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EXHIBIT 1.12
EARN UP AGREEMENT
THIS EARN UP AGREEMENT (this "Agreement") is executed as of the
6th day of May, 1997 between Queen Sand Resources, Inc., a Delaware
corporation (the "Company"), and Forseti Investments Ltd., a Barbados
corporation ("Forseti").
WHEREAS, the Company has entered into a Securities Purchase
Agreement (defined below) with Forseti pursuant to which the Company is
purchasing 9,600,000 shares of Common Stock (defined below) from Forseti
for (i) $5,000,000 cash; (ii) the Class A Warrants (defined below); (iii)
the Class B Warrants (defined below); and (iv) this Agreement;
WHEREAS, the Company has entered into the JEDI Purchase Agreement
(defined below) with JEDI (defined below) pursuant to which the Company
has issued shares of the Company's Series A Participating Convertible
Preferred Stock, par value $0.01 per share, for (i) $5 million cash; and
(ii) the JEDI Earn Up Agreement (defined below);
NOW, THEREFORE, in consideration of these premises, the agreements
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Forseti and the Company
agree as follows:
Section 1. DEFINITIONS
"AAA" means the American Arbitration Association, or any successor
organization.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control," when used with respect to any Person, means
the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of, or rights,
warrants or options to purchase, corporate stock or any other equity
interest (however designated) of or in such Person.
"Capitalized Lease Obligation" means the amount of the liability
under any capital lease that, in accordance with GAAP, is required to be
capitalized and reflected as a liability on the consolidated balance sheet
of the Company and its Subsidiaries.
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"Class A Amount" is defined in Section 2(c).
"Class B Amount" is defined in Section 2(d).
"Class A Warrants" means the Class A Common Stock Purchase
Warrants to purchase 1,000,000 shares of Common Stock, substantially in
the form of Exhibit A to this Agreement.
"Class B Warrants" means the Class B Common Stock Purchase
Warrants to purchase 2,000,000 shares of Common Stock, substantially in
the form of Exhibit B to this Agreement.
"Common Stock" means the common stock, par value $.0015 per share,
of the Company.
"Consolidated Adjusted Net Income" means the consolidated net
income (or loss) of the Company and its Subsidiaries for the fiscal year
ending June 30, 1998 as determined in accordance with GAAP, adjusted by
excluding, to the extent included in consolidated net income, (a) net
after-tax extraordinary gains or losses (less all fees and expenses
relating thereto), (b) net after-tax gains or losses (less all fees and
expenses relating thereto) attributable to asset dispositions, (c) the net
income (or net loss) of any Person (other than the Company or any of its
Subsidiaries) in which the Company or any of its Subsidiaries has an
ownership interest, except to the extent of the amount of dividends or
other distributions actually paid to the Company or its Subsidiaries in
cash by such other Person during such period, and (d) net income (or net
loss) of any Person combined with the Company or any of its Subsidiaries
on a "pooling of interests" basis attributable to any period prior to the
date of combination.
"Consolidated Interest Expense" means the amount which, in
conformity with GAAP, is set forth opposite the caption "interest expense"
(or any like caption) on the audited consolidated statement of operations
of the Company and its Subsidiaries for the fiscal year ended June 30,
1998.
"Consolidated Net Working Capital" means (i) the amount which, in
conformity with GAAP, is set forth opposite the caption "total current
assets" (or any like caption) on the audited consolidated balance sheet of
the Company and its Subsidiaries as of June 30, 1998 less (ii) the amount
which, in conformity with GAAP, is set forth opposite the caption "total
current liabilities" (or any like caption) on the audited consolidated
balance sheet of the Company and its Subsidiaries as of June 30, 1998.
"Consolidated Non-cash Charges" means the amount which, in
conformity with GAAP, is set forth opposite the caption "depreciation,
depletion and amortization" (or any like caption) on the audited
consolidated statement of operations of the Company and its Subsidiaries
for the fiscal year ended June 30, 1998.
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"Consolidated Tax Expense" means the amount which, in conformity
with GAAP, is set forth opposite the caption "income tax expense" (or any
like caption) on the audited consolidated statement of operations of the
Company and its Subsidiaries for the fiscal year ended June 30, 1998.
"Dispute" is defined in Section 6.
"EBITDA" means, without duplication, for the fiscal year ended
June 30, 1998, the sum of (i) Consolidated Adjusted Net Income and (ii) to
the extent deducted in computing Consolidated Adjusted Net Income,
Consolidated Interest Expense, Consolidated Tax Expense and Consolidated
Non-cash Charges.
"Earn Up Amount" is defined in Section 2(b).
"Election Date" means the later of (i) September 30, 1998 and (ii)
the date that is 14 days after the date that the Company notifies Forseti
to request Forseti's election under Section 2.
"Exercise Price" means $2.50.
"Forseti Interests" means all of the outstanding ownership
interests in Forseti and each entity that controls or owns an ownership
interest in Forseti.
"Generally Accepted Accounting Principles" or "GAAP" means
generally accepted accounting principles in the United States, in effect
from time to time.
"Guaranteed Debt" means, without duplication, all Indebtedness of
any other Person guaranteed directly or indirectly in any manner by the
Company or any of its Subsidiaries, or in effect guaranteed directly or
indirectly by the Company or any of its Subsidiaries through an agreement
(i) to pay or purchase such Indebtedness or to advance or supply funds for
the payment or purchase of such Indebtedness, (ii) to purchase, sell or
lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against loss,
(iii) to supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services to be acquired by
such debtor irrespective of whether such property is received or such
services are rendered), (iv) to maintain working capital or equity capital
of the debtor, or otherwise to maintain the net worth, solvency or other
financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include
endorsements for collection or deposit.
"Indebtedness" means, as of June 30, 1998, without duplication,
(i) all indebtedness of the Company or any of its Subsidiaries for
borrowed money or for the deferred purchase price of property or services,
excluding any trade accounts payable and other accrued current liabilities
incurred in the ordinary course of business, (ii) all obligations of the
Company or any of its Subsidiaries evidenced by bonds,
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notes, debentures or other similar instruments, (iii) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by the Company or any of its
Subsidiaries (even if the rights and remedies of the seller or lender
under such agreement in the event of default are limited to repossession
or sale of such property), but excluding trade accounts payable arising in
the ordinary course of business, (iv) all Capitalized Lease Obligations,
(v) all indebtedness referred to in (but not excluded from) clause (i),
(ii), (iii) or (iv) above of other Persons, the payment of which is
secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by the Company or any of its Subsidiaries, even though such Person
has not assumed or become liable for the payment of such indebtedness,
(vi) all Guaranteed Debt, (vii) all Redeemable Capital Stock valued at its
maximum fixed repurchase price plus accrued and unpaid dividends, and
(viii) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in
clauses (i) through (vii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock that does not have a
fixed repurchase price shall be calculated in accordance with the terms of
such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be
determined pursuant to this Agreement, and if such price is based upon, or
measured by, the fair market value of such Redeemable Capital Stock, such
fair market value to be determined in good faith by the Board of Directors
of the issuer of such Redeemable Capital Stock.
"JEDI" means Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership.
"JEDI Earn Up Agreement" means the Earn Up Agreement entered into
between the Company and JEDI substantially in the form of Exhibit C to
this Agreement.
"JEDI Purchase Agreement" means the Securities Purchase Agreement
dated as of March 27, 1997 between the Company and JEDI.
"Mediator" is defined in Section 6.
"Outstanding Shares" means, as of June 30, 1998, the issued and
outstanding shares of Common Stock, assuming the conversion of all shares
of preferred stock of the Company, that are convertible into shares of
Common Stock, and excluding any shares of Common Stock held in treasury by
the Company or held by any wholly-owned Subsidiary of the Company.
"Payment Date" means the later of (i) October 15, 1998 or (ii) the
date that is 15 days after the Election Date.
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"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust,
limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
"Price" means, if:
-----
|Price1 - Price2|
Less Than or Equal to
0.1, then (Price1 + Price2)/2;
----------------------
Greater of Price1 or Price2
provided, that if: |Price1 - Price2|
Greater Than 0.1, then the
Company and Forseti
----------------------
Greater of Price1 or Price2
shall negotiate the Price; provided, further, that if the Price has not
been agreed upon within 5 business days after the determination of Price1
and Price2, then the determination of the Price shall be submitted to
nonbinding mediation and arbitration in accordance with this Agreement.
