WARRANT AGENCY AGREEMENT
This Warrant Agency Agreement (the "Agreement") is entered into as of the
____ day of _____________ (the "Effective Date") by and between Fan Energy Inc.,
a Nevada corporation (the "Corporation"), and Atlas Stock Transfer Corp., a Utah
corporation (the "Warrant Agent").
RECITALS
A. The Corporation intends to offer to the public (the "Offering") 300,000
units (the "Units"), each consisting of one share of the Corporation's $0.001
par value common stock (the "Stock") and one warrant (the "Warrants") to
purchase additional shares of the Stock.
B. The 300,000 Warrants that the Corporation intends to issue in connection
with its proposed public offering will entitle the holders to purchase an
aggregate of 300,000 shares of the Stock (the "Warrant Shares").
C. The Corporation desires to provide for issuance of certificates
representing the Warrants (the "Warrant Certificates") and the Warrant Shares.
D. The Corporation and the Warrant Agent desire that the Warrant Agent act
on behalf of the Corporation with respect to the issuance, registration,
transfer and exchange of the Warrant Certificates, the exercise of the Warrants,
and the issuance of certificates representing the Warrant Shares.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in the Agreement, the parties agree as follows:
AGREEMENT
1. Agreement to Act as Warrant Agent. Subject to the terms and conditions
of this Agreement, the Corporation hereby appoints the Warrant Agent, and the
Warrant Agent hereby agrees to be retained by the Corporation, as the
Corporation's agent in connection with the issuance, registration, transfer and
exchange of the Warrant Certificates and the exercise of the Warrants.
2. Duties of the Warrant Agent. The Warrant Agent shall act as an agent for
the Corporation in a ministerial capacity, and the Warrant Agent's duties shall
be determined solely by the provisions of this Agreement. The Warrant Agent
shall not, by issuing and delivering Warrant Certificates or by any other act,
be deemed to make any representation as to the validity, value or authorization
of the Warrants, the Warrant Shares or the Warrant Certificates. The Warrant
Agent shall have no duty or responsibility to any holder of a Warrant
Certificate to adjust the exercise price of a Warrant or to determine whether
any fact exists that may require an adjustment of the exercise price pursuant to
Section 14 of this Agreement. Any notice, statement, instruction, request,
direction, order or demand of the Corporation to the Warrant Agent shall be
evidenced by instructions from an officer of the Corporation. The Warrant Agent
shall not be liable for any action taken or omitted by it in accordance with any
such notice, statement, instruction, request, direction, order or demand.
3. Compensation. In consideration of the Warrant Agent's services pursuant
to this Agreement, the Corporation has appointed the Warrant Agent to be the
stock transfer agent and registrar for its Stock pursuant to a separate
agreement between the Corporation and the Warrant Agent. The Corporation also
agrees to reimburse the Warrant Agent for any extraordinary out-of-pocket
expenses reasonably incurred by tue Warrant Agent in performance of its duties
under this Agreement. The Warrant Agent shall present the Corporation with an
itemized account of all such expenses not less frequently than monthly.
4. Delivery of Warrant Certificates. Warrant Certificates representing the
Warrants shall be executed by the proper officers of the Corporation and
delivered to the Warrant Agent after execution of this Agreement. Such Warrant
Certificates shall be attached to certificates representing an aggregate of
300,000 shares of the Stock and shall be distributed by the Warrant Agent to the
purchasers of Units in the Corporation's public offering.
5. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
attached to this Agreement as Exhibit A, and may be printed, lithographed
or engraved with such letters, numbers or other marks of identification and
such legends, summaries or endorsements as are not inconsistent with the
provisions of this Agreement and as the Corporation deems appropriate. The
Warrant Certificates shall be dated as of the date of their issuance,
whether on initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates.
(b) Each Warrant Certificate shall be issued initially only when
attached to a stock certificate representing that number of shares of the
Stock which is equal to the number of Warrant Shares set forth on the face
of the Warrant Certificate. The Warrant Certificates shall be numbered
serially in accordance with the stock certificates to which they are
attached with the letter "W" appearing on each Warrant Certificate. The
Warrant Certificates may be detached from the stock certificates as of the
effective date of the prospectus covering the Corporation's public offering
(the "Prospectus"). After detachment from the stock certificates, Warrant
Certificates may be issued by number preceded by the letter "W" without
regard to the number of the stock certificate to which the Warrant
Certificate was initially attached.
(c) The Warrant Certificates shall be executed on behalf of the
Corporation by its authorized officers, by manual signatures or facsimile
signatures, and shall be printed with a facsimile of the Corporation's
seal. The Warrant Certificates shall be manually countersigned by the
Warrant Agent, and shall not be valid for any purpose unless so
countersigned. In the event any officer of the Corporation who executed a
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Warrant Certificate shall cease to be an officer of the Corporation before
the date of issuance of the Warrant Certificate or before countersignature
and delivery by the Warrant Agent, the Warrant Certificate may be
countersigned, issued and delivered by the Warrant Agent with the same
force and effect as though the person who signed the Warrant Certificate
had not ceased to be an officer of the Corporation. The Corporation shall
file promptly with the Warrant Agent such approval, adoption or
ratification as may be required by law.
