1
EXHIBIT 10.7
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
Warrant No. 2 Void after
August 12, 2001
XXXXXXX HOLDINGS, INC.
STOCK PURCHASE WARRANT
This Warrant is issued, for good and valuable consideration, receipt
of which is hereby acknowledged, to Cambrian Capital Partners, L.P., a Delaware
limited partnership (the "Holder") by Xxxxxxx Holdings, Inc., a Texas
corporation (the "Company").
1. Purchase of Shares. Subject to the terms and conditions
hereinafter set forth, the Holder is entitled, upon surrender of this Warrant
at the principal office of the Company (or at such other place as the Company
shall notify the Holder hereof in writing), to purchase from the Company 38,671
shares of its common stock (the "Common Stock").
2. Exercise Period. This Warrant is exercisable at any time and
from time to time and, except as provided below, shall remain so exercisable
from the date hereof until August 12, 2001 (the "Exercise Period") on which
date this Warrant shall terminate and no longer be exercisable.
3. Exercise Price. The exercise price (the "Exercise Price") for
the Warrants exercised shall be $8.00 per share of the Common Stock purchased
by the Holders.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Sections 1 and 2 above, the Holder may exercise,
in whole or in part, the purchase rights evidenced hereby. Such exercise shall
be effected by:
(i) the surrender of the Warrant, together with a duly
executed copy of a subscription notice in substantially the form of Exhibit A
attached hereto, to the Secretary of the Company at its principal offices; and
(ii) the payment to the Company of an amount equal to the
aggregate Exercise Price in cash or in a certified cashier's check for the
number of shares of Common Stock being purchased.
2
Upon any such exercise, the number of shares of Common Stock
purchasable upon exercise of the Warrant shall be reduced by such designated
number of shares of Common Stock, and, if a balance of purchasable shares of
Common Stock remains after such exercise, the Company shall execute and deliver
to the Holder hereof a new Warrant for such balance of shares of Common Stock.
5. Exercise by Exchange of Warrant.
(a) In addition to and without limiting the rights of the Holder
under the terms hereof, at any time after the Common Stock is traded on a
national securities exchange the Warrant (or any subdivision thereof) may be
exercised by being exchanged in whole or in part at any time or from time to
time prior to its expiration for a number of shares of Common Stock having an
aggregate fair market value on the date of such exercise equal to the
difference between (x) the fair market value of the number of shares of Common
Stock subject to the Warrant designated by the Holder hereon on the date of the
exercise and (y) the aggregate Exercise Price of the Warrant otherwise payable
by the Holder hereof for such designated shares of Common Stock. Upon any such
exercise, the number of shares of Common Stock purchasable upon exercise of the
Warrant shall be reduced by such designated number of shares of Common Stock,
and, if a balance of purchasable shares of Common Stock remains after such
exercise, the Company shall execute and deliver to the Holder hereof a new
Warrant for such balance of shares of Common Stock. No payment of any cash or
other consideration shall be required or permitted. Such exchange shall be
effective upon the date of receipt by the Company of the original Warrant
surrendered for cancellation and a duly executed subscription notice
substantially in the form of Exhibit A attached hereto from the Holder hereof
that the exchange pursuant to this section be made. No fractional shares
arising out of the above formula for determining the number of shares issuable
in such exchange shall be issued, and the Company shall in lieu thereof make
payment to the Holder hereof of cash in the amount of such fraction multiplied
by the fair market value of the Shares on the date of exchange. Any tax
liability related to such transaction shall be paid by the Holder.
(b) The "fair market value" of Common Stock, as used in the
immediately preceding paragraph, shall mean, as to any exercise date, (i) the
last sale price of the Common Stock reported on a national securities exchange
or the Nasdaq National Market, (ii) the last sale price regular way for the
Common Stock as reported in the consolidated transaction reporting system on
which the Common Stock may then be listed for trading, (iii) if the Common
Stock is not quoted on the Nasdaq National Market or is not listed for trading
on a national securities exchange, the closing bid price as published by Nasdaq
(or, if such price is not so published by Nasdaq, the average of the high and
low bid prices for the Common Stock on such exercise date, as furnished by any
National Association of Securities Dealers, Inc. ("NASD") member firm selected
from time to time by the Company for such purpose) or (iv) if the Common Stock
is not quoted on the Nasdaq National Market, is not listed for trading on a
national securities exchange or neither Nasdaq nor an NASD member firm
publishes a bid price for the Common Stock, the fair market value of the Common
Stock shall be determined in good faith by the Company as of the exercise date.
