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EXHIBIT 1
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WARRANT AGREEMENT
between
BELCO OIL & GAS CORP.
and
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
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Dated as of November 26, 1997
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Warrants to Purchase 1,666,667 Common Shares
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TABLE OF CONTENTS
RECITALS ......................................................................1
AGREEMENT .....................................................................1
1. DEFINITIONS ..............................................................1
2. WARRANT CERTIFICATES .....................................................6
2.1 Issuance of Warrant .................................................6
2.2 Form, Denomination and Date of Warrants .............................6
2.3 Execution and Delivery of Warrant Certificates ......................7
2.4 Transfer and Exchange ...............................................7
3. EXERCISE AND EXPIRATI0N OF WARRANTS ......................................8
3.1 Right to Acquire Warrant Shares Upon Exercise .......................8
3.2 Exercise and Expiration of Warrants .................................8
(a) Exercise of Warrants ...........................................8
(b) Expiration of Warrants .........................................8
(c) Method of Exercise .............................................9
(d) Partial Exercise ...............................................9
(e) Issuance of Warrant Shares .....................................9
(f) Time of Exercise ..............................................10
3.3 Payment of Taxes ...................................................10
3.4 Surrender of Certificates ..........................................10
3.5 Shares Issuable ....................................................11
4. DISSOLUTION, LIQUIDATION OR WINDING UP ..................................11
5. ADJUSTMENTS .............................................................11
5.1 Adjustments ........................................................11
(a) Stock Dividends, Subdivisions and Combinations ................11
(b) Certain Other Dividends and Distributions .....................12
(c) Reclassifications .............................................13
(d) Distribution of Warrants or Other Rights to Holders of Common
Shares ........................................................13
(e) Superseding Adjustment of Number of Warrant Shares into Which
Each Warrant is Exercisable ...................................13
(f) Other Provisions Applicable to Adjustments under this
Section .......................................................14
(g) Warrant Price Adjustment ......................................15
(h) Merger, Consolidation or Combination ..........................15
(i) Compliance with Governmental Requirements .....................15
(j) Optional Tax Adjustment .......................................15
(k) Warrants Deemed Exercisable ...................................16
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(1) Limitations on Certain Non-Stock Dividends ....................16
5.2 Notice of Adjustment ...............................................16
5.3 Statement on Warrant Certificates ..................................16
5.4 Fractional Interest ................................................16
6. LOSS OR MUTILATION ......................................................17
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES .........................17
8. WARRANT TRANSFER BOOKS ..................................................18
9. WARRANT HOLDERS .........................................................19
9.1 Voting or Dividend Rights ..........................................19
9.2 Rights of Action ...................................................19
9.3 Treatment of Holders of Warrant Certificates .......................19
9.4 Communications to Holders ..........................................19
10. NOTICES .................................................................20
10.1 Notices Generally ..................................................20
10.2 Required Notices to Holders ........................................21
11. APPLICABLE LAW ..........................................................22
12. PERSONS BENEFITING ......................................................22
13. COUNTERPARTS ............................................................22
14. AMENDMENTS ..............................................................22
15. INSPECTION ..............................................................23
16. SUCCESSOR TO THE COMPANY ................................................23
17. ENTIRE AGREEMENT ........................................................23
18. HEADINGS ................................................................23
EXHIBITS
A. List of Warrant Certificates To Be Issued ..............................A-1
B. Form of Warrant Certificate.............................................B-1
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WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of November 26, 1997 (the "Issue
Date") is entered into between BELCO OIL & GAS CORP., a Nevada corporation (the
"Company"), and JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a
Delaware limited partnership ("JEDI").
RECITALS
A. This Agreement is entered into in connection with the
Agreement and Plan of Merger, dated as of October 31, 1997, by and among the
Company, Belco Acquisition Sub, Inc., a Delaware corporation, and Coda Energy,
Inc., a Delaware corporation (the "Merger Agreement").
B. Pursuant to the Merger Agreement, the Company proposes to
issue to JEDI 1,666,667 Warrants, as hereinafter described, each to purchase
from time to time at the Warrant Price (as defined below) one Common Share (as
defined below) of the Company after the Trigger Date (as defined below) and on
or prior to the Expiration Date (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. DEFINITIONS
"Additional Common Shares" shall mean all Common Shares issued or
issuable by the Company after the date of this Agreement, other than the
Warrant Shares.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, "Affiliate" shall not include any wholly-owned Subsidiary of the
Company.
"Agreement" shall mean this Warrant Agreement, as the same may be
amended, modified or supplemented from time to time.
"Business Day" shall mean a day which in New York, New York is neither
a legal holiday nor a day on which banking institutions are authorized by law
or regulation to close.
"Capital Stock" of any Person shall mean any and all shares,
interests, participations, or other equivalents (however designated) of such
Person's capital stock, and any warrants, options or similar rights to acquire
such capital stock.
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"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all
or substantially all of the assets of the Company and its Subsidiaries taken as
a whole to any "person" (as such term is used in Section 3(d)(3) of the
Exchange Act) other than any one or more Principals or their Affiliates, (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any purchase, sale, acquisition, disposition, merger or
consolidation) the result of which is that any "person" (as such term is used
in Section 13(d)(3) of the Exchange Act), other than one or more Principals or
their Affiliates, becomes the "beneficial owner" (as such term is described in
Rule 13d-3 and Rule 13d-5 under the Exchange Act) of more than 50% of the
aggregate voting power of all classes of Capital Stock of the Company having
the right to elect directors under ordinary circumstances, (iv) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors or (vi) a "Rule 13e-3 transaction" (as such term is
defined in Rule 13e-3 under the Exchange Act). For purposes of this definition,
"Principals" means (i) Xxxxxx X. Xxxxxx, (ii) the spouse of Xxxxxx X. Xxxxxx,
(iii) Xxxxxxxx X. Xxxxxx, (iv) the spouse of Xxxxxxxx X. Xxxxxx, (v) the lineal
descendants of Xxxxxx X. Xxxxxx, and (vi) trusts in which Xxxxxx X. Xxxxxx, the
spouse of Xxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxx, the spouse of Xxxxxxxx X.
Xxxxxx, or a lineal descendant of Xxxxxx X. Xxxxxx is a beneficiary, and
"Continuing Directors" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of this Agreement or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Common Equity Securities" shall mean any class or series of Common
Shares of the Company.
"Common Shares" shall mean (i) the common stock, par value $.01 per
share, of the Company, as constituted on the original issuance of the Warrants,
(ii) any Capital Stock into which such Common Shares may thereafter be changed
and (iii) any share of the Company of any other class issued to holders of such
Common Shares upon any reclassification thereof.
"Company" shall mean the company identified in the preamble hereof and
its successors and assigns.
"Corporate Office" shall mean the executive offices of the Company
located at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 or such other
place as the Company shall locate its executive offices.
"Current Market Price" shall mean, with respect to any security on any
date:
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(1) if the Company does not have a class of
equity securities registered under the Exchange Act, the
value of such security (a) most recently determined as of a
date within the one month preceding such date by an
Independent Financial Expert using one or more valuation
methods that such Independent Financial Expert, in its best
professional judgment, determines to be most appropriate but
without giving effect to the discount for any lack of
liquidity of the security or to the fact that the Company may
not have any class of equity securities registered under the
Exchange Act and assuming that the Warrants are currently
exercisable (in the event of more than one such determination,
the determination for the later date shall be used) or (b) if
no such determination shall have been made within such one
month period, determined as of such date by an Independent
Financial Expert as described in (a) above, or
(2) if the Company does have a class of equity
securities registered under the Exchange Act, the average of
the daily Market Prices of such security for each Business Day
during the period commencing thirty (30) Business Days before
such date and ending on the date one day prior to such date
or, if the Company has had a class of equity securities
registered under the Exchange Act for less than thirty (30)
consecutive Business Days before such date, then the average
of the daily Market Price for all of the Business Days before
such date for which daily Market Prices are available provided,
however, that in the event that the Current Market Price per
share of a security is determined during a period following
the announcement by the Company of (A) a dividend or
distribution on such a security payable in shares of such a
security or securities convertible into shares of such a
security, or (B) any subdivision, combination or
reclassification of such security, and prior to the expiration
of such thirty (30) Business Day period before such date (or,
if applicable, such lesser number of Business Days before such
date for which daily Market Prices are available) after the
ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or
reclassification, then in each such case, Current Market Price
shall be properly adjusted to take into account ex-dividend
trading.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean November 25, 2000 or such earlier date as
determined in accordance with Section 4.