6. Warrant Agent's Records. The Warrant Agent shall maintain transfer books
at its principal office (the "Corporate Office") in which all Warrant
Certificates, and the transfer of all Warrant Certificates, shall be registered.
The Corporation shall be entitled from time to time to a listing of Registered
Holders and to mailing services provided by the Warrant Agent at the Warrant
Agent's standard fees for such services.
7. Exercise of Warrants. Each one Warrant shall entitle the holder in whose
name the applicable Warrant Certificate is registered in the books maintained by
the Warrant Agent (the "Registered Holder") to purchase one Warrant Share
(subject to modification as provided in Section 14 of this Agreement) upon
exercise of the Warrants. Each Warrant evidenced by a Warrant certificate may be
exercised at any time during the period commencing on the effective date of the
Prospectus and terminating at 5:00 p.m., Denver, Colorado time on the date which
is three years after the date of the commencement of the Offering (the "Exercise
Period"). The Warrants shall not be exercisable after the termination of the
Exercise Period (the "Expiration Date") unless the Corporation has amended this
Agreement to extend the Exercise Period. The exercise price for the Warrants
(the "Exercise Price") will be $0.10 per Warrant or $0.10 per Warrant Share
acquired. A Warrant shall be deemed to have been exercised immediately prior to
the close of business on the date of the delivery to the Warrant Agent by the
Registered Holder (the "Exercise Date") of (i) the Warrant Certificate, provided
that the subscription form contained on the back of the Warrant Certificate has
been completed in full by the Registered Holder or its duly authorized attorney,
and (ii) payment of the aggregate Exercise Price in cash or by bank cashier's
check or certified check. The Registered Holder of the Warrant shall be treated
for all purposes as the holder of the Warrant Shares as of the close of business
on the Exercise Date. Warrant Certificates may be exercised in whole or in part.
8. Fractional Shares. No fractional Warrant Shares will be issuable upon
the exercise of a Warrant. if the exercise of a Warrant would otherwise require
the issuance of fractional Warrant Shares, the Corporation will purchase the
fractional interest from the Registered Holder on the Exercise Date for a price
equal to the lesser of $0.10 per Warrant comprising the fractional interest, or
the market value of the fractional Warrant Shares. For purposes of calculating
market value as provided in the preceding sentence, the market value of one
Warrant Share shall be equal to the closing reported bid price for the Stock on
the day prior to the Exercise Date (or on the preceding business day if such
date is on Saturday, Sunday or a holiday), on either a national or local
over-the-counter market, as reported by the Wall Street Journal provided, that
if no published bid price is available, the market value of one Warrant Share
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shall be the average of the mean between the bid and asked prices for the Stock
as quoted on that date by any two independent persons or entities making a
market for the Stock, such persons or entities to be selected by the Warrant
Agent.
9. Issuance of Warrant Shares. As soon as practicable on or after the
Exercise Date, the Warrant Agent shall issue and deliver to the Registered
holder one or more certificates for the number of Warrant Shares deliverable
upon such exercise. No adjustment shall be made to the Registered Holder as a
result of cash dividends paid by the Corporation prior to the Exercise Date.
The Corporation and the Warrant Agent acknowledge that the Corporation will
be required to deliver a Prospectus (the Prospectus) that satisfies the
requirements of Section 9 of the Securities Act of 1933, as amended (the "1933
Act") with the Warrant shares that are issued in connection with any exercise of
the Warrants. The Corporation and the Warrant Agent further acknowledge that the
Corporation must have a registration statement (or a post-effective amendment to
an existing registration statement) effective under the 1933 Act in order for
the Corporation to comply with the Prospectus delivery requirements described in
the preceding sentence. The Corporation covenants and agrees that to the extent
necessary to comply with the requirements of the 1933 Act, the Corporation will
file a registration statement (or post-effective amendment to an existing
registration statement) and will use its best efforts to cause the same to
become effective.
The Corporation covenants and agrees that it will advise the Warrant Agent
of the status of the Corporation's registration statement under the 1933 Act,
and that the Corporation will advise the Warrant Agent immediately if the
effectiveness of the Corporation's registration statement should lapse.
The Corporation agrees to furnish the Warrant Agent with, and the Warrant
Agent agrees to deliver, copies of the Corporation's Prospectus to be delivered
with the Warrant Shares upon any exercise of the Warrant. The Corporation agrees
to indemnify the Warrant Agent against any and all losses, expenses and
liabilities that the Warrant Agent may incur in Connection with the delivery of
copies of the Corporation's Prospectus to Registered Holders upon any exercise
of the Warrants.
