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EXHIBIT 99.3
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KEY ENERGY GROUP, INC.
AND
THE BANK OF NEW YORK
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WARRANT AGREEMENT
DATED AS OF SEPTEMBER 14, 1998
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WARRANT AGREEMENT
TABLE OF CONTENTS(1)
Page
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SECTION 1. APPOINTMENT OF WARRANT AGENT..........................................1
SECTION 2. WARRANT CERTIFICATES..................................................1
SECTION 3. EXECUTION OF WARRANT CERTIFICATES.....................................1
SECTION 4. REGISTRATION AND COUNTERSIGNATURE.....................................2
SECTION 5. REGISTRATION OF TRANSFERS AND EXCHANGES...............................2
SECTION 6. TERMS OF WARRANTS; EXERCISE OF WARRANTS...............................3
SECTION 7. PAYMENT OF TAXES......................................................6
SECTION 8. MUTILATED OR MISSING WARRANT CERTIFICATES.............................6
SECTION 9. RESERVATION OF WARRANT SHARES.........................................6
SECTION 10. OBTAINING STOCK EXCHANGE LISTINGS....................................7
SECTION 11. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES ISSUABLE...7
SECTION 12. FRACTIONAL INTERESTS.................................................16
SECTION 13. CERTAIN COVENANTS....................................................17
SECTION 14. NOTICES TO WARRANT HOLDERS...........................................17
SECTION 15. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.............18
SECTION 16. WARRANT AGENT........................................................19
SECTION 17. CHANGE OF WARRANT AGENT..............................................21
SECTION 18. NOTICES TO COMPANY AND WARRANT AGENT.................................22
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(1) This Table of Contents does not constitute a part of this Agreement or have
any bearing upon the interpretation of any of its terms or provisions.
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SECTION 19. SUPPLEMENTS AND AMENDMENTS...........................................22
SECTION 20. SUCCESSORS...........................................................23
SECTION 21. TERMINATION..........................................................23
SECTION 22. GOVERNING LAW........................................................23
SECTION 23. BENEFITS OF THIS AGREEMENT...........................................23
SECTION 24. COUNTERPARTS.........................................................23
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WARRANT AGREEMENT dated as of September 14, 1998 between Key Energy
Group, Inc., a Maryland corporation (the "COMPANY"), and The Bank of New York, a
New York banking corporation, as Warrant Agent (the "WARRANT AGENT").
WHEREAS, the Company proposes to issue 150,000 Common Stock Purchase
Warrants, as hereinafter described (the "WARRANTS"), which in the aggregate
initially entitle the holders thereof to purchase up to 15.0% of the Common
Stock (outstanding on a fully diluted basis), par value $0.10 per share (the
"COMMON STOCK"), of the Company (the Common Stock issuable on exercise of the
Warrants being referred to herein as the "WARRANT SHARES"), in connection with a
bridge loan of $150,000,000 in aggregate principal amount (the "LOANS") pursuant
to a Bridge Loan Agreement among the Company, Xxxxxx Commercial Paper Inc. and
Xxxxxx Brothers Inc.
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and exercise of Warrants and other matters as
provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. Warrant Certificates. The certificates evidencing the
Warrants (the "WARRANT CERTIFICATES") to be delivered pursuant to this Agreement
shall be in registered form only and shall be substantially in the form set
forth in Exhibit A attached hereto.
SECTION 3. Execution of Warrant Certificates. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board or its
President or a Vice President and by its Secretary or an Assistant Secretary.
Each such signature upon the Warrant Certificates may be in the form of a
facsimile signature of the present or any future Chairman of the Board,
President, Vice President, Secretary or Assistant Secretary and may be imprinted
or otherwise reproduced on the Warrant Certificates and for that purpose the
Company may adopt and use the facsimile signature of any person who shall have
been Chairman of the Board, President, Vice President, Secretary or Assistant
Secretary, notwithstanding the fact that at the time the Warrant Certificates
shall be countersigned and delivered or disposed of he shall have ceased to hold
such office.
In case any officer of the Company who shall have signed any of the
Warrant
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Certificates shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned by the Warrant Agent, or disposed of by the
Company, such Warrant Certificates nevertheless may be countersigned and
delivered or disposed of as though such person had not ceased to be such officer
of the Company; and any Warrant Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Warrant
Certificate, shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Warrant Agreement any
such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 4. Registration and Countersignature. The Warrant Agent, on
behalf of the Company, shall hold the Warrants unnumbered and unregistered.