"Holder" or "Warrantholder" shall mean any Person in whose name at the
time any Warrant Certificate is registered upon the Warrant Register.
"Independent" shall mean a nationally recognized investment banking
firm or Person (as the case may be) (i) that does not then have, and for the
ten years immediately preceding such time has
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not had (and, in the case of a nationally recognized investment banking firm,
whose directors, officers, employees and Affiliates do not then have, and for
the ten years immediately preceding such time have not had) a direct or
indirect interest in the Company or any of its Subsidiaries or Affiliates or
any successor to any of them and (ii) that is not then, and for the ten years
immediately preceding such time was not (and, in the case of a nationally
recognized investment banking firm, whose directors, officers, employees or
Affiliates are not then, and for the ten years immediately preceding such time
were not) an employee, consultant, advisor, director, officer or Affiliate (it
being understood that the term "Independent" when applied to a director of the
Company, means a non-employee director of the Company whose only relationship
with the Company during the relevant period has been as a director of the
Company) of the Company, any of its Subsidiaries or Affiliates or any successor
to any of them.
"Independent Financial Expert" shall mean an Independent nationally
recognized investment banking firm with assets in excess of $1.0 billion
selected by a majority of the members of the Board of Directors (and by a
majority of the Independent members of the board, if any) of the Company.
"JEDI" shall mean the limited partnership identified in the preamble
hereof and its successors.
"Market Price" shall mean (A) in the case of a security listed or
admitted to trading on any securities exchange, the closing price, regular way,
on such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, (B) in the case of a security not then listed
or admitted to trading on any securities exchange, the last reported sale price
on such day, or if no sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a reputable quotation source
designated by the Company, (C) in the case of a security not then listed or
admitted to trading on any securities exchange and as to which no such reported
sale price or bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reputable quotation
service, or The Wall Street Journal, Eastern Edition, or if such newspaper is
no longer published then in a newspaper of general circulation in the Borough
of Manhattan, City and State of New York, customarily published on each
Business Day, designated by the Company or if there shall be no bid and asked
prices on such day, the average of the high bid and low asked prices, as so
reported, on the most recent day (not more than ten (10) days prior to the date
in question) for which prices have been so reported, and (D) if there are no
bid and asked prices reported during the ten (10) days prior to the date in
question, the Current Market Value of the security shall be determined as if
the Company did not have a class of equity securities registered under the
Exchange Act.
"Non-Stock Dividend" shall mean any payment by the Company to all
holders its Common Shares of any dividend, or any other distribution by the
Company to such holders, of any shares of Capital Stock of the Company,
evidences of indebtedness of the Company, cash or other assets (including
rights, warrants or other securities (of the Company or any other Person)),
other than any dividend or distribution (i) upon a merger or consolidation or
sale to which Section 5.1(h) applies, (ii) of any Common Shares referred to in
Section 5.1(a) or (iii) of cash not in liquidation of the Company.
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"Non-Surviving Combination" shall mean any merger, consolidation or
other business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity or becomes a
wholly-owned subsidiary of another entity.
"outstanding" shall mean, as of the time of determination, when used
with respect of any Warrants, all Warrants originally issued under this
Agreement except (i) Warrants that have been exercised pursuant to Section
3.2(a), (ii) Warrants that have expired pursuant to Sections 3.2(b), 4 or 6 and
(iii) Warrants that have otherwise been acquired by the Company; provided,
however, that in determining whether the Holders of the requisite amount of the
outstanding Warrants have given any request, demand, authorization, direction,
notice, consent or waiver under the provisions of this Agreement, Warrants owned
by the Company or any Subsidiary or Affiliate of the Company or any Person that
is at such time a party to a merger or acquisition agreement with the Company
shall be disregarded and deemed not to be outstanding.
"Person" shall mean any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any
other entity.
"Recipient" shall have the meaning given such term in Section 3.2(e).
"Restricted Warrants" shall have the meaning given such term in
Section 2.2(b).
"Restricted Warrant Legend" shall mean the legend so designated on the
Warrant Certificate attached hereto as Exhibit A.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of such Person or a combination
thereof.
"Trigger Date" shall mean the earliest of (i) November 26, 1998, (ii)
the date of a Change of Control or (iii) the date of any notice given pursuant
to Section 3.2(g).
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"Warrant Certificates" shall mean those certain warrant certificates
evidencing the Warrants, substantially in the form of Exhibit A attached
hereto.
"Warrant Price" shall mean the exercise price per Warrant Share,
initially set at $27.50, subject to adjustment as provided in Section 5.1(g).
"Warrant Register" shall have the meaning given such term in Section
8.
"Warrant Shares" shall mean the Common Shares issuable upon exercise of
the Warrants, the number of which is subject to adjustment from time to time in
accordance with Section 5.
"Warrants" shall mean those warrants issued hereunder to purchase
initially up to an aggregate of 1,666,667 Warrant Shares at the Warrant Price,
subject to adjustment pursuant to Section 5.
2. WARRANT CERTIFICATES
2.1 Issuance of Warrant. An aggregate of 1,666,667 Warrants shall
be issued on the date of this Agreement to JEDI. The Company shall issue to
JEDI Warrant Certificates evidencing such Warrants. Each Warrant Certificate
issued pursuant to this Section 2.1 shall evidence the number of Warrants
specified therein and each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to purchase one Warrant
Share, subject to adjustment as provided in Section 5.
2.2 Form, Denomination and Date of Warrants.
(a) Warrant Certificates shall be substantially in the
form of Exhibit A hereto. The Warrants shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plans as the officers
of the Company executing the same may determine. Each Warrant shall be dated
the date of its authentication. Any of the Warrants may be issued with
appropriate insertions, omissions, substitutions and variations, and may have
imprinted or otherwise reproduced thereon such legend or legends, not
inconsistent with the provisions of this Agreement, as may be required to
comply with any law or with any rules or regulations pursuant thereto, or with
the rules of any securities market in which the Warrants are admitted to
trading, or to conform to general usage. All Warrants shall be otherwise
substantially identical except as to denomination and as provided herein.
(b) Each Warrant Certificate issued pursuant to this
Agreement ("Restricted Warrants") will bear the Restricted Warrant Legend
unless removed in accordance with Section 2.4.
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2.3 Execution and Delivery of Warrant Certificates.
(a) Warrant Certificates evidencing the Warrants which
may be delivered under this Agreement are limited to Warrant Certificates
evidencing 1,666,667 Warrants, except for Warrant Certificates delivered
pursuant to Sections 2.4, 3.2(d), 6 and 8 upon registration of transfer of, or
in exchange for, or in lieu of, one or more previously issued Warrant
Certificates.
(b) At any time and from time to time on or after the
date of this Agreement, Warrant Certificates evidencing the Warrants may be
executed and delivered by the Company for issuance.