The Warrant Agent promptly shall notify the Corporation in writing of any
exercise of a Warrant and of the number of Warrant Shares delivered. The Warrant
Agent shill pay to the Corporation on a weekly basis cash in an amount equal to
the collected funds that the Warrant Agent has received upon exercise of the
Warrants. The Warrant Agent shall hold any proceeds collected by it and not yet
paid to the Corporation in a federally insured account. Except as provided in
Section 11 of this Agreement, no fees will be charged by the Warrant Agent to
the Corporation or to the Registered Holders for initial administration and
issuance of Warrant shares to the purchasers of Units in the corporation s
public offering.
10. Reservation of Shares. The Corporation shall at all tines reserve and
have available as authorized stock the number of shares of Stock for which
Warrants remain outstanding. The Corporation agrees that all Warrant Shares
issued by the Corporation shall be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. If any shares of the
Stock reserved for the exercise of Warrants require registration with or
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approval of any government authority under any federal or state law before they
may be validly issued or delivered, the Corporation will in good faith and as
expeditiously as possible attempt to obtain the required registration or
approval.
11. Taxes. The Registered Holder shall pay all documentary, stamp or
similar taxes and other governmental charges imposed with respect to the
issuance of the Warrants or the Warrant Shares. In the event that the Warrant
Agent is directed to deliver Warrant Shares to anyone other than the Registered
Holder, no delivery shall be made unless the person to whom delivery is to be
made has paid all taxes and other charges incident to the delivery of the
Warrant Shares.
12. Registration of Transfer. The Warrant Certificates may be exchanged or
transferred in whole or in part. Registered Holders that desire to exchange
Warrant Certificates shall surrender the Warrant certificates to the Warrant
Agent at the Warrant Agent's principal office (the "Corporate Office"). The
Corporation shall then execute and the Warrant Agent shall countersign, issue
and deliver the Warrant Certificate or Certificates that the Registered Holder
is entitled to receive. Registered holders that desire to transfer Warrant
Certificates shall present the Warrant Certificates to the Warrant Agent at the
Corporate office for registration of transfer. The Corporation shall then
execute and the Warrant Agent shall countersign, issue and deliver to the
transferee or transferees one or more new Warrant Certificates representing an
equal number of Warrants. All Warrant Certificates presented to the Warrant
Agent for registration of transfer shall have the notice of assignment contained
on the back of the Warrant Certificate completed in full by the Registered
Holder or its duly authorized attorney. A $20 fee shall be paid by the
Registered Holder for any registration of transfer of a Warrant Certificate and
for issuance of new Warrant Certificates to anyone other than the Registered
Holder. The Registered Holder also may be required to pay a fee sufficient to
cover any tax or other government charge imposed in connection with the transfer
of the Warrant certificate. Prior to presentment by a Registered Holder of a
Warrant Certificate for transfer pursuant to this Section 12, the Corporation
and the Warrant Agent may treat the Registered Holder as the absolute owner of
the Warrant or Warrants represented by the Warrant Certificate regardless of any
notations of ownership or other markings that have been made by anyone other
than the Corporation or the Warrant Agent on the Warrant Certificate.
13. Loss or Mutilation. Upon receipt by the Warrant Agent of evidence
satisfactory to it as to the ownership of, and the loss, theft, destruction or
mutilation of, any Warrant Certificate, the Corporation shall execute and the
Warrant Agent shall countersign, issue and deliver to the Registered Holder a
new Warrant certificate evidencing the same number of Warrants as evidenced by
the lost, stolen, destroyed or mutilated Warrant Certificate; provided, however,
that in the case of a lost, stolen or destroyed Warrant Certificate, no new
Warrant Certificate shall be issued until the Registered Holder has indemnified
the Corporation and the Warrant Agent in writing in an amount that the Warrant
Agent determines is satisfactory to indemnify both the Corporation and the
Warrant Agent against damages incurred by either of them as a result of the
loss, theft or destruction of the Warrant Certificate. In the case of a
mutilated Warrant Certificate, no new Warrant Certificate shall be issued until
the mutilated Warrant Certificate is surrendered by the Registered Holder to the
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Warrant Agent for cancellation. Registered Holders requesting substitute Warrant
Certificates pursuant to this Section also shall comply with such other
regulations and pay such other reasonable charges as the Corporation may
prescribe.
14. Adjustments and Anti-Dilution Provisions: Stock Dividends,
Reclassification, Reorganization, Merger, Spin-Off, Dissolution, And
Liquidation.