Initially, the Warrants will be issued by the Company and deposited with The
Bank of New York, as escrow agent (the "ESCROW AGENT"), pursuant to an Escrow
Agreement, dated September 14, 1998 (the "ESCROW AGREEMENT"), among the Company,
Xxxxxx Brothers Inc. (the "ARRANGER") and The Bank of New York. Upon any release
of any Warrants under the Escrow Agreement to the Arranger, the Warrant Agent
shall number and register such Warrants in the names, denominations and
exercisable for such number of shares of Common Stock as directed in writing by
the Arranger.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board, the
President, a Vice President, the Treasurer or the Chief Financial Officer of the
Company, initially countersign, issue and deliver Warrants entitling the holders
thereof to purchase not more than the number of Warrant Shares referred to above
in the first recital hereof and shall countersign and deliver Warrants as
otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 5. Registration of Transfers and Exchanges. The Warrant Agent
shall from time to time, subject to the limitations of Section 6, register the
transfer of any outstanding Warrant Certificates upon the records to be
maintained by it for that purpose, upon surrender thereof duly endorsed or
accompanied (if so required by it) by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, duly executed by the
registered holder or holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney. Upon any such
registration of transfer, a new Warrant Certificate shall be issued to the
transferee(s) and the surrendered Warrant Certificate shall be cancelled by the
Warrant Agent. Cancelled Warrant Certificates shall thereafter be disposed of by
the Warrant Agent in its customary manner.
The Warrant holders agree that prior to any proposed transfer of the
Warrants or of the Warrant Shares, if such transfer is not made pursuant to an
effective Registration Statement
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under the Securities Act of 1933, as amended (the "ACT"), or an opinion of
counsel that the Warrant or Warrant Shares may be transferred without
registration under the Act, the Warrant holder will deliver to the Company:
(1) an investment covenant reasonably satisfactory to the Company
signed by the proposed transferee;
(2) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the Warrant
Shares;
(3) an agreement by such transferee to be bound by the provisions of
this Agreement.
The Warrant holders agree that each certificate representing Warrant
Shares will bear a legend in substantially the following form:
"The securities evidenced or constituted hereby have
been acquired for investment and have not been
registered under the Securities Act of 1933, as amended.
Such securities may not be sold, transferred, pledged or
hypothecated unless the registration provisions of said
Act have been complied with or unless the Company has
received an opinion of counsel reasonably satisfactory
to the Company that such registration is not required."
Subject to the terms of this Agreement, Warrant Certificates may be
exchanged at the option of the holder(s) thereof, when surrendered to the
Warrant Agent at its principal office, which is currently located at the address
listed in Section 18 hereof, for another Warrant Certificate or other Warrant
Certificates of like tenor and representing in the aggregate a like number of
Warrants. Any holder desiring to exchange a Warrant Certificate shall deliver a
written request to the Warrant Agent, and shall surrender, duly endorsed or
accompanied (if so required by the Warrant Agent) by a written instrument or
instruments of transfer in form satisfactory to the Warrant Agent, the Warrant
Certificate or Certificates to be so exchanged. Warrant Certificates surrendered
for exchange shall be cancelled by the Warrant Agent. Such cancelled Warrant
Certificates shall then be disposed of by such Warrant Agent in its customary
manner.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Section 5 and of Section 4, the new Warrant
Certificates required pursuant to the provisions of this Section 5.
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SECTION 6. Terms of Warrants; Exercise of Warrants.