- 2 -
3
If the exercise date is not a business day, then the "fair market
value" shall be calculated using the next day immediately following the
exercise date on which the national securities system, the Nasdaq National
Market or any other quotation system used to determine the "fair market value"
of the Common Stock is open for business.
6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
shares of Common Stock so purchased shall be issued as soon as practicable
thereafter, and in any event within thirty (30) days of the delivery of the
subscription notice.
7. Representations and Covenants of Company.
(a) Reservation of Shares. The Company covenants that it will at
all times keep available such number of authorized shares of its Common Stock,
free from all preemptive rights with respect thereto, which will be sufficient
to permit the exercise of this Warrant for the full number of shares of Common
Stock specified herein. The Company further covenants that such shares of
Common Stock, when issued pursuant to the exercise of this Warrant, will be
duly and validly issued, fully paid and non-assessable shares of Common Stock
and free from all taxes, liens and charges with respect to the issuance
thereof.
(b) Authorized, Issued and Outstanding Shares. The authorized
capital stock of the Company consists solely of 100,000,000 shares of Common
Stock, $0.01 par value, of which 773,425 shares are issued and outstanding and
226,575 shares are held in its treasury, and 50,000,000 shares of preferred
stock of which -0- shares are issued and outstanding. There are no outstanding
or authorized options, warrants (other than this Warrant and that certain
Warrant to Purchase Shares of Common Stock granted to Xxxx X. Xxxxxxxxxxx for
15,000 shares of Common Stock, subject to adjustment as provided therein),
subscriptions, calls, conversions or other rights, contracts, agreements or
commitments or undertakings of any kind (except for options which may be
granted under the Company's 1998 Stock Option Plan) obligating the Company to
issue, sell, purchase, or redeem any shares of capital stock of the Company or
any other securities convertible into, exchangeable for or evidencing the right
to subscribe to any shares of capital stock or other ownership interest in the
Company.
(c) Issuance of Stock Options. The Company hereby covenants that
any stock options granted by the Company pursuant to the Company's 1998 Stock
Option Plan (the "Plan") to purchase any of the shares of Common Stock reserved
for issuance under the Plan, shall have an exercise price which shall not be
less than the fair market value of the Common Stock on the date of grant of
such stock options.
8. Anti-Dilution. The number of and kind of shares of Common
Stock purchasable upon exercise of this Warrant (with respect to subsection (c)
below) and the Exercise Price shall be subject to adjustment from time to time
as follows:
- 3 -
4
(a) Subdivisions, Combinations and Issuance of Additional Shares.
If the Company shall at any time prior to the expiration of this Warrant (i)
subdivide its Common Stock by split-up or otherwise, (ii) combine its Common
Stock or (iii) issue additional shares of authorized but unissued Common Stock
for cash or non-cash consideration less than the Exercise Price, the number of
shares of Common Stock available upon the exercise of the Warrant shall be
proportionately increased in the case of any subdivision or issuance of
additional shares or proportionately decreased in the case of a contribution.
Appropriate adjustments shall also be made to the purchase price payable per
share, but the aggregate purchase price payable for the total number of shares
of Common Stock purchasable under this Warrant (as adjusted) shall remain the
same. Any adjustment under this Section 8(a) shall become effective at the
close of business on the date the subdivision or combination becomes effective.
