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WARRANT
Quest Resource Corporation
a Nevada Corporation
(the "Company")
To Purchase 1,600,000
Shares of the Company's Common Stock
issued to
Xxxxx Fargo Energy Capital, Inc.
a Texas Corporation
( "Purchaser")
November 7, 2002
This Warrant and the Shares issued upon exercise thereof are subject to
repurchase by the Company as provided in the Warrant Purchase Agreement dated
November 7, 2002.
This Warrant and any Shares acquired upon the exercise of this Warrant have
not been registered under the Securities Act of 1933, as amended, and may not be
transferred, sold or otherwise disposed of in the absence of such registration
or an exemption therefrom under such Act. This Warrant and such Shares may be
transferred only in compliance with the conditions specified in this Warrant and
the Warrant Purchase Agreement, a copy of which is available from the Company to
holders of this Warrant.
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Quest Resource Corporation
Warrant
No. W-1 November 7, 2002
Quest Resource Corporation (the "Company"), a Nevada corporation, for value
received, hereby certifies that Xxxxx Fargo Energy Capital, Inc., a Texas
corporation, or Permitted Transferee (as herein defined), is entitled to
purchase from the Company 1,600,000 duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock, $.001 par value (the "Common Stock")
at any time or from time to time prior to 5:00 p.m., Houston, Texas time, on the
Expiration Date (as herein defined), all subject to terms, conditions and
adjustments set forth in this Warrant.
This is the Warrant (the "Warrant") (such term to include any warrants
issued in substitution therefor) originally issued pursuant to the Warrant
Purchase Agreement of even date herewith. Certain capitalized terms used in this
Warrant are defined in Article VII; unless otherwise specified, references to an
"Exhibit" mean one of the exhibits attached to this Warrant, references to an "
Article" mean one of the articles in this Warrant and references to a "Section "
mean one of the sections of this Warrant.
ARTICLE I. EXERCISE OF WARRANT
Section 1.1. Manner of Exercise. This Warrant may be exercised by the
holder hereof, in whole (and not in part) , during normal business hours on any
Business Day, by surrender of this Warrant to the Company at its office
maintained pursuant to subdivision (a) of Section 6.2, accompanied by a
subscription in substantially the form attached to this Warrant (or a reasonable
facsimile thereof) duly executed by such holder and accompanied by payment, in
cash or by certified or official bank check payable to the order of the Company
in the amount obtained by multiplying (b) the number of shares of Common Stock (
without giving effect to any adjustment thereof) designated in such subscription
by (c) the Initial Price, and such holder shall thereupon be entitled to receive
the number of duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock (or Other Securities) determined as provided in Articles
II through IV. In lieu of delivering the number of shares of Common Stock (or
Other Securities) calculated under the previous sentence, the Company shall if
requested by the holder of this Warrant, issue to the holder of this Warrant
upon exercise a number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (or Other Securities) equal to the
following, rounded to the nearest whole share: the quotient of (i) the product
of (x) the number of shares of Common Stock (or Other Securities) to be
delivered under such previous sentence multiplied by the Market Price of the
Common Stock (or Other Securities) on the date of exercise minus (y) the
aggregate amount the holder is required to pay to the Company as provided in
such sentence upon such exercise, divided by (ii) the Market Price of the Common
Stock (or Other Securities) on the date of exercise.
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If the Company delivers shares of Common Stock (or Other Securities) under the
preceding sentence, then the holder shall not be required to make any payment in
connection with the exercise of this Warrant.
Section1.2. When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1, and at such time the Person or Persons in whose name or
names any certificate or certificates for shares of Common Stock (or Other
Securities) shall be issuable upon such exercise as provided in Section 1.3
shall be deemed to have become the holder or holders of record thereof.
Section 1.3. Delivery of Stock Certificates. etc. As soon as practicable
after each exercise of this Warrant, and in any event within five Business Days
thereafter, the Company, at its expense (including the payment by it of any
applicable issue taxes), will cause to be issued in the name of and delivered to
the holder hereof, subject to Article V, as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (or Other Securities) to which such holder
shall be entitled upon such exercise plus, in lieu of any fractional share to
which such holder would otherwise be entitled, cash in an amount equal to the
same fraction of the Market Price per share on the Business Day next preceding
the date of such exercise.
ARTICLE II. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE
Section 2.1. General: Warrant Price. The number of shares of Common Stock
which the holder of this Warrant shall be entitled to receive upon the exercise
hereof shall be determined by multiplying the number of shares of Common Stock
which would otherwise (but for the provisions of this Article II) be issuable
upon such exercise, as designated by the holder hereof pursuant to Section 1.1,
by a fraction (the "Dilution Factor") (a) the numerator of which is the Initial
Price and (b) the denominator of which is the Warrant Price in effect at the
effective time of such exercise (as provided in Section 1.2). The "Warrant
Price" shall initially be the Initial Price, shall be adjusted and readjusted
from time to time as provided in this Article II and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or readjustment
thereof is required by this Article II.
