Exhibit 4(b)
AGREEMENT, dated this day of ________________, 1996 between
TELLURIAN, INC., a Delaware corporation (the "Company"), and CONTINENTAL STOCK
TRANSFER & TRUST COMPANY, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H :
WHEREAS, in connection with (i) the offering (the "Initial
Public Offering") to the public of up to 1,850,000 shares (the "Shares"), of the
Company's common stock, $.01 par value ("Common Stock"), which includes 450,000
shares to be sold by certain Selling Security Holders and 1,850,000 Common Stock
Purchase Warrants (the "Warrants"), entitling the holder of each Warrant to
purchase one share of Common Stock, (ii) the over-allotment option to purchase
up to an additional 210,000 shares of Common Stock and 277,500 Warrants (the
"Over-Allotment Option"), and (iii) the sale to X.X. Xxxxxxx & Co., Inc., its
successors and assigns ("Xxxxxxx" or the "Representative") of warrants (the
"Representative's Warrants") to purchase up to 140,000 shares of Common Stock
and 185,000 Warrants, such Warrants being identical to the Warrants being sold
to the public except as may be otherwise provided herein (the Warrants issuable
upon the exercise of the Representative's Warrants are referred to as the
"Common Stock Warrants"), the Company will issue up to 1,850,000 Warrants,
185,000 Common Stock Warrants and the Representative's Warrants (subject to
increase as provided in the Representative's Warrant Agreement); and
WHEREAS, the Company is obligated to issue an additional
3,000,000 Warrants to certain existing Warrant holders; and
WHEREAS, the Company desires to provide for the issuance of
certificates representing the Warrants and the Common Stock Warrants
(collectively, the Warrants and the Common Stock Warrants shall be referred to
herein as the "Warrants"); and
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, transfer and exchange of certificates
representing the Warrants and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder of the Company, the Representative, the holders of certificates
representing the Warrants and the Warrant Agent, the parties hereto agree as
follows:
SECTION 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise
require:
(a) "Common Stock" shall mean stock of the Company of any
class, whether now or hereafter authorized, which has the right to
participate in the voting and in the distribution of earnings and assets of the
Company without limit as to amount or percentage.
(b) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal business
shall be administered, which office is located on the date hereof at Two
Xxxxxxxx, Xxx Xxxx 00000.
(c) "Exercise Date" shall mean, subject to the provisions of
Section 5(b) hereof, as to any Warrant, the date on which the Warrant Agent
shall have received both (i) the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder hereof or
his attorney duly authorized in writing, and (ii) payment in cash or by check
made payable to the Warrant Agent for the account of the Company, of the amount
in lawful money of the United States of America equal to the applicable Purchase
Price.
(d) "Initial Warrant Exercise Date" shall mean in the case of
the Warrants ________________, 1996 and in the case of the Common Stock Warrants
______, 1997.
(e) "Initial Warrant Redemption Date" shall mean _______,
1997.
(f) "Purchase Price" shall mean $6.00 for the Warrants other
than the Warrants issuable upon exercise of the Representative's Warrants, whose
Purchase Price shall be equal to the lesser of ___% of the Purchase Price of the
Warrants then in effect and $___, subject in each case to modification and
adjustment as provided in Section 8, and further subject to Company's right,
with the prior written consent of the Representative, to decrease the Purchase
Price for a period of not less than 30 days on not less than 30 days prior
written notice to the Registered Holders.
(g) "Registered Holder" shall mean the person in whose name
any certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(h) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary power to
elect a majority of the Board of Directors of such corporation (regardless of
whether or not at the time stock of any other class or classes of such
corporation shall have or may have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the Company or
by one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(i) "Transfer Agent" shall mean Continental Stock Transfer &
Trust Company of its authorized successor.
2
(j) "Underwriting Agreement" shall mean the underwriting
agreement dated _____________ , 1996 between the Company and the Representative,
relating to the purchase for resale to the public of the Shares and the
Warrants.
(k) "Representative's Warrant Agreement" shall mean the
agreement(s) dated as of ______________, 1996 between the Company and the
Representative relating to and governing the terms and provisions of the
Representative's Warrants.
(l) "Warrant Certificate" shall mean a certificate
representing Warrants substantially in the form annexed hereto as Exhibit A.