The initial exercise price per share at which Warrant Shares shall be
purchasable upon the exercise of Warrants (the "EXERCISE PRICE") shall be equal
to 110% of the fair market value (as defined below) of one share of Common Stock
as of the Escrow Release Date (as defined below) for such Warrant. On its
respective Escrow Release Date, each Warrant shall be initially exercisable for
that number of shares of Common Stock equal to: 0.15 times the number of shares
of Common Stock outstanding on such date on a fully diluted basis (after giving
effect to the exercise of all options, warrants and rights to acquire Common
Stock and the conversion of all convertible securities for the maximum number of
shares of Common Stock obtainable whether or not such options, warrants or
rights are then exercisable or vested and whether or not such convertible
securities are then convertible) divided by 150,000; provided, however, that
such calculation shall not give effect to issuances of Common Stock made prior
to the Escrow Release Date if such issuances would not have caused an adjustment
pursuant to Section 11 hereof. For purposes of this paragraph of Section 6,
"FAIR MARKET VALUE" shall be (i) if the Common Stock is reported on an
interdealer quotation system, the last reported sales price, per share or if
there is no reported sales price, the average of the last bid and ask per share,
of the Common Stock on the trading day immediately prior to the Escrow Release
Date, (2) if the Common Stock is listed on a securities exchange, the average of
the closing prices of the Company's Common Stock for the five consecutive
trading days on the principal securities exchange on which the Common Stock is
so listed immediately prior to the Escrow Release Date, or (3) if the Common
Stock is not so reported or listed, as reasonably determined by the Company's
Board of Directors, as supported by an opinion of a nationally recognized
investment banking firm. The term "ESCROW RELEASE DATE," with respect to any
Warrant, shall be the date that such Warrant was first released from escrow
under the Escrow Agreement. The Arranger shall send a notice to the Warrant
Agent and the Company of any such release from escrow, which notice shall state
the number of Warrants so released, the Escrow Release Date and the initial
Exercise Price. Such notice shall be binding on the Company and the Warrant
Agent absent manifest error. The Company shall immediately notify the Warrant
Agent and the Arranger as to its determination of the number of shares for which
one Warrant is then exercisable (which shall be determined as specified in this
Section 6), which number may be impressed on the Warrant Certificate and shall
be binding upon the Company, but shall not be binding upon any Warrant holder
who disputes such determination.
Subject to the terms of this Agreement, each Warrant holder shall
have the right, which may be exercised commencing at the opening of business on
the Escrow Release Date of such warrant and until 5:00 p.m., New York City time
on September 14, 2008, to receive from the Company the number of fully paid and
nonassessable Warrant Shares which the holder may at the time be entitled to
receive on exercise of such Warrants and payment of the Exercise Price then in
effect for such Warrant Shares. In the alternative, each Holder may exercise its
right, during the Exercise Period, to receive Warrant Shares on a net basis,
such that, without the exchange of any funds, the Holder receives that number of
Warrant Shares otherwise issuable (or payable) upon exercise of its Warrants
less that number of Warrant Shares having an aggregate fair market value (as
defined below) at the time of exercise equal to the aggregate Exercise Price
that would otherwise have been paid by the Holder of the Warrant Shares. Each
Warrant not exercised prior to 5:00 p.m., New York City time, on September 14,
2008 shall become void and all rights
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thereunder and all rights in respect thereof under this agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
A Warrant may be exercised upon surrender to the Company at the
principal office of the Warrant Agent, which is currently located at the address
listed in Section 18 hereof, of the certificate or certificates evidencing the
Warrants to be exercised with the form of election to purchase on the reverse
thereof duly filled in and signed, which signature shall be guaranteed by a
participant in a recognized Signature Guarantee Medallion Program and such other
documentation as the Warrant Agent may reasonably request, and upon payment to
the Warrant Agent for the account of the Company of the Exercise Price which is
set forth in the form of Warrant Certificate attached hereto as Exhibit A as
adjusted as herein provided, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of the aggregate Exercise Price
shall be made (i) in cash or by certified or official bank check payable to the
order of the Company in New York Clearing House Funds, (ii) through the
surrender of debt or preferred equity securities of the Company having a
principal amount or liquidation preference, as the case may be, equal to the
aggregate Exercise Price to be paid (the Company will pay the accrued interest
or dividends on such surrendered debt or preferred equity securities in cash at
the time of surrender notwithstanding the stated terms thereof), or (iii) in the
manner provided in the second paragraph of this Section 6.
Subject to the provisions of Section 7 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to and in such name or names as the
Warrant holder may designate, a certificate or certificates for the number of
full Warrant Shares issuable upon the exercise of such Warrants together with
cash as provided in Section 12; provided, however, that if any consolidation,
merger or lease or sale of assets is proposed to be effected by the Company as
described in subsection (m) of Section 11 hereof, or a tender offer or an
exchange offer for shares of Common Stock of the Company shall be made, upon
such surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall, as soon as possible, but in any event not later than two business
days thereafter, issue and cause to be delivered the full number of Warrant
Shares issuable upon the exercise of such Warrants in the manner described in
this sentence together with cash as provided in Section 12. 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
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price.