Section 2.2. Issuance of Additional Shares of Common Stock. In case the
Company at any time or from time to time after the date hereof shall issue or
sell Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to section 2.4 or 2.5) without consideration
or for a consideration per share less than the Dilutive Basis, then, and in each
such case, such Warrant Price shall be reduced, concurrently with such issue or
sale, to the lower of the prices (calculated to the nearest cent) determined as
follows:
(a) by multiplying the Warrant Price then in existence by a fraction,
the numerator of which shall be (i) the number of shares of Common Stock
outstanding immediately prior to such issue or sale plus (ii) the number of
shares of Common Stock which the aggregate consideration received by the
Company for the total number of such Additional Shares of
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Common Stock so issued or sold would purchase at the Current Market Price,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such issue or sale, provided that, for the
purposes of this Section 2.2, (i) immediately after any Additional Shares
of Common Stock are deemed to have been issued pursuant to Section 2.4 or
2.5, such Additional Shares of Common Stock shall be deemed to be
outstanding, and (ii) treasury shares shall not be deemed to be
outstanding; and
(b) by dividing (i) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such issuance or
sale multiplied times the then effective Warrant Price plus (2) the total
consideration, if any, received and deemed received by the Company upon
such issue or sale, by (ii) the total number of shares of Common Stock
outstanding and deemed outstanding immediately after such issue or sale.
Section 2.3. Extraordinary Dividends and Distributions. If the Company at
any time or from time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or Other Securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on the Common Stock, other than (a) a dividend
payable in Additional Shares of Common Stock or (b) a dividend payable in cash
or other property and declared out of the earned surplus of the Company as at
the date thereof as increased by any credits (other than credits resulting from
a revaluation of property) and decreased by any debits made thereto, then, and
in each such case, the Warrant Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any class
of securities entitled to receive such dividend or distribution shall be
reduced, effective as of the close of business on such record date, to a price
(calculated to the nearest cent) determined by multiplying such Warrant Price by
a fraction:
(a) the numerator of which shall be the Current Market Price in effect
on such record date or, if the Common Stock trades on an ex-dividend basis,
on the date prior to the commencement of ex-dividend trading, less the
amount of such dividend or distribution (as determined in good faith by the
Board of Directors of the Company) applicable to one share of Common Stock,
and
(b) the denominator of which shall be the Current Market Price on such
record date, or if the Common Stock trades on an ex-dividend basis, on the
date prior to the commencement of ex-dividend trading.
Section 2.4. Treatment of Options and Convertible Securities. In case the
Company at any time or from time to time after the date hereof shall issue,
sell, grant or assume, or shall fix a record date for the determination of
holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, solely for the purpose of
the calculations to be made pursuant to this Article II, the maximum number of
Additional Shares of Common Stock (as set forth in the instrument relating
thereto, without regard to any provisions contained therein for a subsequent
adjustment of such number) issuable upon the exercise of such Options or, in the
case
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of Convertible Securities and Options therefor, the conversion or exchange of
such Convertible Securities, or, in the case of Appreciation Rights, the number
computed in Section 2.9, shall be deemed to be the number of Additional Shares
of Common Stock issued as of the time of such issue, sale, grant or assumption
or, in case such a record date shall have been fixed, as of the close of
business on such record date (or, if the Common Stock trades on an ex-dividend
basis, on the date prior to the commencement of ex-dividend trading); provided
that such Additional Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined pursuant to Section 2.6)
of such shares would be less than the Dilutive Basis in effect on the date of
and immediately prior to such issue, sale, grant or assumption or immediately
prior to the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading), as the case may be; and provided, further, that in any
such case in which Additional Shares of Common Stock are deemed to be issued no
further adjustment of the Warrant Price shall be made upon the subsequent issue
or sale of Convertible Securities or Additional Shares of Common Stock upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
Section 2.5. Treatment of Stock Dividends. Stock Splits. etc. In case the
Company at any time or from time to time after the date hereof shall declare or
pay any dividend on the Common Stock payable in Common Stock, or shall effect a
subdivision of the outstanding shares of Common Stock into a greater number of
shares of Common Stock (by reclassification or otherwise than by payment of a
dividend in Common Stock), then, and in each such case, Additional Shares of
Common Stock shall be deemed to have been issued (a) in the case of any such
dividend, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
Section 2.6. Computation of Consideration. For the purpose of Article II,
the following shall be used to determine the consideration received or deemed
received by the Company:
(a) Shares Actually Issued. The consideration for the issue or sale of
any Additional Shares of Common Stock shall, irrespective of the accounting
treatment of such consideration,
(i) insofar as it consists of cash, be computed at the net amount
of cash received by the Company, without deducting any expenses paid
or incurred by the Company or any commissions or compensations paid or
concessions or discounts allowed to underwriters, dealers or others
performing similar services in connection with such issue or sale,
(ii) insofar as it consists of property (including securities)
other than cash, be computed at the fair value thereof at the time of
such issue or sale, as determined in good faith by the Board of
Directors of the Company, and
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(iii) in case Additional Shares of Common Stock are issued or
sold together with other stock or securities or other assets of the
Company for a consideration which covers both, be the portion of such
consideration so received, computed as provided in clauses (i) and
(ii) above, applicable to such Additional Shares of Common Stock, all
as determined in good faith by the Board of Directors of the Company.