(m) "Warrant Expiration Date" shall mean, unless the Warrants
are redeemed as provided in Section 9 hereof prior to such date, 5:00 p.m. (New
York City Time) on ________________, 2001, or if such date shall in the State of
New York be a Saturday, Sunday, holiday or a day on which banks are authorized
to close, then 5:00 p.m. (New York City Time) on the next following day which in
the State of New York is not a Saturday, Sunday, holiday or a day on which banks
are authorized to close, subject to the Company's right, prior to the Warrant
Expiration Date, in its sole discretion, to extend such Warrant Expiration Date
on five business days prior written notice to the Registered Holders.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) One Warrant shall initially entitle the registered
holder of a Warrant to purchase at the Purchase Price therefor from the Initial
Warrant Exercise Date until the Warrant Expiration Date one share of Common
Stock upon the exercise thereof, subject to modification and adjustment as
provided in Section 8.
(b) Upon execution of this Agreement, Warrant
Certificates representing 4,850,000 Warrants to purchase up to an aggregate of
4,850,000 shares of Common Stock (subject to modification and adjustment as
provided in Section 8) shall be executed by the Company and delivered to the
Warrant Agent.
(c) Upon exercise of the Over-Allotment Option, in whole
or in part, Warrant Certificates representing up to 277,500 Warrants to purchase
up to an aggregate of 277,500 shares of Common Stock (subject to modification
and adjustment as provided in Section 8) shall be executed by the Company and
delivered to the Warrant Agent.
(d) Upon exercise of the Representative's Warrants as
provided therein, Warrant Certificates representing 185,000 Common Stock
Warrants to purchase up to an aggregate of 185,000 shares of Common Stock
(subject to modification and adjustment as provided in Section 8 hereof and in
the Representative's Warrant
3
Agreement), shall be countersigned, issued and delivered by the Warrant Agent
upon written order of the Company signed by its Chairman of the Board, Chief
Executive Officer, or President and by its Treasurer or an Assistant Treasurer
or its Secretary or an Assistant Secretary.
(e) From time to time until the Warrant Expiration Date,
the Warrant Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. Except as provided in Section 7 hereof, no Warrant Certificates shall
be issued except (i) Warrant Certificates initially issued hereunder, (ii)
Warrant Certificates issued upon any transfer or exchange of Warrants, (iii)
Warrant Certificates issued in replacement of lost, stolen, destroyed or
mutilated Warrant Certificates pursuant to Section 7, (iv) Warrant Certificates
issued pursuant to the Representative's Warrant Agreement (including Common
Stock Warrants in excess of the 185,000 Common Stock Warrants initially issuable
upon exercise of the Representative's Warrants and any Warrants issued as a
result of the anti-dilution provisions contained in the Representative's Warrant
Agreement), and (v) at the option of the Company, Warrant Certificates in such
form as may be approved by its Board of Directors, to reflect any adjustment or
change in the Purchase Price, the number of shares of Common Stock purchasable
upon exercise of the Warrants or the Redemption Price therefor made pursuant to
Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates evidencing the Warrants shall be
substantially in the form annexed hereto as Exhibit A (the provisions of which
are hereby incorporated herein), and may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Warrants may be listed, or to conform to usage. The Warrant Certificates
shall be dated the date of issuance thereof (whether upon initial issuance,
transfer, exchange or in lieu of mutilated, lost, stolen or destroyed Warrant
Certificates).
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, or President and
by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon.
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
4
of the Company who shall have signed any of the Warrant Certificates shall cease
to be such officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature by the Warrant Agent and issue and
delivery thereof, such Warrant Certificates, nevertheless, may be countersigned
by the Warrant Agent, issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be such
officer of the Company.
SECTION 4. Exercise.