Notwithstanding anything to the contrary in this Agreement, under no
circumstances shall the Price exceed the higher of Price1 and Price2 or be
less than the lower of Price1 and Price2.
(1.1 * SEC PV10) - Indebtedness + Consolidated Net Working
Capital
"Price1" =
------ --------------------------------------------------------------
Outstanding Shares
(6.0 * EBITDA) - Indebtedness + Consolidated Net Working
Capital
"Price2" =
------ --------------------------------------------------------------
Outstanding Shares
"Redeemable Capital Stock" means any Capital Stock of the Company
or any of its Subsidiaries that, either by its terms, by the terms of any
security into which it is convertible or exchangeable or otherwise, (i)
is, or upon the happening of an event or passage of time would be,
required to be redeemed, or (ii) is, or upon the happening of an event or
passage of time would be, redeemable at the option of the holder thereof,
or (iii) is, or upon the happening of an event or passage of time would
be, convertible into or exchangeable for debt securities.
"SEC PV10" means the pre tax future net cash flows from proved oil
and gas reserves of the Company and its Subsidiaries at June 30, 1998,
computed using a discount factor of ten percent, as determined in
accordance with the rules, regulations and guidelines of the United States
Securities and Exchange Commission and reported in the reserve report
dated as of such date prepared in accordance with Section 6.11 of the JEDI
Purchase Agreement.
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"Securities Purchase Agreement" means the Securities Purchase
Agreement dated March 27, 1997 between the Company and Forseti.
"Statutory Declaration" means a statutory declaration by Forseti
that as of the Election Date and the Payment Date (i) the individual who,
as of the date hereof, owned all the Forseti Interests owns all of the
Forseti Interests, (ii) there are no encumbrances, pledges or other liens
on any equity interests in Forseti, and (iii) no other event under Section
8(h) has occurred.
"Subsidiary" of a Person means any corporation, limited liability
company, limited or general partnership, joint venture, association,
joint-stock company or business trust of which at the time of
determination such Person, directly and/or indirectly through one or more
other Persons, owns more than 50% of the voting interests.
"Transfer" of any property means any exercise, or any direct or
indirect sale, transfer, encumbrance, gift, donation, assignment, grant of
any interest, pledge, hypothecation or other disposition of such property
or any interest therein, whether voluntary or involuntary, including, but
not limited to, any transfer by operation of law, by court order, by
judicial process, or by foreclosure, levy, or attachment.
"Value" is defined in Section 2(f).
"Warrant Transfer Amount" is defined in Section 2(e).
"Warrants" means, collectively, the Class A Warrants and the Class
B Warrants.
2.0 FORSETI ELECTION; PAYMENT OF EARN UP AMOUNT
(a) On or before the Election Date, Forseti shall deliver
notice to the Company of its election to either (i) accept the
payment of the Earn Up Amount in accordance with the terms and
conditions of this Agreement (in which event the Warrants that
have not been Transferred by Forseti shall be delivered to the
Company pursuant to Section 2(b)); or (ii) retain the Warrants
that have not been Transferred by Forseti (in which event the
Company shall have no obligation to pay Forseti the Earn Up Amount
and the Company's obligations under this Agreement shall terminate
immediately). If Forseti fails to deliver notice to the Company
on or before the Election Date specifying the election in (i) or
(ii), then Forseti shall be deemed to have elected (i) above.
(b) In the event that Forseti elects, or is deemed to elect,
(i) above, then on or before the Payment Date, subject to the
limitations in Section 3 and only against delivery by Forseti to
the Company of (x) the Warrants and (y) the Statutory Declaration,
the Company shall pay Forseti an amount (the "Earn Up Amount")
equal to the amount, if any, by which (i) the sum of the Class A
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Amount and the Class B Amount exceeds (ii) the Warrant Transfer
Amount; provided, that in no event shall the Earn Up Amount exceed
$9,400,000.
(c) The "Class A Amount" means a dollar amount equal to the
product of (i) the Value (not to exceed $1.50) less $1.25,
multiplied by (ii) 9,600,000; provided, that in no event shall the
Class A Amount be greater than $2,400,000; and if the Class A
Amount is zero or a negative number, the Class A Amount shall be
deemed to be zero.
(d) The "Class B Amount" means a dollar amount equal to the
product of (i) the Value (not to exceed $1.25) less $0.521,
multiplied by (ii) 9,600,000; provided, that in no event shall the
Class B Amount be greater than $7,000,000; and if the Class B
Amount is zero or a negative number, the Class B Amount shall be
deemed to be zero.
(e) The "Warrant Transfer Amount" means a dollar amount equal
to the greatest of (i) the product of (x) $3.50 multiplied by (y)
the aggregate number of Class A Warrants and Class B Warrants
Transferred by Forseti before the Payment Date; (ii) the aggregate
gross proceeds that Forseti has received or is entitled to receive
from the Transfer of all of the Class A Warrants and Class B
Warrants Transferred by Forseti before the Payment Date; and (iii)
the difference between the average daily bid price of the
Company's shares of Common Stock for the 21-day period ending on
the Election Date less the Exercise Price, multiplied by the
number of Class A Warrants and the Class B Warrants Transferred by
Forseti before the Payment Date.
(f) The "Value" means the product of the Price, multiplied by
0.60; provided, that if (i) the Common Stock is quoted on The
Nasdaq National Market at the Election Date and (ii) the average
daily trading volume of the Company's shares of Common Stock for
the 21-day period ending on the Election Date is at least 50,000
shares per day (excluding trading of shares in any accounts
controlled by the Company or Forseti or their respective
Affiliates, and provided, that if on any of the 21 days the
trading volume is greater than 300,000 shares, then only 300,000
shares on such days may be used in calculating the average), then
Value means the product of the Price, multiplied by 0.75.
(g) The Company represents and warrants to Forseti that the
definitions of the terms "Price" and "Value" in the JEDI Earn Up
Agreement are identical to the definitions of such terms in this
Agreement.
3.0 LIMITATION ON PAYMENT
The Company shall be obligated to pay Forseti under this Agreement
only to the extent that the Company has received a like amount as payment
from JEDI under the JEDI Earn Up Agreement. If JEDI shall fail to make
payments due under
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the JEDI Earn Up Agreement on the Election Date, then Company shall have
no obligation to pay Forseti under this Agreement until such time that
JEDI makes payment to the Company under the JEDI Earn Up Agreement, and
then only to the extent of payments made by JEDI under the JEDI Earn Up
Agreement.
4.0 SHARING OF EXCESS PROCEEDS
If the sum of (i) $5,000,000 and (ii) the aggregate amount
received by Forseti from the Transfer of Warrants, exceeds the sum of (x)
$14,400,000 plus (y) a dollar amount equal to the sum of the expenses of
the Company paid by Forseti pursuant to the Securities Purchase Agreement,
the reasonable out-of-pocket expenses up to a maximum of $50,000 incurred
by Forseti in connection with the Securities Purchase Agreement, and the
escrow agent fees incurred by Forseti under the Escrow Agreement among the
Company, Forseti and Comerica Bank-Texas the sum of subclauses (x) and (y)
being referred to as "Net Proceeds," then within 10 days of the date (the
"Excess Determination Date") the aggregate amount received by Forseti
exceeds the Net Proceeds, (x) Forseti shall deliver to the Company an
amount in cash or by wire transfer of immediately available funds equal to
75% of such amount received by Forseti in excess of the Net Proceeds, and
(y) Forseti shall spend the remaining 25% of such excess amount to
purchase from the Company, subject to applicable securities laws, Common
Stock at a price equal to the average of the Nasdaq bid price over 21
trading days ending on the Excess Determination Date.