(b) Shares Deemed Issued. Additional Shares of Common Stock deemed to
have been issued pursuant to Section 2.4, relating to Options and
Convertible Securities, shall be deemed to have been issued for a
consideration per share determined by dividing,
(i) the present value (using a discount factor equal to the
average interest rate on the Company's outstanding indebtedness to
financial institutions and assuming any consideration receivable by
the Company shall be received at the latest date possible under the
terms of such Options or Convertible Securities) of the total amount,
if any, received and receivable by the Company as consideration for
the issue, sale, grant or assumption of the Options or Convertible
Securities in question, plus the present value (using a discount
factor equal to the average interest rate on the Company's outstanding
indebtedness to financial institutions and assuming any consideration
receivable by the Company shall be received at the latest date
possible under the terms of the Options and Convertible Securities) of
the minimum aggregate amount of additional consideration (as set forth
in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration to
protect against dilution) payable to the Company upon the exercise in
full of such Options or the conversion or exchange of such Convertible
Securities or, in the case of Options for Convertible Securities, the
exercise of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case computing
such consideration as provided in the foregoing subdivision (a), by
(ii) the maximum number of Additional Shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number
to protect against dilution) issuable upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
(c) Stock Dividends, etc. Additional Shares of Common Stock issued or
deemed to have been issued pursuant to Section 2.5, relating to stock
dividends, stock splits, etc., shall be deemed to have been issued for no
consideration.
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(d) Services. Additional Shares of Common Stock issued or sold or
deemed issued or sold in exchange for services shall be deemed to have been
issued for the consideration determined in good faith by the Board of
Directors of the Company; not withstanding anything herein to the contrary,
the term "Additional Shares of Common Stock" shall not include any shares
issued or sold in exchange for services if the value of the services per
share of Common Stock (as determined above) is equal to at least 75% of the
Current Market Price (determined as of the valuation date).
Section 2.7. Adjustments for Combinations, etc. In case the outstanding
shares of Common Stock shall be combined or consolidated, by reclassification or
otherwise, into a lesser number of shares of Common Stock, the Warrant Price in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.
Section 2.8. Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale upon
the conversion or exchange of any stock (or Other Securities) of the Company (or
any issuer of Other Securities or any other Person referred to in Article II) or
to subscription, purchase or other acquisition pursuant to any Options issued or
granted by the Company (or any such other issuer or Person) for a consideration
such as to dilute, on a basis consistent with the standards established in the
other provisions of this Article II, the purchase rights granted by this
Warrant, then, and in each such case, the computations, adjustments and
readjustments provided for in this Article II with respect to the Warrant Price
shall be made as nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time receivable upon the
exercise of the Warrant, so as to protect the holder of the Warrant against the
effect of such dilution.
Section 2.9. Appreciation Rights. If the Company issues or sells
Appreciation Rights, a number of Additional Shares of Common Stock shall be
deemed issued for purposes of this Article II and shall be computed as follows:
(a) Value Based on Dividends. If the Appreciation Rights entitle the
holder thereof to distributions or payments based on or determined with
reference to dividends paid or payable on Common Stock, the number of
Additional Shares of Common Stock deemed issued will be the number of
shares of Common Stock that would be required to be issued such that the
holder thereof would receive distribution payments equal to those paid or
payable with respect to such Appreciation Rights.
(b) Value Based on Liquidating Distributions. If the Appreciation
Rights entitle the holder thereof to distributions or payments based on or
determined with reference to liquidation distributions paid or payable on,
or consideration received, in connection with the sale, exchange or
transfer of Common Stock, the number of Additional Shares of Common Stock
deemed issued will be the number of shares of Common Stock that would be
required to be issued such that the holder thereof would receive
distributions or payments equal to those paid or payable with respect to
such Appreciation rights.
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(c) Value Based on Dividends and Liquidating Distributions. If the
Appreciation Rights entitle the holder thereof to distributions based on or
determined with reference to either dividends paid or payable on Common
Stock and liquidating distributions paid or payable or on consolidation
received in connection with the sale, exchange or transfer of Common Stock,
the number of Additional Shares of Common Stock deemed issued will be the
greater of the amount computed under (a) or (b) above.
(d) Other Profits. If the Appreciation Rights entitle the holder
thereof to. distributions based on or determined with reference to any
other measure of profit of the Company, the number of Additional Shares of
Common Stock deemed issued will be the value of the Appreciation Right, as
determined in the good faith judgment of the Board of Directors, divided by
the Current Market Price of the Common Stock on the date of issuance of the
Appreciation Right.
Section 2.10. Business Combination Transactions. Notwithstanding anything
herein to the contrary, the term "Additional Shares of Common Stock" shall not
include any shares issued or sold by the Company in connection with a merger or
consolidation with, a purchase of all or substantially all of the assets or
equity of, or any other business combination transaction with, another Person,
if the value of the consideration per share of Common Stock (determined pursuant
to Section 2.6(a)) received or receivable from such Person in such transaction
is equal to at least 75% of the Current Market Price (determined as of the date
of the definitive agreement for such transaction).
ARTICLE III. CONSOLIDATION, MERGER, ETC.
Section 3.1. Consolidation, Merger, Sale of Assets, Reorganization, etc.
From and after the date hereof, without the prior consent of the holder of this
Warrant, except as contemplated in Section 3.2 hereof, the Company shall not (a)
consolidate with or merge into any other Person if the Company is not the
continuing or surviving corporation of such consolidation or merger, (b) permit
any other Person to consolidate with or merge into the Company even though the
Company shall be the continuing or surviving Person if, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, (c) transfer all or substantially all of its properties or
assets to any other Person, or (d) effect a capital reorganization or
reclassification of the Common Stock or Other Securities (other than a capital
reorganization or reclassification resulting in the issue of Additional Shares
of Common Stock for which adjustment in the Warrant Price is provided in Section
2.2 or 2.3).