(a) Warrants in denominations of one or whole number
multiples thereof may be exercised commencing at any time on or after the
Initial Warrant Exercise Date, but not after the Warrant Expiration Date, upon
the terms and subject to the conditions set forth herein (including the
provisions set forth in Sections 5 and 9 hereof) and in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised immediately prior
to the close of business on the Exercise Date, provided that the Warrant
Certificate representing such Warrant, with the exercise form thereon duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing, together with payment in cash or by check made payable to the Warrant
Agent for the account of the Company, of an amount in lawful money of the United
States of America equal to the applicable Purchase Price has been received in
good funds by the Warrant Agent. The person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes as the holder
of such securities as of the close of business on the Exercise Date. If Warrants
in denominations other than one or whole number multiples thereof shall be
exercised at one time by the same Registered Holder, the number of full shares
of Common Stock which shall be issuable upon exercise thereof shall be computed
on the basis of the aggregate number of full shares of Common Stock issuable
upon such exercise. As soon as practicable on or after the Exercise Date and in
any event within five business days after such date, if one or more Warrants
have been exercised, the Warrant Agent on behalf of the Company shall cause to
be issued to the person or persons entitled to receive the same, a Common Stock
certificate or certificates for the shares of Common Stock deliverable upon such
exercise, and the Warrant Agent shall deliver the same to the person or persons
entitled thereto. Upon the exercise of any one or more Warrants, the Warrant
Agent shall promptly notify the Company and the Representative in writing of
such fact and of the number of securities delivered upon such exercise and,
subject to subsection (b) below, shall cause all payments of an amount in cash
or by check made payable to the order of the Company, equal to the Purchase
Price, to be deposited promptly in the Company's bank account.
(b) If at the time of exercise of any Warrant commencing one
year after the date of issuance (i) the market price of the Company's Common
Stock is equal to or greater than the then
5
Purchase Price of the Warrant, (ii) the exercise of the Warrant is solicited by
the Representative or another broker-dealer who is at such time is a member of
the National Association of Securities Dealers, Inc. ("NASD"), (iii) the Warrant
is not held in a discretionary account, (iv) disclosure of the compensation
arrangement is made in documents provided to the holders of the Warrants, and
(v) the solicitation of the exercise of the Warrant is not in violation of Rule
10b-6 (as such rule or any successor rule may be in effect as of such time of
exercise) promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act"), then the Representative shall be entitled to receive from the Company
upon exercise of each of the Warrants so exercised a fee (the "Exercise Fee") of
ten percent (10%) of the aggregate Purchase Price of the Warrants so exercised
commencing in the second year following the date of issuance. Anything to the
contrary in the foregoing notwithstanding, no Exercise Fee with respect to any
Warrants exercised shall be payable to the Representative if the payment of the
Exercise Fee with respect to such Warrants would be in violation of the General
Rules and Regulations promulgated under the Exchange Act, or the rules and
regulations of the NASD or applicable state securities or "blue sky" laws, or
the Warrants are Common Stock Warrants underlying the Representative's Warrants.
The procedures for payment of the warrant solicitation fee are set forth in
Section 5(c) below.
(c) (1) Within ten (10) days after the last day of each month
commencing with _______________ , 1997, the Warrant Agent will notify the
Representative of each Warrant Certificate which has been properly completed for
exercise by holders of Warrants during the last month. The Company and Warrant
Agent shall determine, in their sole and absolute discretion, whether a Warrant
Certificate has been properly completed. The Warrant Agent will provide the
Representative with such information in connection with the exercise of each
Warrant as the Representative shall reasonably request.
(2) The Company hereby authorizes and instructs the
Warrant Agent to deliver to the Representative the Exercise Fee promptly after
receipt by the Warrant Agent from the Company of a check payable to the order of
the Representative in the amount of the Exercise Fee. In the event that an
Exercise Fee is paid to the Representative with respect to a Warrant which the
Company or the Warrant Agent determines is not properly completed for exercise
or in respect of which the Representative is not entitled to an Exercise Fee,
the Representative will be instructed by the Warrant Agent to return such
Exercise Fee to the Warrant Agent which shall forthwith return such fee to the
Company.
While the Warrants are outstanding, the Representative and the
Company may at any time during business hours, examine the records of the
Warrant Agent, including its ledger of original Warrant certificates returned to
the Warrant Agent upon exercise of
6
Warrants. Notwithstanding any provision to the contrary, the provisions of
Section 4(b) and 4(c) may not be modified, amended or deleted without the prior
written consent of the Representative.
(d) The Company shall not be obligated to issue any fractional
share interests or fractional warrant interests upon the exercise of any Warrant
or Warrants, nor shall it be obligated to issue scrip in lieu of fractional
interests. However, the Company shall pay the Registered Holder of any
fractional warrant interest an amount in cash based upon the average of the high
and low bid prices for the Common Stock on the Nasdaq SmallCap Market (or if
applicable NASDAQ National Market) during the ten day trading period immediately
preceding the date of exercise.
