Exhibit 4.2
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement") is made and entered into as of _______
____, 2001, by and between American Energy Services, Inc., a Texas corporation
(the "Company") and _____________ (together with any successor, the "Warrant
Agent").
WHEREAS, the Company proposes to conduct a private offering (the "Offering") of
investment units (the `Units"), each consisting of a promissory note (the
"Notes") in the original principal amount of $1,000 and 500 warrants (the
"Warrants") to purchase one share of the Company's common stock, par value
$0.001 per share (the "Common Shares"); and,
WHEREAS, the Company proposes to issue to the purchasers in the Offering
certificates representing the Warrants (collectively, the "Warrant
Certificates"); and,
WHEREAS, the Company desires to appoint the Warrant Agent, and the Warrant Agent
agrees, to act on behalf of the Company in connection with the issuance,
transfer, exchange, replacement and surrender of the Warrant Certificates; and,
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement, among other things, the form and provisions of the Warrant
Certificates and the terms and conditions under which they may be issued,
transferred, exchanged, replaced and surrendered in connection with exercise of
the Warrants;
NOW THEREFORE, in consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DISTRIBUTION OF WARRANT CERTIFICATES
1.1 APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant Agent
to act on behalf of the Company in accordance with the instructions hereinafter
in this Agreement set forth, and the Warrant Agent hereby accepts such
appointment.
1.2 FORM OF WARRANT CERTIFICATES. The Warrant Certificates for the Warrants
shall be issued in registered form only and, together with the purchase and
assignment forms to be printed on the reverse thereof, shall be substantially in
the form of EXHIBIT A, and in addition, may have such letters, numbers or other
marks of identification or designation and such legends, summaries or
endorsements stamped, printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Agreement or as, in any particular case, may be required, in the opinion of the
Company, to comply with any law or with any rule or regulation of any regulatory
authority or agency, or to conform to customary usage.
1
1.3 EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates shall be
executed on behalf of the Company by its Chairman or Vice Chairman of the Board,
or President or any Vice President, and by its Chief Financial Officer or any
Assistant Treasurer or Secretary or any Assistant Secretary, either manually or
by facsimile signature printed thereon. The Warrant Certificates shall be
manually countersigned and dated the date of countersignature by the Warrant
Agent and shall not be valid for any purpose unless so countersigned and dated.
In the case any authorized officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be such officer of the Company either
before or after delivery thereof by the Company to the Warrant Agent, the
signature of such person on such Warrant Certificates, nevertheless, shall be
valid and such Warrant Certificates may be countersigned by the Warrant Agent
and issued and delivered to those persons entitled to receive the Warrants
represented by thereby with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
1.4 ISSUANCE AND DISTRIBUTION OF WARRANT CERTIFICATES. Upon completion of the
Offering, the Company shall deliver to the Warrant Agent an adequate supply of
Warrant Certificates for the Warrants executed on behalf of the Company as
described in Section 1.3 hereof. Upon receipt of an order from the Company, the
Warrant Agent shall within three (3) business days complete and countersign the
Warrant Certificates representing the total number of Warrants to be issued as
part of the Units, and shall deliver such Warrant Certificates pursuant to
written instructions of the Company.
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS
2.1 EXERCISE PRICE. Each Warrant Certificate for Warrants shall, when signed and
countersigned as set forth in Section 1.3 of this Agreement, entitle the
registered holder thereof to purchase from the Company one Common Share for each
Warrant represented thereby at an exercise price (the "Exercise Price") equal to
the lower of (a) $1.75 (the "Maximum Exercise Price"), or (b) the average of the
Market Price (as defined in Section 3.2 below) of the Common Shares for the ten
(10) trading days commencing on the first trading day immediately following the
effective date of a registration statement filed by the Company under the
Securities Act of 1933, as amended, with respect to the Common Shares issuable
upon exercise of the Warrants (a "Registration Statement"), but in any case not
less than $0.50 (the "Minimum Exercise Price"). The number of Common Shares
issuable upon exercise of a Warrant and the Exercise Price may be adjusted from
time to time pursuant to the provisions of Article III of this Agreement.
2.2 EXERCISABILITY OF WARRANTS. Each Warrant may be exercised at any time after
issuance, but not after 5:00 pm, central time on __________, 2006, unless
extended for an additional year at the Company's option by written notice given
to the Warrant Agent on or before __________, 2006 (the "Exercise Deadline").
