ANNEX B-2
THE SECURITIES REPRESENTED BY THIS WARRANT AND THE COMMON STOCK ISSUABLE THEREBY
HAVE NOT BEEN AND WILL NOT BE, EXCEPT AS PROVIDED IN THE REGISTRATION RIGHTS
AGREEMENT REFERRED TO BELOW, REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE RESOLD,
PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE
SECURITIES ACT AND IN ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS.
WARRANT
to Purchase 2,500,000 Shares of Common Stock of
XXXXXX EXPLORATION COMPANY
This Common Stock Purchase Warrant (the "Warrant") certifies that for
value received, Guardian Energy Management Corp., a Michigan corporation
("Guardian"), or its assigns, is entitled to subscribe for and purchase from
Xxxxxx Exploration Company, a Delaware corporation (the "Company"), in whole or
in part, 2,500,000 shares (the "Warrant Shares") of Common Stock, par value
$0.01 per share, of the Company ("Common Stock") at the Exercise Price (as
hereinafter defined), subject, however, to the provisions and upon the terms and
conditions hereinafter set forth This Warrant and all rights hereunder shall
expire at 5:00 p.m., Traverse City, Michigan time, on the second anniversary of
the approval of the Conversion Shares by the stockholders of the Company (the
"Termination Date").
ARTICLE I
Exercise of Warrants
1.1 Term; Exercise Price. The Warrant represented hereby may be exercised
by the holder hereof, in whole or in part, at any time and from time to time
after the date hereof until 5:00 p.m., Traverse City, Michigan time, on the
Termination Date (the "Term"). Subject to adjustment as provided in Article IV
hereof, the exercise price for shares of Common Stock under this Warrant shall
be $2.50 per share of Common Stock (the "Exercise Price").
1.2 Method of Exercise. To exercise this Warrant, the holder hereof shall
deliver to the Company, at the Warrant Office designated in Section 2.1 hereof,
a written notice in the form of the Subscription Notice attached as Exhibit A
hereto, stating therein the election of such holder to exercise the Warrants in
the manner provided in the Subscription Notice; and (ii) payment in full of the
Exercise Price in cash or by wire transfer or check for all Warrant Shares
purchased hereunder. This Warrant shall be deemed to be exercised on the date of
receipt by the Company of the Subscription Notice, accompanied by payment for
the Warrant Shares and surrender of this Warrant, as aforesaid, and such date is
referred to herein as the "Exercise Date". Upon such exercise, the Company
shall, as promptly as practicable and in any event within five business days,
issue and deliver to such holder a certificate or certificates for the full
number of the Warrant Shares purchased by such holder hereunder. As permitted by
applicable law, the person in whose name the certificates for Common Stock are
to be issued shall be deemed to have become a holder of record of such Common
Stock on the Exercise Date and shall be entitled to all of the benefits of such
holder on the Exercise Date, including without limitation the right to receive
dividends and other distributions for which the record date falls on or after
the Exercise Date and to exercise voting rights.
1.3 Expense and Taxes. The Company shall pay all expenses and taxes
(including, without limitation, all documentary, stamp, transfer or other
transactional taxes) attributable to the preparation, issuance or delivery of
the Warrant and of the shares of Common Stock issuable upon exercise of the
Warrant.
1.4 Reservation of Shares. The Company shall reserve at all times so long
as the Warrant remain outstanding, free from preemptive rights, out of its
treasury Common Stock or its authorized but unissued shares of Common Stock, or
both, solely for the purpose of effecting the exercise of the Warrant, a
sufficient number of shares of Company Stock to provide for the exercise of the
Warrant.
1.5 Valid Issuance. All shares of Common Stock that may be issued upon
exercise of the Warrant will, upon issuance by the Company, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof and, without limiting the generality of the
foregoing, the Company shall take no action or fail to take any action which
will cause a contrary result.