SECTION 5. Reservation of Shares: Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of Warrants, such number of shares of Common Stock as
shall then be issuable upon the exercise of all outstanding Warrants. The
Company covenants that all shares of Common Stock which shall be issuable upon
exercise of the Warrants shall, at the time of delivery thereof, be duly and
validly issued and fully paid and nonassessable and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each securities exchange, if
any, on which the other shares of outstanding Common Stock of the Company are
then listed.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder require registration
with, or approval of, any governmental authority under any federal securities
law before such securities may be validly issued or delivered upon such
exercise, then the Company will file a registration statement under the federal
securities laws or a post-effective amendment, use its best efforts to cause the
same to become effective, keep such registration statement current while any of
the Warrants are outstanding and deliver a prospectus which complies with
Section 10(a)(3) of the Securities Act of 1933, as amended, to the Registered
Holder exercising the Warrant. The Company will use its best efforts to maintain
appropriate approvals or registrations under state "blue sky" securities laws in
states where the Initial Public Offering is sold. With respect to any such
securities, however, Warrants may not be exercised by, or shares of Common Stock
issued to, any Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance or delivery of any shares of Common Stock
upon exercise of the Warrants; provided, however, that if shares of Common Stock
are to
7
be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing shares
of Common Stock or other securities required upon exercise of the Warrants, and
the Company will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, and the Company
shall execute and the Warrant Agent shall countersign, issue and deliver in
exchange therefor, the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at such office, books in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription of
exercise form, as the case may be, on the reverse thereof shall be duly endorsed
or be accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.
(d) No service charge shall be made for any exchange or
registration of transfer of Warrant Certificates. However, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly cancelled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer
thereof, the Company and the Warrant Agent may deem and
8
treat the Registered Holder of any Warrant Certificate as the absolute owner
thereof of each Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than the Company or the
Warrant Agent) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the Warrant Agent
of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of
Common Stock Deliverable.
(a) (i) Except as hereinafter provided, in the event the
Company shall, at any time or from time to time after the date hereof, issue any
shares of Common Stock as a stock dividend to the holders of Common Stock, or
subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares (any such issuance, subdivision or combination being
herein called a "Change of Shares"), then, and thereafter immediately before the
date of such sale or the record date for each Change of Shares, the Purchase
Price for the Warrants (whether or not the same shall be issued and outstanding)
in effect immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (1) the product of (a) the Purchase Price in effect immediately before
such Change of Shares and (b) the total number of shares of Common Stock
outstanding immediately prior to such Change of Shares, by (2) the total number
of shares of Common Stock outstanding immediately after such Change of Shares.
(ii) Upon each adjustment of the Purchase Price pursuant to
this Section 8, the number of shares of Common Stock purchasable upon the
exercise of each Warrant shall be the number derived by multiplying the number
of shares of Common Stock purchasable immediately prior to such adjustment by
the Purchase Price in effect prior to such adjustment and dividing the product
so obtained by the applicable adjusted Purchase Price.
(b) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or as a result of
subdivision or combination), or in case of
9
any consolidation or merger of the Company with or into another corporation
(other than a merger with a subsidiary in which merger the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants) or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant, the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant
Agent, a statement signed by its Chairman, Chief Executive Officer or President
and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary evidencing such provision. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Section 8(a). The above provisions of this Section
8(b) shall similarly apply to successive reclassifications and changes of shares
of Common Stock and to successive consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(e) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
(d) After each adjustment of the Purchase Price pursuant to
this Section 8, the Company will promptly prepare a certificate signed by the
Chairman, Chief Executive Officer or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Purchase Price as so adjusted, (ii) the number of shares
of Common Stock purchasable upon exercise of each Warrant, after such
adjustment, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the Warrant
Agent and cause a brief summary thereof to be sent by ordinary first class mail
to each Registered Holder at his last address as it shall appear on the registry
books of the Warrant
10
Agent. No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity thereof. The affidavit of an officer of the
Warrant Agent or the Secretary or an Assistant Secretary of the Company that
such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(e) No adjustment of the Purchase Price shall be made as a
result of or in connection with the issuance or sale of shares of Common Stock
if the amount of said adjustment shall be less than $.05 for one share of Common
Stock; provided, however, that in such case, any adjustment that would otherwise
be required to be made shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment that shall amount, together
with any adjustment so carried forward, to at least $.05 for one share of Common
Stock. In addition, Registered Holders shall not be entitled to cash dividends
paid by the Company prior to the exercise of any Warrant or Warrants held by
them.
