1
Exhibit 4.2
XXXXXX OIL AND GAS COMPANY
WARRANT AGREEMENT
DATED: FEBRUARY 28, 1992
VOID AFTER 5:00 P.M., LOS ANGELES LOCAL TIME
FEBRUARY 28, 1997
4,230 Warrants to Purchase Common Shares, $.01 Par Value
XXXXXX OIL AND GAS COMPANY, a Delaware Corporation, (hereinafter
referred to as the "Company") hereby certifies that Xxxxx Xxxx (hereinafter
referred to as "Investor"), its successors and assigns, for value received, is
entitled to purchase from the Company at any time on or after February 28, 1992,
and before 5:00 P.M. Los Angeles local time on February 28, 1997, one fully-paid
and non-assessable share of the Common Stock, $.01 Par Value, (hereinafter
referred to as the "Warrant Stock") of the Company (the number and character of
such shares being subject to adjustment as provided herein) for each Warrant
indicated on the face hereof at the purchase price of $9.00 per share
(hereinafter referred to as the "Exercise Price"). This Warrant Agreement was
entered into as part of the purchase of interests in a certain oil and gas well
known as Xxxxxxxx ("Xxxxxxxx Investment") by Investor. The text of each Warrant
("Warrant Certificate") and the Election to Purchase Form shall be substantially
as set forth in Exhibit A attached hereto.
1. EXERCISE OF WARRANTS. Upon presentation and surrender at the principal office
of the Company of the Warrant Certificate and the attached Election to Purchase
Form duly executed by the registered holder thereof, together with a certified
or bank cashier's check payable to the Company in the amount of the Exercise
Price times the number of the Common Shares of the Company being purchased, the
Company shall deliver to the holder thereof, as promptly as practicable, a share
certificate or certificates representing that number of shares being purchased.
The Warrant Certificate may be exercised in whole or in part; and, in case of
exercise thereof in part only, the Company, upon surrender thereof, will deliver
to the holder a new Warrant Certificate or Certificates of like tenor entitling
said holder to purchase the number of shares as to which the Warrant Certificate
has not been exercised.
2. REGISTRATION ON DEMAND.
(a) One time, upon the written request of the each persons holding
Warrants pursuant to this Warrant Agreement ("Holder") and other persons who
together with Holder own a majority of the Warrant Stock issued in connection
with the Xxxxxxxx Investment ("Requesting Holders") that the Company effect
registration, qualification or compliance under the Securities Act and state
securities laws of all or part of the Warrant Shares received
2
pursuant to the Xxxxxxxx Investment ("Registrable Securities") of the Requesting
Holders and specifying the intended method of disposition thereof, the Company
shall (i) promptly thereupon give written notice of the proposed registration to
all other holders of Warrant Stock issued in connection with the Xxxxxxxx
Investment and (ii) effect, as soon as practicable and within 90 days after such
request, all such registrations, qualifications and compliances under the
Securities Act and state securities law of the Registrable Securities which the
Company has been so requested to register by Requesting Holders and any other
holder or holders joining in such registration as specified in a written request
received by the Company within 15 business days after the Company's notice to
the extent requisite to permit the sale and distribution of such securities;
provided, however, that the Company shall not be obligated to effect a
registration under the Securities Act pursuant to this Section 3 before January
1, 1993, or after January 1, 1998.
(b) A registration requested pursuant to this Section 3 will not be
deemed to have been effected (i) unless it has become effective and remained
effective for the period of not less than 180 days.
(c) If Requesting Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 3
and provide the name of the managing underwriter or underwriters that the
majority in interest of such Requesting Holders would propose to employ in
connection with the public offering proposed to be made pursuant to the
registration requested; provided that if the Company reasonable objects to any
managing underwriter or underwriters proposed by Requesting Holders, the
Requesting Holders shall propose another managing underwriter or underwriters.
If the sale proposed by the Requesting Holders is to be effected pursuant to an
underwritten public offering, the right of Holder to registration pursuant to
this Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Requesting Holders and such Holder) to the extent provided herein. The Company
and the Requesting Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting, and shall
execute powers of attorney and custodial agreements in customary form for
selling same.