(b) Stock Dividends and Distributions. In case the Company shall
at any time while this Warrant is outstanding and unexpired pay a dividend with
respect to Common Stock payable in shares of such stock, or make any other
distribution of securities or property with respect to such stock (except any
distribution provided for in Section 8(a) or 8(c) herein), then (A) the
Exercise Price in effect immediately prior to the record date for distribution
of such dividend or in the event that no record date is fixed, upon the making
of such dividend shall be adjusted to that price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction
(i) the numerator of which shall be the total number of shares of such stock
outstanding immediately prior to such dividend and (ii) the denominator of
which shall be the total number of shares of such stock outstanding immediately
after such dividend and (B) the number of shares of Common Stock purchasable
under this Warrant in effect immediately prior to the record date for
distribution of such dividend or in the event no record date is fixed, upon the
making of such dividend shall be adjusted to that number of shares determined
by multiplying the number of shares of Common Stock purchasable under this
Warrant immediately prior to such record date by a fraction, (i) the numerator
of which shall be the total number of shares of Common Stock outstanding
immediately after such dividend and (ii) the denominator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend; provided, however, that in no event shall any adjustment to the
Exercise Price or number of shares of Common Stock purchasable under this
Warrant be made upon the payment of a cash dividend or cash distribution or
interest payment by the Company on any of its securities.
(c) Reclassification, Reorganization and Consolidation. In case of
any reclassification, conversion, capital reorganization, consolidation or
merger with or into any other entity (including, without limitation, any
transaction or series of transactions whereby the Company becomes a subsidiary
of another entity), transfer of all or substantially all of the properties or
assets of the Company or its Subsidiaries, or change in the Common Stock (other
than as provided for in Sections 8(a) and (b) above), then, as a condition of
such reclassification, conversion, reorganization, consolidation, merger,
transfer or change, as the case may be, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder of this Warrant, so that such Holder shall
have the right at any time prior to the expiration of this Warrant to purchase,
at a total price equal to that payable upon the exercise of this Warrant, the
kind and amount of shares of stock and other securities and property receivable
in
- 4 -
5
connection with such reclassification, conversion, reorganization,
consolidation, merger, transfer or change, as the case may be, by a holder of
the same number of shares of Common Stock as were purchasable by the Holder of
this Warrant immediately prior to such reclassification, conversion,
reorganization, consolidation, merger, transfer or change, as the case may be.
In any such case appropriate provisions shall be made with respect to the
rights and interest of the Holder of this Warrant so that the provisions hereof
shall thereafter be applicable with respect to any shares of stock or other
securities and property deliverable upon exercise hereof, and appropriate
adjustments shall be made to the purchase price per share payable hereunder,
provided the aggregate purchase price shall remain the same. Upon any
reorganization, consolidation, merger or transfer referred to in this Section
8(c), this Warrant shall continue in full force and effect and the terms hereof
shall be applicable to the shares of stock, other securities and property
receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation, merger or transfer, as the case may be and shall
be binding upon the issuer of any such stock or other securities including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
(d) No Dilution or Impairment. The Company covenants that it will
not, by amendment of its articles of incorporation, or through any
reorganization, transfer of assets, consolidation, merger, dissolution, or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holder of
this Warrant against dilution or other impairment. Without limiting the
generality of the foregoing, the Company covenants that it (i) will not
increase the par value of any shares of stock receivable on the exercise of the
Warrant above the amount payable therefor on such exercise, (ii) will take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of stock on the
exercise of the Warrant, and (iii) will not consolidate with or merge with or
into any other entity or permit any such entity to consolidate with or merge
into the Company (if the Company is not the surviving entity), or permit the
creation of, or allow its shareholders to create, an entity which is a holding
company or a parent corporation or other entity holding all of the Company's
equity securities, unless such other entity shall expressly assume in writing
and will be bound by all the terms of this Warrant.
(e) Notice of Adjustment. When any adjustment is required to be
made in the number or kind of shares purchasable upon exercise of the Warrant,
or in the Exercise Price, the Company shall promptly notify the Holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of the Warrant.
9. No Fractional Shares. No fractional shares shall be issued
upon the exercise of this Warrant, and the number of shares of stock issued
upon exercise of this Warrant shall be rounded to the nearest whole share.