SECTION 9. Redemption.
(a) Commencing on or after the Initial Warrant Redemption
Date, the Company may redeem all the Warrants at $.30 per Warrant on at least 30
days prior written notice to the Registered Holders of the Warrants, commencing
on the Initial Warrant Redemption Date; provided, however, that before any such
call for redemption of Warrants can take place, the Market Price of the Common
Stock for twenty (20) consecutive trading days ending within 10 days of the
notice of redemption shall be $9.25, subject to adjustment in the event of any
stock splits or other similar events as provided in Section 8 hereof. All
Warrants must be redeemed if any are redeemed. For purposes of this Section 9,
the "Market Price" of the Common Stock for any trading day means the last sale
price for the Common Stock on The Nasdaq SmallCap Market, or if no longer quoted
thereon, on the OTC Electronic Bulletin Board, in either case as reported by the
National Quotation Bureau Incorporated, or if the Common Stock is then quoted on
the Nasdaq National Market, the closing sale price thereon, or if the Common
Stock is then traded or admitted to unlisted trading privileges on a national
securities exchange, the closing sale price on that exchange.
(b) In the event the Company exercises its right to redeem all
of the Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants, by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, within ten (10) calendar days of the
aforementioned twenty (20) consecutive trading days and at least by the
thirtieth (30th) day before the date fixed for redemption, at their last address
as shall appear on the records of the Warrant Agent. Any notice mailed in the
manner provided herein shall be conclusively presumed to have been duly given
whether or not the
11
Registered Holder receives such notice. At the time of the mailing to the
Registered Holders of the Warrants of the notice of redemption, the Company
shall deliver or cause to be delivered to the Representative a similar notice
telephonically and confirmed in writing together with a list of the Registered
Holders (including their respective addresses and number of Warrants
beneficially owned) to whom such notice of redemption has been or will be given.
(c) The notice of redemption, which may not be mailed until on
or after the Initial Warrant Redemption Date, shall specify (i) the redemption
price, (ii) the date fixed for redemption, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, (iv) that
the Representative is the Company's exclusive warrant solicitation agent and
shall receive the commission contemplated by Section 4(b) hereof, and (v) that
the right to exercise the Warrant shall terminate a 5:00 p.m. (New York City
Time) on the business day immediately preceding the date fixed for redemption.
The date fixed for the redemption of the Warrants shall be the Redemption Date.
No failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for such redemption except as to a
Registered Holder (a) to whom notice was not mailed or (b) whose notice was
defective. An affidavit of the Warrant Agent or the Secretary or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00
p.m. (New York City Time) on the business day immediately preceding the
Redemption Date. The redemption price payable to the Registered Holders shall be
mailed to such persons at their addresses of record.
(e) The Company shall indemnify the Representative and each
person, if any, who controls the Representative within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from the registration statement or prospectus referred to in Section 5(b) hereof
to the same extent and with the same effect (including the provisions regarding
contribution) as the provisions pursuant to which the Company has agreed to
indemnify the Representative contained in Sections 6 and 7 of the Underwriting
Agreement.
(f) The Company shall as soon as practicable after the
Redemption Date, and in any event within 15 months thereafter, make "generally
available to its security holders" (within the meaning of Rule 158 under the
Act) an earnings statement (which need not be
12
audited) complying with Section ll(a) of the Act and covering a period of at
least 12 consecutive months beginning after the Redemption Date.
(g) The Company shall deliver within five (5) business days
prior to the Redemption Date, copies of all correspondence between the
Securities and Exchange Commission ("Commission") and the Company, its counsel
or auditors and all memoranda relating to discussions with the Commission or its
staff with respect to such registration statement and permit the Representative
to do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
NASD. Such investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as Duke shall reasonably request.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company and the Representative, and its duties
shall be determined solely by the provisions hereof. The Warrant Agent shall
not, by issuing and delivering Warrant Certificates or by any other act
hereunder, be deemed to make any representations as to the validity or value or
authorization of the Warrant Certificates or the Warrants represented thereby or
of any securities or other property delivered upon exercise of any Warrant or
whether any stock issued upon exercise of any Warrant is fully paid and
nonassessable.