5.0 OPTION
Subject to this Section 5, the Company hereby grants to Forseti an
option to purchase from the Company a number of shares of Common Stock
equal to the quotient of (x) the amount by which the Earn Up Amount
exceeds $7,000,000 and (y) $2.50 (as such number of shares may be adjusted
pursuant to this Section 5, the "Shares"), at a price per share equal to
$2.50 (as such price may be adjusted pursuant to this Section 5). The
option granted in this Section 5 is exerciseable in full or in part (i)
only from the date that the Earn Up Amount is paid by the Company to
Forseti through the fifth business day after the date of payment of the
Earn Up Amount and (ii) by written notice to the Company of such exercise,
which notice shall be accompanied by proper payment in cash or certified
or bank check. The option in this Section 5.0 is not transferable. The
number of Shares for which the option in this Section 5 may be exercised,
and the price at which such option may be exercised, are subject to
appropriate adjustment in the event that the Company (i) pays a dividend
of shares of Common Stock or makes a distribution in shares of Common
Stock), (ii) subdivides its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combines its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or
(iv) issues any shares of its capital stock or other assets in a
reclassification or reorganization of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity). THE OPTION IN THIS SECTION 5 AND THE
SHARES OF COMMON STOCK ISSUABLE UPON
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EXERCISE OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED, OR ANY OTHER UNITED STATES FEDERAL OR
STATE SECURITIES OR BLUE SKY LAWS OR APPLICABLE NON-UNITED STATES
SECURITIES LAWS.
6.0 MEDIATION.
Any controversy, dispute or claim arising out of or relating to
this Agreement (a "Dispute") shall be submitted to non-binding mediation
upon the request of the Company or Forseti on the following terms. Upon
the request of either party, a neutral mediator acceptable to both parties
(the "Mediator") shall be appointed within 15 days. The Mediator shall
attempt through negotiations in any manner deemed reasonably appropriate
by the Mediator, in which the parties shall participate, to resolve the
Dispute. The Mediator shall be compensated at a rate agreeable to the
Company, Forseti and the Mediator, and each of the Company and Forseti
shall pay its pro rata share of such compensation and other expenses of
the mediation.
7.0 ARBITRATION.
In the event that mediation of a Dispute has not commenced within
15 days after a request for mediation is submitted or is terminated
without resolution under Section 6.0, any controversy or claim arising out
of or relating to this Agreement, including the right to or amount of
indemnity, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the AAA by three (3) arbitrators. Each of
Forseti and the Company shall appoint one arbitrator, who shall be an
impartial person. If a party fails to appoint an arbitrator within thirty
(30) days from the date a Demand to Arbitrate was made under Rule 6, the
AAA shall make the appointment of the arbitrator. The two (2) arbitrators
thus appointed shall appoint the third arbitrator, who shall be an
impartial person. If said two (2) arbitrators fail to appoint the third
arbitrator within sixty (60) days from the date a Demand to Arbitrate was
made under Rule 6, the AAA shall make the appointment of the third
arbitrator, who shall be an impartial person. Should any of the
arbitrators appointed die, resign, refuse or become unable to act before a
decision is given, the vacancy shall be filled by the method set forth in
this clause for the original appointment. The arbitration shall be held
in Dallas, Texas and shall be conducted in the English language. A
decision by the arbitrators shall be final and binding on all the parties.
The arbitrators shall execute and deliver to the respective parties the
arbitration panel's decision in writing. Judgment upon the award, if any,
rendered by the arbitrators (which must be expressed in United States
Dollars) may be entered in any court having jurisdiction thereof. In any
award, the arbitrators shall assess the arbitration costs and expenses,
including, without limitation, attorneys fees of the parties, in a manner
deemed equitable by the arbitrators, taking into account the arbitration
decision. Notwithstanding anything to the contrary in this Agreement, if
a Dispute involves the determination of Price, the Price, as determined by
arbitration under this Section 7, shall not (i) (a) exceed the higher or
Price1 and Price2, or (b) be lower than the lower of Price1 and Price2,
(ii) exceed the Price as determined under the JEDI Earn Up Agreement,
including a Price as
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determined by arbitration under the provisions of the JEDI Earn Up
Agreement, or (iii) exceed the amount received by the Company from JEDI
pursuant to the JEDI Earn Up Agreement.
8.0 MISCELLANEOUS
(a) Governing Law; Choice of Forum; Consent to Service of
Process. This Agreement shall be governed by the substantive laws
of the State of Texas. Except as provided in Sections 6 and 7,
the parties hereto agree that any suit, action or proceeding
arising out of or relating to this Agreement or any agreement or
obligation delivered in connection with this Agreement or any
judgment entered by any court in respect thereof shall be brought
in the Courts of the State of Texas, County of Dallas or in the
United States District Court for the Northern District of Texas
and each such party hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action or
proceeding relating to this Agreement or any related agreement or
obligation. Forseti hereby submits to the jurisdiction of the
State of Texas and agrees that service of all writs, process and
summonses in any such suit, action or proceeding brought in the
United States against Forseti may be made upon CT Corporation
System at its offices located at 000 Xxxxx Xx. Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 (or any subsequent address of CT Corporation
System), and Forseti hereby irrevocably appoints CT Corporation
System at its offices located at 000 Xxxxx Xx. Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 (or any subsequent address of CT Corporation
System) its true and lawful attorney-in-fact in their name, place
and stead to accept such service of any and all such writs,
process and summonses, and agree that the failure of CT
Corporation System to give to Forseti any notice of any such
service of process shall not impair or affect the validity of such
service or of any judgment based thereon. The Company shall send,
within 5 days after service of process under this subsection (a),
notice to Forseti in accordance with subsection (e) of any service
of process on CT Corporation System under this subsection (a).
Service of process on the Company may be made to the Company's
registered agent in Delaware, Corporation Trust Centre, 0000
Xxxxxx Xxxxxx, xx xxx Xxxx xx Xxxxxxxxxx, Xxxxxx of New Castle.
Each party hereto hereby irrevocably waives any objection
that it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement or any agreement or obligation delivered in connection
with this Agreement, brought in the Courts of the State of Texas,
County of Dallas or the United States District Court for the
Northern District of Texas, and hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.
(b) Invalid Provisions. If any provision of this Agreement
is held to be illegal, invalid or unenforceable, such provision
shall be fully severable.
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(c) Entirety and Amendments. This Agreement and that certain
Letter Agreement dated as of the date hereof between the Company
and the individual who owns directly or indirectly all of the
Forseti Interests embody the entire agreement and understanding
relating to the subject matter hereof and supersede all prior
understandings between the parties relating to the subject matter
hereof. This Agreement may be amended only by an instrument in
writing executed by the Company and Forseti.
(d) Parties Bound. This Agreement shall be binding upon and
inure to the benefit of the Company and Forseti, and their
respective successors and permitted assigns. Neither the Company
nor Forseti may assign its rights or delegate its obligations
hereunder (whether voluntarily, involuntarily, or by operation of
law) without the prior written consent of the other party.
(e) Notices. Unless otherwise specified, whenever this
Agreement requires or permits any consent, approval, notice,
request, or demand from one party to another, that communication
must be in writing (which may be by telecopy) to be effective and
is deemed to have been given (a) if by telecopy, when transmitted
to the appropriate telecopy number (and all communications sent by
telecopy must be confirmed promptly by telephone; but any
requirement in this parenthetical does not affect the date when
the telecopy is deemed to have been delivered), or (b) if by any
other means, including by internationally acceptable courier or
hand delivery, when actually delivered. Until changed by notice
pursuant to this Agreement, the address (and telecopy number) for
the Company and Forseti are:
If to Forseti: Forseti Investments Ltd.
000-000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx
West Indies
Attn: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
With copies to: Xxxxx Fresenius Xxxxx Scherzberg, attorneys
Xxxx-Xxxxxxx-Strasse 37-39
60596 Frankfurt-Am-Main
Attn: Xxxxxxxxx Xxxxx
Facsimile: (00) 0000000000
If to Company: Queen Sand Resources, Inc.
0000 Xxx Xxxx, Xxxxx 000, X.X.#00
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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With copies to: Queen Sand Resources, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Boeing
Facsimile: (000) 000-0000
(f) Section and Other Headings. The headings contained in
this Agreement are for reference purposes only and will not affect
in any way the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original and
all of which together will constitute one instrument.