(c) The Warrant Certificates shall be executed in the
corporate name and on behalf of the Company by the Chairman (or any
Co-Chairman) of the Board, the Chief Executive Officer, the President or any
one of the Vice Presidents of the Company under corporate seal reproduced
thereon and attested to by the Secretary or one of the Assistant Secretaries of
the Company, either manually or by facsimile signature printed thereon. In case
any officer of the Company whose signature shall have been placed upon any of
the Warrant Certificates shall cease to be such officer of the Company before
and delivery thereof, such Warrant Certificates may, nevertheless, be issued
and delivered with the same force and effect as though such person had not
ceased to be such officer of the Company, and any Warrant Certificate may be
signed on behalf of the Company by such person as, at the actual date of the
execution of such Warrant Certificate, shall be a proper officer of the
Company, although at the date of the execution of this Agreement any such
person was not such an officer.
2.4 Transfer and Exchange.
(a) If a holder of a Restricted Warrant wishes at any
time to transfer such Restricted Warrant to a Person who wishes to take
delivery thereof in the form of a Restricted Warrant, such holder may, subject
to the restrictions on transfer set forth herein and in such Restricted
Warrant, cause the exchange of such Restricted Warrants for one or more
Restricted Warrants of any authorized denomination or denominations and
exercisable for the same aggregate number of Warrant Shares. Upon receipt by
the Company at its Corporate Office of (1) such Restricted Warrant, duly
endorsed as provided herein, (2) instructions from such holder directing the
Company to authenticate and deliver one or more Restricted Warrants exercisable
for the same aggregate number of Warrant Shares as the Restricted Warrant to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Restricted Warrants to be so issued and appropriate delivery instructions, and
(3) an opinion of counsel, reasonably satisfactory to the Company, to the
transferor of such Restricted Warrant to the effect that the transfer of such
Restricted Warrant has been registered under the Securities Act or is exempt
from registration thereunder pursuant to an applicable exemption therefrom,
then the Company shall cancel or cause to be canceled such Restricted Warrant
and, concurrently therewith, the Company shall execute and deliver, one or
more Restricted Warrants to the effect set forth therein, in accordance with
the instructions referred to above.
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(b) If Warrants are issued upon the transfer, exchange or
replacement of Warrants bearing the Restricted Warrant Legend, or if a request
is made to remove such Restricted Warrant Legend, the Warrants so issued shall
bear the Restricted Warrant Legend, or the Restricted Warrant Legend shall not
be removed, as the case may be, unless there is delivered to the Company
satisfactory evidence, which may include an opinion of counsel as may be
reasonably required by the Company to the effect that neither the Restricted
Warrant Legend nor the restrictions on transfer set forth therein are required
to ensure that transfers thereof comply with the provisions of the Securities
Act or, with respect to Restricted Warrants, that such Warrants are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision of such satisfactory evidence the Company shall authenticate and
deliver Warrant Certificates that do not bear the Restricted Warrant Legend.
(c) No service charge shall be made to a Warrantholder
for any registration of transfer or exchange; provided, however, that the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration
of transfer or exchange of Warrant Certificates.
3. EXERCISE AND EXPIRATION OF WARRANTS
3.1 Right to Acquire Warrant Shares Upon Exercise.
Each Warrant Certificate shall entitle the Holder thereof, subject to
the provisions thereof and of this Agreement, to acquire from the Company, for
each Warrant evidenced thereby, one Warrant Share at the Warrant Price, subject
to adjustment as provided in this Agreement. The Warrant Price shall be adjusted
from time to time as required by Section 5.1. The Warrants are exercisable at
any time on and after the Trigger Date and on or prior to the Expiration Date.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and
conditions set forth herein, including, without limitation, the exercise
procedure described in Section 3.2(c), a Holder of a Warrant Certificate may
exercise all or any whole number of the Warrants evidenced thereby, on any
Business Day on and after the Trigger Date until 5:00 p.m., Now York City time,
on the Expiration Date (subject to earlier expiration pursuant to Section 4)
for the Warrant Shares purchasable thereunder.
(b) Expiration of Warrants. The Warrants shall terminate
and become void as of 5:00 p.m., New York City time, on the Expiration Date,
subject to earlier expiration in accordance with Section 4. In the event that
the Warrants are to expire by reason of Section 4, the term "Expiration Date"
shall mean such earlier date for all purposes of this Agreement.
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(c) Method of Exercise. The Holder may exercise all or
any of the Warrants by either of the following methods:
(i) The Holder may deliver to the Company at the
Corporate Office (A) a written notice of such Holder's
election to exercise Warrants, duly executed by such Holder in
the form set forth on the reverse of, or attached to, such
Warrant Certificate, which notice shall specify the number of
Warrant Shares to be purchased, (B) the Warrant Certificate
evidencing such Warrants and (C) a sum equal to the aggregate
Warrant Price for the Warrant Shares into which such Warrants
are being exercised, which sum shall be paid in any combination
elected by such Holder of (x) a company or personal check
payable to the order of the Company and delivered to the
Company at the Corporate Office, or (y) wire transfers in
immediately available funds to the account of the Company at
such banking institution as the Company shall have given
notice to the Holders in accordance with Section 10.1(b); or
(ii) The Holder may also exercise all or any of
the Warrants in a "cashless" or "net-issue" exercise by
delivering to the Company at the Corporate Office (A) a
written notice of such Holder's election to exercise Warrants,
duly executed by such Holder in the form set forth on the
reverse of, or attached to, such Warrant Certificate, which
notice shall specify the number of Warrant Shares to be
delivered to such Holder and the number of Warrant Shares with
respect to which such Warrants are being surrendered in
payment of the aggregate Warrant Price for the Warrant Shares
to be delivered to the Holder, and (B) the Warrant Certificate
evidencing such Warrants. For purposes of this subparagraph
(ii), each Warrant Share as to which such Warrants are
surrendered in payment of the aggregate Warrant Price will be
attributed a value equal to (x) the Current Market Price per
share of Common Shares minus (y) the then-current Warrant
Price.
(d) Partial Exercise. If fewer than all the Warrants
represented by a Warrant Certificate are exercised, such Warrant Certificate
shall be surrendered and a new Warrant Certificate of the same tenor and for
the number of Warrants which were not exercised shall be executed by the
Company. The Company, subject to the provisions of Section 8, as may be
directed in writing by the Holder, shall deliver the new Warrant Certificate to
the Person or Persons in whose name such new Warrant Certificate is so
registered.
(e) Issuance of Warrant Shares. Upon surrender of a
Warrant Certificate evidencing Warrants in conformity with the foregoing
provisions and payment of the Warrant Price in respect of the exercise of one
or more Warrants evidenced thereby, when such payment is received, the Company
shall thereupon, as promptly as practicable, and in any event within five
Business Days after receipt by the Company of such notice of exercise, execute
or cause to be executed and deliver or cause to be delivered to the Recipient
(as defined below) a certificate or certificates representing the aggregate
number of Warrant Shares issuable upon such exercise (based
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upon the aggregate number of Warrants so exercised), determined in accordance
with Section 3.5, together with an amount in cash in lieu of any fractional
share(s) determined in accordance with Section 5.4. The certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in such notice of exercise and
shall be registered or otherwise placed in the name of, and delivered to, the
Holder or, subject to Section 2.2 and Section 3.3, such other Person as shall
be designated by the Holder in such notice (the Holder or such other Person
being referred to herein as the "Recipient").
(f) Time of Exercise. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date on which
all requirements set forth in Section 3.2(c) applicable to such exercise have
been satisfied. Subject to Section 5.1(f)(iv), certificate(s) evidencing the
Warrant Shares issued upon the exercise of such Warrant shall be deemed to have
been issued and, for all purposes of this Agreement, the Recipient shall, as
between such Person and the Company, be deemed to be and entitled to all rights
of the holder of record of such Warrant Shares as of such time.