Section 3.2. Assumption of Obligations. Notwithstanding anything contained
in this Warrant to the contrary, the Company may effect any of the transactions
described in clauses (a) through (d) of Section 3.1 if, prior to the
consummation thereof, each Person (other than the Company) which may be required
to deliver any stock, securities, cash or property upon the exercise of this
Warrant as provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the holder of this Warrant, (a) the obligations of
the Company under this Warrant (and if the
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Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Warrant) and (b) the obligation to deliver
to such holder such shares of stock, securities, cash or property as such holder
may be entitled to receive. Nothing in this Article III shall be deemed to
authorize the Company to enter into any transaction not otherwise permitted by
the Loan Agreement.
ARTICLE IV. OTHER PROVISIONS CONCERNING DILUTION
Section 4.1. Other Dilutive Events. In case any event shall occur as to
which the provisions of Article II or III are not strictly applicable but the
failure to make any adjustment would not fairly protect the purchase rights
represented by this Warrant in accordance with the essential intent and
principles of such sections, then, in each such case, the Company and the holder
of this Warrant shall in good faith negotiate an appropriate adjustment, if any,
on a basis consistent with the essential intent and principles established in
Articles II and III, necessary to preserve, without dilution, the purchase
rights represented by this Warrant.
Section 4.2. No Dilution or Impairment. The Company will not, by amendment
of its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, 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 Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not permit the par value of
any shares of stock receivable upon the exercise of this Warrant to exceed the
amount payable therefor upon such exercise, (b) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock on the exercise of the
Warrant from time to time outstanding, and (c) will not take any action which
results in any adjustment of the Warrant Price if the total number of shares of
Common Stock (or Other Securities) issuable after the action upon the exercise
of the Warrant would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issuance upon such exercise.
Section 4.3. Company's Report as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and prepare a report setting forth such adjustment or readjustment
and showing in reasonable detail the method of calculation thereof and the facts
upon which such adjustment or readjustment is based, including a statement of
(a) the consideration received or to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued,
(b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Warrant Price in effect immediately prior to such issue
or. sale and as adjusted and readjusted (if required by Article II) on account
thereof. The Company shall also prepare and certify a report stating that any
computation of the fair value of property by the Board of Directors was done in
good faith by the Board of Directors as required herein. The Company will
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forthwith mail a copy of each such report to each holder of this Warrant and
will, upon the written request at any time of such holder of a Warrant, furnish
to such holder a like report setting forth the Warrant Price at the time in
effect and showing in reasonable detail the manner in which it was calculated.
The Company will also keep copies of all such reports at its office maintained
pursuant to subdivision (a) of Section 6.2 and will cause the same to be
available for inspection at such office during normal business hours by such
holder.
Section 4.4. Notices of Corporate Action. In the event that any of the
following occurs,
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend (other than a regular periodic dividend
payable in cash out of earned surplus in an amount not exceeding the amount
of the immediately preceding cash dividend for such period) or other
distribution, or any right to subscribe for, purchase or otherwise acquire
any shares of stock of any class or any other securities or property , or
to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any consolidation
or merger involving the Company and any other Person or any transfer of all
or substantially all the assets of the company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, the Company will mail to the holder of this
Warrant a notice specifying (i) the date or expected date as of which any
such record is to be taken for the purpose of such dividend, distribution
or right, and the amount and character of such dividend, distribution or
right, and (ii) the date or expected date on which any such reorganization,
reclassification, recapitalization, consolidation, merger, transfer ,
dissolution, liquidation or winding-up is to take place and the time, if
any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of
Common Stock (or Other Securities) for the securities or other property
deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, transfer, dissolution, liquidation or winding-up.
Such notice shall be mailed at least 20 days prior to the date therein
specified.
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Section 4.5. Registration of Common Stock Prior To Exercise. If any shares
of Common Stock required to be reserved for purposes of exercise of this Warrant
require registration with or approval of any governmental authority under any
federal or state law (other than the Securities Act) before such shares may be
issued upon exercise, the Company will, at its expense and as expeditiously as
possible, use its commercially reasonable best efforts to cause such shares to
be duly registered or approved, as the case may be. At any such time as Common
Stock is listed on any national securities exchange, the Company will, at its
expense, obtain the notice of issuance of the shares of Common Stock issuable
upon exercise of the Warrant and maintain the listing of such shares" after
their issuance; and the Company will also list on such national securities
exchange, will register under the Exchange Act and will maintain such listing
of, any Other Securities that at any time are issuable upon exercise of the
Warrant, if and at the time that any securities of the same class shall be
listed on such national securities exchange by the Company.
Section 4.6. Availability of Information. The Company will cooperate with
the holder of this Warrant or Restricted Security in supplying such information
as may be reasonably requested by such holder to complete and file any
information reporting forms presently or hereafter required by the Commission to
report such holder's beneficial ownership of Common Stock or Other Securities or
as a condition to the availability of an exemption from the provisions of the
Securities Act for the sale of any Restricted Securities.