10. No Stockholder Rights. Prior to the exercise of this Warrant,
the Holder shall not be entitled to any rights of a shareholder with respect to
the shares of Common Stock purchasable
- 5 -
6
hereunder, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon, or be notified of shareholder
meetings, and such Holder shall not be entitled to any notice or other
communication concerning the business or affairs of the Company.
11. Exchange of Warrant. Subject to any restriction upon transfer
set forth in this Warrant, each Warrant may be exchanged for another Warrant or
Warrants of like tenor and representing in the aggregate a like number of
Warrants. Any Holder desiring to exchange a Warrant or Warrants shall make such
request in writing delivered to the Company, and shall surrender, properly
endorsed, the Warrant or Warrants to be so exchanged.
12. Mutilated or Missing Warrants. In case any Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence reasonably satisfactory to the Company of such
loss, theft or destruction of such Warrant and indemnity or bond, if requested,
also reasonably satisfactory to the Company. An applicant for such substitute
Warrant shall also comply with such other reasonable regulations and pay such
other reasonable charges as the Company may prescribe.
13. Payment of Taxes. The Company will pay all taxes (other than
any income taxes or other similar taxes), if any, attributable to the initial
issuance of the Warrant and the issuance of the shares of Common Stock upon
the exercise of the Warrant, provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of the
issuance or delivery of any Warrant, or the transfer thereof, and no such
issuance, delivery or transfer shall be made unless and until the person
requesting such issuance or transfer has paid to the Company the amount of any
such tax, or has established, to the satisfaction of the Company, that no such
tax is payable or such tax has been paid.
14. Warrant Register. The Warrants shall be numbered and shall be
registered in a Warrant Register (hereinafter defined) as they are issued. The
Company shall be entitled to treat the registered holder of any Warrant on the
Warrant Register as the owner in fact thereof for all purposes and shall not be
bound to recognize any equitable or other claim to or interest in such Warrant
on the part of any other person, and shall not be liable for any registration
or transfer of Warrants which are registered or to be registered in the name of
a fiduciary or the nominee of a fiduciary unless made with the actual knowledge
that a fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with knowledge of such facts that its
participation therein amounts to bad faith.
15. Transfer of Warrants.
(a) By accepting this Warrant, the Holder hereby agrees that such
Warrant, and any shares of Common Stock issuable hereunder, will be held for
investment purposes only and not with a view to resell. This Section 15(a)
shall be binding upon the Holder and its heirs, successors and assigns.
- 6 -
7
(b) Notwithstanding Section 15(a) or any other provision herein
contained, the Warrants shall be transferable on the books of the Company (the
"Warrant Register") only upon delivery thereof duly endorsed by the Holder or
by his duly authorized attorney or representative, or accompanied by proper
evidence of succession, assignment or authority to transfer. In all cases of
transfer by an attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified shall be deposited with the Company.
In case of transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority shall be
produced, and may be required to be deposited with the company in its
discretion. Upon any registration of transfer, the Company shall deliver a
new Warrant or Warrants to the person entitled thereto. Notwithstanding the
foregoing, the Company shall have no obligation to cause a Warrant to be
transferred on its books to any person, unless (i) such Warrant and the shares
of Common Stock issuable upon exercise of such Warrant are registered under a
valid and effective registration statement under the Securities Act of 1933,
as amended, and applicable state blue sky laws or (ii) the Company receives a
written opinion of counsel satisfactory to the Company that registration is not
required under such act. Any shares of Common Stock issued pursuant to this
Warrant shall bear legends describing, among other things, restrictions on
transfer.
16. Registration Rights.
16.1 Registration Under the Securities Act of 1933. Upon exercise,
in part or in whole, of the Warrants, certificates representing the shares
Common Stock and any other securities issuable upon exercise of the Warrants
(collectively, the "Warrant Securities") shall bear the following legend:
The securities represented by this certificate may not be offered or
sold except pursuant to (i) an effective registration statement under
the Act, (ii) to the extent applicable, Rule 144 under the Act (or
any similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an exemption
from registration under such Act is available.