3. EXCHANGE AND TRANSFER. The Warrant Certificate (a) at any time prior to the
exercise thereof upon presentation and surrender to the Company may be
exchanged, alone or with other Warrant Certificates of like tenor registered in
the name of the same
2
3
Holder, for another Warrant Certificate or other Warrant Certificates of like
tenor in the name of such Holder exercisable for the same aggregate number of
Common Shares as the Warrant or Warrants surrendered, and
(b) may not be sold, transferred, hypothecated, or assigned to any
person or entity without the prior written consent of the Company and without a
legal opinion in form and substance satisfactory to legal counsel for the
Company that such sale, transfer, hypothecation or assignment does not violate
any applicable federal or state securities laws.
4. RIGHTS AND OBLIGATIONS OF WARRANT HOLDERS. The Investor shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or in equity; provided, however, in the event that any certificate representing
shares of the Company's Common Stock is issued to the Investor upon exercise of
some or all of the Warrants represented hereby, such Investor shall, for all
purposes be deemed to have become the holder of record of such stock on the date
on which the Warrant Certificate, together with a duly executed Election to
Purchase Form, was surrendered and payment of the purchase price was made,
irrespective of the date of delivery of such share certificate. The rights of
the holder of the Warrant Certificate are limited to those expressed herein and
the holder of the Warrant Certificate, by his acceptance hereof, consents to and
agrees to be bound by and to comply with all the provisions of this Warrant
Agreement, including without limitation all the obligations imposed upon the
holder hereof by Paragraph 7. In addition, the holder of the Warrant
Certificate, by accepting the same, agrees that the Company and its transfer
agent may deem and treat the person in whose name the Warrant Certificate is
registered as the absolute, true and lawful owner for all purposes whatsoever,
and neither the Company nor the transfer agent shall be affected by any notice
to the contrary.
5. WARRANT STOCK. The Company covenants and agrees that all shares delivered
upon exercise of the Warrant Certificate will, upon delivery, be duly and
validly authorized and issued, fully-paid and non-assessable. In addition, the
Company agrees at all times to reserve and keep available an authorized number
of its Common Shares sufficient to permit the exercise in full of all
outstanding Warrants.
6. DISPOSITION OF WARRANTS OR WARRANT STOCK. The holder of the Warrant
Certificate and any transferee thereof or of the Warrant Stock, by their
acceptance thereof, hereby agrees that (a) no public distribution of the
Warrants or the Warrants Stock will be made in violation of the provisions of
the Securities Act of 1933, as amended, or the Rules and Regulations promulgated
thereunder (such Act and Rules and Regulations being hereinafter referred to as
the "Act") and (b) during such period as delivery of a prospectus with respect
to the Warrants or the Warrant Stock may be
3
4
required by the Act, no public distribution of the Warrants or Warrant Stock
will be made in a manner or on terms different from those set forth in, or
without delivery of, a prospectus then meeting the requirements of Section 10 of
the Act and in compliance with all applicable state laws. If a disposition of
the Warrant Certificate and any of the Warrants or Warrant Stock is proposed to
be made otherwise than by delivery of a prospectus meeting the requirements of
Section 10 of the Act, such action shall be taken only after submission to the
Company of an opinion of counsel, to the effect that the proposed distribution
will not be in violation of the Act or of applicable state law. Furthermore, it
shall be a condition for the transferee thereof to deliver to the Company his or
its agreement to accept and be bound by all of the terms and conditions of this
Warrant Agreement.
7. ADJUSTMENT. The Exercise Price and the number of Warrants are subject to
adjustment from time to time upon the occurrence of any of the events enumerated
below;
(a) Definition of "Shares". As used herein, "Shares" shall mean the
Company's Common Stock, $.01 Par Value and, where appropriate, the other
securities or property purchasable upon the exercise of a Warrant as provided
herein.