(g) In the event that the Company shall propose any
transaction which would result in a Change of Control, the Company shall send a
written notice to each holder of Warrant Certificates not less than 20 days
prior to the consummation of the transaction that would result in such Change
of Control.
3.3 Payment of Taxes
The Company shall pay any and all taxes (other than income taxes) and
other charges that may be payable in respect of the issue or delivery of
Warrant Shares on exercise of Warrants pursuant hereto. The Company shall not
be required, however, to pay any tax or other charge imposed in respect of any
transfer involved in the issue and delivery of any certificates for Warrant
Shares or payment of cash to any Recipient other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer or payment, the Company shall not be required to issue or deliver any
certificate or pay any cash until (a) such tax or charge has been paid or an
amount sufficient for the payment thereof has been delivered to the Company or
(b) it has been established to the Company's satisfaction that any such tax or
other charge that is or may become due has been paid.
3.4 Surrender of Certificates.
Any Warrant Certificate surrendered for exercise shall be promptly
canceled by the Company and shall not be reissued by the Company.
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3.5 Shares Issuable.
The number of Warrant Shares "issuable upon exercise" of Warrants at
any time shall be the number of Warrant Shares into which such Warrants are then
exercisable. The number of Warrant Shares "into which each Warrant is
exercisable" initially shall be one share, subject to adjustment as provided in
Section 5.1.
4. DISSOLUTION, LIQUIDATION OR WINDING UP
If, on or prior to the Expiration Date, the Company (or any other
Person controlling the Company) shall propose a voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company, the
Company shall give written notice thereof to all Holders of Warrant
Certificates in the manner provided in Section 10 prior to the date on which
such transaction is expected to become effective or, if earlier, the record
date for such transaction. Such notice shall also specify the date as of which
the holders of record of the Common Shares shall be entitled to exchange their
shares for moneys, securities or other property deliverable upon such
dissolution, liquidation or winding up, as the case may be, the date on which
each Holder of Warrant Certificates shall be entitled to receive the moneys,
securities or other property which such Holder would have been entitled to
receive had such Holder been the holder of record of the Warrant Shares into
which the Warrants were exercisable immediately prior to such dissolution,
liquidation or winding up (net of the then applicable Warrant Price) and the
date on which the rights to exercise the Warrants shall terminate.
In case of any such voluntary or involuntary dissolution, liquidation
or winding up of the Company, the Company shall retain any moneys, securities
or other property which the Holders are entitled to receive under this
Agreement. After any Holder has surrendered a Warrant Certificate to the
Company, the Company shall make payment in the appropriate amount to such
Person or Persons as it may be directed in writing by the Holder surrendering
such Warrant Certificate. The Company shall not be required to pay interest on
any money deposited pursuant to the provisions of this Section 4.
5. ADJUSTMENTS
5.1 Adjustments.
The number of Warrant Shares into which each Warrant is exercisable and
the Warrant Price shall be subject to adjustment from time to time after the
Issue Date in accordance (and only in accordance) with the provisions of this
Section 5:
(a) Stock Dividends, Subdivisions and Combinations. In
case at any time or from time to time after the date hereof the Company shall:
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(i) pay to the holders of its Common Shares a
dividend payable in, or make any other distribution on any
class of its capital stock in, Common Shares (other than a
dividend or distribution upon a merger or consolidation or
sale to which Section 5.1(h) applies);
(ii) subdivide its outstanding Common Shares into
a larger number of Common Shares (other than a subdivision
upon a merger or consolidation or sale to which Section 5.1(h)
applies); or
(iii) combine its outstanding Common Shares into a
smaller number of Common Shares (other than a combination upon
a merger or consolidation or sale to which Section 5.1(h)
applies);
then, (x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of Common Shares entitled to receive such dividend
or distribution or (y) in the case of any subdivision or combination, effective
immediately after the opening of business on the day after the day upon which
such subdivision or combination becomes effective, the number of Warrant Shares
into which each Warrant is exercisable shall be adjusted to that number of
Warrant Shares determined by (A) in the case of any such dividend or
distribution, multiplying the number of Warrant Shares into which each Warrant
is exercisable at the opening of business on the day after the day for
determination by a fraction (not to be less than one), (1) the numerator of
which shall be equal to the sum of the number of Common Shares outstanding at
the close of business on such date for determination and the total number of
shares constituting such dividend or distribution and (2) the denominator of
which shall be equal to the number of Common Shares outstanding at the close of
business on such date for determination, or (B) in the case of any such
combination, by proportionately reducing, or, in the case of any such
subdivision by proportionately increasing, the number of Warrant Shares into
which each Warrant is exercisable at the opening of business on the day after
the day upon which such subdivision or combination becomes effective.
(b) Certain Other Dividends and Distributions. In case at
any time or from time to time after the date hereof the Company shall effect a
Non-Stock Dividend (other than any dividend or distribution of any warrants,
options or rights referred to in Section 5.1(d)), then, and in each such case,
effective immediately after the opening of business on the day after the date
for the determination of the holders of Common Shares entitled to receive such
distribution, the number of Warrant Shares into which each Warrant is
exercisable shall be adjusted to that number determined by multiplying the
number of Warrant Shares into which each Warrant is exercisable immediately
prior to the close of business on the date of determination by a fraction, (i)
the numerator of which shall be the Current Market Price per Common Share on
such date of determination and (ii) the denominator of which shall be such
Current Market Price per Common Shares minus the portion applicable to one
Common Share of the fair market value (as determined in good faith by the Board
of Directors of the Company) of such securities or other assets so distributed
pursuant to such Non-Stock Dividend.
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(c) Reclassifications. A reclassification of the Common
Shares (other than any such reclassification in connection with a merger or
consolidation or sale to which Section 5.1(h) applies) into Common Shares and
shares of any other class of stock shall be deemed a distribution by the
Company to the holders of its Common Shares of such shares of such other class
of stock for the purposes and within the meaning of Section 5.1(b) (and the
effective date of such reclassification shall be deemed to be "the date for the
determination of the holders of Common Shares entitled to receive such
distribution" for the purposes and within the meaning of Section 5.1(b)) and,
if the outstanding number of Common Shares shall be changed into a larger or
smaller number of Common Shares as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding Common Shares for the purposes and within the meaning of
Section 5.1(a) (and the effective date of such reclassification shall be deemed
to be "the day upon which such subdivision or combination becomes effective" for
the purposes and within the meaning of Section 5.1(a)).
(d) Distribution of Warrants or Other Rights to Holders
of Common Shares. In case at any time or from time to time after the Effective
Date the Company shall make a distribution to all holders of outstanding Common
Shares of any warrants, options or other rights to subscribe for or purchase
any Additional Common Shares or securities convertible into or exchangeable for
Additional Common Shares (other than a distribution of such warrants, options
or rights upon a merger or consolidation or sale to which Section 5.1(h)
applies), whether or not the rights to subscribe or purchase thereunder are
immediately exercisable, and the consideration per share for which Additional
Common Shares may at any time thereafter be issuable pursuant to such warrants
or other rights shall be less than the Current Market Price per Common Share on
the date fixed for determination of the holders of Common Shares entitled to
receive such distribution, then, and for each such case, effective immediately
after the opening of business on the day after the date for determination, the
number of Warrant Shares into which each Warrant is exercisable shall be
adjusted to that number determined by multiplying the number of Warrant Shares
into which each Warrant is exercisable at the opening of business on the day
after such date for determination by a fraction (not less than one), (i) the
numerator of which shall be the number of Common Shares outstanding at the close
of business on such date for determination plus the maximum number of
Additional Common Shares issuable pursuant to all such warrants or other rights
and (ii) the denominator of which shall be the number of Common Shares
outstanding at the close of business on such date for determination plus the
number of Common Shares that the minimum consideration received and receivable
by the Company for the issuance of such maximum number of Additional Common
Shares pursuant to the terms of such warrants or other rights would purchase at
such Current Market Price.