16.2 Piggyback Registration. If, at any time commencing after the
date hereof the Company registers any of its securities under the Securities
Act of 1933, as amended, or any successor statute thereto (the "Act") (such
period being hereinafter referred to as the "Registration Period"), the Company
proposes to register any of its securities under the Act (other than in
connection with a transaction contemplated by Rule 145(a) promulgated under the
Act or pursuant to Form X-0, Xxxx X-0 or any successor form thereto) it will
give written notice by registered mail, at least thirty (30) days prior to the
filing of each such registration statement, to all Holders of the Warrants
and/or the Warrant Securities of its intention to do so. If the Holders of the
Warrants and/or Warrant Securities notify the Company within fifteen (15) days
after receipt of any such notice of its or their desire to include any such
securities in such proposed registration statement, the Company shall afford
the Holders of the Warrants and/or Warrant Securities the opportunity to have
such Warrant Securities registered under such registration statement, except as
otherwise provided herein. In the case of the registration of shares of its
common stock by the Company in
- 7 -
8
connection with an underwritten public offering, the Company shall not be
required to register Warrant Securities in excess of the amount, if any, of
Warrant Securities that the principal underwriter of an underwritten offering
shall reasonably and in good faith agree in writing to include in such
offering.
Notwithstanding the provisions of this Section 16.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 16.2 (irrespective of whether a written request for inclusion of
any such securities shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the filing but
prior to the effective date thereof.
16.3 Demand Registration.
(a) At any time during the Exercise Period, the Holders of the
Warrant Securities representing 51% of the Common Stock (assuming the exercise
of all of the Warrants), issued pursuant to this Warrant shall have the right
(which right is in addition to the registration rights under Section 16.2
hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Commission, on one occasion, a registration statement
and such other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the Underwriter and
Holders, in order to comply with the provisions of the Act, so as to permit a
public offering and sale of their respective Warrant Securities for twelve (12)
consecutive months by such Holders and any other Holders of the Warrants and/or
Warrant Securities who notify the Company within ten (10) days after receiving
notice from the Company of such request. Anything herein to the contrary
notwithstanding, the Company shall be obligated to take any action to comply
with this Section 16.3 on only one occasion.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 16.3 by the majority of the Holders to
all other a registered Holders of the Warrants and the Warrant Securities
within ten (10) days from the date of the receipt of any such registration
request.
(c) In addition to the registration rights under Section 16.2 and
subsection (a) of this Section 16.3, at any time commencing after and expiring
ten (10) years thereafter, any Holder of Warrants and/or Warrant Securities
shall have the right, exercisable by written request to the Company, to have
the Company prepare and file, on one occasion, with the Commission a
registration statement so as to permit a public offering and sale for twelve
(12) consecutive months by any such Holder of its Warrant securities; provided,
however, that the provisions of Section 16.4(b) hereof shall not apply to any
such registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holders making such request.
(d) Notwithstanding anything to the contrary contained herein, if
the Company shall not have filed a registration statement for the Warrant
Securities within forty-five (45) days of the receipt of the written notice
specified in Section 16.3(a), the Company agrees that upon written notice by the
Holders of the Warrants and/or Warrant Securities representing more than 50% of
the
- 8 -
9
Warrants and the Warrant Securities, at that time outstanding (assuming the
exercise of all of the Warrants) it shall repurchase (i) any and all Warrant
Securities at the higher of the fair market value (as defined in Section 5(b))
per share of Common Stock on (x) the date of the notice sent pursuant to
Section 16.3(a) or (y) the expiration of the period specified in Section
16.4(a) and (ii) any and all Warrants at such fair market value less the
exercise prices of such Warrants. Such repurchase shall be in immediately
available funds and shall close within two (2) days after the latter of (i) the
expiration of the period specified in Section 16.4(a) of (ii) the delivery of
the written notice of election specified in this Section 16.3(d).
16.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 16.2 or 16.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand pursuant to Section
16.3, shall use its good faith efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectus as shall
reasonably be requested.