2
2.3 PROCEDURE FOR EXERCISE OF WARRANTS. At anytime after the date of issuance
and before the Exercise Deadline, Warrants may be exercised by surrendering the
Warrant Certificates representing such Warrants to the Warrant Agent at its
offices as specified in Section 7.15 of this Agreement (the "Principal Office")
with the election to purchase form set forth on the Warrant Certificate duly
completed and executed, with signature guaranteed by an eligible guarantor
institution that is a participant in a signature guarantee program acceptable to
the Warrant Agent ("Signature Guaranteed"), accompanied by payment in full of
such taxes as are specified in Section 7.1 hereof and, unless the exercise may
be made in a cashless fashion pursuant to Section 3.1(b) the Exercise Price in
effect at the time of such exercise, for each Common Share with respect to which
such Warrants are being exercised. The Exercise Price and taxes shall be paid in
full by certified check or money order payable in United States currency to the
order of the Company. The date on which the Warrants are exercised is sometimes
referred to herein as the "Exercise Date."
2.4 PROCEDURE FOR CASHLESS EXERCISE OF WARRANTS. In the event that the Warrants
become eligible for cashless exercise pursuant to Section 3.1(b), Warrants may
be exercised by surrendering the Warrant Certificates representing such Warrants
to the Warrant Agent at its Principal Office with the election to purchase form
set forth on the Warrant Certificate duly completed and executed, with Signature
Guaranteed and noting the holder's desire to effect a cashless exercise, in
which case no payment of cash will be required. Upon such cashless exercise, the
number of Common Shares to be purchased by the exercising holder shall be
determined by dividing: (a) the number obtained by multiplying the number of
shares that are the subject of the exercise by the amount, if any, by which the
then Market Price exceeds the Exercise Price; by (2) the then per share Market
Price.
2.5 ISSUANCE OF COMMON SHARES. As soon as practicable after the Exercise Date,
the Warrant Agent shall provide the Company and the Escrow Agent under that
certain Escrow Agreement (the "Escrow Agreement") of even date herewith between
the Company and ___________________, as escrow agent (the "Escrow Agent"), with
written notice of such exercise. Upon receipt of such notice, the Company shall
cause the Escrow Agent to transfer to the exercising Warrant holder, in
certificated or uncertificated form, that number of Common Shares to which such
holder is entitled in accordance with the instructions set forth in the election
to purchase. All Common Shares issued on exercise of any Warrants shall be
validly authorized and issued, full paid and nonassessable, and free from all
taxes, liens and charges created by the Company in respect of the issue thereof,
and shall be previously unissued shares. Each person entitled to Common Shares
pursuant to instructions set forth in the election to purchase shall for all
purposes be deemed to have become the beneficial owner on the Exercise Date of
the Common Shares to be issued upon exercise of the Warrants covered by election
to purchase, irrespective of the date of issuance or delivery of the Common
Shares. Promptly after a Registration Statement has been declared effective by
the Securities and Exchange Commission (the "SEC"), the Company shall cause
notice thereof or a copy of the prospectus covering the Common Shares to be
mailed to the Warrant Agent and each registered holder of Warrants.
3
2.6 CERTIFICATE OF UNEXERCISED WARRANTS. In the event that less than all of the
Warrants represented by a Warrant Certificate are exercised, the Warrant Agent
shall countersign and mail, by first class mail, within 30 days of the Exercise
Date, to the registered holder of such Certificate, or such other person as
shall be designated in the election to purchase, a new Warrant Certificate
representing the number of full Warrants not exercised. In no event shall a
fraction of a Warrant be exercised, and the Warrant Agent shall distribute no
Warrant Certificates representing fractions of Warrants under this or any other
section of this Agreement. Final fractions of Common Shares shall be treated as
provided in Section 3.14
2.7 ESCROW OF COMMON SHARES. The Company shall at all times maintain in escrow
pursuant to the Escrow Agreement a number of Common Shares equal to 125% of the
number of Common Shares issuable upon exercise in full of all outstanding
Warrants.
2.8 DISPOSITION OF PROCEEDS. The Warrant Agent shall account at least quarterly
(or more frequently at the request of the Company; provided that in no event
shall the Warrant Agent be required to account more frequently than monthly) to
the Company with respect to Warrants exercised and concurrently deliver to the
Company all funds.
ARTICLE III
ADJUSTMENTS AND NOTICE PROVISIONS
3.1 ADJUSTMENT OF EXERCISE PRICE. Subject to the provisions of this Article III,
the Exercise Price in effect from time to time shall be subject to adjustment,
as follows:
(a) In the event that (i) a Registration Statement with respect to the Common
Shares issuable upon conversion of the Notes and upon exercise of the Warrants
is not declared effective by the SEC within 120 calendar days after the first
issuance of Warrants or any action is taken or threatened by any regulatory
authority to terminate or suspend such effectiveness, or (ii) in the event that
a final prospectus available for use in connection with the sale of the Common
Shares to the public is not furnished to the Warrant Agent and each registered
holder of Warrants within 120 calendar days after the first issuance of Warrants
or such prospectus ceases to comply with all applicable securities rules and
regulations, then the Exercise Price shall be adjusted to equal the Minimum
Exercise Price.
