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Warrant Agreement
Dated as of September 26, 2006
Warrants Exercisable for Common Stock
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TABLE OF CONTENTS
Section 1. Issuance of Warrants; Execution and Delivery of Warrant
Certificates........................................................1
1.1 Issuance of Warrants..................................................1
1.2 Execution and Delivery of Warrant Certificates........................1
Section 2. Warrant Price, Manner of Exercise...................................2
2.1 Warrant Price, Term, Expiration and Notice............................2
2.2 Manner of Exercise....................................................2
2.3 Cashless Exercise.....................................................2
2.4 When Exercise Deemed Effected.........................................3
2.5 Delivery of Stock Certificates, etc...................................3
Section 3. Adjustment of Shares of Common Stock Purchasable and Warrant
Price...............................................................3
3.1 Antidilution Provision................................................3
3.2 Statements on Warrant Certificates....................................6
3.3 Accountants' Report as to Adjustments.................................6
3.4 Successive Transactions...............................................6
The provisions of this Section 3 shall similarly apply to successive
share exchanges, consolidations, mergers, sales of all or
substantially all of the assets, or successive recapitalizations and
changes of shares of Common Stock...........................................6
Section 4. Notices of Corporate Action.........................................6
Section 5. Legend on Warrant Stock.............................................7
Section 6. Reservation of Stock................................................8
6.1 Reservation of Stock..................................................8
Section 7. Other Provisions Relating to Rights and Obligations of Holders
of Warrant Certificates.................8
7.1 Lost, Stolen, Mutilated or Destroyed Warrant Certificates.............8
7.2 Warrantholder May Enforce Rights......................................8
Section 8. Registration Rights.................................................9
8.1 Requested Registration................................................9
8.2 Company Registration.................................................11
8.3 Expenses of Registration.............................................12
8.4 Registration Procedures..............................................12
8.5 Related Registration Matters.........................................13
8.6 Indemnification and Contribution.....................................14
8.7 Information by Stockholders..........................................16
8.8 Sales Without Registration...........................................16
8.9 Rule 144.............................................................16
8.10 Transfer of Registration Rights......................................16
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8.11 Post-Effective Amendments............................................16
8.12 Cessation of Sale Activities.........................................17
8.13 Supplements..........................................................17
Section 9. Exchange and Transfer of Warrant Certificates......................17
9.1 Exchange and Transfer of Warrant Certificates........................17
9.2 Treatment of Holders of Warrant Certificates.........................18
9.3 Cancellation of Warrant Certificates.................................18
Section 10. Notices...........................................................18
Section 11. Representations and Warranties....................................19
11.1 Capitalization......................................................19
11.2 Authorization; Enforceability.......................................19
11.3 Issuance of Shares..................................................20
Section 12. Miscellaneous.....................................................20
12.1 Amendment...........................................................20
12.2 Parties in Interest.................................................20
12.3 Applicable Law......................................................20
12.4 Consent to Jurisdiction.............................................20
12.5 Waiver of Jury Trial................................................21
12.6 Counterparts........................................................21
12.7 Inspection of Agreement.............................................21
12.8 Headings............................................................21
WARRANT AGREEMENT
THIS WARRANT AGREEMENT ("Agreement"), dated as of September 26, 2006, is
made by and between DUNE ENERGY, INC., a Delaware corporation (the "Company")
and XXXXXXX NATIONAL SENIOR FUNDING, LTD. ("Xxxxxxx"), and DRAWBRIDGE SPECIAL
OPPORTUNITIES FUND LP ("Drawbridge" and with "Xxxxxxx" "Grantees" and, together
with any transferee of Warrants or Warrant Stock, the "Warrantholder").
W I T N E S S E T H:
Recitals:
A. Reference is made to that certain Credit Agreement, dated as of
September 26, 2006, by and among DUNE ENERGY, INC., a Delaware corporation (the
"Borrower"), the lenders signatory thereto (the "Lenders"), and X.X. XXXXX
SPECIAL OPPORTUNITIES FUND, L.P., as Administrative Agent (the "Credit
Agreement").
B. As a consequence of the contractual relationship among the Company, the
Lenders and the Administrative Agent under the Credit Agreement, the Company has
and will continue to receive substantial benefits from the Lenders and the
Administrative Agent making advances to Company.
C. The Company proposes to issue to Grantees as partial consideration for
the Lenders' and the Administrative Agent's entering into the Credit Agreement,
in the aggregate 500,000 common stock purchase warrants (the "Warrants") to
purchase 500,000 shares (the "Warrant Shares") which represents 0.84% of the
Company's common stock, par value $0.001 per share (the "Common Stock"), each
Warrant entitling the holder thereof to purchase one share of Common Stock.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
Section 1. Issuance of Warrants; Execution and Delivery of Warrant
Certificates.
1.1 Issuance of Warrants. The Company will issue and deliver the Warrants
to Grantee on the Effective Date as defined in the Credit Agreement (the
"Closing Date"). The aggregate number of Warrants to be issued and delivered to
the Grantees shall be 500,000. Such Warrants shall be evidenced by a certificate
(the "Warrant Certificate") which the Company will issue and deliver to Grantees
on the Closing Date. The Warrants shall vest on the Closing Date and shall be
exercisable on or after the Closing Date.
1.2 Execution and Delivery of Warrant Certificates. Each original Warrant
Certificate issued shall be in substantially the form set forth in Appendix A
hereto and may have such letters, numbers, or other marks of identification or
designation and such legends or endorsements printed thereon as the officers of
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the Company executing the same may approve (execution thereof to be conclusive
evidence of such approval) and as are not inconsistent with this Agreement, or
as may be required to comply with any law or with any rule or regulation made
pursuant thereto. The Warrant Certificates shall be executed on behalf of the
Company by its President or one of its Vice Presidents and by its Treasurer or
its Secretary.
In case any officer of the Company who shall have signed any Warrant
Certificate shall cease to be an officer before the Warrant Certificate so
signed shall have been delivered by the Company, such Warrant Certificate may be
delivered notwithstanding that such person ceased to be an officer of the
Company, and any Warrant Certificate may be signed on behalf of the Company by
such person as, at the actual date of the execution of the Warrant Certificate,
shall be the proper officer of the Company, even if at the date of the execution
of this Agreement such person was no such officer.
Section 2. Warrant Price, Manner of Exercise.