(b) Distribution on Shares. In case the Company shall make any
distribution on the Shares payable in the Common Stock of the Company, then the
Exercise Price in effect immediately prior to the making of such distribution
shall be adjusted to a price (computed to the nearest cent) determined by
dividing (A) an amount equal to the product of (i) the number of shares of
Common Stock outstanding immediately prior to the making of such distribution
(including as outstanding shares the maximum number of shares of Common Stock
necessary to effect the conversion or exchange of all then outstanding
convertible stock options, or obligations theretofore issued in distributions on
the Shares) multiplied by (ii) the Exercise Price, by (B) the total number of
shares of Common Stock outstanding immediately following the making of such
distribution (including as then outstanding shares the maximum number of shares
of Common Stock necessary to effect the conversions or exchange of all then
outstanding convertible stock, options, or obligations theretofore issued in
distributions on the Shares).
(c) Subdivision or Combination of Shares. In case the Shares issuable
upon exercise of the Warrants shall be subdivided into a greater or combined
into a lesser number of Shares (whether with or without par value), the Exercise
Price shall be decreased or increased, as the case may be, to an amount which
shall bear the same relation to the Exercise Price in effect immediately prior
to such subdivision or combination as the total number of Shares outstanding
immediately prior to such subdivision or combination bears to the total number
of Shares outstanding immediately after such subdivision or combination. In case
of a subdivision or
4
5
combination, the adjustment in the Exercise Price shall be made as of the
effective date of the applicable event.
(d) Increase in Shares Per Warrant. Upon each adjustment of the
Exercise Price as a result of calculations made pursuant to this Paragraph 8,
each Warrant outstanding prior to the making of the adjustment in the Exercise
Price shall thereafter evidence the right to purchase, at the adjusted Exercise
Price, that number of Shares (calculated to the nearest hundredth) obtained by
(i) multiplying the number of shares purchasable upon exercise of a Warrant
prior to adjustment of the number of Shares by the Exercise Price in effect
prior to adjustment of the Exercise Price and (ii) dividing the product so
obtained by the Exercise Price in effect after such adjustment of the Exercise
Price.
(e) Effect of Sale, Merger, or Consolidation. In case of any capital
reorganization of the Company, or of any reclassification of the Shares, or in
case of the consolidation of the Company with or the merger of the Company into
any other corporation, each Warrant shall after such capital reorganization,
reclassification of Shares, consolidation or merger be exercisable, upon the
terms and conditions specified in this Agreement, for the number of shares of
stock or other securities of the Company, or of the corporation resulting from
such consolidation or surviving such merger, as the case may be, to which the
Shares issuable (at the time of such capital reorganization, reclassification of
Shares, consolidation or merger) would be entitled if such exercise had taken
place immediately prior to such capital reorganization, reclassification of
Shares, consolidation or merger; and in any such case, if necessary, the
provisions set forth herein with respect to the rights and interests thereafter
of the holders of the Warrants shall be appropriately adjusted so as to be
applicable, as nearly as may reasonably be, to any shares of stock or other
securities or property thereafter deliverable on the exercise of the Warrants.
The subdivision or combination of Shares at any time outstanding into a greater
or lesser number of Shares shall not be deemed to be a reclassification of the
Shares of the Company for the purposes of this Section. Anything herein
contained to the contrary notwithstanding, each Warrant shall, following any
sale of the properties and assets of the Company as, or substantially, as, an
entirety to any other person or entity where such sale is to be followed by a
dissolution or liquidation of the Company, remain exercisable until such
dissolution or liquidation is effected, for such securities or property of the
Company as would have been distributable if such exercise had take place prior
to such sale.
(f) Notice to Warrant Holders of Adjustment. Whenever the Exercise
Price is adjusted as herein provided, the Company shall cause to be mailed to
the Warrant Holders in accordance with the provisions of this Paragraph 6 a
notice (i) stating that the Exercise Price and the number of Shares purchasable
upon exercise
5
6
of a Warrant have been adjusted, (ii) setting forth the adjusted Exercise Price
and the adjusted number of Shares purchasable upon the exercise of a Warrant,
and (iii) showing in reasonable detail the computations and the facts, including
the amount of the consideration received or deemed to have been received by the
Company, upon which such adjustments are based.