(a) If, at any time prior to the expiration of the Warrants either by
their terms or by their exercise, the Corporation increases or decreases
the number of its issued and outstanding shares of Stock, or changes in any
way the rights and privileges of such shares, by means of (i) the payment
of a stock dividend or the making of any other distribution on such shares
payable in its Stock, (ii) a forward or reverse stock split or subdivision
of shares, (iii) a consolidation or combination of shares, or (iv) a
reclassification or recapitalization involving its Stock, then the Exercise
Price in effect at the time of such action and the number of shares of the
Stock purchasable upon the exercise of the Warrants at that time shall be
proportionately adjusted so that the numbers, rights, and privileges
relating to the shares of the Stock then purchasable upon the exercise of
the Warrants shall be increased, decreased or changed in like manner, for
the same aggregate purchase price set forth in the Warrants, as if the
Stock purchasable upon the exercise of the Warrants immediately prior to
the event at issue had been issued, outstanding, fully paid and
nonassessable at the time of that event. As an example, if the Corporation
were to declare a two-for-one forward stock split or a 100% stock dividend,
then the number of shares of Stock purchasable upon the exercise of the
Warrants would be doubled and the Exercise Price for all of those Warrant
Shares would be reduced by 50%. These adjustments would result in the
Registered Holders' rights under the Warrants not being diluted by the
stock split or stock dividend. Any dividend or other distribution paid or
distributed upon the Stock in stock of any other class of securities
convertible into shares of the Stock shall be deemed to be a dividend paid
in the Stock subject to the provisions of this subsection (a) to the extent
that shares of the Stock are issuable upon the conversion of the
distributed securities.
(b) Upon the occurrence of any of the following events prior to the
expiration of the Warrants either by their terms or their exercise, if the
notice required by Section 15 below has been given, the Warrants shall
automatically terminate and be of no further force or effect whatsoever:
(i) the merger or consolidation of the Corporation with one or more other
corporations, regardless of which entity survives the transaction; or (ii)
the dissolution or liquidation of the Corporation. Upon the occurrence of
any of the following events prior to the expiration of the Warrants either
by their terms or their exercise, notice of which events is not required,
the Warrants shall automatically terminate and be of no further force or
effect whatsoever: (i) the appointment of a receiver for all, or
substantially all, of the Corporation's assets or business; or (ii) the
appointment of a trustee for the Corporation after a petition has been
filed for the Corporation's reorganization under applicable insolvency
statutes.
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(c) Whenever the Exercise Price and the aggregate number of shares of
Stock purchasable upon the exercise of Warrants shall be adjusted pursuant
to subsection (a) above, the Board of Directors of the corporation shall
determine the adjustment to be made, in accordance with the terms and
conditions of this Agreement, and the Corporation promptly shall file with
the Warrant Agent at the Corporate Office an Officers' Certificate executed
by the Corporation's President and Secretary or Assistant Secretary
describing the adjustment and setting forth, in reasonable detail, the
facts requiring such adjustment and the basis for and the calculation of
such Agreement. Each such Officers' Certificate shall be made available to
the Registered Holders for inspection at the Corporate Office at all
reasonable times. The Officers' Certificate described in this subsection
(c) shall be deemed to be conclusive as to the correctness of the
adjustment reflected therein. Failure to prepare or provide the Officers'
Certificate shall not modify the parties' rights under this Agreement.
(d) No adjustment of the Exercise Price or of the number of shares of
stock purchasable upon the exercise of Warrants shall be made as a result
of or in connection with the issuance of shares of the stock pursuant to
(i) option plans, options, warrants and share purchase agreements
outstanding or in effect as of the date of this Agreement, (ii) the
establishment of additional option plans, or the modification, renewal or
extension of any option plan in effect as of the date of this Agreement, or
the issuance of shares of Stock pursuant to any such plan, (iii) any
acquisition of property or assets by the corporation, or (iv) any
compensation arrangement for the Corporation's officers, employees or
agents.
(e) Except for this subsection (e), a summary of the information
contained in Section 14 of this Agreement shall be printed on the reverse
side of all warrant certificates.
15. Notice of Certain Events. In case, prior to the expiration of the
Warrants either by their terms or by their exercise, any of the following shall
occur:
(a) the Corporation shall declare a dividend or authorize any other
distribution on its stock;
(b) the corporation shall authorize the granting to the shareholders
of its Stock of rights to subscribe for or purchase any securities or any
other similar rights;
(c) any reclassification, reorganization, or similar change of the
Stock, or any consolidation or merger to which the Corporation is a party,
or the sale, lease, or exchange of all, or substantially all, of the assets
of the Corporation;
(d) the voluntary or involuntary dissolution, liquidation or winding
up of the corporation; or
(e) any purchase, retirement or redemption by the Corporation of its
Stock;
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then, and in any such case, the Corporation shall deliver to the Registered
Holders and the Warrant Agent written notice of such event at least 30 days
prior to the earliest applicable such event at least 30 days prior to the
earliest applicable date specified below with respect to which notice is to be
given, which notice shall state the following:
(i) the date on which a record is to be taken for the purpose of
such dividend, distribution or rights, or, if record is not to be
taken, the date as of which the holders of the Stock of record to be
entitled to such dividend, distribution or rights is to be determined;
(ii) the date on which such reclassification, reorganization,
consolidation, merger, sale, lease, exchange, dissolution,
liquidation, winding up, purchase retirement or redemption is expected
to become effective, and the date, if any, as of which the holders of
the Stock of record shall be entitled to exchange their Stock for
securities or other property deliverable upon such event; and
(iii) if any matter referred to in the foregoing clauses (i) and
(ii) are to be voted upon by holders of the Stock, the date as of
which those shareholders to be entitled to vote are to be determined.