Section 4.7. Reservation of Stock. etc. The Company will at all times
reserve and keep available, solely for issuance and delivery upon exercise of
the Warrant, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of the Warrant. All shares of Common Stock
(or Other Securities) issuable upon exercise of the Warrant shall be duly
authorized and, when issued upon such exercise, shall be validly issued and, in
the case of shares, fully paid and non-assessable with no liability on the part
of the holders thereof.
Section 4.8. Registration of Common Stock. If at any time after the date
hereof the Company is eligible to utilize a Form S-3 registration statement, and
continuing for a period of five (5) years thereafter, a majority in interest of
the holders of the Warrant can require Company to file a Registration Statement
("Registration Statement") pursuant to the Securities Act to register such
majority in interest's shares of common stock underlying the Warrant (the
"Registration Shares") with the Commission. The Registration Statement will
include the Registration Shares. The Company will use reasonable efforts to
cause the Registration Statement to become effective and to keep the
Registration Statement current until the earlier of (i) the expiration of a
period of two (2) years after the date hereof and (ii) such time as the
Registration Shares may be sold pursuant to Rule 144 without restriction. The
Company shall not be obligated to effect more than one registration on behalf of
the holders of the Warrant under this section. The procedure for registering the
Registration Shares shall be the procedure set forth in Section 4.9 below
(provided, however, that no such registration shall be pursuant to an
underwriting).
Section 4.9. Company Registration of Registration Shares. (a) If at any
time or from time to time, the Company shall determine to register any of its
securities, other than a registration
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relating solely to employee benefit plans on Form S-8 or similar forms which may
be promulgated in the future relating solely to a Commission Rule 145
transaction, the Company will:
(i) promptly give written notice thereof to the holder of the
Warrant; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registration Shares specified in a written
request or requests, made within thirty (30) days after receipt of
such written notice from the Company, by the holder of the Warrant,
except as may be limited by the provisions set forth in Section
4.9(b).
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the holder of the Warrant as a part of the written
notice given pursuant to this Section 4.9. In such event the right of the
holder of the Warrant to registration pursuant to this Section 4.9 shall be
conditioned upon the holders' participation in such underwriting and the
inclusion of the Registration Shares in the underwriting to the extent
provided herein. If the holder of the Warrant proposes to distribute their
securities through such an underwriting it shall (together with the Company
and the other shareholders, if any, distributing their securities through
such underwriting) enter into an underwriting agreement in customary form
with the underwriter selected for such underwriting by the Company
("Underwriter"). Notwithstanding any other provision of this Section 4.9,
if the Underwriter determines that marketing factors require a limitation
of the shares to be underwritten, the Underwriter may limit the amount of
securities to be included in the registration and underwriting by the
Company's shareholders; provided, however, the number of shares to be
included in such registration and underwriting by the holder of the Warrant
shall not be reduced to less than a pro rata basis equal to the percentage
ownership of the holder's Common Stock relative to the total number of
shares that might be sold pursuant to such registration statement by all
Persons having rights similar to the provisions of this Section 4.9. The
number of shares that may be included in the registration and underwriting
shall be allocated among all such shareholders in proportion, as nearly as
practicable, to the respective amounts of securities entitled to inclusion
in such registration held by such shareholders at the time of filing of the
registration statement. If any such shareholder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice
to the Company and the Underwriter. Any Registration Shares excluded or
withdrawn from such underwriting shall be excluded from such registration.
(c) Expenses of Registration. All registration expenses of the holder
and the Company pursuant to Sections 4.8 and 4.9 shall be borne by the
Company. All Selling Expenses shall be borne by the Persons participating
in the registration on a pro rata basis based on the number of shares so
registered.
11
(d) Registration Procedures. In the case of each registration,
qualification, or compliance effected by the Company pursuant to this
Agreement, the Company will, upon request, inform the holder as to the
status of each such registration, qualification, and compliance. At its
expense the Company will:
(i) Use reasonable efforts to keep such registration, and any
qualification, or compliance under state securities laws which the
Company determines to obtain, effective for a period of one hundred
twenty (120) days or until the holder has completed the distribution
described in the registration statement relating thereto, whichever
first occurs;
(ii) Furnish such number of prospectuses and other documents
incident thereto as the holder from time to time may reasonably
request.