2.1 Warrant Price, Term, Expiration and Notice. Each Warrant Certificate
shall entitle the Warrantholder, subject to the provisions thereof and of this
Agreement, to purchase from the Company one share of Common Stock for each of
the Warrants evidenced thereby at a price per share equal to $1.35 per share,
subject to adjustment as provided herein (the "Warrant Price"). The
Warrantholder may exercise any Warrants issued pursuant to this Agreement at any
time or from time to time, from the date hereof and prior to 5:00 p.m., New
York, New York time, on September 27, 2015 (the "Expiration Date"). If the
Expiration Date is not a Business Day, then this Warrant may be exercised on the
next succeeding Business Day. For purposes hereof, the term "Business Day" shall
mean any day other than a Saturday or a Sunday or a day on which commercial
banking institutions in the cities of New York, New York or Houston, Texas are
authorized or required by law to be closed, and provided that any reference to
"days" (unless Business Days are specified) shall mean calendar days.
2.2 Manner of Exercise. The vested Warrants may be exercised by the
Warrantholder, in whole or in part, during normal business hours on any Business
Day by surrender of a Warrant Certificate, together with the form of Election to
Exercise included as Appendix B hereto (or a reasonable facsimile thereof) duly
executed by such Warrantholder, to the Company at its principal office,
accompanied by the required payment of the Warrant Price as then in effect, in
cash or other immediately available funds, or as provided in Section 2.3 below,
or a combination thereof.
2.3 Cashless Exercise. The Warrantholder shall have the right to pay all
or a portion of the Warrant Price by making a "Cashless Exercise" pursuant to
this Section 2.3, in which case the Warrantholder shall not pay the Warrant
Price in cash and the number of shares of Common Stock otherwise issuable
pursuant to the Election to Exercise shall be reduced by the total number of
shares of Common Stock otherwise issuable to the Warrantholder multiplied by the
Warrant Price and divided by the Current Market Price per share of the Common
Stock on the date of the Election to Exercise, determined as provided in Section
3.1(d)(ii) of this Agreement.
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2.4 When Exercise Deemed Effected. Each exercise of Warrants pursuant to
this Agreement shall be deemed to have been effected immediately upon surrender
of such Warrants to the Company as provided in Section 2.2, and at such time,
the person or persons in whose name or names any certificate or certificates for
shares of Common Stock shall be issuable upon such exercise as provided in
Section 2.5 shall be deemed to have become the holder of record thereof.
2.5 Delivery of Stock Certificates, etc. As soon as practicable after the
exercise of Warrants pursuant to this Agreement, in whole or in part, the
Company at its expense will cause
(a) a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares of Common Stock to which the
Warrantholder shall be entitled upon such exercise, to be issued in the name of
and delivered to such Warrantholder or such other name as shall be designated by
the Warrantholder in the Election of Exercise; and
(b) in case less than all the Warrants represented by a Warrant
Certificate are exercised, a new Warrant Certificate of the same tenor and for
the number of Warrants not exercised to be registered in such name or names as
may be directed in writing by the Warrantholder and to be delivered to the
person entitled to receive such new Warrant Certificate.
Section 3. Adjustment of Shares of Common Stock Purchasable and Warrant
Price.
3.1 Antidilution Provision. So long as any Warrants are outstanding and
unexercised, in whole or in part:
(a) if the Company shall pay a dividend in Common Stock or make any
other distribution in Common Stock on or with respect to its Common Stock, the
number of shares of Common Stock purchasable upon exercise of each Warrant
outstanding and unexercised at such time shall be increased by multiplying such
number of shares by a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding at the close of business on the day
immediately preceding the date of such dividend or other distribution and the
numerator of which shall be the sum of such number of shares and the total
number of shares of Common Stock constituting such dividend or other
distribution, such increase to become effective immediately after the record
date of such dividend or other distribution;
(b) in the event outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the number of shares
of Common Stock purchasable upon exercise of each Warrant shall be
proportionately increased, and conversely, in case outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, the
number of shares of Common Stock purchasable upon exercise of each Warrant shall
be proportionately decreased, such increase or decrease, as the case may be, to
become effective immediately after the effective date of such subdivision or
combination;
(c) if the Company issues or distributes to all holders of Common
Stock (i) rights or warrants entitling them to subscribe for or purchase shares
of any class of capital stock of the Company or (ii) evidences of its
indebtedness, cash or other assets (including cash dividends but excluding stock
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dividends referred to in subsection (a) above), the Company shall issue or
distribute to each Warrantholder such rights, warrants, evidences of
indebtedness, cash or other assets that such Warrantholder would have been
entitled to receive as a stockholder if such Warrantholder had exercised all of
its Warrants immediately prior thereto; and
(d)
(i) if the Company shall sell or issue shares of Common Stock
or securities convertible or exchangeable into shares of Common
Stock or rights, options or warrants to purchase shares of Common
Stock, or securities convertible or exchangeable into shares of
Common Stock (collectively, the "Additional Shares"), at a price per
share of Common Stock lower than the Current Market Price per share
of Common Stock immediately prior to such sale or issuance, then the
number of shares of Common Stock issuable upon exercise of the
Warrant shall be adjusted to that number determined by multiplying
the number of shares of Common Stock issuable upon exercise of the
Warrant immediately prior to such adjustment by a fraction (y) the
numerator of which shall be number of shares of Common Stock
outstanding immediately prior to the issuance of such Additional
Shares plus the number of such Additional Shares to be issued and
(z) the denominator of which shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such
Additional Shares plus the number of shares of Common Stock which
the aggregate consideration for the total number of such Additional
Shares to be issued would purchase at the Warrant Price.