16. Record Holders. For purposes of Section 14 and 15 of this Agreement,
and for all other purposes, the Corporation may deem and treat the Registered
Holders as the absolute owners of the Warrants, and the Corporation shall not be
affected by any notice to the contrary.
17. Dividends. Ownership of a Warrant shall not entitle the Registered
Holder to any of the rights of a shareholder of the Corporation or to any
dividend declared on the Stock unless the Registered holder shall have exercised
the warrant and purchased the Warrant Shares prior to the record date fixed by
the Corporation's Board of Directors for the determination of holders of the
Stock entitled to the dividend or other right.
18. Indemnification of Warrant Agent.
(a) The Warrant Agent shall not (i) be liable for any recital or
statement of fact contained in this Agreement or for any action taken or
omitted by it in reliance on any Warrant Certificate or any other document
or instrument believed by it in good faith to be genuine and to have been
signed or delivered by the proper party or parties, (ii) be responsible for
any failure on the part of the corporation to comply with any of its
covenants and obligations contained in this Agreement or in the Warrant
Certificates, or (iii) be liable for any act or omission in connection with
this Agreement except if caused by its own negligence or willful
misconduct.
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(b) At any time the Warrant Agent may apply to an officer of the
Corporation for instructions or information, and may consult with counsel
for the Corporation or its own counsel, in respect to any matter arising in
connection with the Warrant Agent's agency under this Agreement, and the
Warrant Agent shall not be liable for any action taken or omitted by it in
good faith in accordance with such instructions, information or advice or
opinion of such counsel. The Warrant Agent also shall be protected in
recognizing Warrant certificates that the Warrant Agent reasonably believes
bear the proper manual or facsimile signatures of the officers of the
Corporation and the proper counter-signature of the warrant Agent or
registrar.
(c) The Corporation agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities, including judgments, court costs
and attorneys' fees, incurred by the Warrant Agent as a result of any
action taken or omitted by the Warrant Agent in the execution of its duties
and powers under this Agreement, except if incurred by the Warrant Agent as
a result of the Warrant Agent's own breach, negligence or willful
misconduct.
19. Resignation by or Termination of Warrant Agent. The Warrant Agent may
resign its duties under this Agreement or the Corporation may terminate the
Warrant Agent, and the Warrant Agent shall be discharged from all further duties
and liabilities under this Agreement (except liabilities arising as a result of
the Warrant Agent's breach, negligence or willful misconduct), upon 40 days'
prior written notice to the other party. At least 15 days prior to the date on
which such resignation or termination is to become effective, the Corporation
shall mail a copy of the notice of resignation or termination to each Registered
Holder. The Corporation shall appoint a new warrant agent within 30 days after
the date of the notice of termination or resignation. If the corporation fails
to appoint a new warrant agent within the 30-day period described in the
preceding sentence, then any Registered Holder may apply to any court of
competent jurisdiction for the appointment of a new warrant agent. If the
Warrant Agent resigned its duties tinder this Agreement, absent a breach of this
Agreement by the Corporation, the Warrant Agent shall pay all reasonable charges
and fees of the new warrant agent. After acceptance in writing of the
appointment of a new warrant agent is received by the Corporation, the new
warrant agent shall be vested without any further assurance, conveyance, act or
deed with the same rights, powers, duties and responsibilities as if it had been
originally named as the Warrant Agent in this Agreement; provided, however, that
if either the Corporation or the new warrant agent feels that it is necessary or
expedient to perform, execute and deliver any further assurance, conveyance or
deed or to perform any act, it shall be done as soon as practicable at the
expense of the Corporation. The Corporation shall file a notice of appointment
of new warrant agent with the resigning or terminated Warrant Agent and shall
mail a copy of the notice to each Registered Holder.
20. Successor Warrant Agent. Any corporation into which the Warrant Agent
or any new warrant agent is converted or merged, or any corporation resulting
from the consolidation of the Warrant Agent or any new warrant agent with any
other corporation, or any corporation succeeding to the corporate trust business
of the Warrant Agent or any new warrant agent, shall be a successor warrant
agent under this Agreement. Any such successor warrant agent shall promptly
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cause notice of its succession as warrant agent to be mailed to the Corporation
and to each Registered Holder. No further action shall be required for the
establishment and authorization of a successor warrant agent
21. Other Dealings Between the Corporation and the Warrant Agent. The
Warrant Agent and its officers, directors, subsidiaries, and affiliates may buy,
hold or sell Warrants or other securities of the corporation and otherwise deal
with the Corporation in the same manner and to the same extent and with the same
effect as though it were not the Warrant Agent. Nothing contained in this
Agreement shall preclude the Warrant Agent from acting in any other capacity for
the Corporation.