(b) The Warrant Agent shall not at any time be under any duty
or responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Purchase Price provided in this Agreement, or to
determine whether any fact exists which may require any such adjustment, or with
respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of fact contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement, except for
its own gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and
13
shall incur no liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice of such
counsel.
(d) Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board of Directors, Chief Executive Officer or
President (unless other evidence in respect thereof is herein specifically
prescribed). The Warrant Agent shall not be liable for any action taken,
suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Warrant Agent's own gross negligence or willful misconduct),
after giving 60 days prior written notice to the Company. At least 30 days prior
to the date such resignation is to become effective, the Warrant Agent shall
cause a copy of such notice of resignation to be mailed to the Registered Holder
of each Warrant Certificate at the Company's expense. Upon such resignation the
Company shall appoint in writing a new warrant agent. If the Company shall fail
to make such appointment within a period of 60 days after it has been notified
in writing of such resignation by the resigning Warrant Agent, then the
Registered Holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a bank or trust
company having a capital and surplus, as shown by its last published report to
its stockholders, of not less than $10,000,000 or a stock transfer company doing
business in New York, New York. After acceptance in writing of such appointment
by the new warrant agent is received by the Company, such new warrant agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named herein as the warrant agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file
14
notice thereof with the resigning Warrant Agent and shall forthwith cause a copy
of such notice to be mailed to the Registered Holder of each Warrant
Certificate.
(g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding paragraph. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its Subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell Warrants or
other securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effect as though it were not Warrant
Agent. Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of three years
from the date of exercise any Warrant Certificate received by it upon such
exercise, marked to indicate its cancellation thereof in accordance with Section
6(e) hereof.
SECTION 11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental
agreement make any changes or corrections in this Agreement without the approval
of any holders of Warrants (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained; (ii) that they may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Warrant Certificates; (iii) that they deem necessary or desirable to decrease
the Purchase Price as provided for in Section 1(f) hereof; or (iv) which may be
required by law; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders representing not less than 50% of the Warrants
then outstanding; provided, further, that no change in the number or nature of
the securities purchasable upon the exercise of any Warrant, or the Purchase
Price (other than a decrease in the Purchase Price as provided in Section l(f)
thereof) therefor, shall be made without the consent in writing of the
Registered Holder of the Warrant Certificate, other than such changes as are
specifically permitted or prescribed by this Agreement as
15
originally executed. In addition, this Agreement may not be modified, amended or
supplemented without the prior written consent of the Representative, other than
(i) to cure any ambiguity or to correct any provision which is inconsistent or
which is a manifest mistake or error; (ii) to make any such change that is
necessary or desirable and which shall not adversely affect the interests of the
Representative; (iii) to decrease the Purchase Price as provided for in Section
1 (f) hereof; or (iv) except as may be required by law.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class postage prepaid, or delivered to a telegraph office for
transmission if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company at 00 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx Xxxxx, Xxx Xxxxxx
00000 Attention: Chief Executive Officer, or at such other address as may have
been furnished to the Warrant Agent in writing by the Company; and if to the
Warrant Agent, at its Corporate Office. Copies of any notice delivered pursuant
to this Agreement shall be delivered to the Representative at Xxx Xxxxxxx Xxxx
Xxxxx, 00xx xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxx, President,
or at such other addresses as may have been furnished to the Company and the
Warrant Agent in writing.
SECTION 13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to conflicts of laws.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation. The Representative is, and shall
at all times irrevocably be deemed to be, third-party beneficiaries of this
Agreement, with full power, authority and standing to enforce the rights granted
to it hereunder.
SECTION 15. Counterparts.
This Agreement may be executed in several counterparts, which
taken together shall constitute a single document.
16
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the first date first above written. [SEAL]
TELLURIAN, INC. CONTINENTAL STOCK
TRANSFER & TRUST CO.
By: By:
-------------------- ------------------------
Xxxxxx Xxxxxx Xxxxxx Xxxxxx, President
President
17
No. TI
VOID AFTER , 2001
REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK
TELLURIAN, INC.