(b) If the average Market Price for the Company's common stock is less than
$0.50 per share during the 30-day period commencing on the earlier of the (i)
the date a Registration Statement is declared effective with respect to the
Common Shares, or (ii) the date that is 120 calendar days after the first
issuance of Warrants, then the Exercise Price shall be adjusted to $0.01 per
share and the Warrants shall be eligible for exercise in a "cashless" manner
under Section 2.4.
(c) In case the Company shall at any time after the date the Warrants were first
issued (1) declare a dividend on its outstanding common stock payable in shares
of its capital
4
stock, (2) subdivide its outstanding common stock, (3) combine its outstanding
common stock into a smaller number of shares, or (4) issue any shares of its
capital stock by reclassification of its common stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the surviving entity), then, in each case, the Maximum Exercise Price
and the Minimum Exercise Price, and the number of Common Shares issuable upon
exercise of the Warrants, in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, shall be proportionately adjusted so that the registered
holders after such time shall be entitled to receive the aggregate number and
kind of shares which, if the Warrants had been exercised immediately prior to
such time, he would have owned upon such exercise and been entitled to receive
by virtue of such dividend, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(d) In case the Company shall issue or fix a record date for the issuance to all
holders of its common stock of rights, options, or warrant to subscribe for or
purchase the Company's common stock (or securities convertible into or
exchangeable for the Company's common stock) at a price per share (or having a
conversion or exchange price per share, if a security convertible into or
exchangeable for the Company's common stock) less than the Market Price of the
common stock on such record date, then, in each case, the Maximum Exercise Price
and the Minimum Exercise Price shall be adjusted by multiplying the Maximum
Exercise Price and the Minimum Exercise Price, respectively, in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of common stock outstanding on such record date
plus the number of shares of common stock which the aggregate offering price of
the total number of shares of common stock so to be offered (or the aggregate
initial conversion or exchange price of the convertible or exchangeable
securities so to be offered) would purchase at such Market Price and the
denominator of which shall be the number of shares of common stock outstanding
on such record date plus the number of additional shares of common stock to be
offered for subscription or purchase (or into which the convertible or
exchangeable securities so to be offered are initially convertible or
exchangeable); provided, however, that no such adjustment shall be made which
results in an increase in the Maximum Exercise Price or the Minimum Exercise
Price. Such adjustment shall become effective at the close of business on such
record date; provided, however, that, to the extent the shares of common stock
(or securities convertible into or exchangeable for shares of common stock) are
not delivered, the Maximum Exercise Price and the Minimum Exercise Price shall
be readjusted after the expiration of such rights, options, or warrants (but
only with respect to Warrants exercised after such expiration), to the Maximum
Exercise Price and the Minimum Exercise Price which would then be in effect had
the adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of common stock (or
securities convertible into or exchangeable for shares of common stock) actually
issued. In case any subscription price may be paid in a consideration, part or
all of which shall be in a form other than cash, the value of such consideration
shall be as determined in good faith by the board of directors of the Company,
whose determination shall be conclusive absent manifest error. Shares of common
stock owned
5
by or held for the account of the Company or any majority-owned subsidiary shall
not be deemed outstanding for the purpose of any such computation.
(e) In case the Company shall distribute to all holders of its common stock
(including any such distribution made to the stockholders of the Company in
connection with a consolidation or merger in which the Company is the surviving
corporation) evidences of its indebtedness, cash or assets (other than
distributions and dividends payable in shares of common stock), or rights,
options, or warrants to subscribe for or purchase common stock, or securities
convertible into or changeable for shares of common stock (excluding those with
respect to the issuance of which an adjustment of the Maximum Exercise Price and
the Minimum Exercise Price is provided pursuant to Section 3.1(d) hereof), then,
in each case, the Maximum Exercise Price and the Minimum Exercise Price shall be
adjusted by multiplying the Maximum Exercise Price and the Minimum Exercise
Price, respectively, in effect immediately prior to the record date for the
determination of stockholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Market Price of the common stock
on such record date, less the fair market value (as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences of indebtedness or assets
so to be distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, or the amount of such cash, applicable to one share,
and the denominator of which shall be such Market Price of the common stock.
Such adjustment shall become effective at the close of business on such record
date.
(f) In any case in which this Article III shall require that an adjustment in
the Exercise Price be made effective as of a record date for a specified event,
the Company may elect to defer, until the occurrence of such event, issuing to
the holders of the Warrants, if any holder has exercised a Warrant after such
record date, the Common Shares, if any, issuable upon such exercise over and
above the Common Shares issuable upon such exercise on the basis of the Exercise
Price in effect prior to such adjustment; PROVIDED, HOWEVER, that the Company
shall deliver to such exercising holder a due xxxx or other appropriate
instrument evidencing such holder's right to receive such additional shares upon
the occurrence of the event requiring such adjustment.