22. Modification. The Warrant Agent and the Corporation may by written
agreement amend this Agreement in any manner that they deem necessary or
appropriate to cure any ambiguity, mistake or error or to correct any defective
or inconsistent provision contained in the Agreement or for any other reason;
provided that no amendment may materially adversely affect the interests of the
Registered Holders unless the written consent to such amendment from Registered
Holders representing 66.66% of the outstanding Warrants is obtained. No increase
in the Exercise Price or reduction in the number of Warrant Shares purchasable
upon exercise of a Warrant shall be made without the written consent of all of
the Registered Holders unless the change is specifically provided for in this
Agreement; provided, however, that the Corporation reserves the right to extend
the term of the Warrants and to reduce the exercise price of the Warrants. In
the event of any such extension or reduction, the Corporation shall provide
written notice thereof to all of the Registered Holders.
23. Notice. Any notices pursuant to this Agreement shall be validly given
or served if in writing and delivered personally or sent by registered,
certified or first class mail, postage prepaid, to the following addresses:
(a) If to the Corporation: Fan Energy Inc.
Trinity Place, Suite 720
0000 Xxxxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
(b) If to the Warrant Agent: Atlas Stock Transfer Corp.
0000 Xxxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
(c) If to a Registered Holder: Address of Registered Holder
as shown in the records of the
Warrant Agent
or to such other addresses as any party may hereinafter designate to the others
in writing. Delivery of any notice shall be deemed to be effective on the date
set forth on the receipt of registered or certified mail or on the third day
after mailing, if sent by first class mail.
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24. Computation of Time. In computing any period of time under this
Agreement, the date of the act, event or default from which the designated
period of time begins to run shall not sbe included. The last day of the period
so computed shall be included unless it is a Saturday, Sunday or legal holiday,
in which event the period shall run until the end of the next day which is not a
Saturday, Sunday or legal holiday.
25. Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the Corporation, the Warrant Agent, the Registered Holders and
their respective successors and assigns. Nothing in this Agreement is intended
or shall be construed to confer upon any other person any right, remedy or claim
or to impose on any other person any duty, liability or obligation.
26. Further Instruments. The parties shall execute and deliver any and all
other instruments and shall take any and all other actions as may be reasonably
necessary to carry out the intention of this Agreement.
27. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative for
any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain in full
force and effect and he enforced in accordance with its terms, and the effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
28. Waiver. All of the rights and remedies of either party under this
Agreement are cumulative and not exclusive ut any other rights and remedies as
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent to any act or occurrence of any party where required
shall not be deemed to be a consent to any other action or occurrence.
29. Integration. This writing represents the entire Agreement and
understanding of the parties with respect to the subject matter hereof; it may
not be altered or amended except by an agreement in writing signed by both
parties.
30. Choice of Law. This Agreement has been made in and its validity,
performance and effect shall be determined in accordance with the laws of the
state of Colorado.
31. Headings. The headings of Sections of this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
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IN WITNESS WHEREOF, and intending to be legally bound, the parties have
executed this Agreement on the dates indicated below.
THE CORPORATION:
FAN ENERGY INC.
By
----------------------------------------------
Xxxxxx X. Xxxxxxx Xx., Chief Executive Officer
THE WARRANT AGENT:
ATLAS STOCK TRANSFER CORP.
By
----------------------------------------------
Authorized Officer
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[FORM OF WARRANT CERTIFICATE]
[FACE]
The Warrants evidenced by this certificate were issued as part of a Unit
consisting of one Shae of Common Stock and one Warrant each Warrant of which
entitles the Warrant Holder to purchase one Share of Common Stock. THE WARRANTS
MAY NOT BE EXERCISED IF THE SHARES HAVE NOT BEEN QUALIFIED FOR SALE IN THE STATE
OF RESIDENCE OF THE WARRANT HOLDER.
VOID AFTER ______________, 2003
W ______________________________ WARRANTS
CUSIP _________________
WARRANT CERTIFICATE
FAN ENERGY INC.