WARRANTS
CUSIP 879674 11 7
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns
(the "Registered Holder") is the owner of the number of Redeemable Warrants the
"Warrants") specified above. Each Warrant initially entitles the Registered
Holder to purchase, subject to the terms and conditions set forth in this
Certificate and the Warrant Agreement (as hereinafter defined), one fully paid
and non-assessable share of Common Stock, $.01 par value, of Tellurian, Inc., a
Delaware corporation (the "Company"), at any time from _______________ , 1996,
and prior to the Expiration Date (as hereinafter defined), upon the presentation
and surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of Continental Stock
Transfer & Trust Company, Two Broadway, 19th floor, Xxx Xxxx, XX 00000 as
Warrant Agent, or its successor (the "Warrant Agent"), accompanied by payment of
$6.00, subject to adjustment (the "Purchase Price"), in lawful money of the
United States of America in cash or by check made payable to the Warrant Agent
for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated , 1996,
by and between the Company and the Warrant Agent.
The Purchase Price and the number of shares of Common Stock subject to purchase
upon the exercise of each Warrant represented hereby are subject to
modification or adjustment upon the occurrence of certain events as provided
for in the Warrant Agreement.
Each Warrant represented hereby is exercisable at the option of the Registered
Holder, but no fractional interests will be issued. In the case of the exercise
of less than all the warrants represented hereby, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate or Warrant Certificates of like tenor, which the
Warrant Agent shall countersign, for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York City Time) on ,
2001. If such date shall in the State of New York be a Saturday, Sunday,
holiday or a day on which the banks are authorized to close, then the
Expiration Date shall mean 5:00 P.M. (New York City Time) the next following
day which in the State of New York is not a Saturday, Sunday, holiday or a day
on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to the
exercise of this Warrant unless a registration statement under the Securities
Act of 1933, as amended (the "Act"), with respect to such securities is
effective or an exemption thereunder is available. The Company has covenanted
and agreed that, if required by the Act, it will file a registration statement
under the Act, use its best efforts to cause the same to become effective, to
keep such registration statement current, if required under the Act, while any
of the Warrants are outstanding, and deliver a prospectus which complies with
Section 10(a)(3) of the Act to the Registered Holder exercising this Warrant.
This Warrant shall not be exercisable by a Registered Holder in any state where
such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of any
tax or other charge imposed in connection therewith or incident thereto, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered Holder
shall not be entitled to any rights of a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends or other
distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be redeemed
at the option of the Company at a redemption price of $.30 per Warrant, at any
time commencing after , 1997, provided that the Market Price (as defined
in the Warrant Agreement) of the Common Stock for twenty (20) consecutive
trading days and ending no more than ten (10) days prior to the Notice of
Redemption, as defined below, shall have averaged at least $9.25 per share,
subject in each case to adjustment in the event of any stock splits or similar
events. Notice of redemption (the "Notice of Redemption") shall be given at
least thirty days before the date fixed for redemption, all as provided in the
Warrant Agreement. On and after the date fixed for redemption, the Registered
Holder shall have no rights with respect to this Warrant except to receive the
$.30 per Warrant upon surrender of this Certificate.
Under certain circumstances, X.X. Xxxxxxx & Co., Inc., its successors and
assigns shall be entitled to receive, in connection with the exercise of the
Warrants represented hereby, ten percent (10%) of the Purchase Price of the
Warrants so exercised commencing on or after , 1997.
Prior to due presentment for registration of transfer hereof, the Company and
the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to conflicts of law
principles.
This Warrant Certificate is not valid unless countersigned by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: , 1996
Countersigned:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(New York, N.Y.)
as Warrant Agent
By:
TELLURIAN, INC.
By:
By:
Principal
Secretary
President
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrant
The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such Securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(please print or type name and address)
and be delivered to
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1. The exercise of this Warrant was solicited by X.X. Xxxxxxx & Co., Inc. [ ]
2. The exercise of this Warrant was solicited by _______________ . [ ]
3. If the exercise of this Warrant was not solicited, please check the
following box. [ ]
Dated: X
----------------------------------------- ---------------------------
---------------------------
---------------------------
Address
---------------------------
Social Security or Taxpayer
Identification Number
---------------------------
Signature Guaranteed
---------------------------
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, _________________________________ , hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
(please print or type name and address)
_________________________________________ of the Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints__________
___________________________________________________________________ attorney
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Dated: X
------------------------------------- -------------------------------
Signature Guaranteed
-------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A MEMBER OF THE MEDALLION SIGNATURE PROGRAM.