(g) Upon each adjustment of the Maximum Exercise Price and the Minimum Exercise
Price as a result of the calculations made in Sections 3.1(c) or 3.1(d) hereof,
the holders of Warrants shall thereafter be entitled to purchase, at the
adjusted Maximum Exercise Price, that number of shares (calculated to the
nearest thousandth) obtained by dividing (i) the product obtained by multiplying
the number of shares purchasable upon exercise of the Warrant prior to
adjustment of the number of shares by the Maximum Exercise Price in effect prior
to adjustment of the Maximum Exercise Price by (ii) the Maximum Exercise Price
in effect after such adjustment of the Maximum Exercise Price.
3.2 Definition of Market Price. As used in this Agreement, the term "Market
Price" shall mean:
6
(i) if the Common Shares are listed, or admitted to unlisted trading privileges
on a national securities exchange, or is traded on the Nasdaq National Market or
the Nasdaq Small-Cap Market, the last reported high bid price on the each
trading day of any measurement period to which such Market Price relates, in
each case as officially reported by the principal securities exchange on which
the Common Shares are listed or admitted to unlisted trading privileges or by
the Nasdaq National Market or Nasdaq Small-Cap Market, or
(ii) if the Common Shares are not listed or admitted to unlisted trading
privileges, on any national securities exchange, or traded on the Nasdaq
National Market or Nasdaq Small-Cap Market, but is traded on the OTC Bulletin
Board of the Nasdaq Stock Market, Inc. (the "OTCBB"), then the Market Price is
the last reported high bid price of the Common Shares reported by the OTCBB; or
(iii) if the Common Shares are not listed or admitted to unlisted trading
privileges, on any national securities exchange, or traded on the Nasdaq
National Market, Nasdaq Small-Cap Market, or the OTCBB but is traded in the
over-the-counter market, then the Market Price is the last reported high bid
price of the Common Shares reported by the National Quotation Bureau, Inc. or
similar bureau if the National Quotation Bureau, Inc. is no longer reporting
such information on the date of the event to which such Market Price relates,
and if no such prices are reported on such date, then the average of the last so
reported high bid prices on the last five trading days on which such prices are
reported immediately preceding such date; or
(iv) if the Common Shares are neither listed, nor admitted to unlisted trading
privileges on a national securities exchange, nor traded on the Nasdaq National
Market or Nasdaq Small-Cap Market, nor on the OTCBB, nor traded in the
over-the-counter market, then the fair market value of the Common Shares, not
less that the book value thereof, as of the date of the event to which such
Market Price relates, as determined in good faith (using customary valuation
methods) by the Board of Directors of the Company, which determination shall be
evidenced by a resolution of the Board of Directors and based on the best
information available to it.
3.3 MERGER AND CONSOLIDATION. In case of any consolidation with or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the surviving or continuing corporation), or in case of
any sale, lease, or conveyance to another corporation of the property and assets
of any nature of the Company as an entirety or substantially as an entirety,
such successor, leasing, or purchasing corporation, as the case may be, the
Company shall (a) execute with the Warrant Agent an agreement providing that the
holders of the Warrants shall have the right thereafter to receive upon exercise
of the Warrants solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon such
consolidation, merger, sale, lease, or conveyance by a holder of the number of
shares of the Company's common stock for which the Warrants might have been
exercised immediately prior to such consolidation, merger, sale, lease, or
conveyance, and (b) make effective provision in its certificate of incorporation
or otherwise, if
7
necessary, to effect such agreement. Such agreement shall provide for
adjustments that shall be as nearly equivalent as practicable to the adjustments
in Section 3.1.
3.4 RECLASSIFICATION. In case of any reclassification or change of the Common
Shares issuable upon exercise of the Warrants (other than a change in par value
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series or shares), or in case of any consolidation or merger of another
corporation into the Company in which the Company is the continuing corporation
and in which there is a reclassification or change (including a change to the
right to receive cash or other property) of the Common Shares (other than a
change in par value, or from no par value to a specified par value, or as a
result of a subdivision or combination, but including any change in the shares
into two or more classes or series of shares), the holders of Warrants shall
have the right thereafter to receive upon exercise of the Warrants solely the
kind and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of the Company's
common stock for which the Warrants might have been exercised immediately prior
to such reclassification, change, consolidation, or merger. Thereafter,
appropriate provision shall be made for adjustments that shall be as nearly
equivalent as practicable to the adjustments in Section 3.1.
3.5 VERIFICATION OF COMPUTATIONS. Whenever the Maximum Exercise Price and the
Minimum Exercise Price is adjusted as provide in this Article III, the Company
shall promptly obtain a certificate of a firm of independent public accountants
of recognized standing selected by the board of directors (who may be the
regular auditors of the Company) setting forth the Maximum Exercise Price and
the Minimum Exercise Price, so adjusted, and a brief statement of the facts
accounting for such adjustment, an shall make available a brief summary thereof
to the Warrant Agent and to the holders of the Warrants, at their addresses
listed on the register maintained for the purpose by the Warrant Agent.