This Warrant Certificate certifies that __________________________________
or registered assigns (the "Warrant Holder"), is the registered owner of the
above-indicated number of Warrants expiring at 5:00 p.m., Denver, Colorado time,
on _____________, 2003 (the "Expiration Date "). Each full Warrant entitles the
Warrant Holder to purchase from Fan Energy Inc. (the "Company"), a Nevada
corporation, on or after the date hereof ("Exercise Date"), and on or before the
Expiration Date, one fully paid and nonassessable share of Common Stock ($0.001
par value per share) of the Company at the purchase price of $0.10 per share
until the Expiration Date (the "Exercise Price"), in lawful money of the United
States of America for each full Warrant represented hereby upon surrender of
this Warrant Certificate, with the exercise form hereon duly completed and
executed, with payment of the Exercise Price at the office of Atlas Stock
Transfer Corp., 0000 Xxxxx Xxxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 (herein
called the "Warrant Agent"), but only subject to the conditions set forth herein
and in a Warrant Agency Agreement dated as of ____________, 2000 (the "Warrant
Agreement"), between the Company and the Warrant Agent. The Exercise Price, the
number of shares purchasable upon exercise of each Warrant, the number of
Warrants outstanding and the Expiration Date are subject to adjustments upon the
occurrence of certain events set forth in the Warrant Agreement. Reference is
hereby made to the provisions on the reverse side of this Warrant Certificate
and the provisions of the Warrant Agreement, all at which are hereby
incorporated by reference in and made a part of this Warrant Certificate and
which shall for all purposes have the same effect as though fully set forth at
this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants, subject to any adjustments made in accordance with the provisions
of the Warrant Agreement, shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement, upon payment of the transfer fee and any tax or other governmental
charge imposed in connection with such transfer.
The Warrant Holder of the Warrants evidenced by this Warrant Certificate
may exercise all or any whole number of such Warrants during the exercise period
arid in the manner stated hereon. The Exercise Price shall be payable in lawful
money of the United States of America by certified or cashier s check payable to
the order of the Company. Upon any exercise of any Warrants evidenced by this
Warrant Certificate in an amount less than the number of Warrants so evidenced,
there shall be issued to the Warrant Holder a new Warrant Certificate evidencing
the number of Warrants not so exercised. No adjustment shall be made for any
dividends on any shares issued upon exercise of this Warrant.
No Warrant may be exercised after 5:00 p.m., Denver, Colorado time, on the
Expiration Date and any Warrant not exercised by such time shall become void,
unless the Expiration Date is extended by the Company.
This Warrant Certificate shall not be valid unless manually countersigned
by the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its duly authorized officers, each by a facsimile of his signature,
and has caused a facsimile of its corporate seal to be imprinted hereon.
FAN ENERGY INC.,
Dated: a Nevada corporation
By By
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Xxxxxx X. Xxxxxxx, Secretary Xxxxxx X. Xxxxxxx Xx., Chairman
Countersigned:
ATLAS STOCK TRANSFER CORP.
Warrant Agent
By
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Authorized Officer
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[REVERSE]
FORM OF WARRANT CERTIFICATE
Transfer fee $20.00 per Certificate issued
This Warrant Certificate, when surrendered to the Warrant Agent at its
principal office by the Warrant Holder, in person or by attorney duly authorized
in writing, may be exch in the manner and subject to the limitations provided in
the Warrant Agreement, without payment of a charge, except for any tax or other
governmental charge imposed in ion with such exchange, for another Warrant
Certificate or Warrant Certificates of like tenor and evidencing a like number
of Warrants, subject to any adjustments made in accordance with the provisions
of the Warrant Agreement.
The Company and the Warrant Agent may deem and treat the registered holder
hereof as the absolute owner of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone) for all purposes
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. No Warrant Holder, as such, shall have any rights of a shareholder
of the Company, either at law or at equity, and the rights of the Warrant
Holder, as such, are limited to those rights expressly provided in the Warrant
Agreement and in the Warrant Certificates.
Under Section 14 of the Warrant Agreement the Exercise Price is subject to
adjustment if:
(a) If, at any time prior to the expiration of the Warrants either by
their terms or by their exercise, the Corporation increases or decreases
the number of its issued and outstanding shares of Stock, or changes in any
way the rights and privileges of such shares, by means of (i) the payment
of a stock dividend or the making of any other distribution on such shares
payable in its Stock, (ii) a forward or reverse stock split or subdivision
of shares, (iii) a consolidation or combination of shares, or (iv) a
reclassification or recapitalization involving its Stock, then the Exercise
Price in effect at the time of such action and the number of shares of the
Stock purchasable upon the exercise of the Warrants at that time shall be
proportionately adjusted so that the numbers, rights, and privileges
relating to the shares of the Stock then purchasable upon the exercise of
the Warrants shall be increased, decreased or changed in like manner, for
the same aggregate purchase price set forth in the Warrants, as if the
Stock purchasable upon the exercise of the Warrants immediately prior to
the event at issue had been issued, outstanding, fully paid and
nonassessable at the time of that event
(b) Upon the occurrence of any of the following events prior to the
expiration of the Warrants either by their terms or their exercise, if the
notice required by the Warrant Agreement has been given, the Warrants shall
automatically terminate and be of no further force or effect whatsoever:
(i) the merger or consolidation of the Corporation with one or more other
corporations, regardless of which entity survives the transaction; or (ii)
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the dissolution or liquidation of the Corporation. Upon the occurrence of
any of the following events prior to the expiration of the Warrants either
by their terms or their exercise, notice of which events is not required,
the Warrants shall automatically terminate and be of no further force or
effect whatsoever: (i) the appointment of a receiver for all, or
substantially all, of the Corporation s assets or business; or (ii) the
appointment of a trustee for the Corporation after a petition has been
filed for the Corporation s reorganization under applicable insolvency
statutes.