(iii) Supply to the holder drafts of the registration statement
for its review and the holder shall have the right to approve the
portions of the registration statement which relate, either directly
or indirectly, to the holder, prior to filing, provided that such
approval is not to be unreasonably withheld;
(iv) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or blue sky laws of Texas and such other jurisdictions as
shall be reasonably requested by the holder, provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions; and
(v) Notify the holder when a prospectus relating to such
registration statement is required to be delivered under the
Securities Act, at any time that the Company becomes aware of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(e) Indemnification. In the event any Registration Shares are included
in a registration statement under this Section 4.9: (i) The holder will ,
if Registration Shares held by such holder are included in the securities
as to which such registration is being effected, indemnify and hold
harmless the Company , each of its directors, each of its officers, each
person, if any, who controls the Company within the meaning of the
Securities Act, each underwriter, if any, of the Company's securities
covered by such registration, each person who controls such underwriter
within the meaning of the Securities Act, any other holder
12
selling securities in such registration and any controlling person of any
such other holder against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become
subject, under the Securities Act or the Exchange Act or other Federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a
"Violation"): (A) any untrue statement (or alleged untrue statement) of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto; (B) any omission or alleged omission to
state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading; or (C) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act,
any rule or regulation promulgated under the Securities Act or the
Exchange Act or other Federal or state law; in each case to the extent
that such Violation is a result of the reliance on any written information
furnished by such holder (solely in its capacity as a stockholder) for
inclusion in such registration; and the holder will pay, as suffered or
incurred, any legal or other expenses suffered or incurred by any person
intended to be indemnified pursuant to this Section 4.9(e) in connection
with investigating or defending any such loss, claim, damage, liability,
or action, , provided, however, that the indemnity agreement contained in
this Section 4.9(e) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the holder,
(ii) The Company will indemnify and hold harmless the holder, if
Registration Shares held by such holder are included in the securities
as to which such registration is being effected, against any losses,
claims, damages, or liabilities (joint or several) to which such
holder may be subject, under the Securities Act or the Exchange Act or
other Federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation to the extent that such Violation is based on any
untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any written information
furnished by the Company; and the Company will pay, as suffered or
incurred , any legal or other expenses suffered or incurred by such
holder in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 4.9(e) shall not apply
to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent
of the Company, which consent shall not be unreasonably withheld and
provided, further, that the Company will not be liable, with respect
to any preliminary prospectus, to any holder for any expenses, claims,
losses, damages and liabilities arising from the sale of any
Registration Shares by such holder to any person if (A) a copy of the
prospectus (as amended or supplemented if such amendments or
supplements shall have been furnished to such holder one business day
prior to the
13
confirmation of the sale involved) shall not have been sent or given
by or on behalf of such holder to such person, if required by law,
with or prior to the written confirmation of the sale involved, and
(B) the untrue statement or omission , or alleged untrue statement or
omission, of a material fact contained in such preliminary prospectus
from which such expenses, claims losses, damages and liabilities
arose was corrected in the prospectus (as amended or supplemented if
such amendments or supplements thereto shall have been furnished as
aforesaid).
(f) Defense of Claims. (i) Promptly after receipt by an indemnified
party under this Section 4.9 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
Sections 4.8 and 4.9, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in such action at the indemnifying party's expense, and, to the
extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties at the indemnifying party's
expense; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by one
counsel )shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of
such indemnified party or parties, as the case may be, by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential conflicts of interests between such indemnified party and any
other party represented by such counsel in such proceeding. No indemnifying
party, in defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgement or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to the indemnified party of
a release from all liability in respect to such claim or litigation.
(ii) If the indemnification provided for in this Section 4.9 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage,
or expense referred to therein, then the indemnifying party in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent,
14
knowledge, access to information, and opportunity to correct or
prevent such statement or omission. Moreover, no person or entity
guilty of fraudulent misrepresentation within the meaning of Section
11(f) of the Securities Act shall be entitled to contribution from
any person or entity that was not guilty of such fraudulent
misrepresentation.
(iii)The obligations of each of the parties under this Section
4.9 shall survive the completion of any offering of Registration
Shares in a registration statement under this Agreement.
(g) Information by Holder. As a condition to the inclusion of its
Registration Shares, the holder of the Warrant shall furnish to the Company
such information regarding it and the distribution proposed by the holder
as the Company may request in writing and as shall be required in
connection with any registration, qualification, or compliance referred to
in Section 4.8 or 4.9 of this Agreement.
(h) Rule 144 Reporting. With a view to making available to the holder
of the Warrant the benefits of certain rules and regulations of the
Commission which permit the sale of the Registration Shares to the public
without registration, the Company agrees to:
(i) From the date of this Agreement, to use reasonable efforts to
make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) Use its reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act at any time it is subject to
such reporting requirements; and
(iii) From the date of this Agreement and so long as the holder
owns any unregistered Registration Shares, furnish to the holder upon
request a written statement by the issuer as to its compliance with
the reporting requirements of said Rule 144, and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the
Company as the holder may reasonably request in availing itself of any
rule or regulation of the SEC allowing a purchaser to sell any such
securities without registration.
(i) No Transfer of Registration Rights. The right to cause the Company
to register its Registration Shares granted to the holder of the Warrant by
the Company under Section 4.8 and 4.9 may not be assigned by the holder of
the Warrant.
15
(j) Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, neither the Purchaser nor Company shall, without
the prior written consent of the holder of the Warrant, which consent shall
not be unreasonably withheld, enter into any agreement with any holder or
prospective holder of any securities of the Company which would allow such
holder or prospective holder (a) to include such securities in any
registration filed under provisions similar to Sections 4.8 and 4.9, unless
under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that
the inclusion of its securities will not reduce the amount of the
Registration Shares of the holder of the Warrant which is included or (b)
to make a demand registration which could result in such registration
statement being declared effective prior to the date set forth in Section
4.9(a) or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 4.9.
ARTICLE V. RESTRICTIONS ON TRANSFER
Section 5.1. Restriction on Transfer. This Warrant may not be transferred
or assigned except to a Permitted Transferee.
Section 5.2. Restrictive Legends. Except as otherwise permitted by this
Article V, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and any shares acquired upon the exercise of this Warrant
have not been registered under the Securities Act of 1933, as amended, and may
not be transferred, sold or otherwise disposed of in the absence of such
registration or an exemption therefrom under such Act. This Warrant and such
Shares may be transferred only in compliance with the conditions specified in
this Warrant."
Except as otherwise permitted by this Article V, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and may not be transferred in the absence of
such registration or an exemption therefrom under such Act."