Notwithstanding the foregoing, the provisions of this Section 3.1(d)
shall not apply to any securities issued (A) in any of the
transactions described in Sections 3.1(a), (b) or (c), or (B) upon
exercise of this Warrant;
(ii) for the purposes of this Agreement, the "Current Market
Price" shall mean the average price per share of the Company's
Common Stock sold on all securities exchanges located in the United
States on which the Common Stock may at the time be listed or traded
(including, for this purpose, the NASDAQ National Market System or
the NASDAQ SmallCap Market System), during the fifteen (15)
consecutive trading days immediately preceding the date as of which
the "Current Market Price" is to be determined, or, if there shall
have been no sales on any such exchange on such day, the average of
the highest bid and the lowest asked prices per share on all such
exchanges at the end of such day, or if there is no such exchange on
which the Common Stock is so listed or traded, the average of the
high and low bid and asked prices per share of Common Stock on such
fifteen (15) consecutive trading days in the domestic
over-the-counter market as reported by the National Quotation Bureau
Incorporated, or any similar successor organization. If at any time
the Common Stock is not listed or traded on any United States
securities exchange (including, for this purpose, the NASDAQ
National Market System or the NASDAQ SmallCap Market System), or
quoted in the domestic over-the-counter market, the "Current Market
Price" shall be the fair market value per share of the Company's
Common Stock as determined in good faith by the Board of Directors
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of the Company. Notwithstanding the preceding, if the Common Stock
is not then listed or traded on any United States securities
exchange, the NASDAQ National Market System or the NASDAQ SmallCap
Market System, or quoted in the domestic over-the-counter market,
and if the Warrantholder shall disagree with the determination made
by the Board of Directors of the Current Market Price, it may so
notify the Company and a reputable investment bank or appraiser
mutually satisfactory to the Company and the Warrantholder shall be
appointed to make such determination. If the Company and the
Warrantholder are unable to agree within thirty (30) days regarding
the investment bank or appraiser to make such determination, then
Xxxxxx Xxxxxxx & Co. shall be appointed to make such determination.
All expenses of such investment bank or appraiser or Xxxxxx Xxxxxxx
& Co. shall be paid by the Warrantholder, unless the determination
of Current Market Price by such investment bank or appraiser or
Xxxxxx Xxxxxxx & Co. is greater than 103% of the average Closing
Prices or the determination thereof made by the Board of Directors
as applicable, in which event the expenses of such investment bank
or appraiser shall be paid by the Company. In either event, the
determination made by the investment bank or appraiser or Xxxxxx
Xxxxxxx & Co. shall be the Current Market Price for all purposes of
this Agreement;
(iii) if, at any time after any adjustment of the number of
shares of Common Stock purchasable upon exercise of each Warrant
pursuant to this Section 3.1(d), such rights, options, warrants or
convertible or exchangeable securities shall expire or no longer be
outstanding and shall not have been exercised for or converted or
exchanged into Common Stock, such previous adjustment shall be
rescinded and annulled and the Additional Shares which are deemed to
have been issued by virtue of the computation made in connection
with the adjustment so rescinded and annulled, shall no longer be
deemed to have been issued by virtue of such computation. Thereupon,
a recomputation shall be made to give effect to the expiration or
non-exercise of, or failure to convert, such rights, options,
warrants or convertible or exchangeable securities.
(e) Consolidation, Merger, Sale of Assets, Reorganization, etc. If
the stockholders of the Company shall participate in a share exchange or if the
Company shall be a party to any transaction (including, without limitation, a
merger, consolidation, sale of all or substantially all of the Company's assets,
liquidation or recapitalization of the Common Stock) in which the previously
outstanding Common Stock shall be changed into or exchanged for different
securities of the Company or common stock or other securities of another
corporation, or interests in a non-corporate entity or other property (including
cash), or any combination of the foregoing (each such transaction being herein
called a "Transaction"), then the Company, in the case of the recapitalization
or liquidation of the Common Stock, or such other corporation or entity, in the
case of a share exchange, merger, consolidation or sale of all or substantially
all of the assets, shall make lawful and adequate provision so that, upon the
exercise thereof at any time on or after the consummation of the Transaction,
each Warrantholder shall be entitled to receive, and such Warrant shall
represent the right to receive, in lieu of the Common Stock, the securities or
other property (including cash) to which the Warrantholder would have been
entitled upon the consummation of the Transaction if such Warrantholder had
exercised such Warrant immediately prior thereto, subject to adjustment from and
after the consummation date as nearly equivalent as possible to the adjustments
provided for in Section 3.1.
3.2 Statements on Warrant Certificates. The form of Warrant Certificate
need not be changed because of any adjustment made pursuant to this Section 3
and Warrant Certificates issued after such adjustment may state the same Warrant
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Price and the same number of shares of Common Stock as are stated in the Warrant
Certificates initially issued pursuant to this Agreement.
3.3 Accountants' Report as to Adjustments. In each case of any adjustment
or readjustment in the shares of Common Stock (or other securities) issuable
upon the exercise of the Warrants, the chief financial officer of the Company at
the Company's expense will promptly compute such adjustment or readjustment in
accordance with the terms of the Warrants and prepare a report setting forth
such adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based. If the Warrantholder so elects, Warrantholder can request that the
Company cause independent public accountants of recognized national standing
selected by the Company to verify such computations. The Company will forthwith
mail a copy of each such report to each Warrantholder. The Company will also
keep copies of all such reports at its principal office and will cause the same
to be available for inspection at such office during normal business hours by
any Warrantholder or any prospective purchaser of a Warrant designated by the
Warrantholder.
3.4 Successive Transactions. The provisions of this Section 3 shall
similarly apply to successive share exchanges, consolidations, mergers, sales of
all or substantially all of the assets, or successive recapitalizations and
changes of shares of Common Stock.
Section 4. Notices of Corporate Action. In the event of:
(a) any offer to any holders of Common Stock of rights to subscribe
for or to purchase any Additional Shares or other securities, or
(b) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, or
(c) any capital reorganization of the Company, any reclassification
or recapitalization of the capital stock of the Company or any consolidation or
merger involving the Company and any other person or entity, any share exchange
involving stockholders of the Company or any transfer of all or substantially
all the assets of the Company to any other person or entity, or
(d) any voluntary or involuntary dissolution, liquidation or winding
up of the Company,
the Company will mail to each known Warrantholder a notice specifying (i) the
terms of such offer, and (ii) the date or expected date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right, and (iii) the date
or expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, share exchange, transfer, dissolution,
liquidation or winding up is to take place and the time, if any such time is to
be fixed, as of which the holders of record of Common Stock shall be entitled to
exchange their shares of Common Stock for the securities or other property
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deliverable upon such reorganization, reclassification, recapitalization,
consolidation, merger, share exchange, transfer, dissolution, liquidation or
winding up. Such notice shall be mailed at least 20 days prior to the date
therein specified.
Section 5. Legend on Warrant Stock. Each certificate for Warrant Shares
initially issued upon exercise of this Warrant, unless at the time of exercise
such Warrant Shares are registered under the Securities Act of 1933, as amended
from time to time (the "Securities Act"), shall bear the following legend (and
any additional legend(s) required by any securities exchange upon which such
Warrant Stock may, at the time of such exercise, be listed) on the face thereof:
"The Warrants represented by this certificate and the shares of
common stock issued upon exercise hereof have not been registered under
the Securities Act of 1933, as amended, or registered or qualified under
applicable state securities laws. Such shares and or Warrants may not be
offered, sold, transferred, pledged or hypothecated in the absence of an
effective registration statement in effect with respect to the shares
under such Act and registration or qualification under any applicable
state securities laws or an opinion of counsel reasonably satisfactory to
the Company that such registration or qualification is not required under
applicable federal and state securities laws."