(e) Superseding Adjustment of Number of Warrant Shares
into Which Each Warrant is Exercisable. In case at any time after any adjustment
of the number of Warrant Shares into which each Warrant is exercisable shall
have been made pursuant to Section 5.1(d) on the basis of the distribution of
warrants or other rights or after any new adjustment of the number of Warrant
Shares into which each Warrant is exercisable shall have been made pursuant to
this Section 5.1(e), such warrants or rights shall expire, and all or a
portion of such warrants or rights shall not have been
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exercised, then, and in each such case, upon the election of the Company such
previous adjustment in respect of such warrants or rights which have expired
without exercise shall be rescinded and annulled as to any then outstanding
Warrants, and the Additional Common Shares that were deemed for purposes of the
computations set forth in Section 5.1(d) to have been issued or sold by virtue
of such adjustment in respect of such warrants or rights shall no longer be
deemed to have been distributed.
(f) Other Provisions Applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of Warrant Shares into which each Warrant is
exercisable and to the Warrant Price under this Section 5.1:
(i) Treasury Stock. The sale or other disposition
of any issued Common Shares owned or held by or for the account of the
Company shall be deemed an issuance or sale of Additional Common
Shares for purposes of this Section 5. The Company shall not pay any
dividend on or make any distribution on Common Shares held in the
treasury of the Company. For the purposes of this Section 5.1, the
number of Common Shares at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of Common Shares.
(ii) When Adjustments Are to be Made. The
adjustments required by Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d)
shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that no adjustment of the Warrant
Shares into which each Warrant is exercisable that would otherwise be
required shall be made unless and until such adjustment either by
itself or with other adjustments not previously made increases or
decreases the Warrant Shares into which each Warrant is exercisable
immediately prior to the making of such adjustment by at least 1%. Any
adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as
such adjustment, together with other adjustments required by Sections
5.1(a), 5.1(b), 5.1(c) and 5.1(d) and not previously made, would
result in such minimum adjustment.
(iii) Fractional Interests. In computing
adjustments under this Section 5, fractional interests in Common
Shares shall be taken into account to the nearest one-thousandth of a
share.
(iv) Deferral of Issuance upon Exercise. In any
case in which this Section 5 shall require that an adjustment to the
Warrant Shares into which each Warrant is exercisable be made
effective pursuant to Section 5.1(a)(i), 5.1(b) or 5.1(d) prior to the
occurrence of a specified event and any Warrant is exercised after the
time at which the adjustment became effective but prior to the
occurrence of such specified event, the Company may elect to defer
until the occurrence of such specified event the issuing to the Holder
of the Warrant Certificate evidencing such Warrant (or other Person
entitled thereto) of, and may delay registering such Holder or other
Person as the recordholder of, the Warrant
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Shares over and above the Warrant Shares issuable upon such exercise
determined in accordance with Section 3.5 on the basis of the Warrant
Shares into which each Warrant is exercisable prior to such adjustment
determined in accordance with Section 3.5; provided, however, that the
Company shall deliver to such Holder or other person a due xxxx or
other appropriate instrument evidencing the right of such Holder or
other Person to receive, and to become the record holder of, such
Additional Common Shares, upon the occurrence of the event requiring
such adjustment.
(g) Warrant Price Adjustment. Whenever the number of
Warrant Shares into which a Warrant is exercisable is adjusted as provided in
this Section 5.1, the Warrant Price payable upon exercise of the Warrant shall
simultaneously be adjusted by multiplying such Warrant Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
Warrant Shares into which such Warrant was exercisable immediately prior to
such adjustment, and the denominator of which shall be the number of Warrant
Shares into which such Warrant was exercisable immediately thereafter.
(h) Merger, Consolidation or Combination, In the event
the Company merges, consolidates or otherwise combines with or into any Person,
then, as a condition of such merger, consolidation or combination, lawful and
adequate provisions shall be made whereby Warrantholders shall, in addition to
their other rights hereunder, thereafter have the right to purchase and receive
upon the basis and upon the terms and conditions specified in this Agreement
upon exercise of the Warrants and in lieu of the Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding Common
Shares equal to the number of Warrant Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby,
and in any such case appropriate provision shall be made with respect to the
rights and interests of the Warrantholders to the end that the provisions
hereof (including, without limitation, provisions for adjustments of the number
of Warrant Shares) shall thereafter be applicable, as nearly as may be
practicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof.
(i) Compliance with Governmental Requirements. Before
taking any action that would cause an adjustment reducing the Warrant Price
below the then par value of any of the Warrant Shares into which the Warrants
are exercisable, the Company will take any corporate action that may be
necessary in order that the Company may validly and legally issue fully paid
and nonassessable Warrant Shares at such adjusted Warrant Price.
(j) Optional Tax Adjustment. The Company may at its
option, at any time during the term of the Warrants, increase the number of
Warrant Shares into which each Warrant is exercisable, or decrease the Warrant
Price, in addition to those changes required by Section 5.1(a), 5.1(b), 5.1(c),
5.1(d) or 5.1(g), as deemed advisable by the Board of Directors of the Company,
in order that any event treated for Federal income tax purposes as a dividend of
stock or stock rights shall not be taxable to the Recipients.
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(k) Warrants Deemed Exercisable. For purposes solely of
this Section 5, the number of Warrant Shares which the holder of any Warrant
would have been entitled to receive had such Warrant been exercised in full at
any time or into which any Warrant was exercisable at any time shall be
determined assuming such Warrant was exercisable in full at such time, although
such Warrant may not be exercisable in full at such time pursuant to Section
3.2(a).
(l) Limitations on Certain Non-Stock Dividends. The
Company agrees that it will not declare or pay any Non-Stock Dividend subject
to Section 5.1(b) hereof to the extent that the fair market value of the
property or other assets to be distributed in respect of one Common Share equals
or exceeds the Current Market Price per Common Share at the date of
determination.
5.2 Notice of Adjustment.
Whenever the number of Warrant Shares into which a Warrant is
exercisable is to be adjusted, or the Warrant Price is to be adjusted, in
either case as herein provided, the Company shall compute the adjustment in
accordance with Section 5.1, and shall, promptly after such adjustment becomes
effective, cause a notice of such adjustment or adjustments to be given to all
Holders in accordance with Section 10.1(b).
5.3 Statement on Warrant Certificates.
Irrespective of any adjustment in the number or kind of shares into
which the Warrants are exercisable, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares initially issuable pursuant to this Agreement
5.4 Fractional Interest.
The Company shall not issue fractional Warrant Shares on the exercise
of Warrants. If Warrant Certificates evidencing more than one Warrant shall be
presented for exercise at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon such exercise thereof shall be
computed on the basis of the aggregate number of Warrants so to be exercised.
If any fraction of a Warrant Share would, except for the provisions of this
Section 5.4, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall, in lieu of issuing any fractional Warrant Shares,
pay an amount in cash calculated by it to be equal to the then Current Market
Price per Common Share on the date of such exercise multiplied by such fraction
computed to the nearest whole cent. The Holders, by their acceptance of the
Warrant Certificates, expressly waive their right to receive any fraction of a
Warrant Share or a stock certificate representing a fraction of a Warrant
Share.