3.6 NOTICE OF ACTIONS. In the event that the Company shall propose to take any
action that could cause an adjustment in the Maximum Exercise Price and the
Minimum Exercise Price, the Company shall cause notice of such proposal to be
given to the Warrant Agent. Such notice shall specify the date on which the
action is expected to take place. The Company shall cause copies of such notice
to be mailed to each registered holder of Warrants at least 20 calendar days
prior to the date of expected action.
3.7 AMENDMENT TO WARRANT CERTIFICATES. Irrespective of any adjustments pursuant
to this Article III, Warrant Certificates theretofore or thereafter issued need
not be amended or replaced, but certificates thereafter issued shall bear a
legend or other notice of any adjustments.
3.8 FRACTIONAL SHARES. The Company shall not be required upon the exercise of
any Warrant to issue fractional shares of its common stock that may result from
adjustments in accordance with this Article III to the Maximum Exercise Price
and the
8
Minimum Exercise Price or the number of Common Shares purchaseable under each
Warrant. If more than one Warrant is exercised at one time by the same
registered holder, the number of full Common Shares that shall be deliverable
shall be computed based on the number of Common Shares deliverable in exchange
for the aggregate number of Warrants exercised. With respect to any final
fraction of a share called for upon the exercise of any Warrant or Warrants, the
Company shall pay a cash adjustment in respect of such final fraction in an
amount equal to the same fraction of the Market Price of a Common Share
calculated in accordance with Section 3.2.
ARTICLE IV
REPURCHASE OF WARRANTS BY THE COMPANY
At any time after not less than 30 calendar days written notice to the warrant
agent and each registered holder of Warrants, the Company may repurchase all,
but not less than all of the then outstanding Warrants at a price of $0.10 per
Common Share issuable upon exercise of such Warrants, provided that on the date
notice is given (i) the Common Stock issuable upon exercise of the Warrants
shall be subject to an effective registration statement under the Securities
Act, and (ii) the Market Price of the Common Shares for the 20 preceding
consecutive trading days shall have been at least three times the Exercise Price
of the Warrants to be repurchased. During the notice period provided above, the
holder of Warrants may give notice of exercise of the Warrants called for
repurchase, in which event the Company's right to repurchase the Warrants shall
be suspended for the period provided for closing of the purchase of Common
Shares issuable upon exercise of the Warrants.
ARTICLE V
OTHER PROVISIONS RELATING TO
RIGHTS OF REGISTERED HOLDERS
OF WARRANT CERTIFICATES
5.1 RIGHTS OF WARRANT HOLDERS. No Warrant Certificate shall entitle the
registered holder thereof to any rights of a shareholder of the Company,
including without limitation, the right to vote, to receive dividends and other
distributions, to receive any notice of, or to attend, meetings of shareholders
or any other proceedings of the Company.
5.2 LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES. If any Warrant
Certificate shall be lost, mutilated, stolen or destroyed, the Company in its
discretion may direct the Warrant Agent to execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Warrant Certificate, or in
lieu of or in substitution for a lost, stolen or destroyed Warrant Certificate,
a new Warrant Certificate for the number of Warrants represented by the Warrant
Certificate so lost, mutilated, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Warrant Certificate, and of
the ownership thereof, and indemnity, if requested, all satisfactory to the
Company and the Warrant Agent. Applicants for such substitute Warrant
Certificates shall also comply with such other reasonable regulations and pay
such other reasonable
9
charges incidental thereto as the Company or the Warrant Agent may prescribe.
Any such new Warrant Certificate shall constitute and original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant Certificate shall be at anytime enforceable by anyone.
ARTICLE VI
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER
AND CANCELLATION OF WARRANT CERTIFICATES
6.1 SPLIT UP, COMBINATION, EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES.
(a) Prior to the Exercise Deadline, Warrant Certificates, subject to the
provisions of Section 6.2 and compliance with applicable law, may be split up,
combined or exchanged for other Warrant Certificates representing a like
aggregate number of Warrants or may be transferred in whole or in part. Any
holder desiring to split up, combine or exchange a Warrant Certificate or
Warrant Certificates shall make such request in writing delivered to the Warrant
Agent at its Principal Office and shall surrender the Warrant Certificate or
Warrant Certificates so to be split up, combined or exchanged at said office.
(b) Without the written consent of the Company (which shall not be unreasonably
withheld), Warrants may not be sold, transferred or otherwise disposed of by the
registered holder thereof, except to officers, directors, partners, members,
employees or affiliates of such registered holder. Subject to the foregoing
restriction, any applicable laws, rules or regulations restricting
transferability, any restriction that may appear on a Warrant Certificate in
accordance with the terms hereof, or any "stop-transfer" instructions the
Company may give to the Warrant Agent to implement any such restrictions (which
instructions the Company is expressly authorized to give), transfer of
outstanding Warrant Certificates may be effected by the Warrant Agent from time
to time upon the books of the Company to be maintained by the Warrant Agent for
that purpose, upon surrender of the Warrant Certificate to the Warrant Agent at
its Principal Office, with the assignment form set forth in the Warrant
Certificate duly executed with Signatures Guaranteed.