Section 6. Reservation of Stock.
6.1 Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon exercise of the Warrants, the
number of shares of Common Stock from time to time issuable upon exercise of all
Warrants at the time outstanding. All shares of Common Stock shall be duly
authorized and, when issued upon such exercise and payment of the Warrant Price,
shall be validly issued, fully paid and nonassessable with no liability on the
part of the holders thereof.
Section 7. Other Provisions Relating to Rights and Obligations of Holders
of Warrant Certificates.
7.1 Lost, Stolen, Mutilated or Destroyed Warrant Certificates. Upon
receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate and of an indemnity from the Warrantholder reasonably satisfactory
to the Company and, in the case of mutilation, upon surrender of the Warrant
Certificate to the Company for cancellation, then, in the absence of notice to
the Company that such Warrant Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver, in exchange for or in lieu of
the lost, stolen, destroyed or mutilated Warrant Certificate, a substitute
Warrant Certificate of the same tenor and evidencing a like number of Warrants.
Upon the issuance of any substitute Warrant Certificate under this Section 7.1,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses in connection therewith. Every substitute Warrant Certificate executed
and delivered pursuant to this Section 7.1 in lieu of any lost, stolen or
destroyed Warrant Certificate shall represent an additional contractual
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obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and every holder thereof
shall be entitled to the benefits of this Warrant Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder.
7.2 Warrantholder May Enforce Rights. Notwithstanding any of the
provisions of this Warrant Agreement, any Warrantholder, without the consent of
the holder of any Common Stock or the holder of any other Warrant Certificate,
may, on its own behalf and for its own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to enforce,
or otherwise in respect of, such Warrantholder's right to exercise the Warrants
evidenced by such Warrantholder's Warrant Certificate in the manner provided in
its Warrant Certificate and in this Agreement.
Section 8. Registration Rights.
8.1 Requested Registration.
(a) Request for Registration. After the exercise of at least 167,500
Warrants for Common Stock, but in no event prior to March 31, 2007, each of
Xxxxxxx and Drawbridge (or their assignees) shall have the right upon written
request to the Company (the "Demand Registration"), on at least two separate
occasions to require the Company to effect a registration of such number of
Registrable Securities as the Warrantholders may elect. Upon receipt of such
notice, the Company will:
(i) promptly give written notice of the proposed registration
to all other holders of Registrable Securities, which written notice
shall include the name or names of the underwriter or underwriters
to be employed; and
(ii) use its diligent good faith efforts to effect, as soon as
practicable, such registration (including, without limitation, the
filing of post-effective amendments, appropriate qualification under
the applicable blue sky or other state securities laws and
appropriate compliance with the Securities Act and any other
governmental requirements or regulations) as may be so requested by
any holder of Registrable Securities within five days after written
notice is given by the Company and as would permit or facilitate the
sale and distribution of all or such portion of the Registrable
Securities so requested to be included in such registration;
provided that the Company shall not be obligated to take any action to effect
any such registration pursuant to this Section 8.1.1: (a) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process, to register as a securities broker or dealer or to cause
any officer or employee of the Company to register as a salesman in effecting
such registration or (b) after the Company has effected two such registrations
pursuant to this Section 8.1.1which have been declared or ordered effective.
Subject to the foregoing, the Company shall prepare and file a
registration statement covering the Registrable Securities so requested to be
registered as soon as reasonably practicable and in any event within 45 days
after such request is received.
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Notwithstanding the foregoing, the Company shall not be obligated to
effect a registration, qualification or compliance under this Section 8.1.1
starting with the date 60 days prior to the Company's good faith estimate of the
date of filing of, and ending on a date 180 days following the effective date
of, a registration statement pertaining to an underwritten public offering of
securities for the account of the Company, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and such registration statement becomes effective
within three months from the date of delivery to the Company of a written
request to effect such registration, qualification or compliance.
(b) Selection of Underwriter. If any Demand Registration is an
underwritten offering, the holders of a majority of the Registrable Securities
to be included in such registration will select a managing underwriter or
managing underwriters of nationally recognized standing which shall be
reasonably acceptable to the Company. The Company shall (together with the
holders proposing to distribute their Registrable Securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting in the manner set
forth above.
The holders of Registrable Securities participating in a registration
under this Section 8.1 shall, to the extent required by the managing
underwriter(s), execute and deliver a custody agreement and power of attorney
with respect to the Registrable Securities to be registered (a "Custody
Agreement" and "Power of Attorney," respectively). The Custody Agreement and
Power of Attorney will provide, among other things, that the holders will
deliver to and deposit in custody with the custodian named therein a certificate
or certificates representing such Registrable Securities (duly endorsed in blank
by the registered owner or owners thereof or accompanied by duly executed stock
powers in blank) and irrevocably appoint said custodian and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney, respectively, on such holder's behalf with respect to matters
specified therein, including the execution and delivery of an underwriting
agreement.
Notwithstanding any of the other provisions of this Section 8.1, if the
managing underwriter determines and advises the Company that marketing factors
require a limitation of the number of shares to be underwritten, then all
holders of Registrable Securities that have previously elected to participate in
such registration shall be advised of the same, and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all such holders in proportion, as nearly as practical,
to the respective amounts of Registrable Securities that were proposed to be
sold by such holders. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be in such
registration.
If any holder of Registrable Securities disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter and the other holders who have
previously elected to participate in the registration. The Registrable
Securities so withdrawn shall also be withdrawn from registration; provided that
if by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other holders may be included in such
registration (up to a maximum of any limitation imposed by the underwriters),
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then the Company shall offer to all holders who have included Registrable
Securities in the registration the right to include additional shares in the
same proportion used in effecting the limitation referred to above in this
Section 8.1.2.
