1
WARRANT AGREEMENT
BETWEEN
XXXXXX OIL AND GAS COMPANY
AND
DATED AS OF OCTOBER 30, 1992
2
WARRANT AGREEMENT dated as of October 30, 1992, between Xxxxxx Oil and
Gas Company, a Delaware corporation (the "Company") and ____________ ("Holder").
WHEREAS, the Company proposes to issue to the Holder as partial
compensation for its agreement to sell the partnership assets of the Xxxxxx Oil
& Gas Drilling Partnership 1989-3 L.P. (the "Partnership") and another for
Xxxxxx Oil & Gas Drilling Program 1990-1 L.P. (the "Partnership") common stock
purchase warrants (the "Warrants") to purchase up to ____________ shares (the
"Warrant Shares") of the Company's Common Stock, par value $.01 per share (the
"Common Stock"), each Warrant entitling the holder thereof to purchase one share
of Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and in the Agreement set forth and for other good and valuable
consideration, the parties hereto agree as follows:
1. Issuance of Warrants; Form of Warrant. The Company will issue and
deliver the Warrants to Holder, in consideration for, and as part of the
compensation to Holder in connection with the sale of the assets of the
Partnership. The number of Warrants to be issued and delivered shall be
________________. No cash consideration will be paid by Holder for the Warrants.
The text of each Warrant, of the purchase form and of each assignment form to be
printed on the reverse thereof shall be substantially as set forth in Exhibit A
attached hereto. The Warrants shall be executed on behalf of the Company by the
manual or facsimile signature of the present or any future Chairman of the
Board, President, Treasurer or Vice President of the Company, under its
corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the present or future Secretary or an Assistant Secretary of the
Company. A Warrant bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the Company
notwithstanding that such individuals or any of them shall have ceased to hold
such offices prior to the delivery of such Warrant or did not hold such offices
on the date of this Agreement.
Warrants shall be dated as of the date of execution thereof by the
Company either upon initial issuance or upon division, exchange, substitution or
transfer.
2. Registration. The Warrants shall be numbered and shall be registered
on the books of the Company (the "Warrant Register") as they are issued. The
Company shall be entitled to treat the registered holder of any Warrant on the
Warrant Register (the "Holder") 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
1
3
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 or transfer, or with knowledge
of such facts that its participation therein amounts to bad faith. The Warrants
shall be registered initially in the name of Holder in such denominations as
Holder may request in writing to the Company.
3. Exchange of Warrant Certificates. Subject to any restriction upon
transfer set forth in this Agreement, each Warrant certificate may be exchanged
at the option of the Holder thereof for another certificate or certificates of
different denominations entitling the Holder thereof to purchase upon surrender
to the Company or its duly authorized agent a like aggregate number of Warrant
Shares as the certificate or certificates surrendered then entitle such Holder
to purchase. Any Holder desiring to exchange a Warrant certificate or
certificates shall make such request in writing delivered to the Company, and
shall surrender, properly endorsed, the certificate or certificates to be so
exchanged. Thereupon, the Company shall execute and deliver to the person
entitled thereto a new Warrant certificate or certificates, as the case may be,
as so requested. Any Warrant issued upon exchange, transfer or partial exercise
of the Warrants shall be the valid obligation of the Company, evidencing the
same generic rights and entitled to the same generic benefits under this
Agreement as the Warrants surrendered for such exchange, transfer or exercise.
4. Restrictions on Transfer. From the date hereof until October 30,
1994 (the "Restricted Period"), the Warrants and the Warrant Shares may not be
sold, transferred, assigned or hypothecated except by operation of law. The
Warrants shall be transferable only on the Warrant Register upon delivery to the
Company of the Warrant certificate or certificates 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 and whether or not during the Restricted Period, the Company shall
have no obligation to cause Warrants to be transferred on its books to any
person, unless the Holder of such Warrants shall furnish to the Company evidence
of compliance with the Securities Act of 1933, as
2
4
amended (the "Act"), in accordance with the provisions of Section 11 of this
Agreement.
5. Term of Warrants; Exercise of Warrants.
(a) Each Warrant entitles the Holder thereof to purchase one
share of Common Stock subject to adjustment in accordance with Section
9 hereof at any time from 9:00 A.M., Los Angeles time, on October 1,
1993 until 5:00 P.M., Los Angeles time, on October 30, 1997 (the
"Expiration Date") at a purchase price of $10.00 per share.