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 a
certificate evidencing Warrants is exercised in respect of fewer than all of the
Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new certificate evidencing the remaining Warrant
or Warrants will be issued, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section 6 and of Section 3
hereof, and the Company, whenever required by the Warrant Agent, shall supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose. The Warrant Agent may assume that any Warrant
presented for exercise is permitted to be so exercised under applicable law and
shall have no liability for acting in reliance on such assumption.
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All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall
then be disposed of by the Warrant Agent in its customary manner. The Warrant
Agent shall account promptly to the Company with respect to Warrants exercised
and concurrently pay to the Company all monies received by the Warrant Agent for
the purchase of the Warrant Shares through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders with
reasonable prior written notice during normal business hours at its office. The
Company shall supply the Warrant Agent from time to time with such numbers of
copies of this Agreement as the Warrant Agent may request.
SECTION 7. Payment of Taxes. The Company will pay all documentary
stamp taxes attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants; 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 of any Warrant Certificates or any certificates for Warrant Shares
in a name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
SECTION 8. Mutilated or Missing Warrant Certificates. In case any of
the Warrant Certificates shall be mutilated, lost, stolen or destroyed, the
Company may in its discretion issue and the Warrant Agent may countersign, in
exchange and substitution for and upon cancellation of the mutilated Warrant
Certificate, or in lieu of and substitution for the Warrant Certificate lost,
stolen or destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant Certificate and
indemnity, if requested, also satisfactory to the Company. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
SECTION 9. Reservation of Warrant Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or its authorized and
issued Common Stock held in its treasury, for the purpose of enabling it to
satisfy any obligation to issue Warrant Shares upon exercise of Warrants, the
maximum number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants. The Warrant Agent shall have no duty to
verify availability of such shares set aside by the Company.
The Company or, if appointed, the transfer agent for the Common Stock
(the "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 will be irrevocably authorized and directed at all times to
reserve such number of authorized shares as shall be required for such purpose.
The Company will keep a copy of this Agreement on file with the Transfer Agent
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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 Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such Transfer Agent the stock certificates required to honor
outstanding Warrants upon exercise thereof in accordance with the terms of this
Agreement. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 12. The Company will furnish
such Transfer Agent a copy of all notices of adjustments and certificates
related thereto, transmitted to each Holder pursuant to Section 14 hereof.
Before taking any action which would cause an adjustment pursuant to
Section 11 hereof to reduce the Exercise Price below the then par value (if any)
of the Warrant Shares, the Company will take any corporate action which may, in
the opinion of its counsel (which may be counsel employed by the Company), be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Warrant Shares at the Exercise Price as so adjusted.
The Company covenants that all Warrant Shares which may be issued
upon exercise of Warrants will, upon payment of the Exercise Price therefor and
issue, be fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 10. Obtaining Stock Exchange Listings. The Company will from
time to time take all action which may be necessary so that the Warrant Shares,
immediately upon their issuance upon the exercise of Warrants, will be listed on
the principal securities exchanges and markets within the United States of
America, if any, on which other shares of Common Stock are then listed.
SECTION 11. Adjustment of Exercise Price and Number of Warrant Shares
Issuable. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 11. With respect to any
Warrant, no adjustment to the Exercise Price or to the number of Warrant Shares
issuable upon exercise shall be made for any event enumerated in this Section 11
if the date as to which the Company committed to undertake such event was prior
to such Warrant's respective Escrow Release Date. For purposes of this Section
11, "COMMON STOCK" means shares now or hereafter authorized of any class of
common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
(a) Adjustment for Change in Capital Stock.
If the Company:
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(1) pays a dividend or makes a distribution on its Common
Stock in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into
a greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of
its capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any
shares of its capital stock,
then the Warrant in effect immediately prior to such action
shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised may receive the aggregate number and kind of shares of
capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior
to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Warrant upon exercise of it may
receive shares of two or more classes of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes of capital stock. After such allocation, the exercise privilege and
the Exercise Price of each class of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section 11.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Rights Issue.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to purchase shares of Common Stock at a
price per share less than the current market price per share on that record
date, the Exercise Price shall be adjusted in accordance with the formula:
N x P
---------
E' = E x O + M
----------
O + N
where:
E'= the adjusted Exercise Price.