As used in this Agreement, the term "Registrable Securities" shall mean,
collectively, the shares of Common Stock acquired or to be acquired by the
Warrantholder upon exercise of the Warrants pursuant to this Agreement and any
shares of Common Stock or other securities issued with respect to such Common
Stock by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation, share exchange,
reorganization or otherwise; provided, however, that such Common Stock (or any
part thereof) or other securities shall cease to be Registrable Securities when
(i) a registration statement with respect to the disposition of such Common
Stock or other securities shall have become effective under the Securities Act
and such securities shall have been disposed of in accordance with the plan of
distribution set forth in such registration statement, (ii) and to the extent,
such Common Stock or other securities may be sold, without restrictions on
volume, pursuant to Rule 144 (or any successor provision) under the Securities
Act, (iii) an opinion of counsel, reasonably satisfactory to the Company and the
holders of Common Stock or other securities to which the opinion relates shall
have been delivered to the Company and such holders to the effect that the
subsequent disposition of such Common Stock or other securities may be made
pursuant to Rule 144(k) (or any successor provision) under the Securities Act,
or (iv) such Common Stock or other securities shall cease to be outstanding.
8.2 Company Registration.
(a) Right to Inclusion. If at any time (or from time to time) the
Company shall determine to register any of its securities in an underwritten
offering, either for its own account or the account of a holder of Registrable
Securities or any other holder of securities of the Company, other than (i) a
registration pursuant to Section 8.1 hereof, (ii) a registration relating solely
to employee benefit or stock option plans, (iii) a registration relating solely
to a transaction described in Rule145 under the Securities Act, (iv) a
transaction relating solely to an exchange offering, or (v) a transaction
relating solely to an acquisition of assets or property for securities, then the
Company will:
(i) promptly give to each holder of Registrable Securities
written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify the
offer and sale of such securities under the applicable blue sky or
other state securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities
specified in any written request or requests by any holder received
by the Company within 15 days after such written notice is given.
(b) Underwriting. The right of any holder of Registrable Securities
to registration pursuant to Section 8.2 (a) shall be conditioned upon such
holder's participation in the underwriting and the inclusion of such holder's
Registrable Securities in the underwriting to the extent provided herein. All
holders proposing to distribute their Registrable Securities through such
10
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
Such holders of Registrable Securities shall also execute and deliver, to the
extent required by the managing underwriter, a Custody Agreement and Power of
Attorney satisfactory to the Company with respect to the Registrable Securities
to be registered. The Custody Agreement and Power of Attorney will provide,
among other things, that such holders of Registrable Securities will deliver to
and deposit in custody with the custodian named therein a certificate or
certificates representing such Registrable Securities (duly endorsed in blank by
the registered owner or owners thereof or accompanied by duly executed stock
powers in blank) and irrevocably appoint said custodian and attorney-in-fact
with full power and authority to act under the Custody Agreement and Power of
Attorney, respectively, on the holder's behalf with respect to matters specified
therein, including the execution and delivery of an underwriting agreement.
Notwithstanding any other provisions of this Section 8.2, if the managing
underwriter determines and advises the Company that marketing factors require a
limitation on the number of shares to be underwritten, the underwriter and the
Company may limit or exclude entirely the Registrable Securities to be included
in any registration and underwriting. In such event, the Company shall so advise
all holders of Registrable Securities that would otherwise be registered and
underwritten pursuant hereto, and the number of shares of Common Stock
(including the Registrable Securities) or other securities that may be included
in the registration and underwriting shall be allocated among all holders of
Registrable Securities and any other holders of Common Stock or other securities
requesting to be registered in proportion, as nearly as practicable, to the
respective amounts of Common Stock (including the Registrable Securities) or
other securities that were proposed to be sold by all holders of Registrable
Securities and holders of Common Stock or other securities entitled to
participate therein. No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration.
If any holder of Registrable Securities disapproves of the terms of the
underwriting, such holder may elect to withdraw therefrom by written notice to
the Company and the managing underwriter(s). The Registrable Securities so
withdrawn shall also be withdrawn from registration; provided that if by the
withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all holders who have included Registrable Securities in the
registration the right to include additional shares in the same proportion used
in effecting the limitation referred to above in this Section 8.2.2. With
respect to any registration withdrawal by the Company pursuant to this Section
8.2.2, the Company shall have the right to withdraw such registration at any
time at its sole discretion without the consent or approval of any stockholder,
including the holders of Registrable Securities, in such registration.
8.3 Expenses of Registration. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Section 8, including,
without limitation, all registration, filing and qualification fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company and
fees and expenses of accountants incidental to or required by such registration,
11
the fees and disbursements of one special counsel retained by the holders of
Registrable Securities covered by such registration, (but excluding
underwriters' fees, discount and commissions relating to the Registrable
Securities sold), shall be borne by the Company.
8.4 Registration Procedures. In the case of such registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each holder of Registrable Securities participating
therein advised in writing as to the initial filing of each registration,
qualification and compliance and as to the completion thereof. At its expense,
the Company will:
(a) keep such registration, qualification or compliance pursuant to
Sections 8.1 or 8.2 effective for a period of 180 days or until the holders of
Registrable Securities participating therein have completed the distribution
described in the registration statement relating thereto, whichever occurs
first;
(b) furnish such number of prospectuses and other documents incident
thereto as a holder of Registrable Securities participating therein from time to
time may reasonably request;
(c) make available, upon reasonable notice and during business
hours, for inspection by the managing underwriter all financial and other
records, pertinent corporate documents, agreements and properties of the Company
as shall be reasonably necessary to enable such managing underwriter to exercise
its due diligence responsibilities, and cause the Company's officers, directors
and employees to supply all information reasonably requested by such managing
underwriter in connection with the registration;
(d) during the period when the registration is required to be
effective, notify the holders of the Registrable Securities participating in the
registration of the happening of any event as a result of which the prospectus
included in the registration statement contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and the Company will
forthwith prepare a supplement or amendment to such prospectus or take other
appropriate action so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue statement or
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading;
(e) cause such Registrable Securities included in the registration
to be listed or authorized for trading on each securities exchange (including,
for this purpose, the NASDAQ National Market System or NASDAQ SmallCap System)
on which similar securities issued by the Company are then traded; provided that
the Company is eligible to do so under applicable listing requirements; and
(f) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission (the
"Commission") and all of the terms and provisions of this Agreement.