1.6 No Fractional Share. The Company shall not be required to issue
fractional shares of Common Stock on the exercise of this Warrant. If more than
one Warrant shall be presented for exercise at the same time by the same holder,
the number of full shares of Common Stock which shall be issuable upon such
exercise shall be computed on the basis of the aggregate number of whole shares
of Common Stock purchasable on exercise of the Warrant so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 1.6, be issuable on the exercise of this Warrant, the Company shall pay
an amount in cash calculated by it to be equal to the price of one share of
Common Stock as quoted on the NASDAQ National Market System at the close of
business on the date of such exercise multiplied by such fraction computed to
the nearest whole cent.
ARTICLE II
Transfer
2.1 Warrant Office. The Company shall maintain an office for certain
purposes specified herein (the "Warrant Office"), which office shall initially
be the Company's offices at 0000 Xxxxx Xxxxxx Xxxx, X.X. Xxx 000, Xxxxxxxx Xxxx,
Xxxxxxxx 00000-0000, and may subsequently be such other office of the Company or
of any transfer agent of the Common Stock in the continental United States as to
which written notice has previously been given to the holder hereof. The Company
shall maintain, at the Warrant Office, a register for the Warrants in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each permitted
assignee of the rights of the registered owner hereof.
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2.2 Limited Right of Transfer. This Warrant may not be directly or
indirectly sold, assigned, pledged, hypothecated, encumbered, transferred or
otherwise disposed of without the prior written consent of the Company;
provided, however, that Guardian may assign its interest in this Warrant to one
or more of the entities or individuals listed on Schedule 2.2 hereto upon
receipt by the Company of (a) evidence, in form and substance satisfactory to
the Company, that each such assignee is an "Accredited Investor" as defined
under Rule 501 of the Securities Act, or (b) an opinion of the Company's counsel
that such assignment can be made without registration under the Securities Act.
2.3 Transfer of Warrant. The Company agrees to maintain at the Warrant
Office books for the registration and transfer of the Warrant. Subject to the
provisions of Section 2.2, the Company, from time to time, shall register the
transfer of the Warrant in such books upon surrender of this Warrant at the
Warrant Office properly endorsed or accompanied by appropriate instruments of
transfer and written instructions for transfer satisfactory to the Company. Upon
any such transfer and upon payment by the holder or its transferee of any
applicable transfer taxes, new Warrants shall be issued to the transferee and
the transferor (as their respective interests may appear) and the surrendered
Warrant shall be canceled by the Company. The Company shall pay all taxes (other
than securities transfer taxes) and all other expenses and charges payable in
connection with the transfer of the Warrant hereunder.
ARTICLE III
Anti-Dilution
3.1 Reclassification, Consolidation, Merger or Sale of Assets. In the event
that the Company shall be a party to any transaction (including without
limitation (i) any recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value), (ii) any combination or subdivision of the Common Stock
into a lesser or greater number of shares of Common Stock, (iii) any
consolidation of the Company with, or merger of the Company into, any other
person, (iv) any merger of another person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or (v) any
sale or transfer of all or a material amount of all of the assets of the Company
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or any compulsory share exchange) pursuant to which the Common Stock is
converted into the right to receive other securities, cash or other property,
then lawful provision shall be made as part of the terms of such transaction
whereby the holder of this Warrant shall receive upon the exercise hereof the
kind and amount of securities, cash and other property receivable upon such
transaction by a holder of the number of shares of Common Stock for which the
Warrant was exercisable immediately prior to such transaction. The entity formed
by such consolidation or resulting from such merger or which acquires such
assets or which acquires the Company's shares, as the case may be, shall make
provision in its certificate or articles of incorporation or other constituent
document to establish such right. The above provisions shall similarly apply to
successive transactions of the foregoing type.