(h) Termination. This Agreement shall terminate upon the
earlier of (i) the Transfer of any Warrants in violation of the
restrictions on Transfer of Warrants under the Securities Purchase
Agreement, (ii) the election by Forseti to retain the Warrants
under Section 2(a)(ii), (iii) the Transfer of all of the Warrants,
(iv) upon the Transfer of any ownership interest in Forseti or any
entity controlling Forseti where the purpose of the transfer is to
realize or receive cash, securities or any other property as
consideration for the Warrants without transferring the Warrants;
and (v) as of the Election Date or the Payment Date, the
individual who, as of the date hereof owned, directly or
indirectly, all of the Forseti Interests does not own, directly or
indirectly, all of the Forseti Interests. No termination of this
Agreement shall affect the validity of the Warrants.
(i) Currency. All dollar amounts in this Agreement shall
mean United States dollars.
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13
IN WITNESS WHEREOF, Forseti and the Company have executed this
Agreement as of the day and year first stated above.
FORSETI:
FORSETI INVESTMENTS LTD.
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Officer
COMPANY:
QUEEN SAND RESOURCES, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
and
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
14
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE THEREOF (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY OTHER UNITED STATES FEDERAL OR STATE SECURITIES OR BLUE SKY
LAWS OR APPLICABLE NON-UNITED STATES SECURITIES LAWS, AND HAVE BEEN ISSUED
IN A MANNER INTENDED TO COMPLY WITH THE CONDITIONS CONTAINED IN REGULATION
S UNDER THE ACT. PRIOR TO MAY 6, 1998, NO OFFER, SALE, TRANSFER, PLEDGE
OR OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OR EXERCISE OF THE
WARRANTS REPRESENTED BY THIS CERTIFICATE MAY BE MADE (A) IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY "U.S. PERSON" (AS
DEFINED IN REGULATION S) UNLESS (i) REGISTERED UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (ii) QUEEN SAND RESOURCES,
INC. (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH
DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS OR (B) OUTSIDE THE
UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON WHO IS NOT
A "U.S. PERSON" UNLESS PRIOR TO SUCH DISPOSAL (i) THE BENEFICIAL OWNER OF
SUCH SECURITIES AND THE PROPOSED TRANSFEREE SUBMIT CERTAIN CERTIFICATIONS
TO THE COMPANY (FORMS OF WHICH ARE AVAILABLE FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES) AND (ii) THE COMPANY RECEIVES THE LEGAL
OPINION DESCRIBED IN (A)(ii) ABOVE. THE SECURITIES ARE ALSO SUBJECT TO
CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN THIS WARRANT AND THE
SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 27, 1997, A COPY OF WHICH
IS AVAILABLE FOR INSPECTION AT ITS PRINCIPAL PLACE OF BUSINESS.
QUEEN SAND RESOURCES, INC.
Class A Common Stock Purchase Warrant
Representing Right To Purchase Shares of
Common Stock
of
Queen Sand Resources, Inc.
No. A-1
14
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FOR VALUE RECEIVED, QUEEN SAND RESOURCES, INC., a Delaware
corporation (the "Company"), hereby certifies that Forseti Investments
Ltd., a Barbados corporation (the "Holder"), is entitled, subject to the
provisions of this Warrant, to purchase from the Company, at any time or
from time to time during the Exercise Period (as hereinafter defined), a
total of 1,000,000 shares (as such number of shares may be adjusted
pursuant to the terms hereof, the "Warrant Shares") of Common Stock, par
value $.0015 per share, of the Company, at a price per share equal to the
Exercise Price (as defined below). This Warrant is issued to the Holder
(together with such other warrants as may be issued in exchange, transfer
or replacement of this Warrant, the "Warrants") pursuant to the Securities
Purchase Agreement (as defined below) and entitles the Holder to purchase
the Warrant Shares and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and conditions and pursuant to the
provisions set forth herein and in the Securities Purchase Agreement.
Section 1. Definitions. The following terms, as used
herein, have the following respective meanings:
"Common Stock" means the Company's common stock, $0.0015 par
value.
"Company" is defined in the introductory paragraph of this
Warrant.
"Date of Issuance" means May 6, 1997.
"Earn Up Agreement" means the Earn Up Agreement, dated as of the
date hereof, between the Company and the Holder.
"Exercise Period" means the period of time between the Date of
Issuance and 5:00 p.m. (New York City time) on December 31, 1998,
provided, however, that any Warrants held by Forseti Investments Ltd. on
the Election Date (as defined in the Earn Up Agreement) shall expire on
the Election Date unless Forseti Investments Ltd. elects to retain the
Warrants pursuant to Section 2(a)(ii) of the Earn Up Agreement.
"Exercise Price" means an amount, per share, equal to $2.50 (U.S.
dollars). The Exercise Price shall be subject to adjustment, as set forth
in Section 4.
"Holder" means Forseti Investments Ltd. and its permitted
assignees.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust,
limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
"Required Holders" means the Holders of more than 50% of all
Warrant Shares then outstanding (assuming the full exercise of all
Warrants).
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 27, 1997, between the Company and Forseti, as
such agreement shall be modified, amended and supplemented and in effect
from time to time.
"Value" means, as of any date of determination, with respect to
the Common Stock, $3.50 per share of Common Stock.
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16
"Warrants" is defined in the introductory paragraph of this
Warrant.
"Warrant Shares" is defined in the introductory paragraph of this
Warrant.
Section 2. Exercise of Warrant; Cancellations of Warrant.
Subject to the Securities Purchase Agreement and the provisions of
Regulation S promulgated under the Securities Act of 1933, as amended,
this Warrant may be exercised in whole or in part, at any time or from
time to time, during the Exercise Period, by presentation and surrender
hereof to the Company at its principal office at the address set forth in
Section 11 (or at such other reasonable address as the Company may after
the date hereof notify the Holder in writing, coming into effect not
before 14 days after receipt of such notice by the Holder), with the
Purchase Form annexed hereto as Exhibit A duly executed and accompanied by
either (at the option of the Holder) proper payment in cash or certified
or bank check equal to the Exercise Price for the Warrant Shares for which
this Warrant is being exercised; provided, that if this Warrant is
exercised in part, the Warrant must be exercised for the purchase of at
least 100,000 shares of Common Stock. Upon exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable, and in any event
within 20 days thereafter, execute and deliver to the Holder a certificate
or certificates for the total number of Warrant Shares for which this
Warrant is being exercised, in such names and denominations as requested
in writing by the Holder. The Company shall pay any and all documentary
stamp or similar issue taxes payable in respect of the issue of the
Warrant Shares. If this Warrant is exercised in part only, the Company
shall, upon surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
Warrant Shares issuable hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of
Warrant. This Warrant is exchangeable, without expense, at the option of
the Holder, upon presentation and surrender hereof to the Company for
other Warrants of different denominations, entitling the Holder to
purchase in the aggregate the same number of Warrant Shares. The Holder
of this Warrant shall be entitled, without obtaining the consent of the
Company, to transfer or assign its interest in (and rights under) this
Warrant in whole or in part to any Person or Persons, subject to the
provisions of Section 7 of this Warrant and Article 8 of the Securities
Purchase Agreement. Upon surrender of this Warrant to the Company, with
the Assignment Form annexed hereto as Exhibit B duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees named in such Assignment Form and, if the Holder's entire
interest is not being assigned, in the name of the Holder, and this
Warrant shall promptly be canceled. This Warrant may be divided or
combined with other Warrants that carry the same rights upon presentation
hereof at the office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation
of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification (including, if required in the
reasonable judgment of the Company, a statement of net worth of such
Holder that is at a level reasonably satisfactory to the Company), and
upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
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17
Section 4. Antidilution Provisions.