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6. LOSS OR MUTILATION
Upon (i) receipt by the Company of evidence reasonably satisfactory to
the Company of the ownership of and the loss, theft, destruction or mutilation
of any Warrant Certificate and such reasonable and customary security or
indemnity as may be required by the Company to save the Company harmless and
(ii) surrender, in the case of mutilation, of the mutilated Warrant Certificate
to the Company and cancellation thereof, then, in the absence of notice to the
Company that the Warrants evidenced thereby have been acquired by a bona fide
purchaser, the Company shall execute and deliver to the registered Holder of the
lost, stolen, destroyed or mutilated Warrant Certificate, in exchange therefor
or in lieu thereof, a new Warrant Certificate of the same tenor and for a like
aggregate number of Warrants. At the written request of such registered Holder,
the new Warrant Certificate so issued shall be retained by the Company as having
been surrendered for exercise, in lieu of delivery thereof to such Holder, and
shall be deemed for purposes of Section 3.2 to have been surrendered for
exercise on the date the conditions specified in clauses (i) and (ii) of the
preceding sentence were first satisfied.
Upon the issuance of any new Warrant Certificate under this Section 6,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto.
Every new Warrant Certificate executed and delivered pursuant to this
Section 6 in lieu of any lost, stolen or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant Certificate shall be at any
time enforceable by anyone, and shall be entitled to the benefits of this
Agreement equally and proportionately with any and all other Warrant
Certificates duly executed and delivered hereunder.
The provisions of this Section 6 are exclusive and shall preclude (to
the extent lawful) all other rights or remedies with respect to the replacement
of mutilated, lost, stolen, or destroyed Warrant Certificates.
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES
The Company shall at all times reserve and keep available, free from
preemptive rights, solely for issue upon the exercise of Warrants as herein
provided, such number of its authorized but unissued Warrant Share deliverable
upon the exercise of Warrants as will be sufficient to permit the exercise in
full of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing
subject to official notice of issuance on each securities exchange, if any, on
which the Common Shares are then listed. The Company covenants that (i) all
Warrant Shares that may be issued upon exercise of Warrants shall upon issuance
be duly and validly authorized, issued and fully paid and nonassessable and free
of preemptive or similar rights and (ii) the stock certificates issued to
evidence any such Warrant Shares will comply with Section 78 of the Nevada
Revised Statutes (or its successor) and any other applicable law.
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The Company hereby authorizes and directs its current and future
transfer agents for the Common Shares at all times to reserve stock
certificates for such number of authorized shares as shall be requisite for such
purpose. The Company will supply such transfer agents with duly executed stock
certificates for such purposes.
8. WARRANT TRANSFER BOOKS
The Company will maintain at the Corporate Office where Warrant
Certificates may be surrendered for registration of transfer or exchange and
where Warrant Certificates may be surrendered for exercise of Warrants
evidenced thereby. The Company, will give prompt written notice to all Holders
of Warrant Certificates of any change in the location of Corporate Office.
The Warrant Certificates evidencing the Warrants shall be issued in
registered form only. The Company, shall cause to be kept at the Corporate
Office a warrant register (the "Warrant Register") in which, subject to such
reasonable regulations as the Company may prescribe and such regulations as may
be prescribed by law, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein
provided.
Subject to Section 2.4, upon surrender for registration of transfer of
any Warrant Certificate at the Corporate Office, the Company shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Warrant Certificates evidencing a like aggregate number of Warrants.
Subject to Section 2.4, (i) at the option of the Holder, Warrant
Certificates may be exchanged at the Corporate Office upon payment of the
charges herein provided for other Warrant Certificates evidencing a like
aggregate number of Warrants and (ii) whenever any Warrant Certificates are so
surrendered for exchange, the Company shall execute and deliver the Warrant
Certificates of the same tenor and evidencing the same number of Warrants as
evidenced by the Warrant Certificates surrendered by the Holder making the
exchange.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
Subject to Section 2.4, every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Company) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, duly executed by the Holder thereof or his
attorney duly authorized in writing.
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9. WARRANT HOLDERS
9.1 Voting or Dividend Rights.
Prior to the exercise of the Warrants, except as may be specifically
provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be
entitled to any of the rights of a holder of Common Shares, including, without
limitation, the right to vote at or to receive any notice of any meetings of
stockholders; (ii) the consent of any Holder shall not be required with respect
to any action or proceeding of the Company; (iii) except as provided in
Section 4, no Holder, by reason of the ownership or possession of a Warrant or
the Warrant Certificate representing the same, shall have any right to receive
any stock dividends, allotments or rights or other distributions paid, allotted
or distributed or distributable to the stockholders of the Company prior to, or
for which the relevant record date preceded, the date of the exercise of such
Warrant; and (iv) no Holder shall have any right not expressly conferred by
this Agreement or Warrant Certificate held by such Holder.
9.2 Rights of Action.
All rights of action against the Company in respect of this Agreement
are vested in the Holders of the Warrant Certificates, and any Holder of any
Warrant Certificate, without the consent of the Holder of any other Warrant
Certificate, may, in such Holder's own behalf and for such Holder's own
benefit, enforce and may institute and maintain any suit, action or proceeding
against the Company suitable to enforce, or otherwise in respect of, such
Holder's right to exercise, exchange or tender for purchase such Holder's
Warrants in the manner provided in this Agreement,
9.3 Treatment of Holders of Warrant Certificates.
Every Holder of a Warrant Certificate, by accepting the same, consents
and agrees with the Company and with every subsequent holder of such Warrant
Certificate that, prior to due presentment of such Warrant Certificate for
registration of transfer, the Company may treat the Person in whose name the
Warrant Certificate is registered as the owner thereof for all purposes and as
the Person entitled to exercise the rights granted under the Warrants, and
neither the Company nor any agent of the Company shall be affected by any
notice to the contrary.
9.4 Communications to Holders.
(a) If any Holder of a Warrant Certificate applies in
writing to the Company and such application states that the applicant desires
to communicate with other Holders with respect to its rights under this
Agreement or under the Warrants, then the Company shall, within five (5)
Business Days after the receipt of such application, and upon payment to the
Company by such applicant of the reasonable expenses of preparing such list,
provide to such applicant a list of the names and addresses of all Holders of
Warrant Certificates as of the most recent practicable date.
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(b) Every Holder of Warrant Certificates, by receiving
and holding the same, agrees with the Company that neither the Company nor any
agent of either of the Company shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 9.4(a).
10. NOTICES
10.1 Notices Generally.
(a) Any request, notice, direction, authorization,
consent, waiver, demand or other communication permitted or authorized by this
Agreement to be made upon, given or furnished to or filed with the Company by
the other party hereto or by any Holder shall be sufficient for every purpose
hereunder if in writing (including telecopy communication) and telecopied or
delivered by hand (including by courier service) as follows:
If to the Company, to it at:
Belco Oil & Gas Corp.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
If to a Holder, to it at:
to the address provided
to Company upon issuance
of the Warrants
or, in either case, such other address as shall have been set forth in a notice
delivered in accordance with this Section 10.1(a).
All such communications shall, when so telecopied or delivered by
hand, be effective when telecopied with confirmation of receipt or received by
the addressee, respectively.
Any Person that telecopies any communication hereunder to any Person
shall, on the same date as such telecopy is transmitted, also send, by first
class mail, postage prepaid and addressed to such Person as specified above, an
original copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders
of any event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage prepaid, to
each Holder affected by such event, at the address of such Holder as
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it appears in the Warrant Register, not later than the latest date, and not
earlier than the earliest date, prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders.
Where this Agreement provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made by a method reasonably approved
in good faith by the Company as one which would be most reliable under the
circumstances for successfully delivering the notice to the addresses shall
constitute a sufficient notification for every purpose hereunder.
10.2 Required Notices to Holders.
In case the Company shall propose (i) to pay any dividend payable in
stock of any class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares for which an adjustment is
required to be made pursuant to Section 5, (ii) to distribute to the holders of
its Common Shares rights to subscribe for or to purchase any Additional Common
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Common Shares, (iv) to
effect any transaction described in Section 5.1(h) or (v) to effect the
liquidation, dissolution or winding up of the Company, then, and in each such
case, the Company shall give to each Holder of a Warrant Certificate, in
accordance with Section 10.1(b), a notice of such proposed action or event.