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E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record
date.
N = the number of additional shares of Common Stock offered.
P = the purchase price per share of the additional shares.
M = the current market price per share of Common Stock on the
record date.
(1) The adjustment shall be made successively whenever any
such rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of stockholders
entitled to receive the rights, options or warrants. If at the end of the
period during which such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Exercise
Price shall be immediately readjusted to what it would have been if "N" in
the above formula had been the number of shares actually issued.
(c) Adjustment for Other Distributions.
If the Company distributes to all holders of its Common Stock any of
its assets or debt securities or any rights or warrants to purchase debt
securities, assets or other securities of the Company, the Exercise Price shall
be adjusted in accordance with the formula:
E' = E x M - F
-------
M
where:
E'= the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the
record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants distributable to one share of
Common Stock. The Board of Directors shall determine the fair
market value.
The adjustment shall be made successively whenever any such
distribution is made and shall become effective immediately after the record
date for the determination of stockholders entitled to receive the distribution.
This subsection (c) does not apply to regular quarterly cash
dividends or cash
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distributions paid out of consolidated current or retained earnings as shown on
the books of the Company prepared in accordance with generally accepted
accounting principles. Also, this subsection does not apply to rights, options
or warrants referred to in subsection (b) of this Section 11. If any adjustment
is made pursuant to this subsection (c) as a result of the issuance of rights,
options or warrants and at the end of the period during which any such rights,
options or warrants are exercisable, not all such rights, options or warrants
shall have been exercised, the Warrant shall be immediately readjusted as if "F"
in the above formula was the fair market value on the record date of the
indebtedness or assets actually distributed upon exercise of such rights,
options or warrants divided by the number of shares of Common Stock outstanding
on the record date. Notwithstanding anything to the contrary contained in this
subsection (c), if "M-F" in the above formula is less than $1.00 (or is a
negative number) then in lieu of the adjustment otherwise required by this
subsection (c), the Company may elect to distribute to the holders of the
Warrants, upon exercise thereof, the evidences of indebtedness, assets, rights,
options or warrants which would have been distributed to such holders had such
warrants been exercised immediately prior to the record date for such
distribution.
(d) Adjustment for Common Stock Issue.
If the Company issues shares of Common Stock for a consideration per
share less than the current market price per share on the date the Company fixes
the offering price of such additional shares, the Exercise Price shall be
adjusted in accordance with the formula:
P
-
E' = E x O + M
-------
A
where:
E'= the adjusted Exercise Price.
E = the then current Exercise Price.
O = the number of shares outstanding immediately prior to the
issuance of such additional shares.
P = the aggregate consideration received for the issuance of such
additional shares.
M = the current market price per share on the date of issuance of
such additional shares.
A = the number of shares outstanding immediately after the issuance
of such additional shares.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
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This subsection (d) does not apply to:
(1) any of the transactions described in subsections (b) and
(c) of this Section 11,
(2) the exercise of Warrants, or the conversion or exchange of
other securities convertible or exchangeable for Common Stock,
(3) Common Stock issued to the Company's employees, officers
and directors under bona fide employee benefit plans or stock option plans
adopted by the Board of Directors of the Company and approved by the
holders of Common Stock when required by law, if such Common Stock would
otherwise be covered by this subsection (d) (but only to the extent that
the aggregate number of shares excluded hereby and issued after the date of
this Warrant Agreement shall not exceed 5% of the Common Stock outstanding
at the time of the adoption of each such plan, exclusive of antidilution
adjustments thereunder),
(4) Common Stock upon the exercise of rights or warrants
issued to the holders of Common Stock,
(5) Common Stock issued to shareholders of any person which
merges into the Company in proportion to their stock holdings of such
person immediately prior to such merger, upon such merger, or
(6) Common Stock issued in a bona fide public offering
pursuant to a firm commitment underwriting.
(e) Adjustment for Convertible Securities Issue.
If the Company issues any securities convertible into or exchangeable
for Common Stock (other than securities issued in transactions described in
subsections (b) and (c) of this Section 11) for a consideration per share of
Common Stock initially deliverable upon conversion or exchange of such
securities less than the current market price per share on the date of issuance
of such securities, the Exercise Price shall be adjusted in accordance with this
formula:
P
-
E' = E x O + M
---------
O + D
where:
E'= the adjusted Exercise Price.