(a) Adjustment of Number of Warrant Shares and Exercise
Price. The number of Warrant Shares purchasable pursuant hereto and the
Exercise Price, each shall be subject to adjustment from time to time on
and after the Date of Issuance as provided in this Section 4(a). In case
the Company shall at any time after the Date of Issuance (i) pay a
dividend of shares of Common Stock or make a distribution of shares of
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of Common Stock or
(iv) issue any shares of its capital stock or other assets in a
reclassification or reorganization of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing entity), then (x) the securities purchasable
pursuant hereto shall be adjusted to the number of Warrant Shares and
amount of any other securities, cash or other property of the Company
which the Holder would have owned or have been entitled to receive after
the happening of any of the events described above, had this Warrant been
exercised immediately prior to the happening of such event or any record
date with respect thereto, and (y) the Exercise Price shall be adjusted to
equal the Exercise Price immediately prior to the adjustment multiplied by
a fraction, (A) the numerator of which is the number of Warrant Shares for
which this Warrant is exercisable immediately prior to the adjustment, and
(B) the denominator of which is the number of shares for which this
Warrant is exercisable immediately after such adjustment. The adjustments
made pursuant to this Section 4(a) shall become effective immediately
after the effective date of the event creating such right of adjustment,
retroactive to the record date, if any, for such event. Any Warrant
Shares purchasable as a result of such adjustment shall not be issued
prior to the effective date of such event.
For the purpose of this Section 4(a) and (b), the term "shares of
Common Stock" means (i) the classes of stock designated as the Common
Stock of the Company as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to this Section 4(a), the
Holder shall become entitled to receive any securities of the Company
other than shares of Common Stock, thereafter the number of such other
securities so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Warrant Shares
contained in this Section 4.
(b) Reorganization, Merger, etc. If any capital
reorganization, reclassification or similar transaction involving the
capital stock of the Company (other than as specified in Section 4(a)),
any consolidation, merger or business combination of the Company with
another corporation or the sale or conveyance of all or any substantial
part of its assets to another corporation, shall be effected in such a way
that holders of the shares of Common Stock shall be entitled to receive
stock, securities or assets (including, without limitation, cash) with
respect to or in exchange for shares of the Common Stock, then, prior to
and as a condition of such reorganization, reclassification, similar
transaction, consolidation, merger, business combination, sale or
conveyance, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
Warrant Shares immediately theretofore purchasable and receivable upon the
exercise of
17
18
this Warrant, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding
Warrant Shares equal to the number of Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of this Warrant
had such reorganization, reclassification, similar transaction,
consolidation, merger, business combination, sale or conveyance not taken
place. The Company shall not effect any such consolidation, merger,
business combination, sale or conveyance unless prior to or simultaneously
with the consummation thereof the survivor or successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
executed and sent to the Holder, the obligation to deliver to the Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to receive.
(c) Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares,
this Warrant may continue to express the same price and number and kind of
shares as are stated on the front page hereof.
(d) Exception to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment
of the number of Warrant Shares issuable hereunder or to the Exercise
Price in the case of the issuance of the Warrants or the issuance of
shares of the Common Stock (or other securities) upon exercise of the
Warrants.
(e) Treasury Shares. The number of shares of the Common
Stock outstanding at any time shall not include treasury shares or shares
owned or held by or for the account of the Company or any of its
subsidiaries, and the disposition of any such shares shall be considered
an issue or sale of the Common Stock for the purposes of this Section 4.
(f) Adjustment Notices to Holder. Upon any increase or
decrease in the number of Warrant Shares purchasable upon the exercise of
this Warrant or the Exercise Price the Company shall, within 30 days
thereafter, deliver written notice thereof to all Holders, which notice
shall state the increased or decreased number of Warrant Shares
purchasable upon the exercise of this Warrant and the adjusted Exercise
Price, setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based.
Section 5. Notification by the Company. In case at any time
while this Warrant remains outstanding:
(a) the Company shall declare any dividend or make any
distribution upon its Common Stock or any other class of its capital
stock; or
(b) the Company shall offer for subscription pro rata to the
holders of its Common Stock or any other class of its capital stock any
additional shares of stock of any class or any other securities
convertible into or exchangeable for shares of stock or any rights or
options to subscribe thereto; or
18
19
(c) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or a
substantial part of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
(d) actions or proceedings shall be authorized or commenced
for a voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then, in any one or more of such cases, the Company shall give written
notice to the Holder, at the earliest time legally practicable (and not
less than 20 days before any record date or other date set for definitive
action) of the date on which (i) the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription
rights or options or (ii) such reorganization, reclassification, sale,
conveyance, consolidation, merger, dissolution, liquidation or winding-up
shall take place or be voted on by shareholders of the Company, as the
case may be. Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in said dividend,
distribution, subscription rights or options or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case
may be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of shareholders, the notice required by this Section 5
shall so state.
Section 6. No Voting Rights; Limitations of Liability.
Prior to exercise, this Warrant will not entitle the Holder to any voting
rights or other rights as a stockholder of the Company. No provision
hereof, in the absence of affirmative action by the Holder to exercise
this Warrant, and no enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of the Holder for the purchase
price of the Warrant Shares pursuant to the exercise hereof.
Section 7. Restrictions on Transfer. The Warrants and the
Warrant Shares shall not be transferable except upon the conditions in
this Warrant and specified in the Securities Purchase Agreement. The
Warrants may not be transferred, sold or otherwise disposed of except in
blocks of Warrants for the purchase of at least 100,000 shares of Common
Stock; provided, that if at the time of such transfer, sale or other
disposition, the Warrants owned by the Holder are for the purchase of less
than 100,000 shares of Common Stock, the Holder may sell, transfer or
otherwise dispose of all, but not less than all, of the Warrants. This
Warrant bears and the certificates for Warrant Shares will bear a legend
as specified in the Securities Purchase Agreement. The Holder by its
acceptance of this Warrant agrees to comply with and to be bound by all
of the provisions of the Securities Purchase Agreement.
Section 8. Amendment and Waiver.
(a) No failure or delay of the Holder in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be
19
20
amended, modified or waived with (and only with) the written consent of
the Company and the Required Holders.
(b) No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or
other circumstances.
Section 9. No Fractional Warrant Shares. The Company shall
not be required to issue stock certificates representing fractions of
Warrant Shares, but shall in respect of any fraction of a Warrant Share
make a payment in cash based on the Value of the Common Stock after giving
effect to the full exercise or conversion of the Warrants.
Section 10. Reservation of Warrant Shares. The Company
shall authorize, reserve and keep available at all times, free from
preemptive rights, a sufficient number of Warrant Shares to satisfy the
requirements of this Warrant.
Section 11. Notices. Unless otherwise specified, whenever
this Warrant requires or permits any consent, approval, notice, request,
or demand from one party to another, that communication must be in writing
(which may be by telecopy) to be effective and is deemed to have been
given (a) if by telecopy, when transmitted to the appropriate telecopy
number (and all communications sent by telecopy must be confirmed promptly
by telephone; but any requirement in this parenthetical does not affect
the date when the telecopy is deemed to have been delivered), or (b) if by
any other means, including by internationally acceptable courier or hand
delivery, when actually delivered. Until changed by notice pursuant to
this Warrant, the address (and telecopy number) for the Holder and the
Company are:
If to Holder: Forseti Investments Ltd.
000-000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx
Xxxx Xxxxxx
Attn: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
With copies to: Xxxxx Fresenius Xxxxx Scherzberg, attorneys
Xxxx-Xxxxxxx-Strasse 37-39
60596 Frankfurt-Am-Main
Attn: Xxxxxxxxx Xxxxx
Facsimile: (00) 0000000000
If to Company: Queen Sand Resources, Inc.
0000 Xxx Xxxx, Xxxxx 000, X.X.#00
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With copies to: Queen Sand Resources, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
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21
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Boeing, Esq.
Facsimile: (000) 000-0000
Section 12. Section and Other Headings. The headings
contained in this Warrant are for reference purposes only and will not
affect in any way the meaning or interpretation of this Warrant.