(b) The Warrant Price and the number of shares issuable upon
exercise of Warrants are subject to adjustment upon the occurrence of
certain events, pursuant to the provisions of Section 9 of this
Agreement. Subject to the provisions of this Agreement, each Holder
shall have the right, which may be exercised as expressed in such
Warrants, to purchase from the Company (and the Company shall issue and
sell to such Holder) the number of fully paid and nonassessable shares
of Common Stock specified in such Warrants, upon surrender to the
Company, or its duly authorized agent, of such Warrants, with the
purchase form on the reverse thereof duly filled in and signed, and
upon payment to the Company of the Warrant Price, as adjusted in
accordance with the provisions of Section 9 of this Agreement, for the
number of shares in respect of which such Warrants are then exercised.
Payment of such Warrant Price may be made only in cash, or by certified
or official bank check.
Upon such surrender of Warrants, and payment of the Warrant Price as
aforesaid, the Company shall issue and cause to be delivered with all reasonable
dispatch to or upon the written order of the Holder and (subject to receipt of
evidence of compliance with the Act in accordance with the provisions of Section
11 of this Agreement) in such name or names as the Holder may designate, a
certificate or certificates for the number of full shares of Common Stock so
purchased upon the exercise of such Warrants, together with cash, as provided in
Section 10 of this Agreement, in respect of any fraction of a share of such
stock otherwise issuable upon such surrender. Such certificate or certificates
shall be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such shares as of
the date of the surrender of such Warrants and payment of the Warrant Price as
aforesaid; provided, however, that if, at the time of surrender of the Warrant
and payment of such Warrant Price, the transfer books for the Common Stock or
other class of stock purchasable upon the exercise of the Warrants shall be
closed, the certificates for the shares in respect of which the Warrants are
then exercised shall be issuable as of the date on which such books shall next
be opened whether before, on or after
3
5
the Expiration Date and until such date the Company shall be under no duty to
deliver any certificate for such shares; provided, further, however, that the
transfer books shall not be closed at any one time for a period longer than five
days unless otherwise required by law. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the Holders thereof, either in
full or from time to time in part and, in the event that any Warrant is
exercised in respect of less than all of the shares purchasable on such exercise
at any time prior to the Expiration Date, a new certificate evidencing the
remaining Warrant or Warrants will be issued.
5.1. Compliance with Government Regulations. The Company covenants that
if any shares of Common Stock required to be reserved for purposes of exercise
or conversion of Warrants require, under any Federal or state law or applicable
governing rule or regulation of any national securities exchange, registration
with or approval of any governmental authority, or listing on any such national
securities exchange, before such shares may be issued upon exercise, the Company
will in good faith and as expeditiously as possible endeavor to cause such
shares to be duly registered, approved or listed on the relevant national
securities exchange, as the case may be, provided, however, that in no event
shall such shares of Common Stock be issued, and the Company is hereby
authorized to suspend the exercise of all Warrants, for the period during which
such registration, approval or listing is required but not in effect.
6. Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the initial issuance of Warrant Shares upon the exercise
of Warrants and any securities issued pursuant to Section 9 hereof; provided,
however, that the Company shall not be required to pay any tax or taxes which
may be payable in respect of any transfer involved in the issue or delivery of
any Warrants or certificates for Warrant Shares and any securities issued
pursuant to Section 9 hereof in a name other than that of the Holder of such
Warrants.
7. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant, or in lieu of and in 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 Warrants shall also comply with such other reasonable
4
6
regulations and pay such other reasonable charges as the Company
may prescribe.
8. Reservation of Warrant Shares; Purchase and Cancellation of
Warrants. There have been reserved out of the authorized and unissued shares of
Common Stock, a number of shares sufficient to provide for the exercise of the
rights of purchase represented by the Warrants, and the transfer agent for the
Common Stock ("Transfer Agent") and every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of any of the
rights of purchase aforesaid are hereby irrevocably authorized and directed at
all times until the Expiration Date to reserve such number of authorized and
unissued shares as shall be requisite for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Company will
supply the Transfer Agent and any such subsequent transfer agent with duly
executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be issuable as provided in Section
10 of this Agreement. The Company will furnish to the Transfer Agent and any
such subsequent transfer agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each Holder pursuant to Section 9.3
hereof. All Warrants surrendered in the exercise of the rights thereby evidenced
shall be cancelled, and such cancelled Warrants shall constitute sufficient
evidence of the number of shares of stock which have been issued upon the
exercise of such Warrants (subject to adjustment as herein provided). No shares
of stock shall be subject to reservation in respect of the Warrants subsequent
to the Expiration Date except to the extent necessary to comply with the terms
of this Agreement.
9. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as hereafter defined.
9.1. Mechanical Adjustments. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii)
subdivide its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue
5
7
by reclassification of its shares of Common Stock other securities of
the Company (including any such reclassification in connection with a
consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the
Holder of each Warrant shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which he would
have owned or have been entitled to receive after the happening of any
of the events described above, had such Warrant been exercised
immediately prior to the happening of such event or any record date
with respect thereto regardless of whether the Warrants are exercisable
at the time of the happening of such event or at the time of any record
date with respect thereto. An adjustment made pursuant to this
paragraph (a) shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such
event.
(b) In case the Company shall issue rights, options or
warrants to all holders of its outstanding Common Stock, without any
charge to such holders, entitling them (for a period expiring within 60
days after the record date mentioned below) to subscribe for or
purchase shares of Common Stock at a price per share which is lower at
the record date mentioned below than the then current market price per
share of Common Stock (as determined in accordance with paragraph (e)
below), the number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon exercise of each Warrant
by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights,
options or warrants plus the number of additional shares of Common
Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
on the date of issuance of such rights, options or warrants plus the
number of shares which the aggregate offering price of the total number
of shares of common stock so offered would purchase at the current
market price per share of Common Stock at such record date. Such
adjustment shall be made whenever such rights, options or warrants are
issued, and shall become effective immediately after the record date
for the determination of stockholders entitled to receive such rights,
options or warrants.
(c) In case the Company shall distribute to all holders of its
shares of Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions payable out of consolidated
earnings or earned surplus and dividends or distributions referred to
in paragraph (a) above or in the paragraph immediately following this
paragraph) or rights,
6
8
options or warrants, or convertible or exchangeable securities
containing the right to subscribe for or purchase shares of Common
Stock (excluding those referred to in paragraph (b) above), then in
each case the number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon the exercise of each
Warrant by a fraction, of which the numerator shall be the then current
market price per share of Common Stock (as determined in accordance
with paragraph (e) below) on the date of such distribution, and of
which the denominator shall be the then current market price per share
of Common Stock, less the then fair value (as determined in good faith
by the Board of Directors of the Company, whose determination shall be
conclusive) of the portion of the assets or evidences of indebtedness
so distributed or of such subscription rights, options or warrants, or
of such convertible or exchangeable securities applicable to one share
of Common Stock. Such adjustment shall be made whenever any such
distribution is made, and shall become effective on the date of
distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
In the event of distribution by the Company to all holders of
its shares of Common Stock of stock of a subsidiary or securities
convertible into or exercisable for such stock, then in lieu of an
adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant, the Holder of each Warrant, upon the exercise
thereof at any time after such distribution, shall be entitled to
receive from the Company, such subsidiary or both, as the Company shall
determine, the stock or other securities to which such Holder would
have been entitled if such Holder had exercised such Warrant
immediately prior thereto regardless of whether the Warrants are
exercisable at such time, all subject to further adjustment as provided
in this subsection 9.1; provided, however, that no adjustment in
respect of dividends or interest on such stock or other securities
shall be made during the term of a Warrant or upon the exercise of a
Warrant.