8.5 Related Registration Matters. The Company shall enter into an
underwriting agreement in connection with any registration subject to the
provisions of Sections 8.1 and 8.2 hereof, which agreement shall contain such
12
terms, provisions and agreements as are customary and appropriate for such
registration. In connection with the registration, to the extent not provided in
the underwriting agreement related to such registration, the Company also shall:
(a) engage a bank or other company to act as transfer agent and
registrar for the Registrable Securities;
(b) cause customary opinions of counsel, comfort letters of
accountants and other appropriate documents to be delivered by representatives
of the Company, which documents shall be addressed to the holders of Registrable
Securities participating in the offering in addition to the Underwriters or
other parties designated as addressees in such documents; and
(c) as soon as practicable after the effective date of the
registration statement, and, in any event, within 16 months thereafter, make
"generally available to its stockholders" within the meaning of Rule 158 under
the Securities Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Securities Act and covering a period of at least 12
consecutive months beginning after the effective date of the registration
statement.
8.6 Indemnification and Contribution.
(a) In the event of registration of any of the Registrable
Securities under the Securities Act, the Company will indemnify and hold
harmless each holder of Registrable Securities included in such registration and
each of its directors and officers, each underwriter of such Registrable
Securities and each of its directors and officers, and each other person and
each of its directors and officers, if any, who controls such seller or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended from time to time (the "Exchange Act"), or otherwise,
against any losses, claims, damages or liabilities (or actions in respect
thereof), joint or several, to which such seller, underwriter or controlling
person (or their respective directors and officers) may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (and each of its directors and officers or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities
Act, any preliminary prospectus or final prospectus contained in the
registration statement, or any amendment or supplement to such registration
statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person (and their respective directors and
officers) for any legal or any other expenses reasonably incurred by such
seller, underwriter or controlling person (and their respective directors and
officers) in connection with investigating or defending any such loss, claim,
damage, liability or action; provided that the Company will not have any
liability (and shall not be required to provide such indemnity and hold harmless
obligation) to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or omission made in such
registration statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with written
13
information furnished to the Company through an instrument duly executed by or
on behalf of such holder of Registrable Securities or underwriter specifically
for use in preparation thereof.
(b) In the event of any registration of any of the Registrable
Securities under the Securities Act, each holder of Registrable Securities
included in such registration, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each of its directors and officers and each person and
each of its directors and officers, if any, who controls the Company or any such
underwriter within the meaning of the Securities Act or the Exchange Act,
against losses, claims, damages or liabilities (or actions in respect thereof),
joint or several, to which the Company, such directors and officers, underwriter
or controlling person (or their respective directors and officers) may become
subject under the Securities Act, Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the registration statement, or any
amendment or supplement to the registration statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, to
the extent, and only to the extent, that such untrue statement or omission was
made in reliance upon and in conformity with information furnished in writing to
the Company by or on behalf of such holder, specifically for use in connection
with the preparation of such registration statement, prospectus, amendment or
supplement; provided the liability of each holder of Registrable Securities
pursuant to this Section 8.6(b) shall be limited to the proceeds actually
received by such holder from the disposition of the Registrable Securities
disposed of by such holder pursuant to such registration.
(c) Each party entitled to indemnification under this Section 8.6
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld, delayed or conditioned), and the Indemnified Party may participate in
such defense at such party's expense, and provided, further, that the failure of
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8.6 (except and to the
extent the rights of the Indemnifying Party are materially prejudiced thereby).
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or litigation, the Indemnifying
Party will not be liable to such Indemnified Party for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation so long as and to
the extent the Indemnifying Party continues to defend the Indemnified Party,
unless the Indemnifying Party, in the defense of any such claim or litigation
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
14
(d) To the extent the Company after the date hereof shall agree to
provide for contribution in any written agreement entered into with the
stockholders of the Company if the indemnification obligations are otherwise
unavailable, then the Company shall provide such similar rights to the
Warrantholders in the registration of their shares.
8.7 Information by Stockholders. Each holder of Registrable Securities
requesting to be included in any registration shall furnish to the Company such
information regarding such holder and the distribution proposed by such holder
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
8.
8.8 Sales Without Registration. If, at the time of any transfer of any
Registrable Securities, such Registrable Securities shall not be registered
under the Securities Act, the Company may require, as a condition of allowing
such transfer, that the holder of Registrable Securities or transferee furnish
to the Company an opinion of legal counsel satisfactory in form and substance to
the Company to the effect that such transfer may be made without registration
under the Securities Act; provided that nothing contained in this Section 8.8
shall relieve the Company from complying with any request for registration,
qualification or compliance made pursuant to the other provisions of this
Section 8.
8.9 Rule 144. The Company covenants that it will file the reports required
to be filed by it under the 1933 Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder so long as necessary to permit
sales of Registrable Securities under Rule 144 under the 1933 Act, and it will
take such other action as any holder of Registrable Securities may reasonably
request, all to the extent required from time to time to enable such holder to
sell Registrable Securities without registration under the 1933 Act within the
limitation of the exemptions provided by (a) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any holder
of Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
8.10 Transfer of Registration Rights. The rights to cause the Company to
register Registrable Securities granted by the Company under Section 8.1 and the
right to participate in Company registration under Section 8.2 may be assigned
by any holder of Registrable Securities to a transferee or assignee of any
Registrable Securities (if such transfer or assignment of Registrable Securities
is permitted under Section 5), unless such transferee or assignee acquires such
Registrable Securities through a transaction or chain of transactions involving
a public offering or a sale effected pursuant to Rule 144; provided that the
holder shall give the Company written notice at the time of or within ten days
after said transfer, setting forth the name and address of said transferee or
assignee and identifying the Registrable Securities with respect to which such
registration rights are being assigned.
8.11 Post-Effective Amendments. In connection with any registration
statement filed pursuant to this Section 8, the Company shall file any
post-effective amendment or amendments to the registration statement which may
be required under the Securities Act during the period set forth in Section
8.4(a).
15
8.12 Cessation of Sale Activities. The Company shall notify each
participating holder of Registrable Securities during the period any
registration statement filed pursuant to this Section 8 is required to remain
effective, or at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which such registration statement or the prospectus contained therein, as then
in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading. Each participating holder agrees, upon receipt of such
notice, forthwith to cease making offers and sales of such securities pursuant
to such registration statement or deliveries of the prospectus contained therein
for any purpose and to return to the Company the copies of such prospectus not
theretofore delivered by such holder.
8.13 Supplements. At a participating holder's request, the Company shall
prepare and furnish to such participating holder a reasonable number of copies
of any supplement to or amendment of such prospectus that may be necessary so
that, as thereafter delivered to the purchaser of any shares of Registrable
Securities, such prospectus shall not include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statement therein not misleading in the light of the circumstances
then existing. The Company shall promptly notify each participating holder of
any stop order or similar proceeding initiated by state or Federal regulatory
bodies and use reasonable efforts to take all necessary steps expeditiously to
remove such stop order or similar proceeding.