Section 13. Governing Law; Choice of Forum; Consent to
Service of Process. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE DELAWARE GENERAL CORPORATION LAW, TO THE EXTENT
APPLICABLE TO THE INTERNAL AFFAIRS OF THE COMPANY (INCLUDING THE GRANT OF
THIS WARRANT AND THE ISSUANCE OF THE WARRANT SHARES), AND OTHERWISE SHALL
BE GOVERNED BY, AND CONTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS. The parties hereto agree that any suit, action or proceeding
arising out of or relating to this Warrant or any agreement or obligation
delivered in connection with this Warrant or any judgment entered by any
court in respect thereof shall be brought in the Courts of the State of
Texas, County of Dallas or in the United States District Court for the
Northern District of Texas and each such party hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit,
action or proceeding relating to this Warrant or any related agreement or
obligation. The Holder hereby submits to the jurisdiction of the State of
Texas and agrees that service of all writs, process and summonses in any
such suit, action or proceeding brought in the United States against the
Holder may be made upon CT Corporation System at its offices located at
000 Xxxxx Xx. Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (or any subsequent address
of CT Corporation System), and the Holder hereby irrevocably appoints CT
Corporation System at its offices located at 000 Xxxxx Xx. Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 (or any subsequent address of CT Corporation System)
its true and lawful attorney-in-fact in their name, place and xxxxx to
accept such service of any and all such writs, process and summonses, and
agree that the failure of CT Corporation System to give to the Holder any
notice of any such service of process shall not impair or affect the
validity of such service or of any judgment based thereon. The Company
shall send, within 5 days after any service of process under this Section
13, notice to the Holder in accordance with Section 11 of any service of
process on CT Corporation System under this Section 13. Service of
process on the Company may be made to the Company's registered agent in
Delaware, Corporation Trust Centre, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx
Xxxxxxxxxx, Xxxxxx of New Castle.
Each party hereto hereby irrevocably waives any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Warrant or any agreement or
obligation delivered in connection with this Warrant, brought in the
Courts of the State of Texas, County of Dallas or the United States
District Court for the Northern District of Texas, and hereby further
irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
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22
Section 14. Binding Effect. The terms and provisions of this
Warrant shall inure to the benefit of the Holder and its successors and
assigns and shall be binding upon the Company and its successors and
assigns, including, without limitation, any Person succeeding to the
Company by merger, consolidation or acquisition of all or substantially
all of the Company's assets.
* * * * *
22
23
IN WITNESS WHEREOF, the seal of the Company and the signature of
its duly authorized officer have been affixed hereto as of May 6, 1997.
[SEAL] QUEEN SAND RESOURCES, INC.
Attest: /s/ Xxxxx X. Xxxx By:/s/ Xxxxxx X. Xxxxxx
-------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
and
Attest: /s/ Xxxxx X. Xxxx By:/s/ Xxxxxx X. Xxxxxxx
-------------------------- --------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
23
24
EXHIBIT A
TO
WARRANT
PURCHASE FORM
To Be Executed by the Holder
Desiring to Exercise a Warrant of
Queen Sand Resources, Inc.
The undersigned holder hereby exercises the right to purchase
______ shares of Common Stock covered by the within Warrant, according to
the conditions thereof, and herewith makes payment in full of the Exercise
Price of such shares, in the amount of $____________.
Name of Holder:
---------------------------------------
Signature:
---------------------------
Title:
-------------------------------
Address:
-----------------------------
---------------------------------------
---------------------------------------
Dated: , .
-------------------------- ------
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25
EXHIBIT B
TO
WARRANT
ASSIGNMENT FORM
To Be Executed by the Holder
Desiring to Transfer a Warrant of
Queen Sand Resources, Inc.
FOR VALUE RECEIVED, the undersigned holder hereby sells, assigns
and transfers unto __________________ the right to purchase
________________ shares of Common Stock covered by the within Warrant, and
does hereby irrevocably constitute and appoint _________________ Attorney
to transfer the said Warrant on the books of the Company (as defined in
such Warrant), with full power of substitution.
Name of Holder:
---------------------------------------
Signature:
---------------------------
Title:
-------------------------------
Address:
-----------------------------
---------------------------------------
---------------------------------------
Dated: , .
-------------------------- ------
In the presence of
----------------------------------
NOTICE:
The signature to the foregoing Assignment Form must correspond to the name
as written upon the face of the within Warrant in every detail, without
alteration or enlargement or any change whatsoever.
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26
EXHIBIT B
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE THEREOF (THE "SECURITIES") HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY OTHER UNITED STATES FEDERAL OR STATE SECURITIES OR BLUE SKY
LAWS OR APPLICABLE NON-UNITED STATES SECURITIES LAWS, AND HAVE BEEN ISSUED
IN A MANNER INTENDED TO COMPLY WITH THE CONDITIONS CONTAINED IN REGULATION
S UNDER THE ACT. PRIOR TO MAY 6, 1998, NO OFFER, SALE, TRANSFER, PLEDGE
OR OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OR EXERCISE OF THE
WARRANTS REPRESENTED BY THIS CERTIFICATE MAY BE MADE (A) IN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY "U.S. PERSON" (AS
DEFINED IN REGULATION S) UNLESS (i) REGISTERED UNDER THE ACT AND ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR (ii) QUEEN SAND RESOURCES,
INC. (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH
DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS OR (B) OUTSIDE THE
UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON WHO IS NOT
A "U.S. PERSON" UNLESS PRIOR TO SUCH DISPOSAL (i) THE BENEFICIAL OWNER OF
SUCH SECURITIES AND THE PROPOSED TRANSFEREE SUBMIT CERTAIN CERTIFICATIONS
TO THE COMPANY (FORMS OF WHICH ARE AVAILABLE FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES) AND (ii) THE COMPANY RECEIVES THE LEGAL
OPINION DESCRIBED IN (A)(ii) ABOVE. THE SECURITIES ARE ALSO SUBJECT TO
CERTAIN RESTRICTIONS UPON TRANSFER AS SET FORTH IN THIS WARRANT AND THE
SECURITIES PURCHASE AGREEMENT DATED AS OF MARCH 27, 1997, A COPY OF WHICH
IS AVAILABLE FOR INSPECTION AT ITS PRINCIPAL PLACE OF BUSINESS.
QUEEN SAND RESOURCES, INC.
Class B Common Stock Purchase Warrant
Representing Right To Purchase Shares of
Common Stock
of
Queen Sand Resources, Inc.
No. B-1
FOR VALUE RECEIVED, QUEEN SAND RESOURCES, INC., a Delaware
corporation (the "Company"), hereby certifies that Forseti Investments
Ltd., a Barbados
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27
corporation (the "Holder"), is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at any time or from time to time
during the Exercise Period (as hereinafter defined), a total of 2,000,000
shares (as such number of shares may be adjusted pursuant to the terms
hereof, the "Warrant Shares") of Common Stock, par value $.0015 per share,
of the Company, at a price per share equal to the Exercise Price (as
defined below). This Warrant is issued to the Holder (together with such
other warrants as may be issued in exchange, transfer or replacement of
this Warrant, the "Warrants") pursuant to the Securities Purchase
Agreement (as defined below) and entitles the Holder to purchase the
Warrant Shares and to exercise the other rights, powers and privileges
hereinafter provided, all on the terms and conditions and pursuant to the
provisions set forth herein and in the Securities Purchase Agreement.
Section 15. Definitions. The following terms, as used
herein, have the following respective meanings:
"Common Stock" means the Company's common stock, $0.0015 par
value.
"Company" is defined in the introductory paragraph of this
Warrant.
"Date of Issuance" means May 6, 1997.
"Earn Up Agreement" means the Earn Up Agreement, dated as of the
date hereof, between the Company and the Holder.
"Exercise Period" means the period of time between the Date of
Issuance and 5:00 p.m. (New York City time) on December 31, 1998,
provided, however, that any Warrants held by Forseti Investments Ltd. on
the Election Date (as defined in the Earn Up Agreement) shall expire on
the Election Date unless Forseti Investments Ltd. elects to retain the
Warrants pursuant to Section 2(a)(ii) of the Earn Up Agreement.
"Exercise Price" means an amount, per share, equal to $2.50 (U.S.
dollars). The Exercise Price shall be subject to adjustment, as set forth
in Section 4.
"Holder" means Forseti Investments Ltd. and its permitted
assignees.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust,
limited liability company, unincorporated organization or government or
any agency or political subdivision thereof.
"Required Holders" means the Holders of more than 50% of all
Warrant Shares then outstanding (assuming the full exercise of all
Warrants).
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 27, 1997, between the Company and Forseti, as
such agreement shall be modified, amended and supplemented and in effect
from time to time.
"Value" means, as of any date of determination, with respect to
the Common Stock, $3.50 per share of Common Stock.
"Warrants" is defined in the introductory paragraph of this
Warrant.
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"Warrant Shares" is defined in the introductory paragraph of this
Warrant.
Section 16. Exercise of Warrant; Cancellations of Warrant.