Section 5.3. Notice of Proposed Transfer: Opinions of Counsel. Prior to any
transfer of any Restricted Securities which are not registered under an
effective registration statement under the Securities Act, the holder thereof,
will give written notice to the Company of such holder's intention to effect
such transfer and to comply in all other respects with this Section 5.2. Each
such notice (a) shall describe the manner and circumstances of the proposed
transfer and (b) shall include an opinion of legal counsel addressed to the
Company, in form and substance reasonably satisfactory to the
16
Company, to the effect that such transfer does not violate the Securities Act of
1933 and applicable state securities laws.
Section 5.4. Termination of Restrictions. The restrictions imposed by this
Article V upon the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities when such securities shall
have been sold pursuant to an effective registration statement under the
Securities Act or otherwise become freely transferable by the holder thereof.
Whenever such restrictions shall cease and terminate as to any Restricted
Securities, the holder thereof shall be entitled to receive from the Company,
without expense (other than applicable transfer taxes, if any), new certificates
representing the securities not bearing the applicable legends required by
Section 5.1.
ARTICLE VI. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANT
Section 6.1. Ownership of Warrant. The Company may treat the person in
whose name any Warrant is registered on the register kept at the office of the
Company maintained pursuant to subdivision (a) of Section 6.2 as the owner and
holder thereof for all purposes. Subject to Article V, a Warrant, if properly
assigned, may be exercised by a new holder without a new Warrant first having
been issued.
Section 6.2. Office, Transfer and Exchange of Warrant.
(a) The Company will maintain an office where notices, presentations
and demands in respect of this Warrant may be made upon it. Such office
shall be maintained at 000 X.X. 00xx Xxxxxx, Xxxxxxxx Xxxx, XX 00000 until
such time as the Company shall notify each holder of the Warrant of any
change of location of such office.
(b) New Warrant. Upon surrender of the Warrant (at the office of the
Company maintained pursuant to subdivision (a) of this Section 6.2),
properly endorsed, for registration of a Permitted Transfer, the Company at
its expense will (subject to compliance with Article V, if applicable)
execute and deliver to or upon the order of the holder thereof a new
Warrant of like tenor, in the name of such Permitted Transferee.
Section 6.3. Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of the
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
ARTICLE VII. DEFINITIONS
As used herein, unless the context otherwise requires, the following terms
have the following respective meanings:
17
Additional Shares of Common Stock: All shares (including treasury shares)
of Common Stock issued or sold (or pursuant to Section 2.4, 2.5 or 2.9, deemed
to be issued) by the Company after the date hereof, whether or not subsequently
reacquired or retired by the Company, other than
(a) shares issued upon the exercise of the Warrant,
(b) such additional number of shares as may become issuable upon the
exercise of any of the securities referred to in the foregoing clause (a)
by reason of adjustments required pursuant to anti-dilution provisions
applicable to such securities as in effect on the date hereof, but only if
and to the extent that such adjustments are required as the result of the
original issuance of the Warrant, and
(c) such additional number of shares as may become issuable upon the
exercise of any of the securities referred to in the foregoing clause (a)
by reason of adjustments required pursuant to anti-dilution provisions
applicable to such securities as in effect on the date hereof, in order to
reflect any subdivision or combination of Common Stock, by reclassification
or otherwise, or any dividend on Common Stock payable in Common Stock.
Affiliate: A person that directly, or indirectly through one or more
intermediaries, controls or is controlled by, or is under common control with,
such person.
Appreciation Rights: All stock appreciation rights, net profits interests
or other rights entitling the holder or owner thereof to receive payments based
upon or determined with reference to the distributions to holders of Common
Stock or the profits of the Company.
Business Day: Any day other than a Saturday or a Sunday or a day on which
commercial banking institutions in the States of Texas or New York are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any other federal
agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such term to
include (i) any stock into which such Common Stock shall have been changed or
any stock resulting from any reclassification of such Common Stock, (ii) all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to
preference and (iii) all stock appreciation rights, phantom stock and similar
contract rights the holders of which are entitled to payments based on or
determined by reference to the value of the Common Stock, dividends payable with
respect to Common Stock, or liquidating distributions payable with respect to
Common Stock.
18
Company: As defined in the introduction to this Warrant, such term to
include any Person which shall succeed to or assume the obligations of the
Company hereunder in compliance with Article III.
Convertible Securities: Any evidences of indebtedness, shares of stock
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock; provided, however,
that the term "Convertible Securities" shall not include any securities of the
Company outstanding as of the date of this Warrant.
Current Market Price: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such date,
on which the national securities exchanges were open for trading, except that if
no Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market or the OTC Bulletin Board, the
Current Market Price shall be the Market Price on such date.
Dilution Factor: As defined in Section 2.1.
Dilutive Basis: With respect to any issuance or sale or any deemed issuance
or sale of Additional Shares of Common Stock from and after the date hereof, the
greater of (i) the Current Market Price on the day immediately before issuance
or deemed issuance and (ii) the Warrant Price on the day before issuance or
deemed issuance.
Exchange Act: The Securities Exchange Act of 1934, 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.
Expiration Date: November 7, 2007 unless extended as provided in Section
8.4.
Initial Price: $0.001.
Loan Agreement: The mezzanine revolving credit facility of even date
herewith pursuant to which Purchaser is lending up to $20,000,000 to the
Company.