(c) Upon any such surrender for split up, combination, exchange or transfer, the
Warrant Agent shall execute and deliver to the person entitled thereto a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested. The
Warrant Agent may require the holder to pay a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any split up,
combination, exchange or transfer of Warrant Certificate prior to the issuance
of any new Warrant Certificate.
6.2 CANCELLATION OF WARRANT CERTIFICATES. Any Warrant Certificate surrender upon
the exercise of Warrants or for split up, combination, exchange or transfer, or
purchased or otherwise acquired by the Company, shall be cancelled and shall not
be reissued by the Company; and, except in the case of the exercise of less than
all of the Warrants evidenced by a Warrant Certificate or as provided in Section
6.1 in the case of a split up, combination, exchange or transfer, no Warrant
Certificate shall be issued hereunder in
10
lieu of such cancelled Warrant Certificate. Any Warrant Certificate so cancelled
shall be destroyed by the Warrant Agent, unless otherwise directed by the
Company.
6.3 AGREEMENT OF WARRANT HOLDERS. Every holder of a Warrant Certificate by
accepting the same consents and agrees with the Company and the Warrant Agent
and with every other holder of a Warrant that: (a) transfer of the Warrant
Certificates shall be registered on the books of the Company maintained for that
purpose by the Warrant Agent only if surrendered at the Principal Office of the
Warrant Agent, duly endorsed or accompanied by a proper instrument of transfer,
with Signatures Guaranteed; and, (b) prior to due presentment for registration
of transfer, the Company and the Warrant Agent may be deem and treat the person
in whose name the Warrant Certificate is registered as the absolute owner
thereof and of the Warrants evidenced thereby (notwithstanding any notations of
ownership or writing on the Warrant Certificates made by anyone other than the
Company or the Warrant Agent) for all purposes whatsoever, and neither the
Company nor the Warrant Agent shall be affected by any notice to the contrary.
ARTICLE VII
PROVISIONS CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
7.1 PAYMENT OF TAXES AND CHARGES. The Company will from time to time promptly
pay to the Warrant Agent, or make provisions satisfactory to the Warrant Agent
for the payment of, all transfer taxes and charges that may be imposed by the
United States or any state upon the Company or the Warrant Agent in connection
with the issuance or delivery of Common Shares upon the exercise of any
Warrants, but any such taxes in connection with the issuance of Warrant
Certificates or certificates for Common Shares in any name other than that of
the registered holder of the Warrant Certificate surrendered shall be paid by
such registered holder; and, in such case, the Company shall not be required to
issue or deliver any Warrant Certificate or Common Share certificate until such
taxes shall have been paid or it has been established to the Company's
satisfaction that no tax is due.
7.2 RESIGNATION OR REMOVAL OF WARRANT AGENT. The Warrant Agent may resign his
duties and be discharged from all further duties and liabilities hereunder after
giving 30 days' notice in writing to the Company, except that such shorter
notice may be given as the Company shall, in writing, accept as sufficient. Upon
comparable notice to the Warrant Agent, the Company may remove the Warrant
Agent; PROVIDE, HOWEVER, that in such case the Company shall appoint a new
Warrant Agent, as hereinafter provided, and the removal of the Warrant Agent
shall not be effective until a new Warrant Agent has been appointed and has
accepted such appointment. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent or by
the registered holder of any Warrant, then the registered holder of any Warrant
may apply to any court of competent jurisdiction for the appointment of a new
Warrant Agent. The Warrant Agent hereby agrees to take any such action as may be
necessary to provide for the orderly transfer of its responsibilities hereunder
to the new Warrant Agent. Any new
11
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to the
former Warrant Agent last in office, and to the Company, an instrument accepting
such appointment under substantially the same terms and conditions as are
contained herein, and thereupon such new Warrant Agent without any further act
or deed shall become vested with the rights, powers, duties and responsibilities
of the Warrant Agent and the former Warrant Agent shall cease to be the Warrant
Agent; but for any reason if it becomes necessary or expedient to have the
former Warrant Agent execute and deliver any further assurance, conveyance, act
or deed, the same shall be done at the expense of the Company and shall be
legally and validly executed and delivered by the former Warrant Agent.
Notwithstanding anything to the contrary, the former Warrant Agent shall pay any
expenses resulting from such former Warrant Agent's removal due to his breach of
this Agreement.
7.3 NOTICE OF APPOINTMENT. Not later than the effective date of the appointment
of a new Warrant Agent, the Company shall cause notice thereof to be mailed to
the former Warrant Agent and the transfer agent for the Common Shares, and shall
forthwith cause a copy of such notice to be mailed to each registered holder of
a Warrant. Failure to mail such notice, or any defect contained therein, shall
not affect the legality or validity of the appointment of any successor Warrant
Agent.