Subject to the Securities Purchase Agreement and the provisions of
Regulation S promulgated under the Securities Act of 1933, as amended,
this Warrant may be exercised in whole or in part, at any time or from
time to time, during the Exercise Period, by presentation and surrender
hereof to the Company at its principal office at the address set forth in
Section 11 (or at such other reasonable address as the Company may after
the date hereof notify the Holder in writing, coming into effect not
before 14 days after receipt of such notice by the Holder), with the
Purchase Form annexed hereto as Exhibit A duly executed and accompanied by
either (at the option of the Holder) proper payment in cash or certified
or bank check equal to the Exercise Price for the Warrant Shares for which
this Warrant is being exercised; provided, that if this Warrant is
exercised in part, the Warrant must be exercised for the purchase of at
least 100,000 shares of Common Stock. Upon exercise of this Warrant as
aforesaid, the Company shall as promptly as practicable, and in any event
within 20 days thereafter, execute and deliver to the Holder a certificate
or certificates for the total number of Warrant Shares for which this
Warrant is being exercised, in such names and denominations as requested
in writing by the Holder. The Company shall pay any and all documentary
stamp or similar issue taxes payable in respect of the issue of the
Warrant Shares. If this Warrant is exercised in part only, the Company
shall, upon surrender of this Warrant, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
Warrant Shares issuable hereunder.
Section 17. Exchange, Transfer, Assignment or Loss of
Warrant. This Warrant is exchangeable, without expense, at the option of
the Holder, upon presentation and surrender hereof to the Company for
other Warrants of different denominations, entitling the Holder to
purchase in the aggregate the same number of Warrant Shares. The Holder
of this Warrant shall be entitled, without obtaining the consent of the
Company, to transfer or assign its interest in (and rights under) this
Warrant in whole or in part to any Person or Persons, subject to the
provisions of Section 7 of this Warrant and Article 8 of the Securities
Purchase Agreement. Upon surrender of this Warrant to the Company, with
the Assignment Form annexed hereto as Exhibit B duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge,
execute and deliver a new Warrant or Warrants in the name of the assignee
or assignees named in such Assignment Form and, if the Holder's entire
interest is not being assigned, in the name of the Holder, and this
Warrant shall promptly be canceled. This Warrant may be divided or
combined with other Warrants that carry the same rights upon presentation
hereof at the office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be
issued and signed by the Holder hereof. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation
of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification (including, if required in the
reasonable judgment of the Company, a statement of net worth of such
Holder that is at a level reasonably satisfactory to the Company), and
upon surrender and cancellation of this Warrant, if mutilated, the Company
shall execute and deliver a new Warrant of like tenor and date.
Section 18. Antidilution Provisions.
(a) Adjustment of Number of Warrant Shares and Exercise
Price. The number of Warrant Shares purchasable pursuant hereto and the
Exercise Price, each shall be
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subject to adjustment from time to time on and after the Date of Issuance
as provided in this Section 4(a). In case the Company shall at any time
after the Date of Issuance (i) pay a dividend of shares of Common Stock or
make a distribution of shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (iv) issue any shares of its
capital stock or other assets in a reclassification or reorganization of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing entity),
then (x) the securities purchasable pursuant hereto shall be adjusted to
the number of Warrant Shares and amount of any other securities, cash or
other property of the Company which the Holder would have owned or have
been entitled to receive after the happening of any of the events
described above, had this Warrant been exercised immediately prior to the
happening of such event or any record date with respect thereto, and (y)
the Exercise Price shall be adjusted to equal the Exercise Price
immediately prior to the adjustment multiplied by a fraction, (A) the
numerator of which is the number of Warrant Shares for which this Warrant
is exercisable immediately prior to the adjustment, and (B) the
denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment. The adjustments made
pursuant to this Section 4(a) shall become effective immediately after the
effective date of the event creating such right of adjustment, retroactive
to the record date, if any, for such event. Any Warrant Shares
purchasable as a result of such adjustment shall not be issued prior to
the effective date of such event.
For the purpose of this Section 4(a) and (b), the term "shares of
Common Stock" means (i) the classes of stock designated as the Common
Stock of the Company as of the date hereof, or (ii) any other class of
stock resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. In the event that at any
time, as a result of an adjustment made pursuant to this Section 4(a), the
Holder shall become entitled to receive any securities of the Company
other than shares of Common Stock, thereafter the number of such other
securities so receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent
as practicable to the provisions with respect to the Warrant Shares
contained in this Section 4.
(b) Reorganization, Merger, etc. If any capital
reorganization, reclassification or similar transaction involving the
capital stock of the Company (other than as specified in Section 4(a)),
any consolidation, merger or business combination of the Company with
another corporation or the sale or conveyance of all or any substantial
part of its assets to another corporation, shall be effected in such a way
that holders of the shares of Common Stock shall be entitled to receive
stock, securities or assets (including, without limitation, cash) with
respect to or in exchange for shares of the Common Stock, then, prior to
and as a condition of such reorganization, reclassification, similar
transaction, consolidation, merger, business combination, sale or
conveyance, lawful and adequate provision shall be made whereby the Holder
shall thereafter have the right to purchase and receive upon the basis and
upon the terms and conditions specified in this Warrant and in lieu of the
Warrant Shares immediately theretofore purchasable and receivable upon the
exercise of this Warrant, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding Warrant Shares equal to the number of Warrant Shares
immediately theretofore purchasable and receivable upon the exercise of
this Warrant had such reorganization, reclassification, similar
transaction,
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consolidation, merger, business combination, sale or conveyance not taken
place. The Company shall not effect any such consolidation, merger,
business combination, sale or conveyance unless prior to or simultaneously
with the consummation thereof the survivor or successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument
executed and sent to the Holder, the obligation to deliver to the Holder
such shares of stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to receive.
(c) Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of Warrant Shares,
this Warrant may continue to express the same price and number and kind of
shares as are stated on the front page hereof.
(d) Exception to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment
of the number of Warrant Shares issuable hereunder or to the Exercise
Price in the case of the issuance of the Warrants or the issuance of
shares of the Common Stock (or other securities) upon exercise of the
Warrants.
(e) Treasury Shares. The number of shares of the Common
Stock outstanding at any time shall not include treasury shares or shares
owned or held by or for the account of the Company or any of its
subsidiaries, and the disposition of any such shares shall be considered
an issue or sale of the Common Stock for the purposes of this Section 4.
(f) Adjustment Notices to Holder. Upon any increase or
decrease in the number of Warrant Shares purchasable upon the exercise of
this Warrant or the Exercise Price the Company shall, within 30 days
thereafter, deliver written notice thereof to all Holders, which notice
shall state the increased or decreased number of Warrant Shares
purchasable upon the exercise of this Warrant and the adjusted Exercise
Price, setting forth in reasonable detail the method of calculation and
the facts upon which such calculations are based.
Section 19. Notification by the Company. In case at any time
while this Warrant remains outstanding:
(a) the Company shall declare any dividend or make any
distribution upon its Common Stock or any other class of its capital
stock; or
(b) the Company shall offer for subscription pro rata to the
holders of its Common Stock or any other class of its capital stock any
additional shares of stock of any class or any other securities
convertible into or exchangeable for shares of stock or any rights or
options to subscribe thereto; or
(c) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar transaction involving
the capital stock of the Company, or a sale or conveyance of all or a
substantial part of the assets of the Company, or a consolidation, merger
or business combination of the Company with another Person; or
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(d) actions or proceedings shall be authorized or commenced
for a voluntary or involuntary dissolution, liquidation or winding-up of
the Company;
then, in any one or more of such cases, the Company shall give written
notice to the Holder, at the earliest time legally practicable (and not
less than 20 days before any record date or other date set for definitive
action) of the date on which (i) the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription
rights or options or (ii) such reorganization, reclassification, sale,
conveyance, consolidation, merger, dissolution, liquidation or winding-up
shall take place or be voted on by shareholders of the Company, as the
case may be. Such notice shall also specify the date as of which the
holders of the Common Stock of record shall participate in said dividend,
distribution, subscription rights or options or shall be entitled to
exchange their Common Stock for securities or other property deliverable
upon such reorganization, reclassification, sale, conveyance,
consolidation, merger, dissolution, liquidation or winding-up, as the case
may be. If the action in question or the record date is subject to the
effectiveness of a registration statement under the Securities Act or to a
favorable vote of shareholders, the notice required by this Section 5
shall so state.