(d) In case the Company shall sell and issue shares of Common
Stock (other than pursuant to rights, options, warrants, or convertible
securities initially issued before the date of this Agreement) or
rights, options, warrants or convertible securities containing the
right to subscribe for or purchase shares of Common Stock (excluding
shares, rights, options, warrants or convertible securities issued in
any of the transactions described in paragraphs (a), (b) or (c) above)
at a price per share of Common Stock (determined, in the case of such
rights, options, warrants or convertible securities, by dividing (w)
the total of the amount received or receivable by the Company
(determined as provided below) in
7
9
consideration of the sale and issuance of such rights, options,
warrants or convertible securities, by (x) the total number of shares
of Common Stock covered by such rights, options, warrants or
convertible securities) lower than the then current market price per
share of Common Stock (as determined in accordance with paragraph (e)
below) in effect immediately prior to such sale and issuance, then the
number of Warrant Shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of Warrant
Shares theretofore purchasable upon exercise by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding
on the date of issuance of such shares, rights, options, warrants or
convertible securities plus the number of additional shares of Common
Stock sold or subject to issuance pursuant to such rights, options,
warrants or convertible securities, and of which the denominator shall
be the number of shares of Common Stock outstanding on the date of
issuance of such shares, rights, options, warrants or convertible
securities plus the number of shares of Common Stock which the
aggregate consideration received or receivable (determined as provided
below) for such sale or issuance would purchase at such current market
price per share. Such adjustment shall be made successively whenever
such an issuance is made. For the purposes of such adjustments, the
consideration received or receivable by the Company for rights,
options, warrants or convertible securities shall be deemed to be the
consideration received by the Company for such rights, options,
warrants or convertible securities, plus the consideration or premiums
stated in such rights, options, warrants or convertible securities to
be paid for the shares of Common Stock covered thereby. In case the
Company shall sell and issue shares of Common Stock, or rights,
options, warrants or convertible securities containing the right to
subscribe for or purchase shares of Common Stock, for a consideration
consisting, in whole or in part, of property other than cash or its
equivalent, then in determining the "price per share of Common Stock"
and the "consideration received or receivable by the Company" for
purposes of the first sentence of this paragraph (d), the Board of
Directors shall determine, in its discretion, the fair value of said
property, and such determination, if made in good faith, shall be
binding upon all Holders.
(e) For the purpose of any computation under paragraphs (b),
(c) and (d) of this Section, the current market price per share of
Common Stock at any date shall be the daily closing price of the
Company's Common Stock, as reported by the American Stock Exchange. The
closing price for such day shall be the last such reported sales price
regular way or, in case no such reported sale takes place on such day,
the average of the closing bid and asked prices regular way for such
day, in each case on the principal national securities exchange on
8
10
which the shares of Common Stock are listed or admitted to trading or,
if not listed or admitted to trading, the average of the closing bid
and asked prices of the Common Stock in the over-the-counter market as
reported by NASDAQ or any comparable system. In the absence of one or
more such quotations, the Board of Directors of the Company shall
determine the current market price, in good faith, on the basis of
such quotations as it considers appropriate. Notwithstanding the
foregoing, for the purpose of any calculation under paragraph (d)
above (A) with respect to any issuance of options under the Company's
employee or director compensation stock option plans as in effect or
as adopted by the Board of Directors of the Company on the date
hereof, the term "current market price" in such instances shall mean
the fair market price on the date of the issuance of any such option
determined in accordance with the Company's employee compensation
stock option plans as in effect or as adopted by the Board of
Directors of the Company on the date hereof; (B) with respect to any
issuances of Common Stock (or rights, options, warrants or convertible
securities containing the right to subscribe for or purchase shares of
Common Stock) in connection with bona fide corporate transactions
(other than issuances in such transactions for cash or similar
consideration), the term "fair market price" shall mean the fair
market price per share as determined in arm's-length negotiations by
the Company and such other parties (other than affiliates or
subsidiaries of the Company) to such transactions as reflected in the
definitive documentation with respect thereto, unless such
determination is not reasonably related to the closing market price on
the date of such determination; and (c) with respect to any issuance
of the Company's common stock for cash or similar consideration in a
firm commitment underwriting, the current fair market price shall be
the price the shares are sold at, regardless of whether such price is
higher or lower than the quoted price on the date of the sale and
therefore no adjustment will be made.
(f) In any case in which this Section 9.1 shall require
that any adjustment in the number of Warrant Shares be made effective
as of immediately after a record date for a specified event, the
Company may elect to defer until the occurrence of the event the
issuing to the Holder of any Warrant exercised after that record date
the shares of Common Stock and other securities of the Company, if
any, issuable upon the exercise of any Warrant over and above the
shares of Common Stock and other securities of the Company, if any,
issuable upon the exercise of any Warrant prior to such adjustment;
provided, however, that the Company shall deliver to the holder a due
xxxx or other appropriate instrument evidencing the holder's right to
receive such additional
9
11
shares or securities upon the occurrence of the event requiring such
adjustment.