(b) The Company shall pay all costs (excluding transfer taxes, if
any, and fees and expenses of Holder(s)' counsel and any underwriting or
selling commissions), fees and expenses in connection with all registration
statements filed pursuant to Sections 16.2 and 16.3(a) hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses. The Holder(s) will pay all costs, fees and expenses
in connection with any registration statement filed pursuant to Section
16.3(c). If the Company shall fail to comply with the provisions of Section
16.4(a), the Company shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all incidental, special and
consequential damages and damages due to loss of profit sustained by the
Holder(s) requesting registration of their Warrant Securities.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person,
if any, who controls such Holders within the meaning of Section 15 of the Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act,
the Exchange Act or otherwise, arising from such registration statement, as a
result of any violation by the Company of the Act, any state securities or
"blue sky" laws or any rule or regulation thereunder, except to the extent the
Company is to be indemnified for such items pursuant to Section 16.4(e) below.
- 9 -
10
(e) The Holder(s) of the Warrant Securities to be sold pursuant to
the registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage
or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Warrant Securities and Securities issued by the Company to be
included in any registration statement filed pursuant to Section 16.3 hereof,
without the prior written consent of the Underwriter.
(h) With respect to a registration statement filed pursuant to
Sections 16.3, the Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and the managing underwriter copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the registration statement and permit each Holder and underwriter to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration
- 10 -
11
statement as it deems reasonably necessary to comply with applicable securities
laws and rules of the National Association of Securities Dealers, Inc.
("NASD"). Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent and at such
reasonable times and as often as any such Holder shall reasonably request.
(k) With respect to a registration statement filed pursuant to
Section 16.3, the Company shall enter into an underwriting agreement with the
managing underwriter, reasonably satisfactory to the Company, selected for such
underwriting by Holders holding a majority of the Warrant Securities requested
to be included in such underwriting. Such agreement shall be satisfactory in
form and substance to the Company, each Holder and such managing underwriters,
and shall contain such representations, warranties and covenants by the Company
and such other terms as are customarily contained in agreements of that type
used by the managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
16.5 Public Sale without Registration. In no event shall the
Company be obligated to register any Warrant Securities if, in the opinion of
counsel to the Company, in form and substance acceptable to Holders, all of the
Warrant Securities proposed to be registered may be sold publicly without
restrictions and without registration under the Act.
17. Successors and Assigns. The terms, provisions and rights
evidenced by this Warrant shall inure to the benefit of, and be binding upon,
the Company and the Holder and their respective successors and assigns.
18. Amendments and Waivers. Except for the number of shares
purchasable under this Warrant and except for the Exercise Price (as set forth
in Section 3 hereof), any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of sixty-six and two thirds (66
2/3%) of the total number of shares of Common Stock issuable pursuant to this
Warrant and other warrants of like tenor and effect (except for variations
necessary to express the name of the holder) issued of even date herewith. Any
waiver or amendment effected in accordance with this section shall be binding
upon each holder of any shares of Common Stock purchased under this Warrant at
the time outstanding (including securities into which such Shares have been
converted), each future holder of all such shares of Common Stock, and the
Company.
19. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO THE POSSIBLE APPLICATION OF PRINCIPLES OF CONFLICT OF LAWS.
- 11 -
12
20. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made
if in writing and either delivered in person with receipt acknowledged or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Holder, at Two Houston Center, 000 Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxx 00000, or at the last known address appearing on the books of
the Company maintained for such purpose.
(b) If to the Company
Xxxxxxx Holdings, Inc.
00000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
or such other address as may be substituted by notice given as herein provided.
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Every notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder shall be
deemed to have been duly given or served on the date on which personally
delivered, with receipt acknowledged, or three (3) business days after the same
shall have been deposited in the United States mail.
21. WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT NOT PERMITTED BY
LAW, EACH OF THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE TERM NOTE, THIS AGREEMENT OR THE OTHER SECURITY DOCUMENTS,
OR ANY TRANSACTION CONTEMPLATED THEREBY, BEFORE OR AFTER MATURITY.