Market Price: On any date specified herein, the amount per share of the
Common Stock, equal to (a) the last sale price of such Common Stock, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which such
Common Stock is then listed or admitted to trading, or (b) if such Common Stock
is not then listed or admitted to trading on any national securities exchange
but is designated as a national market system security by the NASD, the last
trading price of the Common Stock on such date, or (c) if there shall have been
no trading on such date or if the Common Stock is not so designated, the average
of the closing bid and asked prices of the Common Stock on such date as shown by
the NASD automated quotation system, or (d) if such Common Stock is not then
listed or admitted to trading on any national exchange or quoted in the
over-the-counter market or the OTC Bulletin Board, the fair value thereof
19
determined in good faith by the Board of Directors of the Company as of a date
which is within 20 days of the date as of which the determination is to be made.
NASD: The National Association of Securities Dealers, Inc.
Options: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities; provided, however, that the term "Options" shall not include any
securities of the Company outstanding as of the date of this Warrant.
Other Securities: Any stock (other than Common Stock) and other securities
of the Company or any other Person (corporate or otherwise) which the holder of
the Warrant at any time shall be entitled to receive, or shall have received
upon the exercise of the Warrant, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been issued in exchange for or
in replacement of Common Stock or Other Securities pursuant to Article III or
otherwise.
Permitted Transferee: Any Person who is an Affiliate of the Purchaser or
who has purchased, assumed or otherwise acquired, or participates in the rights
of the Purchaser under the Loan Agreement and all of the Loan Documents (as that
term is defined in the Loan Agreement).
Person: Any corporation, association, partnership, joint venture, trust,
estate, limited liability company, organization, business, individual,
government or political subdivision thereof or governmental agency.
Registration Shares: means share of Common Stock underlying this Warrant.
Restricted Securities: All of the following: (a) any Warrant bearing the
applicable legend or legends referred to in Article V, (b) any shares of Common
Stock (or Other Securities) which have been issued upon the exercise of the
Warrant and which are evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section and (c) unless the
context otherwise requires, any shares of Common Stock (or Other Securities)
which are at the time issuable upon the exercise of the Warrant and which, when
so issued, will be evidenced by a certificate or certificates bearing the
applicable legend or legends referred to in such section.
Securities Act: The Securities Act of 1933, 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.
Selling Expenses: means all underwriting discounts, selling commissions and
stock transfer taxes applicable to the Registration Shares registered by the
holder of this Warrant and fees of counsel to such holder.
Transfer: Any sale, assignment, pledge or other disposition of any security
, or of any interest therein, which could constitute a "sale" as that term is
defined in section 2(3) of the Securities Act.
Purchaser: Xxxxx Fargo Energy Capital, Inc..
20
Warrant Price: As defined in Section 2.1 of this Warrant.
Warrant Purchase Agreement: That certain Warrant Purchase Agreement by and
between the Company and Purchaser, of even date.
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Remedies. The Company stipulates that the remedies at law of
the holder of this Warrant in the event of any default or threatened default by
the Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
Section 8.2. No Rights or Liabilities as Stockholder. The holder of this
Warrant and all subsequent holders thereof hereby agree that except to the
extent set forth herein, no provision of this Warrant shall be construed as
conferring upon the holder hereof any rights as a stockholder of the Company or
as imposing any obligation on such holder to purchase any securities or as
imposing any liabilities on such holder as a stockholder of the Company, whether
such obligation or liabilities are asserted by the Company or by creditors of
the Company.
Section 8.3. Notices. All notices and other communications under this
Warrant shall be in writing and shall be mailed by registered or certified mail,
return receipt requested, addressed (a) if to any holder of any Warrant, to the
registered address of such holder as set forth in the register kept at the
principal office of the Company, or (b) if the Company, to the attention of its
Chief Financial Officer at its office maintained pursuant to subdivision (a) of
Section 6.2, provided that the exercise of any Warrant shall be effective in the
manner provided in Article I.
Section 8.4. Miscellaneous.
(a) This Warrant may be amended, waived, discharged or terminated and
the Company may take any action herein required to be performed by it, only
if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder of the Warrant.
(b) THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
(c) The section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.
21
QUEST RESOURCE CORPORATION
By: /s/ Xxxxxxx X. Xxxx
----------------------------------
Xxxxxxx X. Xxxx
President
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
Treasurer/Chief Financial Officer
22
FORM OF SUBSCRIPTION
To________________________________:
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases _________* shares of Common Stock of
___________________________, and herewith makes payment of $___________
therefore, and requests that the certificates for such shares be -- issued in
the name of, and delivered to _____________________, whose address is
_________________________________________.
Dated: (Signature must conform in all
respects to name of holder as
specified on the face or Warrant)
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
________________________________
*Insert the number of shares called for on the face of this Warrant without
making any adjustment for Additional Shares of Common Stock or any other stock
or other securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise.
23
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto the right represented by such Warrant
to purchase shares of Common Stock of to which such Warrant relates, and
appoints Attorney to make such transfer on the books of maintained for such
purpose, with full power of substitution in the premises.
Dated: (Signature must conform in all
respects to name of holder as
specified on the face or Warrant)
________________________________
(Xxxxxx Xxxxxxx)
________________________________
(City) (State) (Zip Code)
________________________________
Signed in the presence of:
_________________________________
24