Section 9. Exchange and Transfer of Warrant Certificates.
9.1 Exchange and Transfer of Warrant Certificates. Subject to the terms
contained in this Agreement, upon surrender at the principal office of the
Company, Warrant Certificates evidencing Warrants may be exchanged for Warrant
Certificates in other denominations evidencing such Warrants or the transfer
thereof may be registered in whole or in part; provided that such other Warrant
Certificates evidence the same aggregate number of Warrants as the Warrant
Certificates so surrendered. The Company shall keep the Warrant register in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates upon surrender of such Warrant Certificates to the
Company at its principal office for exchange or registration of transfer,
properly endorsed or accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form satisfactory to the
Company. No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates, but the Company may require payment of a sum
sufficient to cover any stamp or other tax or other governmental charge that may
be imposed in connection with any such exchange or registration of transfer.
Whenever any Warrant Certificates are so surrendered for exchange or
registration of transfer, the authorized officers of the Company shall execute
and deliver to the person or persons entitled thereto a Warrant Certificate or
Warrant Certificates duly authorized and executed by the Company, as so
requested. All Warrant Certificates issued upon any exchange or registration of
transfer of the Warrant Certificates shall be the valid obligations of the
Company, evidencing the same obligations, and entitled to the same benefits
under this Agreement, as the Warrant Certificate surrendered for such exchange
or registration of transfer.
16
9.2 Treatment of Holders of Warrant Certificates. Every holder of a
Warrant Certificate, by accepting the same, consents and agrees with the Company
and with every subsequent holder of such Warrant Certificate that until the
transfer of the Warrant Certificate is registered on the Warrant register,
before such Warrant Certificate is surrendered for transfer pursuant to Section
9.1 hereof, the Company may treat the registered holder of a Warrant Certificate
as the absolute owner thereof for any purpose and as the person entitled to
exercise the rights represented by the Warrants evidenced thereby, any notice to
the contrary notwithstanding.
9.3 Cancellation of Warrant Certificates. Any Warrant Certificate
surrendered for exchange, registration of transfer or transfer or exercise of
the Warrants evidenced thereby shall be surrendered to the Company, and all
Warrant Certificates surrendered and so delivered to the Company shall be
promptly cancelled by the Company and shall not be reissued and, except as
expressly permitted by this Agreement, no Warrant Certificate shall be issued
hereunder in exchange or in lieu thereof.
Section 10. Notices. Any notice or other document required or permitted to
be given or delivered to the Warrantholders prior to the transfer or other
disposition of any Warrant by the original recipient of this Warrant shall be
delivered at or sent by certified or registered mail to the following address or
such other address as shall have been furnished in writing by such original
recipient to the Company:
Xxxxxxx National Senior Funding, Ltd.
000 0xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx XxXxxxxx
Telefax: (000) 000-0000
Drawbridge Special Opportunities Fund LP
1345 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxxx
Telefax: (000) 000-0000
Thereafter, any notice or other document required or permitted to be given or
delivered to the Warrantholders shall be delivered at, or sent by certified or
registered mail to, each such holder at the last address shown on the books of
the Company maintained at the principal office of the Company for the
registration of transfer of the Warrants or at any more recent address of which
any Warrantholder shall have notified the Company in writing. Any notice or
other document required or permitted to be given or delivered to holders of
record of outstanding Registrable Securities shall be delivered at, or sent by
certified or registered mail to, each such holder at such holder's address as
the same appears on the stock records of the Company.
Any notice or other document required or permitted to be given or
delivered to the Company shall be delivered at, or sent by certified or
registered mail to, the addresses set forth below or such other address within
the United States of America as shall have been furnished by the Company to the
Warrantholders and the holders of record of Registrable Securities:
17
Dune Energy, Inc.
0000 Xxxx Xxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx, CFO
Fax: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Xxx Xxxxxx LLP
0 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Section 11. Representations and Warranties. The Company represents and
warrants as follows:
11.1 Capitalization. The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, of which 59,414,292 shares were issued
and outstanding as of the date hereof and 1,000,000 shares of preferred stock,
of which 0 shares were issued and outstanding as of the date hereof. All of the
shares of Common Stock are duly authorized, validly issued, fully paid and
nonassessable. The only rights, options or other agreements which are
outstanding which authorize the acquisition of newly issued shares of Common
Stock are set forth on Schedule 11.1 attached hereto.
11.2 Authorization; Enforceability. The Company has the corporate power
and authority to enter into and perform its obligations under this Agreement.
The execution and delivery by the Company of this Agreement have been approved
by all requisite corporate action and no other corporate proceeding on its part
are necessary to authorize this Agreement and the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligation of the
Company, except as it may be affected by bankruptcy, insolvency, moratorium,
reorganization or other laws and judicial decisions affecting the rights of
creditors generally and general principles of equity.
11.3 Issuance of Shares. The issuance of the shares of Common Stock
subject to the Warrants has been duly authorized and, when issued upon exercise
of the Warrants, such shares will have been validly issued and will be fully
paid and nonassessable.
Organizational Documents. The Company has provided to each Grantee a true and
complete copy of the Company's certificate or articles of incorporation,
certificate of formation, by-laws, any preferred stock designation, any
shareholder's agreement or any other organic document of the Company or any of
its subsidiaries. The Company shall not make any amendment, modification or
supplement to the foregoing documents without the prior written consent of the
Grantees.
18
Section 12. Miscellaneous.
12.1 Amendment. This Warrant Agreement may be amended by the Company, with
the consent of the Warrantholders representing a majority of the then
outstanding Warrants, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein, or making
any other provisions with respect to matters or questions arising under this
Agreement as the Company may deem necessary or desirable, provided that such
action shall not affect adversely the interests of the Warrantholders. This
Agreement may otherwise be amended only with the consent of the Company and all
of the Warrantholders.
12.2 Parties in Interest. The agreements of the Company contained herein,
other than those applicable solely to the Warrants and the Warrantholders
thereof, shall continue to inure to the benefit of, and be enforceable by, any
Warrantholder(s) subsequent to the time Common Stock is issued upon the exercise
of Warrants, whether so expressed or not.
12.3 Applicable Law. THE VALIDITY, INTERPRETATION AND PERFORMANCE OF THIS
AGREEMENT AND EACH WARRANT CERTIFICATE ISSUED HEREUNDER AND OF THE RESPECTIVE
TERMS AND PROVISIONS THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS THEREOF.