22. Arbitration.
(a) Holder and the Company (the "parties") will attempt in good
faith to resolve any controversy or dispute arising out of or relating to
this Agreement promptly by negotiations between themselves. The negotiation
process may be started by the giving of written notice by any party to the
other parties in accordance with the terms of Section 20 hereof, and the
parties agree to negotiate in good faith, and select an independent mediator to
facilitate the negotiations and conduct up to eight consecutive hours of
mediated negotiations in Houston, Texas within 30 days after the notice is
first sent. If, within 10 days after the initial notice, the parties are not
able to agree upon
- 12 -
13
a mediator, the party originally giving the notice shall promptly notify
American Arbitration Association ("AAA"), 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000-0000 [telephone (000) 000-0000; fax (000) 000-0000], AAA will
promptly designate a mediator who is independent and impartial, and AAA's
decision about the identity of the mediator will be final and binding.
(b) No arbitration may be commenced by any party unless and until
a negotiation complying with the foregoing paragraph has been completed, and no
litigation or other proceeding may ever be instituted at any time in any court
for the purpose of adjudicating, interpreting or enforcing any rights or
obligations of the parties hereto or any rights or obligations relating to the
subject matter hereof, whether or not covered by the express terms of this
Agreement, or for the purpose of adjudicating a breach or determination of the
validity of this Agreement, or for the purpose of appealing any decision of an
arbitrator, except a proceeding instituted for the sole purpose of having the
award or judgment or an arbitrator entered and enforced.
(c) If a controversy or dispute is not resolved after completion
of the negotiation process described above, then, upon notice by any party to
the other parties (an "Arbitration Notice") and to AAA, the controversy or
dispute shall be submitted to a sole arbitrator who is independent and
impartial, for binding arbitration in Houston, Texas, in accordance with AAA's
Commercial Arbitration Rules (the "Rules"). The parties agree that they will
faithfully observe this Agreement and the Rules and that they will abide by and
perform any award rendered by the arbitrator. The arbitration shall be governed
by the Federal Arbitration Act, 9 U.S.C. Section 1-16 (or by the same
principles enunciated by such Act in the event it may not be technically
applicable). The award or judgment of the arbitrator shall be final and binding
on all parties and judgment upon the award or judgment of the arbitrator may be
entered and enforced by any court having jurisdiction. If any party becomes the
subject of a bankruptcy, receivership or other similar proceeding under the
laws of the United States of America, any state or commonwealth or any other
nation or political subdivision thereof, then, to the extent permitted or not
prohibited by applicable law, any factual or substantive legal issues arising
in or during the pendency of any such proceeding shall be subject to all of the
foregoing mandatory mediation and arbitration provisions and shall be resolved
in accordance therewith. The agreements contained herein have been given for
valuable consideration, are coupled with an interest and are not intended to be
executory contracts. The fees and expenses of the arbitrator will be shared by
all parties engaged in the dispute or controversy on a basis determined to be
fair and equitable by the arbitrator, taking into account the relative fault of
each party, the relative credibility and merit of all claims and defenses made
by each party and the cooperation, speed and efficiency of each party in
conducting the arbitration proceedings and complying with the Rules and with
orders and requests of the arbitrator.
(d) Promptly after the Arbitration Notice is given, AAA will
select three possible arbitrators with experience in the subject matter of the
controversy, to whom AAA will give the identifies of the parties and the
general nature of the controversy. If any of those arbitrators disqualifies
himself or declines to serve, AAA shall continue to designate potential
arbitrators until the parties have three to select from. After the panel of
three potential arbitrators has been completed, a two-page summary of the
background of each of the potential arbitrators will be given to each of the
parties, and the parties will have a period of 10 days after receiving the
summaries in
- 13 -
14
which to attempt to agree upon the arbitrator to conduct the arbitration. If
the parties are unable to agree upon an arbitrator, then one of the parties
shall notify AAA, and AAA shall select the arbitrator from one of the three, or
less, if one or more has been found to be disqualified or removes himself from
consideration (if all three are disqualified or remove themselves, then AAA
shall start the arbitration-selection process over again). The decision of AAA
with respect to the selection of the arbitrator will be final and binding in
such case.