Such notice shall specify (x) the date on which a record is to be taken for the
purposes of such dividend or distribution; and (y) the date on which such
reclassification, transaction, event, liquidation, dissolution or winding up is
expected to become effective and the date as of which it is expected that
holders of Common Shares of record shall be entitled to exchange their Common
Shares for securities, cash or other property deliverable upon such
reclassification, transaction, event, liquidation, dissolution or winding up.
Such notice shall be given, in the case of any action covered by clause (i) or
(ii) above, at least ten (10) days prior to the record date for determining
holders of the Common Shares for purposes of such action or, in the case of any
action covered by clauses (iii) through (v), at least twenty (20) days prior to
the applicable effective or expiration date specified above or, in any such
case, prior to such earlier time as notice thereof shall be required to be
given pursuant to Rule 10b-17 under the Exchange Act, if applicable.
If at any time the Company shall cancel any of the proposed
transactions for which notice has been given under this Section 10.2 prior to
the consummation thereof, the Company shall give each Holder prompt notice of
such cancellation in accordance with Section 10.1(b) hereof.
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11. APPLICABLE LAW
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH
WARRANT EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THE APPLICATION
OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
12. PERSONS BENEFITTING
This Agreement shall be binding upon and inure to the benefit of the
Company and JEDI, and their respective successors and assigns and the Holders
from time to time of the Warrant Certificates. Nothing in this Agreement is
intended or shall be construed to confer upon any Person, other than the
Company, JEDI and the Holders of the Warrant Certificates, any right, remedy or
claim under or by reason of this Agreement or any part hereof. Each Holder, by
acceptance of a Warrant Certificate, agrees to all of the terms and provisions
of this Agreement applicable thereto.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
14. AMENDMENTS
This Agreement may be amended by the Company only with the consent of
the Holders of a majority of the then outstanding Warrants. Notwithstanding the
foregoing, the consent of each Holder of a Warrant affected shall be required
for any amendment pursuant to which the Warrant Price would be increased or the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided herein).
Upon execution and delivery of any amendment pursuant to this
Section 14, such amendment shall be considered a part of this Agreement for all
purposes and every Holder of a Warrant Certificate theretofore or thereafter
delivered hereunder shall be bound thereby.
Promptly after the execution by the Company of any such amendment, the
Company shall give notice to the Holders of Warrant Certificates, setting forth
in general terms the substance of such amendment, in accordance with the
provisions of Section 10.1(b). Any failure of the Company to mail such notice
or any defect therein, shall not, however, in any way impair or affect the
validity of any such amendment.
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15. INSPECTION
The Company may require such Holder to submit his Warrant Certificate
for inspection by it.
16. SUCCESSOR TO THE COMPANY
So long as Warrants remain outstanding, the Company will not enter
into any Non-Surviving Combination unless the acquirer (or its parent company
under any triangular acquisition) shall expressly assume by a supplemental
agreement, executed and delivered to the Company, in form reasonably
satisfactory to the Company, the due and punctual performance of every covenant
of this Agreement on the part of the Company to be performed and observed and
shall have provided for exercise rights in accordance with Section 5.1(h). Upon
the consummation of such Non-Surviving Combination, the acquirer (or its parent
company under any triangular acquisition) shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this
Agreement with the same effect as if such acquirer (or its parent company under
any triangular acquisition) had been named as the Company herein.
17. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto
as to the subject matter hereof and supersedes all previous agreements among
all or some of the parties hereto with respect thereto, whether written, oral
or otherwise.
18. HEADINGS
The descriptive headings of the several Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above written.
BELCO OIL & GAS CORP.
By: /s/ XXXXXX X. XXXXXX
---------------------------------------------
Xxxxxx X. Xxxxxx, Chairman of the Board and
Chief Executive Officer
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
By: Enron Capital Management Limited Partnership,
its general partner
By: Enron Capital Corp., its general partner
By: /s/ XXXXXXX X. XXXXXXXXX
---------------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
-------------------------------------------
Title: Agent and Attorney-In-Fact
------------------------------------------
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EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION
REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
BELCO OIL & GAS CORP.
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
No. ______________ _______________ Warrants
THIS CERTIFIES THAT, for value received, _______________________________
____________________, or registered assigns, is the registered owner of
______________________ Warrants to Purchase Common Shares of Belco Oil & Gas
Corp., a Nevada corporation (the "Company," which term includes any successor
thereto under the Warrant Agreement), and is entitled, subject to and upon
compliance with the provisions hereof and of the Warrant Agreement, at such
Holder's option, at any time when the Warrants evidenced hereby are exercisable,
to purchase from the Company one Warrant Share for each Warrant evidenced
hereby, at the purchase price of $27.50 per share (as adjusted from time to
time, the "Warrant Price"), payable in full at the time of purchase, the number
of Warrant Shares into which and the Warrant Price at which each Warrant shall
be exercisable, each being subject to adjustment as provided in Section 5 of the
Warrant Agreement.
The Holder of this Warrant Certificate may exercise all or any whole number
of the Warrants evidenced hereby, on any Business Day on and after the Trigger
Date until 5:00 p.m., New York City time, on November __, 2000 (subject to
earlier expiration pursuant to Section 4 of the Warrant Agreement, the
"Expiration Date") for the Warrant Shares purchasable hereunder.
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Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed under its corporate seal.
BELCO OIL & GAS CORP.
[SEAL] By:
----------------------------------------
Xxxxxx X. Xxxxxx, Chairman of the Board
and Chief Executive Officer
ATTEST:
---------------------------
Dated:
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[REVERSE OF WARRANT CERTIFICATE]
BELCO OIL & GAS CORP.
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
1. General.
The Warrants evidenced hereby are one of a duly authorized issue of
Warrants of the Company designated as its Warrants to Purchase Common Shares
("Warrants"), limited in aggregate number to ______ Warrants issued under and
in accordance with the Warrant Agreement, dated as of November __, 1997 (the
"Warrant Agreement"), between the Company and Joint Energy Development
Investments Limited Partnership, a Delaware limited partnership ("JEDI"), to
which Warrant Agreement and all amendments thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, JEDI, the Holders of Warrant Certificates
and the owners of the Warrants evidenced thereby and of the terms upon which the
Warrant Certificates are, and are to be, delivered. A copy of the Warrant
Agreement shall be available at all reasonable times at the Corporate Office for
inspection by the Holder hereof.
In the event of the exercise of less than all of the Warrants evidenced
hereby, a new Warrant Certificate of the same tenor and for the number of
Warrants which are not exercised shall be issued by the Company in the name or
upon the written order of the Holder of this Warrant Certificate upon the
cancellation hereof.
All Warrant Shares issuable by the Company upon the exercise of Warrants
shall, upon such issuance, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive or similar rights. The Company shall pay
any and all taxes (other than income taxes) that may be payable in respect of
the issue or delivery of Warrant Shares on exercise of Warrants. The Company
shall not be required, however, to pay any tax or other charge imposed in
respect of any transfer involved in the issue and delivery of any certificates
for Warrant Shares or payment of cash to any Person other than the Holder of the
Warrant Certificate surrendered upon the exercise of a Warrant, and in case of
such transfer or payment, the Company shall not be required to issue or deliver
any certificate or pay any cash until (a) such tax or charge has been paid or an
amount sufficient for the payment thereof has been delivered to the Company or
(b) it has been established to the Company's satisfaction that any such tax or
other charge that is or may become due has been paid.