(g) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment would
require an increase or decrease of at least one percent (1%) in the
number of Warrant Shares purchasable upon the exercise of each
Warrant; provided, however, that any adjustments which by reason of
this paragraph (g) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest one-thousandth of a share.
(h) Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as herein provided, the
Warrant Price payable upon the exercise of each Warrant shall be
adjusted by multiplying such Warrant Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number
of Warrant Shares purchasable upon the exercise of such Warrant
immediately prior to such adjustment, and of which the denominator
shall be the number of Warrant Shares purchasable immediately
thereafter.
(i) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made under
paragraphs (b), (c) and (d) if the Company issues or distributes to
each Holder of Warrants the rights, options, warrants, or convertible
or exchangeable securities, or evidences of indebtedness or assets
referred to in those paragraphs which each Holder of Warrants would
have been entitled to receive had the Warrants been exercised prior to
the happening of such event or the record date with respect thereto
regardless of whether the Warrants are exercisable at the time of the
happening of such event or at the time of any record date with respect
thereto. No adjustment need be made for a change in the par value of
the Warrant Shares.
(j) For the purpose of this Section 9.1, the term "shares
of Common Stock" shall mean (i) the class of stock designated as the
Common Stock of the Company at the date of this Agreement, or (ii) any
other class of stock resulting from successive changes or
reclassifications of such shares consisting solely of changes in par
value, or from par value to no par value, or from no par value to par
value. In the event that at any time, as a result of an adjustment
made pursuant to paragraph (a) above, the Holders shall become
entitled to purchase any securities of the Company other than shares
of Common Stock, thereafter the number of such other securities so
purchasable upon exercise of each Warrant and the Warrant Price of
such securities shall be subject to adjustment from time to time in a
manner and on terms as
10
12
nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in paragraphs (a) through (i), inclusive,
above, and the provisions of Section 5 and Sections 9.2 through 9.5,
inclusive, with respect to the Warrant Shares, shall apply on like
terms to any such other securities.
(k) Upon the expiration of any rights, options, warrants
or conversion or exchange privileges, if any thereof shall not have
been exercised, the Warrant Price and the number of shares of Common
Stock purchasable upon the exercise of each Warrant shall, upon such
expiration, be readjusted and shall thereafter be such as it would
have been had it been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (A) the only
shares of Common Stock so issued were the shares of Common Stock, if
any, actually issued or sold upon the exercise of such rights,
options, warrants or conversion or exchange rights and (B) such shares
of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants or
conversion or exchange rights whether or not exercised; provided,
however, that no such readjustment shall have the effect of increasing
the Warrant Price or decreasing the number of Warrant Shares by an
amount in excess of the amount of the adjustment initially made with
respect to the issuance, sale or grant of such rights, options,
warrants or conversion or exchange rights.
9.2. Voluntary Adjustment by the Company. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Warrant Price to any amount determined appropriate by the Board of Directors of
the Company.
9.3. Notice of Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Warrant Price of such
Warrant Shares is adjusted, as herein provided, the Company shall promptly mail
by first class, postage prepaid, to each Holder notice of such adjustment or
adjustments and a certificate of a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants employed by the Company) setting forth the number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price of such
Warrant Shares after such adjustment and setting forth a brief statement of the
facts requiring such adjustment and setting forth the computation by which such
adjustment was made. Such certificate, absent manifest error, shall be
conclusive evidence of the correctness of such adjustment.
11
13
9.4. No Adjustment for Dividends. Except as provided in Section
9.1, no adjustment in respect of any dividends shall be made during the term of
a Warrant or upon the exercise of a Warrant.
9.5. Preservation of Purchase Rights Upon Merger, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute with each Holder an agreement that each Holder shall have the right
thereafter upon payment of the Warrant Price in effect immediately prior to
such action to purchase upon exercise of each Warrant the kind and amount of
shares and other securities and property which he would have owned or have been
entitled to receive after the happening of such consolidation, merger, sale,
transfer or lease had such Warrant been exercised immediately prior to such
action regardless of whether the Warrants are exercisable at the time of such
action; provided, however, that no adjustment in respect of dividends, interest
or other income on or from such shares or other securities and property shall
be made during the term of a Warrant or upon the exercise of a Warrant. Such
agreement shall provide for adjustments, which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 9. The
provisions of this Section 9.5 shall similarly apply to successive
consolidations, mergers, sales, transfers or leases.