7.4 MERGER OF WARRANT AGENT. If the Warrant Agent is not a natural person and is
merged with or into another, or is consolidated with another, then any company
resulting from any merger or consolidation to which the Warrant Agent shall be a
party, shall be the successor Warrant Agent under this Agreement without further
act, provided that such company would be eligible for appointment as a successor
Warrant Agent under the provisions of Section 7.2 hereof. Any such successor
Warrant Agent may adopt the prior countersignature of any predecessor Warrant
Agent and distribute Warrant Certificates countersigned but not distributed by
such predecessor Warrant Agent, or may countersign the Warrant Certificates in
its own name.
7.5 COMPANY RESPONSIBILITIES.
(a) The Company agrees that it shall pay to the Warrant Agent the sum of
$5,000.00 per year (the "Agency Fee") in cash as reasonable remuneration for his
services as Warrant Agent hereunder and will reimburse the Warrant Agent upon
demand for all expenses, advances and expenditures that the Warrant Agent may
reasonably incur in the execution of its duties hereunder (including fees and
disbursements of legal counsel). Concurrently with the execution of this
Agreement, the Company shall pay to the Warrant Agent the Agency Fee for the
period beginning on the date hereof and ending on December 31, 2001. Thereafter,
the Agency Fee shall be payable in advance on or before the first day of January
of each calendar year or portion thereof during the term of this Agreement.
(b) provide the Warrant Agent, upon request, with sufficient funds to pay any
cash due pursuant to Section 3.8 upon exercise of Warrants,
12
(c) prepare, file and cause to become effective within 120 days after the first
issuance of Warrants a registration statement under the Securities Act with
respect to the Common Shares issuable upon exercise of the Warrants,
(d) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than six months (subject to extension as provided below) or such longer period
as in the opinion of counsel for the Warrant Agent a prospectus is required by
law to be delivered in connection with sales of the Common Shares issuable on
exercise of the Warrants,
(e) furnish to each holder of Warrants and to the Warrant Agent such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such persons may reasonably
request in order to facilitate the disposition of the Common Shares issuable
upon exercise of the Warrants,
(f) register or qualify the Common Shares issuable on exercise of the Warrants
under such other securities or blue sky laws of such jurisdictions as any holder
of Warrants reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such holders to consummate
the disposition the Common Shares issuable on exercise of the Warrants, and
(g) perform, execute, acknowledge and deliver or cause to be performed,
executed, acknowledged and delivered all further and other acts, instruments and
assurances as may reasonably be required by the Warrant Agent for the carrying
out or performing by the Warrant Agent of the provisions of this Agreement.
7.6 CERTIFICATE FOR THE BENEFIT OF WARRANT AGENT. Whenever in the performance of
his duties under this Agreement the Warrant Agent shall deem it necessary or
desirable that any matter be proved or established or that any instructions with
respect to the performance of his duties hereunder be given by the Company prior
to taking or suffering any action hereunder, such matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed conclusively
proved and established, or such instructions may be given, by a certificate or
instrument signed by the Chairman, the President, a Vice President, the
Secretary or the Treasurer of the Company and delivered to the Warrant Agent.
Such certificate or instrument may be relied upon by the Warrant Agent for any
action taken or suffered in good faith by him under the provisions of this
Agreement; but in its discretion the Warrant Agent may in lieu thereof accept
other evidence of such matter or may require such further or additional evidence
as he may deem reasonable.
7.7 BOOKS AND RECORDS. The Warrant Agent shall maintain the Company's books and
records for registration and registration of transfer of the Warrants issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Warrants,
13
the number of Warrants evidenced on its face by each Warrant Certificate and the
date of each Warrant Certificate.
7.8 LIABILITY OF THE WARRANT AGENT. The Warrant Agent shall be liable hereunder
for his own gross negligence or willful misconduct. The Warrant Agent shall act
hereunder solely by the provisions hereof. The Warrant Agent shall not be liable
for or by reason of any of the statements of fact or recitals contained in this
Agreement or in the Warrant Certificates (except its countersignature thereof)
or be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only. The Warrant Agent will
not incur any liability or responsibility to the Company or to any holder of any
Warrants for any action taken, or any failure to take action, in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument reasonable believed by the Warrant Agent to be genuine
and to have been signed, sent or presented by the proper party or parties. The
Warrant Agent shall not be under any responsibility in respect of the validity
of this Agreement or the execution and delivery hereof by the Company or in
respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall he be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall he be responsible for the making of any
adjustment required under the provisions of Article III hereof or responsible
for the manner, method or amount of any such adjustment or the facts that would
require any such adjustment; nor shall he by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Common Shares or other securities to be issued pursuant to this Agreement or any
Warrant Certificate or as to whether any Common Shares or other securities will
when issued be validly authorized and issued and fully paid and nonassessable.