(c) Whenever the Exercise Price and the aggregate number of shares of
Stock purchasable upon the exercise of Warrants shall be adjusted pursuant
to subsection (a) above, the Board of Directors of the corporation shall
determine the adjustment to be made, in accordance with the terms and
conditions of this Agreement, and the Corporation promptly shall file with
the Warrant Agent at the Corporate Office an Officers Certificate executed
by the Corporation s President and Secretary or Assistant Secretary
describing the adjustment and setting forth, in reasonable detail, the
facts requiring such adjustment and the basis for and the calculation of
such Agreement. Each such Officers Certificate shall be made available to
the Warrant Holder for inspection at the Corporate Office at all reasonable
times.
(d) No adjustment of the Exercise Price or of the number of shares of
stock purchasable upon the exercise of Warrants shall be made as a result
of or in connection with the issuance of shares of the stock pursuant to
(i) option plans, options, warrants and share purchase agreements
outstanding or in effect as of the date of this Agreement, (ii) the
establishment of additional option plans, or the modification, renewal or
extension of any option plan in effect as of the date of this Agreement, or
the issuance of shares of Stock pursuant to any such plan, (iii) any
acquisition of property or assets by the corporation, or (iv) any
compensation arrangement for the Corporation s officers, employees or
agents.
The Warrant Agreement is subject to amendment upon the approval of holders
of at least two-thirds of the outstanding Warrants, except that no such
amendment shall accelerate the Expiration Date or increase the Exercise Price
without the approval of all the holders of all outstanding Warrants. A copy of
the Warrant Agreement will be available at all reasonable times at the office of
the Warrant Agent for inspection by any Warrant Holder. As a condition of such
inspection, the Warrant Agent may require any Warrant Holder to submit his
Warrant Certificate for inspection.
IMPORTANT: The Warrants represented by this Certificate may not be exercised by
a Warrant Holder unless at the time of exercise the underlying Shares are
qualified for sale, by registration or otherwise, in the state where the Warrant
Holder resides or unless the issuance of the Shares would be exempt under the
applicable state securities laws. Further, a registration statement under the
Securities Act of 1933, as amended, covering the exercise of this Warrant must
be in effect at the time of exercise and unless such registration statement is
in effect at the time of exercise, the Company may decline to permit the
exercise of this Warrant.
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ASSIGNMENT
(Form of Assignment to be Executed if the Warrant Holder Desires
to Transfer Warrants Evidenced Hereby)
FOR VALUE RECEIVED,------------------------------------------ hereby sells,
assigns and transfers to ------------------------------------------------------
Please insert social security or other identifying number ---------------------
------------------------------------------------------------------------------.
Please print name and address including zip code.)
---------------------------------------------------------------------- Warrants
represented by this Warrant Certificate and does hereby irrevocably constitute
and appoint -------------------------------------------------------------------
Attorney, to transfer said Warrants on the books of the Warrant Agent with full
power of substitution in the premises.
Dated:
---------------------------------
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Signature
(Signature must conform in all respects to name of holder as specified on the
face of this Warrant Certificate)
Signature Guaranteed:
-----------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
EXERCISE
(Form of Exercise to be Executed if the Warrant Holder
Desires to Exercise Warrants Evidenced hereby)
WARRANT AGENT:
The undersigned hereby irrevocably elects to exercise -------------
Warrants represented by this Warrant Certificate and to purchase thereunder the
full number of Shares issuable upon exercise of such Warrants and encloses
$----------- as the purchase price therefor, and requests that certificates for
such Shares shall be issued in the name of, and cash for any fractional Shares
shall be paid to, -------------------------------------------------------------.
Please insert social security or other identifying number --------------------.
-------------------------------------------------------------------------------
Please print name and address including zip code.)
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and, if said number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the unexercised number
of Warrants evidenced by this Warrant Certificate be delivered to the Warrant
Holder except as such unexercised number of Warrants may be assigned under the
form of Assignment appearing hereon.
Dated:
---------------------------------
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Signature
(Signature must conform in all respects to name of holder as specified on the
face of this Warrant Certificate)
Signature Guaranteed:
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NOTICE: Signature must be guaranteed by a commercial bank or member firm of
one of the following stock exchanges: New York Stock Exchange, Pacific Stock
Exchange or American Stock Exchange.
