)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND
PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF JULY 19, 1999,
BETWEEN XXXXXXX EXPLORATION COMPANY AND THE INITIAL HOLDER OF SECURITIES NAMED
THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF XXXXXXX EXPLORATION
COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN
REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY.
No. ___
WARRANT CERTIFICATE
This Warrant Certificate certifies that Societe Generale, Southwest Agency, or
registered assigns thereof, is the holder of 338,462 warrants (the "Warrants")
to purchase shares of common stock of Xxxxxxx Exploration Company, a Delaware
corporation (the "Company"). Each Warrant entitles the holder, but only subject
to the conditions set forth herein and in the Warrant Agreement referred to
below, to purchase from the Company before 5:00 p.m., New York City time, on the
Expiration Date, as such term is defined in the Warrant Agreement, one fully
paid and non-assessable share of common stock of the Company ("Warrant Stock")
at a price (the "Exercise Price") of two and 25/100 dollars ($2.25) per share of
Warrant Stock payable as set forth in the Warrant Agreement. The number of
shares of Warrant Stock for which each Warrant is exercisable and the Exercise
Price are each subject to adjustment prior to the Expiration Date upon the
occurrence of certain events as set forth in the Warrant Agreement.
The Company may deem and treat the registered holders of the Warrants evidenced
hereby as the absolute owner thereof (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 holders hereof, and for all other purposes.
Warrant Certificates, when surrendered at the office of the Company by the
registered holder hereof in person or by a legal representative duly authorized
in writing, may be exchanged, in the
EXH. A-1
35
manner and subject to the limitations provided in the Warrant Agreement, but
without payment of any service charge, for another Warrant Certificate or
Warrant Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentment for registration of transfer of this Warrant Certificate at
the office of the Company at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxx 0, Xxxxx 000,
Xxxxxx, Xxxxx 00000, Attention: President, or such other address as the Company
may specify in writing to the registered holder of the Warrants evidenced
hereby, 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 in exchange for this Warrant Certificate to the transferee(s) and, if
less than all the Warrants evidenced hereby are to be transferred, the
registered holder hereof, subject to the limitations provided in the Warrant
Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.
The Warrant Certificate is one of the Warrant Certificates referred to in the
Warrant Agreement, dated as of July 19, 1999, between the Company and the
initial holder of Warrants party thereto (the "Warrant Agreement"). Said 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 immunities thereunder of the Company and the
holders, and in the event of any conflict between the terms of this Warrant
Certificate and the provisions of the Warrant Agreement, the provisions of the
Warrant Agreement shall control.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed and its corporate seal to be impressed hereon and attached by its
secretary.
Dated: ____________________________, 1999.
XXXXXXX EXPLORATION COMPANY
By:
----------------------------------------
Printed Name:
------------------------------
Title:
-------------------------------------
(CORPORATE SEAL)
ATTEST:
--------------------------------------
Secretary
EXH. A-2
36
Exhibit A To
Warrant Certificate
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrants]
The undersigned registered owner of this Warrant Certificate irrevocably
exercises Warrants for the purchase of shares of Common Stock of [ ] and
herewith makes payment therefor
$_____ in cash
all at the price and on the terms and conditions specified in the Warrant
Certificate and the Warrant Agreement, and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of ____________________ and
delivered to _____________________________ whose address is
________________________________ and, if such shares of Common Stock shall not
include all of the shares of Common Stock issuable as provided in the Warrant
Certificate, that a new Warrant Certificate of like tenor and date for the
balance of the shares of Common Stock issuable thereunder be delivered to the
undersigned.
----------------------------------------------
(Name of Registered Owner)
----------------------------------------------
(Signature of Registered Owner)
----------------------------------------------
(Street Address)
----------------------------------------------
(City) (State) (Zip Code)
EXH. A-3
37
Exhibit B To
Warrant Certificate
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
Certificate hereby sells, assigns and transfers unto the assignee named below
all of the rights of the undersigned under this Warrant Certificate, with
respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee:
---------------------------------
-----------------------------
-----------------------------
-----------------------------
No. of Shares of
Common Stock
-------
and does hereby irrevocably constitute and appoint ______ attorney-in-fact to
register such transfer on the books of [ ] maintained for that
purpose, with full power of substitution in the premises.
Dated:
-------------------------------
Name:
--------------------------------
Signature:
---------------------------
Witness:
-----------------------------
The assignee named above hereby agrees to purchase and take the attached Warrant
Certificate pursuant to and in accordance with the terms and conditions of the
Warrant Agreement, dated as of ______________, 1999, between [ ] and
the initial Holder named therein and agrees to be bound thereby.
Dated:
-------------------------------
Name:
--------------------------------
Signature:
---------------------------
EXH. B-1 to Warrant Certificate
38
EXHIBIT B TO
Warrant Agreement
[FORM OF CASHLESS CONVERSION NOTICE]
(To be executed upon a cashless exercise of a Warrant.)
The undersigned hereby irrevocably elects to exercise the Cashless
Conversion, represented by this Warrant Certificate, to purchase ____ shares of
Common Stock and herewith tenders in payment for such shares this Warrant
Certificate, all in accordance with the terms hereof. The undersigned requests
that a certificate for such shares be registered in the name of _______________
_______________________________________________ whose address is ______________
________________________________________________ and that such certificate (or
any payment in lieu thereof) be delivered to ______________________________
whose address is ___________________________________.
Dated:
----------------------- --------------------------------------
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant.)
And if said number of shares shall not be all the shares exchangeable
or purchasable under the within Warrant, a new Warrant of like tenor is to be
issued in the name of the undersigned for the balance remaining of the shares
purchasable thereunder.
EXH. B-1
39
SCHEDULE A
Shares of Stock Options
Common Outstanding
Stock ----------------------------------------- Warrants
Outstanding Vested Unvested Total Outstanding
----------- ------- --------- --------- -----------
As of July 19, 1999 14,309,071 267,104 1,307,383 1,574,487 1,000,000
Issued 7/20/99 119,550
Forfeited 7/30/99 (10,500) (10,500)
Forfeited 8/16/99 (263,888) (263,888)
Issued 8/17/99 89,165 105,000 105,000
---------- ------- --------- --------- ---------
As of August 18, 1999* 14,517,786 267,104 1,137,995 1,405,099 1,000,000
---------- ------- --------- --------- ---------
SCH. A-1