12.4 Consent to Jurisdiction. The Company hereby irrevocably consents to
the personal jurisdiction of the federal courts located in the Southern District
of New York, Manhattan Division, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, any rights or
obligations hereunder, or the performance of such rights and obligations. The
Company hereby irrevocably consents to the service of a summons and complaint
and other process in any action, claim or proceeding brought by the
Warrantholder in connection with this Agreement, any rights or obligations
hereunder, or the performance of such rights and obligations.
12.5 Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, THE COMPANY AND THE WARRANTHOLDER HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY
RIGHTS OR OBLIGATIONS HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND
OBLIGATIONS.
12.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which as so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same instrument.
12.7 Inspection of Agreement. A copy of this Agreement shall be available
at all reasonable times at the principal office of the Company for inspection by
19
the holder of any Warrant Certificate. The Company may require such holder to
submit his Warrant Certificate for inspection by it.
12.8 Headings. The section headings in this Agreement are for the purposes
of convenience only and shall not constitute a part hereof.
[Remainder of page intentionally left blank. Signature Pages follow.]
20
IN WITNESS WHEREOF, the Company and the Warrantholder have caused their
respective duly authorized officers to sign this Agreement.
DUNE ENERGY, INC.
By:
-----------------------------
Xxxxx Xxxxx, President
Signature PAge to the Warrant Agreement
S-1
WARRANTHOLDER:
XXXXXXX NATIONAL LOAN INVESTORS,
LTD.
By:
-----------------------------
Xxxxx Xxxxx, Director
Signature PAge to the Warrant Agreement
S-2
WARRANTHOLDER:
DRAWBRIDGE SPECIAL OPPORTUNITIES
FUND LP
By: Drawbridge Special
Opportunities GP LLC, its
General Partner
By:
------------------------
Name:
----------------------
Title:
---------------------
Signature PAge to the Warrant Agreement
S-3
Appendices:
Appendix A Form of Warrant Certificate
Appendix B Election to Exercise
Schedules:
Schedule 11.1 Outstanding Options, Etc.
Signature PAge to the Warrant Agreement
S-4
APPENDIX A
[FORM OF WARRANT CERTIFICATE]
Warrant No. ______ ____ Warrants
WARRANT TO PURCHASE COMMON STOCK OF
DUNE ENERGY INC.
THIS WARRANT IS SUBJECT TO RESTRICTIONS
ON TRANSFER SET FORTH IN THE
AGREEMENT REFERENCED BELOW.
This certificate certifies that _________________ is the registered owner
of the above indicated number of Warrants, each Warrant entitling such owner to
purchase initially one share of Common Stock, $.__________ par value ("Common
Stock"), of Dune Energy Inc., a Delaware corporation, (hereinafter called the
"Company"), at the price per share (the "Warrant Price") set forth in Section 2
of the Warrant Agreement, subject to the terms of that Warrant Agreement
hereafter referred to.
The holder may exercise the Warrant evidenced hereby by surrender, to the
Company at its principal office in Houston, Texas, of this Warrant Certificate
and the form of Election to Exercise attached hereto, both duly filled in and
signed, along with payment in full to the Company of the Warrant Price in cash
or immediately available funds or pursuant to a Cashless Exercise, all as
provided in the Warrant Agreement and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement. According to the terms
of the Warrant Agreement, the Warrants shall cease to be exercisable at 5:00
p.m., Houston, Texas time, on ___________________________.
The Warrant Certificate is issued under and in accordance with the Warrant
Agreement dated as of ________________________ (the "Warrant Agreement"), by and
between the Company and the Warrantholders Parties thereto, and is subject to
the terms and provisions of the Warrant Agreement, which terms and provisions
are hereby incorporated by reference herein and made a part hereof. Each holder
of this Warrant Certificate consents to all of the terms contained in the
Warrant Agreement by acceptance hereof. A copy of the Warrant Agreement is
available for inspection by the registered holder hereof at the principal office
of the Company in Houston, Texas.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH
SUCH ACT AND THE RULES AND REGULATIONS THEREUNDER AND IN ACCORDANCE WITH
Appendix A-1
APPLICABLE STATE SECURITIES LAWS. THE COMPANY WILL NOT TRANSFER SUCH
SECURITIES EXCEPT UPON RECEIPT OF A FAVORABLE OPINION OF COUNSEL AND/OR
EVIDENCE SATISFACTORY TO THE COMPANY THAT THE REGISTRATION PROVISIONS OF
SUCH ACT HAVE BEEN COMPLIED WITH OR THAT SUCH REGISTRATION IS NOT REQUIRED
AND THAT SUCH TRANSFER WILL NOT VIOLATE ANY APPLICABLE STATE SECURITIES
LAWS.
The Warrant Agreement and each Warrant Certificate, including this Warrant
Certificate, shall be deemed a contract made under the laws of the State of New
York and for all purposes shall be construed in accordance with the laws of the
State of New York.
DUNE ENERGY INC.
By:
--------------------------------
Xxxxx Xxxxx, President
Appendix A-2
APPENDIX B
ELECTION TO EXERCISE
(To be executed only upon exercise of warrant)
To _____________________
The undersigned registered holder of the attached warrant hereby
irrevocably exercises and surrenders to the Company such warrant for, and
purchases thereunder, ________* shares of Common Stock of Dune Energy Inc., and
herewith makes payment of $__________ therefor, in cash or immediately available
funds or pursuant to a Cashless Exercise as requested below, and requests that
the certificates for such shares (less any shares, if any, utilized pursuant to
a Cashless Exercise) be issued in the name of, and delivered to ________________
__________________________, whose address is
_____________________________________ _______________________.
Check one of the following boxes: |_| Payment in cash or immediately available
funds
|_| Cashless Exercise
Dated: _________________
____________________________________
(Signature must conform in all
respects to name of holder as
specified on the face of this
warrant)
____________________________________
(Street Address)
____________________________________
(City) (State) (Zip Code)
----------
* Insert here the number of shares called for on the face of this warrant (or,
in the case of a partial exercise, the portion thereof as to which this warrant
is being exercised), in either case without making any adjustment for additional
shares of common stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of this warrant, may be
delivered upon exercise. In the case of a partial exercise, a new warrant or
warrants will be issued and delivered, representing the unexercised portion of
this warrant, to the holder surrendering the same. In the case of a Cashless
Exercise, the number of shares to be issued shall be reduced as set forth in
Section 2.3 of the Warrant Agreement.
Appendix B-1