(g) Notice to Warrant Holders of Stock Dividends, Reorganizations,
etc. In case at any time after the date hereof:
(A) The Company shall declare any dividend upon its Shares
payable otherwise than in cash out of the consolidated net income of the Company
and its subsidiaries or payable in Shares of the Company; or
(B) The Company shall offer for subscription to the holders of
its Shares any additional shares of stock of any class or any other securities
convertible into shares of stock or any rights to subscribe thereto; or
(C) There shall be any capital reorganization or
reclassification of the capital stock of the Company (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or any conversion of the Shares
into securities of another corporation, or a sale or all or substantially all of
the assets of the Company, or a consolidation or merger of the Company with
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 Shares issuable upon exercise of the
Warrants); or
(D) There shall be voluntary or involuntary dissolution,
liquidation or winding up of the Company;
Then, in any one or more of said cases, the Company shall
cause to be mailed to the Warrant Holders, not less than 10 days before any
record date set for definitive action, written notice of the date upon which the
books of the Company shall close or record shall be taken for purposes of such
dividend, distribution or subscription rights or upon which such reorganization,
reclassification, conversion, sale, consolidation, merger, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall also set forth facts as shall indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Exercise
Price and the kind and amount of the shares of stock and other securities and
property deliverable upon exercise of the Warrants. Such notice shall also
specify the date as of which the holders of the Shares of record shall
participate in said dividend, distribution, or subscription rights or shall be
entitled to exchange their Shares for securities or other property deliverable
upon such
6
7
reorganization, reclassification, conversion, sale, consolidation, merger,
dissolution, liquidation or winding up, as the case may be (on which date in the
event of voluntary or involuntary dissolution, liquidation or winding up of the
Company, the right to exercise the Warrants shall terminate).
(h) Fractional Shares. The Company shall not be required to issue any
fraction of a Share upon the exercise of Warrants. If more than one Warrant
shall be surrendered for exercise at one time by the same holder, the number of
full shares which shall be issuable upon exercise thereof shall be computed on
the basis of the aggregate number of Warrants so exercised. If any fractional
interest in a Share shall be deliverable upon the exercise of any Warrant or
Warrants, the Company shall make an adjustment therefore in cash equal to such
fraction multiplied by the Exercise Price per share.
8. REDEMPTION. Each and all of the Warrants may be redeemed at the election of
the Company at any time after one year from the date hereof and only if the
current market price, which for purpose of this Agreement is the last reported
sales price for the ten trading days prior to the notice of the redemption of
the Warrants as reported on the exchange the Company is then trading on or on
NASDAQ National Market System, is at least $9.00. Such redemption shall be at a
price of $.25 per Warrant. The election of the Company to redeem any Warrants
shall be evidenced by resolution of the board of directors, and the Company
shall redeem all but not less than all of such Warrants. Notice of redemption
shall be given by first class mail, postage prepaid, mailed not less than 30 nor
more than 60 days prior to the redemption date to each registered holder of the
Warrants. All such notices shall state the redemption date, the redemption price
and the place and terms of the surrender for payment of the redemption price.
9. SURVIVAL. The various rights and obligations of the Investor and of the
Company as set forth in Paragraph 7 shall survive the exercise of the Warrants
represented hereby and the surrender of the Warrant Certificate.
10. NOTICE. All notice required by this Warrant Agreement to be given or made by
the Company shall be given or made by First Class Mail, postage prepaid,
addressed to the registered holder hereof at the address of such holder as shown
on the books of the Company.
11. LOSS OR DESTRUCTION. Upon receipt of evidence satisfactory to the Company of
the loss, theft, destruction, or mutilation of the Warrant Certificate and, in
the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of the Warrant Certificate, the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
Certificate of like tenor.
7
8
IN WITNESS WHEREOF, the Company has signed this Warrant Agreement as of
the date first set forth above.
XXXXXX OIL AND GAS COMPANY
By: ______________________________
X.X. Xxxxxx, President
8
9
ELECTION TO PURCHASE FORM
_______________________, 199__
TO: XXXXXX OIL AND GAS COMPANY
The undersigned hereby irrevocably elects to exercise the attached Warrant
Certificate to the extent of ____________________ shares of Common Stock ($.01
Par Value) of XXXXXX OIL AND GAS COMPANY and hereby makes payment of the $
purchase price thereof by delivery of a certified or official bank check,
payable to the order of the Company, in the amount of $ ______________________.
------------------------- ---------------------------
Signature Signature
------------------------- ---------------------------
Print or Type Name Print or Type Name
9