Section 20. No Voting Rights; Limitations of Liability.
Prior to exercise, this Warrant will not entitle the Holder to any voting
rights or other rights as a stockholder of the Company. No provision
hereof, in the absence of affirmative action by the Holder to exercise
this Warrant, and no enumeration herein of the rights or privileges of the
Holder, shall give rise to any liability of the Holder for the purchase
price of the Warrant Shares pursuant to the exercise hereof.
Section 21. Restrictions on Transfer. The Warrants and the
Warrant Shares shall not be transferable except upon the conditions
specified in this Warrant and in the Securities Purchase Agreement. The
Warrants may not be transferred, sold or otherwise disposed of except in
blocks of Warrants for the purchase of at least 100,000 shares of Common
Stock; provided, that if at the time of such transfer, sale or other
disposition, the Warrants owned by the Holder are for the purchase of less
than 100,000 shares of Common Stock, the Holder may sell, transfer or
otherwise dispose of all, but not less than all, of the Warrants. This
Warrant bears and the certificates for Warrant Shares will bear a legend
as specified in the Securities Purchase Agreement. The Holder by its
acceptance of this Warrant agrees to comply with and to be bound by all
of the provisions of the Securities Purchase Agreement.
Section 22. Amendment and Waiver.
(a) No failure or delay of the Holder in exercising any power
or right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or
power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and
only with) the written consent of the Company and the Required Holders.
(b) No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or demand in similar or
other circumstances.
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Section 23. No Fractional Warrant Shares. The Company shall
not be required to issue stock certificates representing fractions of
Warrant Shares, but shall in respect of any fraction of a Warrant Share
make a payment in cash based on the Value of the Common Stock after giving
effect to the full exercise or conversion of the Warrants.
Section 24. Reservation of Warrant Shares. The Company
shall authorize, reserve and keep available at all times, free from
preemptive rights, a sufficient number of Warrant Shares to satisfy the
requirements of this Warrant.
Section 25. Notices. Unless otherwise specified, whenever
this Warrant requires or permits any consent, approval, notice, request,
or demand from one party to another, that communication must be in writing
(which may be by telecopy) to be effective and is deemed to have been
given (a) if by telecopy, when transmitted to the appropriate telecopy
number (and all communications sent by telecopy must be confirmed promptly
by telephone; but any requirement in this parenthetical does not affect
the date when the telecopy is deemed to have been delivered), or (b) if by
any other means, including by internationally acceptable courier or hand
delivery, when actually delivered. Until changed by notice pursuant to
this Warrant, the address (and telecopy number) for the Holder and the
Company are:
If to Holder: Forseti Investments Ltd.
000-000 Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx
West Indies
Attn: Xxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
With copies to: Xxxxx Fresenius Xxxxx Scherzberg, attorneys
Xxxx-Xxxxxxx-Strasse 37-39
60596 Frankfurt-Am-Main
Attn: Xxxxxxxxx Xxxxx
Facsimile: (00) 0000000000
If to Company: Queen Sand Resources, Inc.
0000 Xxx Xxxx, Xxxxx 000, X.X.#00
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With copies to: Queen Sand Resources, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxx X0X 0X0
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Boeing, Esq.
Facsimile: (000) 000-0000
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Section 26. Section and Other Headings. The headings
contained in this Warrant are for reference purposes only and will not
affect in any way the meaning or interpretation of this Warrant.
Section 27. Governing Law; Choice of Forum; Consent to
Service of Process. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE DELAWARE GENERAL CORPORATION LAW, TO THE EXTENT
APPLICABLE TO THE INTERNAL AFFAIRS OF THE COMPANY (INCLUDING THE GRANT OF
THIS WARRANT AND THE ISSUANCE OF THE WARRANT SHARES), AND OTHERWISE SHALL
BE GOVERNED BY, AND CONTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS. The parties hereto agree that any suit, action or proceeding
arising out of or relating to this Warrant or any agreement or obligation
delivered in connection with this Warrant or any judgment entered by any
court in respect thereof shall be brought in the Courts of the State of
Texas, County of Dallas or in the United States District Court for the
Northern District of Texas and each such party hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit,
action or proceeding relating to this Warrant or any related agreement or
obligation. The Holder hereby submits to the jurisdiction of the State of
Texas and agrees that service of all writs, process and summonses in any
such suit, action or proceeding brought in the United States against the
Holder may be made upon CT Corporation System at its offices located at
000 Xxxxx Xx. Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 (or any subsequent address
of CT Corporation System), and the Holder hereby irrevocably appoints CT
Corporation System at its offices located at 000 Xxxxx Xx. Xxxx Xxxxxx,
Xxxxxx, Xxxxx 00000 (or any subsequent address of CT Corporation System)
its true and lawful attorney-in-fact in their name, place and xxxxx to
accept such service of any and all such writs, process and summonses, and
agree that the failure of CT Corporation System to give to the Holder any
notice of any such service of process shall not impair or affect the
validity of such service or of any judgment based thereon. The Company
shall send, within 5 days after any service of process under this Section
13, notice to the Holder in accordance with Section 11 of any service of
process on CT Corporation System under this Section 13. Service of
process on the Company may be made to the Company's registered agent in
Delaware, Corporation Trust Centre, 0000 Xxxxxx Xxxxxx, xx xxx Xxxx xx
Xxxxxxxxxx, Xxxxxx of New Castle.
Each party hereto hereby irrevocably waives any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Warrant or any agreement or
obligation delivered in connection with this Warrant, brought in the
Courts of the State of Texas, County of Dallas or the United States
District Court for the Northern District of Texas, and hereby further
irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
Section 28. Binding Effect. The terms and provisions of this
Warrant shall inure to the benefit of the Holder and its successors and
assigns and shall be binding upon the Company and its successors and
assigns, including, without limitation, any Person succeeding to the
Company by merger, consolidation or acquisition of all or substantially
all of the Company's assets.
* * * * *
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IN WITNESS WHEREOF, the seal of the Company and the signature of
its duly authorized officer have been affixed hereto as of May 6, 1997.
[SEAL] QUEEN SAND RESOURCES, INC.
Attest: /s/Xxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxx
-------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President and
Chief Executive Officer
and
Attest: /s/Xxxxx X. Xxxx By: /s/ Xxxxxx X. Xxxxxxx
-------------------------- ----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
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EXHIBIT A
TO
WARRANT
PURCHASE FORM
To Be Executed by the Holder
Desiring to Exercise a Warrant of
Queen Sand Resources, Inc.
The undersigned holder hereby exercises the right to purchase
______ shares of Common Stock covered by the within Warrant, according to
the conditions thereof, and herewith makes payment in full of the Exercise
Price of such shares, in the amount of $____________.
Name of Holder:
---------------------------------------
Signature:
-----------------------------
Title:
---------------------------------
Address:
-----------------------------
---------------------------------------
---------------------------------------
Dated: , .
-------------------------- ------
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EXHIBIT B
TO
WARRANT
ASSIGNMENT FORM
To Be Executed by the Holder
Desiring to Transfer a Warrant of
Queen Sand Resources, Inc.
FOR VALUE RECEIVED, the undersigned holder hereby sells, assigns
and transfers unto __________________ the right to purchase
________________ shares of Common Stock covered by the within Warrant, and
does hereby irrevocably constitute and appoint _________________ Attorney
to transfer the said Warrant on the books of the Company (as defined in
such Warrant), with full power of substitution.
Name of Holder:
----------------------------------------
Signature:
----------------------------
Title:
--------------------------------
Address:
------------------------------
----------------------------------------
----------------------------------------
Dated: , .
-------------------------- ------
In the presence of
----------------------------------
NOTICE:
The signature to the foregoing Assignment Form must correspond to the name
as written upon the face of the within Warrant in every detail, without
alteration or enlargement or any change whatsoever.
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EXHIBIT C
JEDI EARN UP AGREEMENT
[See Exhibit 1.7 to this
Current Report
on Form 8-K]
37