3.2 Common Stock Dilutions. In the event that prior to exercise of this
Warrant the Company issues or agrees to issue additional shares of Common Stock
pursuant to a stock split or stock dividend, or dividend or distribution of
rights to purchase stock, then the number of shares to be issued pursuant to the
exercise of this Warrant and the Exercise Price therefore shall be adjusted
proportionately. In the event that prior to the exercise of this Warrant the
Company issues or agrees to issue cash or property pursuant to a dividend or
distribution, this Warrant shall represent the right to acquire, in addition to
the number of shares of Common Stock receivable upon exercise of this Warrant,
and without payment of any additional consideration therefor, the amount of such
cash or property which the holder hereof would have been entitled to receive
pursuant to such dividend or distribution had it been the holder of record of
the Common Stock receivable upon exercise of this Warrant on the record date
therefor. The Company agrees and covenants that it will not, prior to the
exercise of this Warrant, in connection with any plan for the benefit of
employees or directors (i) issue a number of shares of Common Stock, securities
exercisable for Common Stock or other Common Stock equivalents (the "Plan
Securities") which in the aggregate exceeds fifteen percent (15%) of the total
shares of Common Stock outstanding as of the date thereof, and (ii) of the Plan
Securities issued pursuant to clause (i) of this Section 3.2, issue Plan
Securities which in the aggregate are equal to, convertible into or exercisable
for more than 300,000 shares of Common Stock for consideration, including any
applicable exercise or conversion price, which is below the price quoted for the
Common Stock at the close of business on the day prior to issuance of such Plan
Securities.
3.3 Prior Notice of Certain Events. In the event:
(i) the Company establishes a record date to determine the holders of
Common Stock who are entitled to (A) receive any dividend or other
distribution (other than a dividend payable in shares of Common Stock), (B)
participate in a redemption or repurchase of the then-outstanding shares of
Common Stock, or (C) vote in connection with any of the transactions
identified in clauses (ii),(iii), (iv) or (v) below; or
(ii) the Company shall (A) declare any dividend (or any other
distribution) on its Common Stock, other than a dividend payable in shares
of Common Stock or (B) declare or authorize a redemption or repurchase of
the then-outstanding shares of Common Stock; or
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(iii) the Company shall authorize the granting to all holders of
Common Stock of rights or warrants to subscribe for or purchase any shares
of stock of any class or series or of any other rights or warrants; or
(iv) of any reclassification of Common Stock (other than a change in
par value, or from par value to no par value, or from no par value to par
value), or of any other capital reorganization or of any consolidation or
merger to which the Company is a party, or of the sale or transfer of all
or substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other securities,
cash or other property; or
(v) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or such event is likely to occur.
Then the Company shall cause to be mailed to the holder of this Warrant, at
its address as reflected in the Warrant Office transfer records, a notice
stating (A) the date on which a record (if any) is to be taken with respect
to clause (i) above, (B) the date on which any transaction or event
contemplated in any of clauses (i) through and including clause (v) above
is expected to become effective or the date of the anticipated closing of
the public offering, and (C) the time, if any is fixed, as to when the
holders of record of Common Stock shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon
any such reclassification, reorganization, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up. Each
notice of an event specified in clause (i) above shall be sent at least
five (5) days prior to the record date specified therein and each notice of
an event specified in clauses (ii) through and including (v) above shall be
delivered at least fifteen (15) days prior to the proposed closing of such
transaction.
ARTICLE IV
Miscellaneous
4.1 Entire Agreement. This Warrant, together with that certain registration
rights agreement of even date herewith by and between the Company and Guardian
(the "Registration Rights Agreement"), contain the entire agreement between the
holder hereof and the Company with respect to the Warrant Shares purchasable
upon exercise hereof and the related transactions and supersedes all prior
arrangements or understandings with respect thereto.
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4.2 Governing Law; Venue. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF DELAWARE AND THE UNITED
STATES OF AMERICA FROM TIME TO TIME IN EFFECT.
4.3 Waiver and Amendment. Any term or provision of this Warrant may be
waived at any time by the party which is entitled to the benefits thereof and
any term or provision of this Warrant may be amended or supplemented at any time
by agreement of the holder hereof and the Company, except that any waiver of any
term or condition, or any amendment or supplementation, of this Warrant shall be
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Warrant shall not in any way effect, limit or waiver a
party's rights hereunder at any time to enforce strict compliance thereafter
with every term or condition of this Warrant.
4.4 Illegality. In the event that any one or more of the provisions
contained in this Warrant shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in any other respect and the remaining
provisions of this Warrant shall not, at the election of the party for whom the
benefit of the provision exists, be in any way impaired.