9.6. Statement on Warrants. Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable upon the exercise of
the Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
10. Fractional Interests. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Holder, the number of full Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
10, be issuable on the exercise of any Warrant (or specified portion thereof),
the Company shall pay an amount in cash equal to the closing price for one
share of the Common Stock, as determined in accordance with paragraph (e) of
Section 9.1, on the
12
14
trading day immediately preceding the date the Warrant is presented for
exercise, multiplied by such fraction.
11. Registration Under the Securities Act of 1933. Holder
represents and warrants to the Company that Holder will not dispose of any such
Warrants or Warrant Shares except pursuant to (i) an effective registration
statement, or (ii) an applicable exemption from registration under the
Securities Act of 1933 (the "Act"). In connection with any sale by Holder
pursuant to clause (ii) of the preceding sentence, Holder shall furnish to the
Company an opinion of counsel reasonably satisfactory to the Company to the
effect that such exemption from registration is available in connection with
such sale.
11a. Registration on Demand
(a) One time, upon the written request of the Holder, the Company
will notify all other holders and upon written request the Holder and other
persons who together with Holder own five percent of the Warrant Stock issued
in connection with the Offering ("Requesting Holders") that the Company effect
registration, qualification or compliance under the Securities Act and state
securities laws of all or part of the Registrable Securities of the Requesting
Holders and specifying the intended method of disposition thereof, the Company
shall (i) promptly thereupon give written notice of the proposed registration
to all other holder of Warrant Stock issued in connection with the Offering and
(ii) effect, as soon as practicable and within 90 days after such request, all
such registrations, qualifications and compliances under the Securities Act and
state securities law of the Registrable Securities which the Company has been
so requested to register by Requesting Holders and any other holder or holders
joining in such registration as specified in a written request received by the
Company within 15 business days after the Company's notice to the extent
requisite to permit the sale and distribution of such securities; provided,
however, that the Company shall not be obligated to effect a registration under
the Securities Act pursuant to this Section 3 before October 1, 1993.
(b) A registration requested pursuant to this Section will not be
deemed to have been effected (i) unless it has become effective and remained
effective for the period of not less than 180 days.
(c) If Requesting Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section and
provide the name of the managing underwriter or underwriters that the majority
in interest of such Requesting Holders would propose to employ in connection
13
15
with the public offering proposed to be made pursuant to the registration
requested; provided that if the Company reasonably objects to any managing
underwriter or underwriters proposed by Requesting Holders, the Requesting
Holders shall propose another managing underwriter or underwriters. If the
sale proposed by the Requesting Holders is to be effected pursuant to an
underwritten public offering, the right of Holder to registration pursuant to
this Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless Requesting Holders and such Holder) to the extent provided
herein. The Company and the Requesting Holders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting, and shall execute powers of attorney and custodial agreements in
customary form for selling same.
12. Right to Redeem.
(a) Each or all of the Warrants may be redeemed at the election of
the Company at any time after October 31, 1994 at the price of $0.05 per
Warrant (the "Redemption Price"), or at any time after the issuing of the
Warrants if the Common Stock of the Company closes at $15.00 per share or
higher for a period of ten consecutive trading days.
(b) The election of the Company to redeem any Warrants shall be
evidenced by a resolution of the Board of Directors to redeem all but not less
than all of the Warrants and shall for a date of redemption ("Redemption Date")
at least 60 days after notice to the Warrant Holders.
(c) Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 60 days prior to the Redemption Date to
each registered holder of Warrants to be called at his last address appearing
in the Warrants register.
All notices of redemption shall state:
(1) The Redemption Date,
(2) the Redemption Price,
(3) that upon the Redemption Date the Redemption Price
will become due and payable upon each such Warrant,
(4) the Warrant Price and that the right to exercise a
Warrant to be redeemed will terminate at the close of
business on the Redemption Date and the place or
places where such Warrants may be surrendered to be
exercised, and
(5) the place where such Warrants are to be surrendered
for payment of the Redemption Price.
14
16
Notice of redemption of Warrants to be redeemed at the election of the Company
shall be given by the Company.
(d) Notice of redemption having been given as aforesaid, the
Warrants so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price. Upon surrender of any such Warrant for
redemption in accordance with said notice such Warrant shall be redeemed by the
Company at the Redemption Price. If any Warrant redeemed shall not be so paid
upon surrender thereof for redemption, the principal shall, until paid, bear
interest from the Redemption Date at the rate of the prime rate of interest as
announced by the Bank.