7.9 USE OF ATTORNEYS, AGENTS AND EMPLOYEES. The Warrant Agent may execute and
exercise any of the rights or powers hereby vested in he or perform any duty
hereunder either himself or by or through his attorneys, agents or employees.
7.10 INDEMNIFICATION. The Company agrees to indemnify the Warrant Agent and save
him harmless against any and all losses, expenses or liabilities, including
judgments, costs and counsel fees arising out of or in connection with his
agency under this Agreement, except as a result of the gross negligence or
willful misconduct of the Warrant Agent.
7.11 ACCEPTANCE OF THE AGENCY. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth.
7.12 CHANGES TO AGREEMENT. Neither the Company nor the Warrant Agent may, by
supplemental agreement or otherwise, materially alter or change the rights,
privileges or immunities of the registered holders of the Warrants, without the
prior written consent of the holders of a majority of the Warrants.
14
7.13 ASSIGNMENT. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.
7.14 SUCCESSOR TO COMPANY. The Company will not merge or consolidate with or
into any other corporation or sell or otherwise transfer its property, assets
and business substantially as an entirety to a successor corporation, unless the
corporation resulting from such merger, consolidation, sale or transfer (if not
the Company) shall expressly assume, by supplemental agreement reasonably
satisfactory in form and substance to the Warrant Agent, the due and punctual
performance and observance and each and every covenant condition of this
Agreement to be performed and observed by the Company.
7.15 NOTICES. Any notice or demand required by this Agreement to be given or
made by the Warrant Agent or by the registered holder of any Warrant to or on
the Company shall be sufficiently given or made if sent by certified mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent), as follows:
American Energy Services, Inc.
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: President
Any notice or demand required by this Agreement to be given or made by the
registered holder of any Warrants or by the Company to or on the Warrant Agent
shall be sufficiently given or made if sent by certified mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company), as follows:
-----------------------
-----------------------
-----------------------
Any notice or demand required by this Agreement to be given or made by the
Company or the Warrant Agent to or on any registered holder of Warrants shall be
sufficiently given or made, whether or not such registered holder receives the
notice, if sent by first class mail, postage prepaid, addressed to such
registered holder at his last address as shown on the books of the Company
maintained by the Warrant Agent. Otherwise such notice or demand shall be deemed
given when received by the party entitled thereto.
7.16 DEFECTS IN NOTICE. Failure to file any certificate or notice or to mail any
notice, or any defect in any certificate or notice pursuant to this Agreement,
shall not affect in any way the rights of any registered holder of a Warrant or
the legality or validity of any adjustment made pursuant to Section 3.1 hereof,
or any transaction giving rise to any such adjustment, or the legality or
validity of any action taken or to be taken by the Company.
15
7.17 GOVERNING LAW. The laws of the State of ___________ shall govern
this Warrant Agreement and the Warrant Certificates.
7.18 STANDING. Nothing in this Agreement expressed and nothing that may be
implied from any of the provisions hereof is intended, or shall be construed, to
confer upon, or given to, any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any right remedy or
claim under or by reason of this Agreement or of any covenant, condition,
stipulations, promises and agreements contained in this Agreement shall be for
the sole and exclusive benefit of the Company and the Warrant Agent and their
respective successors, and registered holders of the Warrants.
7.19 HEADINGS. The descriptive headings of the articles and sections of this
Agreement are inserted for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof.
7.20 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 shall together constitute but one and the same instrument.
7.21 CONFLICT OF INTEREST. The Warrant Agent and any shareholder, director,
officer or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though the Warrant
Agent were not Warrant Agent under this Agreement. Nothing in this Agreement
shall preclude the Warrant Agent from acting in any other capacity for the
Company, including without limitation as escrow agent, trustee under any
indenture or as transfer agent for the Units, Common Shares or any other
securities of the Company, or for any other legal entity.
7.22 AVAILABILITY OF THE AGREEMENT. The Warrant Agent shall keep copies of this
Agreement available for inspection by holders of Warrants during normal business
hours at his Principal Office. Copies of this Agreement may be obtained, without
charge, upon written request to the Company at the address set forth in Section
7.15.
7.23 TERM OF AGREEMENT. The term of this Agreement shall commence on the date
hereof and continue until the earlier of (a) June 30, 2006, or (b) the date
which is 30 days after the Exercise Date of the last outstanding Warrant. Upon
termination of this Agreement, the Warrant Agent shall be discharged from any
further obligation hereunder and the Company shall be discharged from any
further obligation to compensate the Warrant Agent for services rendered after
such termination date.
In Witness Whereof, this Agreement has been duly executed by the parties hereto
as of the day and year first above written.
16
AMERICAN ENERGY SERVICES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
------------------------------------
------------------------------------
------------------------------------
17