4.5 Copy of Warrant. A copy of this Warrant shall be filed among the
records of the Company.
4.6 Notice. Any notice or other document required or permitted to be given
or delivered to the holder hereof shall be in writing and delivered at, or sent
by telecopy or certified or registered mail to such holder at, the last address
shown on the books of the Company maintained at the Warrant Office for the
registration of this Warrant or at any more recent address of which the holder
hereof shall have notified the Company in writing. Any notice or other document
required or permitted to be given or delivered to the Company shall be delivered
at, or sent by facsimile transmission or certified or registered mail to, the
Warrant Office, or such other address within the continental United States of
America as shall have been furnished by the Company to the holder of this
Warrant.
4.7 Limitation of Liability; Not Stockholders. No provision of this Warrant
shall be construed as conferring upon the holder hereof the right to vote,
consent, receive dividends or receive notices (other than as herein expressly
provided) in respect of meetings of stockholders for the election of directors
of the Company or any other matter whatsoever as a stockholder of the Company.
No provision hereof, in the absence of affirmative action by the holder hereof
to purchase shares of Common Stock, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability of such
holder for the purchase price of any shares of Common Stock or as a stockholder
of the Company, whether such liability is asserted by the Company or by
creditors of the Company.
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4.8 Loss, Destruction, etc. of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, mutilation or destruction of
this Warrant, and in the case of any such loss, theft or destruction upon
delivery of a bond of indemnity or such other security in such form and amount
as shall be reasonably satisfactory to the Company, or in the event of such
mutilation upon surrender and cancellation of this Warrant, the Company will
make and deliver a new Warrant of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant. Any Warrant issued under the provisions of this
Section 4.8 in lieu of any Warrant alleged to be lost, destroyed or stolen, or
in lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company. This Warrant shall be promptly canceled
by the Company upon the surrender hereof in connection with any exchange or
replacement. The Company shall pay all taxes (other than securities transfer
taxes) and all other expenses and charges payable in connection with the
preparation, execution and delivery of Warrants pursuant to this Section 4.8.
4.9 Compliance with Securities Act and Applicable Law. The Company shall
not be required to transfer this Warrant or to sell or issue Warrant Shares if
such transfer or issuance would constitute a violation by the Company of any
provisions of any law or regulation of any governmental authority. While the
Company is required to register the resale of the Warrant Shares by holder(s)
pursuant to the Registration Rights Agreement, in the event the Warrant Shares
issuable on exercise of this Warrant are not then registered under the Act, the
Company may imprint the following legend or any other legend which counsel for
the Company considers necessary or advisable to comply with the Securities Act
of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws of
any State and may not be sold, transferred or otherwise disposed of except
upon such registration or upon receipt by the issuer, in form and substance
satisfactory to the issuer, of an opinion of the issuer's counsel that
registration is not required for such disposition."
4.10 Registration Rights. The Warrants Shares shall be entitled to such
registration rights under the Securities Act and under applicable state
securities laws as are specified in the Registration Rights Agreement.
4.11 Headings. The Article and Section and other headings herein are for
convenience only and are not a part of this Warrant and shall not affect the
interpretation thereof.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in its
name.
Dated: July 11, 2000
XXXXXX EXPLORATION COMPANY
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
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EXHIBIT A
SUBSCRIPTION NOTICE
The undersigned, the holder of the foregoing Warrant, hereby elects to
exercise purchase rights represented thereby for, and to purchase thereunder,
__________ shares of the Common Stock covered by such Warrant, and herewith
makes payment in full for such shares pursuant to Section 1.2 of such Warrant,
and requests that certificates for such shares (and any other securities or
other property issuable upon such exercise) be issued in the name of, and
delivered to ______________________________.
Dated: ____________, _____.
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SCHEDULE 2.2
LIST OF APPROVED ASSIGNEES
--------------------------
Jordan Exploration Company LLC
Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxx
Xxxxx Xxxxxxxxxx
Xxxxx Xxxxxx
Any Persons (as defined in the Securities Purchase Agreement dated as of July
11, 2000 and entered into between Guardian and the Company) who control, are
controlled by or are under common control with any of the above Persons.
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