The Warrant Certificates are issuable only in registered form in
denominations of whole numbers of Warrants. Upon surrender at the Corporate
Office and payment of the charges specified herein and in the Warrant Agreement,
this Warrant Certificate may be exchanged for Warrant Certificates in other
authorized denominations or the transfer hereof may be registered in whole or in
part in authorized denominations to one or more designated transferees, subject
to the restrictions
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on transfer set forth herein and in the Warrant Agreement; provided, however,
that such other Warrant Certificates issued upon exchange or registration of
transfer shall evidence the same aggregate number of Warrants as this Warrant
Certificate. The Company shall cause to be kept at the Corporate Office the
Warrant Register in which, subject to such reasonable regulations as the Company
may prescribe and such regulations as may be prescribed by law, the Company
shall provide for the registration of Warrant Certificates and of transfers or
exchanges of Warrant Certificates.
2. Expiration.
Except as provided in the Warrant Agreement, all outstanding Warrants shall
expire and all rights of the Holders of Warrant Certificates evidencing such
Warrants shall terminate and cease to exist, as of 5:00 p.m., New York time, on
the Expiration Date. "Expiration Date" shall mean November ___, 2000, or such
earlier date as determined in accordance with the Warrant Agreement.
3. Liquidation of the Company.
If, on or prior to the Expiration Date, the Company (or any other Person
controlling the Company) shall propose a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, each Warrantholder
shall receive the securities, money or other property which such Warrantholder
would have been entitled to receive had such Warrantholder been the holder of
record of the Warrant Shares into which the Warrants were exercisable
immediately prior to such dissolution, liquidation or winding up (net of the
then applicable Warrant Price), and the rights to exercise such Warrants shall
terminate.
4. Anti-Dilution Adjustments.
The number of Warrant Shares issuable upon exercise of a Warrant shall be
adjusted on occurrence of certain events, including, without limitation, the
payment of certain dividends on, or the making of certain distributions in
respect of, the Common Shares, including the distribution of rights to purchase
Common Shares (or securities convertible into or exchangeable for Common Shares)
at a price below the Current Market Price. An adjustment shall also be made in
the event of a combination, subdivision or reclassification of the Common
Shares. Adjustments will be made whenever and as often as any specified event
requires an adjustment to occur.
5. Procedure for Exercising Warrant.
Subject to the provisions hereof and of the Warrant Agreement, the Holder
of this Warrant Certificate may exercise all or any whole number of the Warrants
evidenced hereby by either of the following methods:
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(A) The Holder may deliver to the Corporate Office (i) a written notice
of such Holder's election to exercise all or a portion of the Warrants
evidenced hereby, duly executed by such Holder in the form set forth below,
which notice shall specify the number of Warrant Shares to be purchased,
(ii) this Warrant Certificate and (iii) a sum equal to the aggregate
Warrant Price for the Warrant Shares into which the Warrants represented by
this Warrant Certificate are being exercised, which sum shall be paid in
any combination elected by such Holder of (x) certified or official bank
checks in New York Clearing House funds payable to the order of the Company
and delivered to the Corporate Office, or (y) wire transfers in immediately
available funds to the account of the Company at such banking institution
as the Company shall have given notice to the Holders in accordance with
the Warrant Agreement; or
(B) The Holder may also exercise all or any of the Warrants in a
"cashless" or "net-issue" exercise by delivering to the Company at the
Corporate Agency Office (i) a written notice of such Holder's election to
exercise all or a portion of the Warrants evidenced hereby, duly executed
by such Holder in the form set forth below, which notice shall specify the
number of Warrant Shares to be delivered to such Holder and the number of
Warrant Shares with respect to which Warrants represented by this Warrant
Certificate are being surrendered in payment of the aggregate Warrant Price
for the Warrant Shares to be delivered to the Holder, and (ii) this Warrant
Certificate. For purposes of this subparagraph (B), each Warrant Shares as
to which such Warrants are surrendered in payment of the aggregate Warrant
Price will be attributed a value equal to (x) the Current Market Price per
share of Common Shares minus (y) the then-current Warrant Price.
6. Registered Holder.
Prior to due presentment of this Warrant Certificate for registration of
transfer, the Company and any agent of the Company may treat the Person in whose
name this Warrant Certificate is registered as the owner hereof for all
purposes, and neither the Company nor any agent of the Company shall be affected
by notice to the contrary.
7. Amendment.
The Warrant Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Warrant Certificates under the Warrant
Agreement at any time by the Company with the consent of the Holders of Warrant
Certificates evidencing a majority of the then outstanding Warrants.
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8. Status as Warrantholder.
Prior to the exercise of the Warrants, except as may be specifically
provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate,
as such, shall be entitled to any of the rights of a holder of Common Shares of
the Company, including, without limitation, the right to vote at, or to receive
any notice of, any meetings of stockholders of the Company; (ii) the consent of
any Holder shall not be required with respect to any action or proceeding of the
Company; (iii) except as provided with respect to the dissolution, liquidation
or winding up of the Company, no Holder, by reason of the ownership or
possession of a Warrant or the Warrant Certificate representing the same, shall
have any right to receive any stock dividends, allotments or rights or other
distributions (except as specifically provided in the Warrant Agreement), paid,
allotted or distributed or distributable to the stockholders of the Company
prior to or for which the relevant record date preceded the date of the exercise
of such Warrant; and (iv) no Holder shall have any right not expressly conferred
by the Warrant Agreement or Warrant Certificate held by such Holder.
Notwithstanding anything herein to the contrary, if the Company declares and
pays any cash dividend or makes any distribution in cash in respect of its
Common Shares, it shall pay each Holder of Warrants an amount in cash equal to
the amount that such Holder would have received had it been a holder of record
of the Warrant Shares issuable upon exercise of its Warrants immediately prior
to the record date for such dividend or distribution.
9. Governing Law.
THIS WARRANT CERTIFICATE, EACH WARRANT EVIDENCED THEREBY AND THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO
THE EXTENT THAT APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
10. Definitions.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
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FORM OF EXERCISE
In accordance with and subject to the terms and conditions hereof and of
the Warrant Agreement, the undersigned registered Holder of this Warrant
Certificate hereby irrevocably elects to exercise ____________________ Warrants
evidenced by this Warrant Certificate or represents that such Holder has
tendered the Warrant Price for each of the Warrants evidenced hereby being
exercised in the aggregate amount of $_________ in the indicated combination of:
(i) cash ($____________);
(ii) certified bank check payable to the order of the Company
($___________ );
(iii) official bank check in New York Clearing House funds payable to
the order of the Company ($____________);
(iv) or wire transfer in immediately available funds to the account
designated by the Company for such purpose ($____________); or
(v) "cashless" or "net-issue" exercise with respect to ___________
Warrants pursuant to Section 3.2(c)(ii) of the Warrant Agreement and
Section 5(A) of this Warrant Certificate.
The undersigned requests that the Warrant Shares issuable upon exercise be
in fully registered form in such denominations and registered in such names and
delivered, together with any other property receivable upon exercise, in such
manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
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Dated: Name:
------------------------------ -----------------------------------
(Please Print)
------------------------------------
(Insert Social Security or Other
Identifying Number of Holder) Address:
----------------------------------------
----------------------------------------
----------------------------------------
Signature
Signature Guaranteed:
--------------------------
Instructions (i) as to denominations and names of Warrant Shares issuable
upon exercise and as to delivery of such securities and any other property
issuable upon exercise and (ii) if applicable, as to Warrant Certificates
evidencing unexercised Warrants:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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Assignment
(Form of Assignment To Be Executed If Holder Desires To Transfer Warrant
Certificate)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto
Please insert social security
or other identifying number
------------------------------
--------------------------------------------------
(Please print name and address including zip code)
--------------------------------------------------
the Warrants represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint ___________________ Attorney, to transfer
said Warrant Certificate on the books of the within-named Company with full
power of substitution in the premises.
Dated:
---------------------------------
Signature
Signature Guaranteed:
---------------------------
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