13. Certificate to Bear Legends. The Warrants shall be subject to
a stop-transfer order and the certificate or certificates therefor shall bear
the following legend by which each Holder shall be bound:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES
OF COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT, OR (II) AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933.
ANY SALE PURSUANT TO CLAUSE (II) OF THE PRECEDING SENTENCE
MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH EXEMPTION
FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE."
The Warrant Shares or other securities issued upon exercise of the
Warrants shall, unless issued pursuant to an effective registration statement,
be subject to a stop-transfer order and the certificate or certificates
evidencing any such Warrant Shares or securities shall bear the following
legend by which the Holder thereof shall be bound:
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I)
AN EFFECTIVE REGISTRATION STATEMENT, OR (II) AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933.
ANY SALE PURSUANT TO CLAUSE (II) OF THE PRECEDING SENTENCE
MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL TO THE EFFECT
THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE."
15
17
14. No Rights as Stockholders; Notice to Holders. Nothing
contained in this Agreement or in any of the Warrants shall be construed as
conferring upon the Holders or their transferees the right to vote or to
receive dividends or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the Company or
any other matter, or any rights whatsoever as stockholders of the Company. If,
however, at any time prior to the expiration of the Warrants and prior to their
exercise, any of the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the holders of its shares of Common
Stock; or
(b) the Company shall offer to the holders of its shares
of Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any
right to subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer or lease or all or substantially all of its property, assets,
and business as an entirety) shall be proposed,
then in any one or more of said events the Company shall (a) give notice in
writing of such event to the Holders as provided in Section 15 hereof and (b)
if there are more than 100 Holders, cause notice of such event to be published
once in The Wall Street Journal (national edition), such giving of notice and
publication to be completed at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, or subscription
rights, or for the determination of stockholders entitled to vote on such
proposed dissolution, liquidation or winding up. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to publish, mail or receive such notice or any defect therein or in the
publication or mailing thereof shall not affect the validity of any action
taken in connection with such dividend, distribution or subscription rights, or
such proposed dissolution, liquidation or winding up.
15. Notices. Any notice pursuant to this Agreement to be given or
made by the Holder of any Warrant or Warrant Shares to or on the Company shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed as follows:
16
18
Xxxxxx Oil and Gas Company
000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Notices or demands authorized by this Agreement to be given or made to or on
the Holder of any Warrant or Warrant Shares shall be sufficiently given or made
(except as otherwise provided in this Agreement) if sent by registered mail,
return receipt requested, postage prepaid, addressed to such Holder at the
address of such Holder as shown on the Warrant Register or the Common Stock
Register, as the case may be.
16. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
giving effect to principles of conflict of laws.
17. Supplements and Amendments. The Company and the Holders
may from time to time supplement or amend this Agreement in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Holder may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which shall not adversely
affect the interests of the Holders. Any amendment to this Agreement may be
effected with the consent of Holders of at least 66 2/3% of the Warrants (for
this purpose Warrant Shares shall be deemed to be Warrants in the proportion
that Warrant Shares are then issuable upon the exercise of Warrants); provided
that, any amendment which shall have the effect of materially adversely
affecting the interests of any Holder shall not be effective with respect to
such Holder if such Holder shall not have consented thereto.
18. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Holders shall bind and
inure to the benefit of their respective successors and assigns hereunder.
19. Merger or Consolidation of the Company. So long as this
Agreement remains in effect, the Company will not merge or consolidate with or
into, or sell, transfer or lease all or substantially all of its property to,
any other corporation unless
17
19
the successor or purchasing corporation, as the case may be (if not the
Company), shall expressly assume, by supplemental agreement executed and
delivered to the Holders, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Company.
20. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Holders, any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive benefit of
the Company and the Holders of the Warrants and Warrant Shares.
21. Captions. The captions of the sections and subsections
of this Agreement have been inserted for convenience and shall have no
substantive effect.
22. Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on the day, month and year first above written.
XXXXXX OIL AND GAS COMPANY
By:
------------------------------
Xxxxx X. Xxxxx,
Vice President-Finance
(CORPORATE SEAL)
Attest:
---------------------------
Xxxx X. Xxxxxxx
18