(e) Within 10 days after the selection of the arbitrator, the
parties and their counsel will appear before the arbitrator at a place and time
in Houston, Texas, as may be designated by the arbitrator for the purpose of
each party making a one hour or less presentation and summary of the case.
Thereafter, the arbitrator will set dates and times for additional hearings
until the proceeding is concluded. The desire and goal of the parties is, and
the arbitrator will be advised that his goal should be, to conduct and conclude
the arbitration proceeding as expeditiously as possible. If any party or his
counsel fails to appear at any hearing, the arbitrator shall be entitled to
reach a decision based on the evidence which has been presented to him by the
parties who did appear.
(f) Any arbitral award may be enforced in the courts of the state
of New York or of the United States of America for the Southern District of New
York, and, by execution and delivery of this Agreement, the parties hereby
accept for themselves and in respect of their property, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts for said
purpose and the parties hereby irrevocably waive to the fullest extent
permitted by law any objection, including without limitation, any objection to
the laying of venue or based on the grounds of forum non conveniens, which they
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions.
(g) The arbitrator will have no authority to award punitive or
other damages not measured by the prevailing party's actual damages and may
not, in any event, make any ruling, finding, or award that does not conform to
the terms and conditions of the this Warrant.
(h) The provisions of this Section 22 relating to arbitration of
disputes shall not apply to the enforcement of any rights or obligations in
connection with this Warrant.
23. Successors and Assigns. Subject to the provisions in Section
14, this Warrant and the rights evidenced hereby shall inure to the benefit of
and be binding upon the successors of the Company and the successors and
assigns of Holder.
24. Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
25. Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
- 14 -
15
26. Cancellation of Existing Warrants; Entire Agreement. This
Warrant has been issued in replacement of, and substitution for, that certain
Xxxxxxx Holdings, Inc. Stock Purchase Warrant dated as of August 12, 1996
issued by the Company (designated Warrant No. 1) and that certain Xxxxxxx Gas
Production Corporation Stock Purchase Warrant dated as of August 12, 1996
issued by Xxxxxxx Gas Production Corporation (designated Warrant No. 1)
(collectively the "Existing Warrants"), which Existing Warrants have been duly
endorsed and returned by each Holder to the respective issuer thereof and which
Existing Warrants have been marked canceled and such cancellation has been duly
noted in the Warrant Register and other appropriate records of the Company and
Xxxxxxx Gas Production Corporation, as applicable. This Warrant constitutes the
entire agreement between the parties respecting the subject matter hereof and
hereby terminates, cancels and supersedes the Existing Warrants and any and all
other negotiations, understandings, written and verbal agreements relating to
the subject matter hereof between the parties hereto.
IN WITNESS WHEREOF, the undersigned hereby executes this Stock
Purchase Warrant as of , 1998.
XXXXXXX HOLDINGS, INC.
By:
-------------------------------------
Printed Name:
---------------------------
Title:
----------------------------------
- 15 -
16
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
Pursuant to Section 5 of this Warrant, the undersigned registered
owner of this Warrant irrevocably exercises this Warrant for the purchase of
_____ shares of Common Stock of Xxxxxxx Holdings, Inc., and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant and requests that certificates for the shares of Common Stock
hereby purchased (and any securities or other property issuable upon such
exercise) be issued in the name of and delivered to _________________ whose
address is _________________________ and, if such shares of Common Stock shall
not include all of the shares of Common Stock now and hereafter issuable as
provided in this Warrant, that a new Warrant ("New Warrant") of like tenor and
date for the balance of the shares of Common Stock issuable hereunder be
delivered to the undersigned.
By executing this Subscription Form, the undersigned agrees that the
shares of Common Stock being requested hereby, and any New Warrant being issued
pursuant hereto, will be held for investment purposes only and without a view
to resell, in accordance with Section 15 of the Warrant.
---------------------------------------------
(Name of Registered Owner)
---------------------------------------------
(Signature of Registered Owner)
---------------------------------------------
(Street Address)
---------------------------------------------
(City)(State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the
name as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
- 16 -