E = the then current Exercise Price.
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O = the number of shares outstanding immediately prior to the
issuance of such securities.
P = the aggregate consideration received for the issuance of such
securities.
M = the current market price per share on the date of issuance of
such securities.
D = the maximum number of shares deliverable upon conversion or in
exchange for such securities at the initial conversion or
exchange rate.
The adjustment shall be made successively whenever any such issuance
is made, and shall become effective immediately after such issuance.
If all of the Common Stock deliverable upon conversion or exchange of
such securities have not been issued when such securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion or exchange of such securities.
This subsection (e) does not apply to:
(1) convertible securities issued to shareholders of any
person which merges into the Company, or with a subsidiary of the Company,
in proportion to their stock holdings of such person immediately prior to
such merger, upon such merger,
(2) convertible securities issued in a bona fide public
offering pursuant to a firm commitment underwriting or
(3) convertible securities issued in a bona fide private
placement through a placement agent which is a member firm of the National
Association of Securities Dealers, Inc. (except to the extent that any
discount from the current market price attributable to restrictions on
transferability of Common Stock issuable upon conversion, as determined in
good faith by the Board of Directors and described in a Board resolution
which shall be filed with the Trustee, shall exceed 20% of the then current
market price).
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(f) Current Market Price.
In subsections (b), (c), (d) and (e) of this Section 11 the current
market price per share of Common Stock on any date is the average of the Quoted
Prices of the Common Stock for 30 consecutive trading days commencing 45 trading
days before the date in question. The Company shall be solely responsible for
tracking and calculation of the Quoted Price and its average. The "QUOTED PRICE"
of the Common Stock is the last reported sales price of the Common Stock as
reported by NASDAQ, National Market System, or if the Common Stock is listed on
a securities exchange, the last reported sales price of the Common Stock on such
exchange which shall be for consolidated trading if applicable to such exchange,
or if neither so reported or listed, the last reported bid price of the Common
Stock. In the absence of one or more such quotations, the Board of Directors of
the Company shall determine the current market price on the basis of such
quotations as it in good faith considers appropriate.
(g) Consideration Received.
For purposes of any computation respecting consideration received
pursuant to subsections (d) and (e) of this Section 11, the following shall
apply:
(1) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in
no case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith;
(2) in the case of the issuance of shares of Common Stock for
a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair market value thereof as
determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose determination
shall be conclusive, and described in a Board resolution which shall be
filed with the Warrant Agent; and
(3) in the case of the issuance of securities convertible into
or exchangeable for shares, the aggregate consideration received therefor
shall be deemed to be the consideration received by the Company for the
issuance of such securities plus the additional minimum consideration, if
any, to be received by the Company upon the conversion or exchange thereof
(the consideration in each case to be determined in the same manner as
provided in clauses (1) and (2) of this subsection).
(h) When De Minimis Adjustment May Be Deferred.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the Exercise
Price. Any adjustments that are not made shall be carried forward and taken into
account in any subsequent adjustment.
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All calculations under this Section 11 shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(i) When No Adjustment Required.
No adjustment need be made for a transaction referred to in
subsections (b) or (c), (d) or (e) of this Section 11 if Warrant holders are to
participate, without requiring the Warrants to be exercised, in the transaction
on a basis and with notice that the Board of Directors of the Company determines
to be fair and appropriate in light of the basis and notice on which holders of
Common Stock participate in the transaction.
No adjustment need be made for a change in the par value or no par
value of the Common Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the amount of cash into which such
Warrants are exercisable. Interest will not accrue on the cash.
(j) Notice of Adjustment.
Whenever the Exercise Price is adjusted, the Company shall provide
the notices required by Section 14 hereof.
(k) Voluntary Reduction.
The Company from time to time may reduce the Exercise Price by any
amount for any period of time (including, without limitation, permanently) if
such period is at least 20 days; provided, however, that in no event may the
Exercise Price be less than the par value of a share of Common Stock.
Whenever the Exercise Price is reduced, the Company shall mail to
Warrant holders a notice of the reduction. The Company shall mail the notice at
least 15 days before the date the reduced Exercise Price takes effect. The
notice shall state the reduced Exercise Price and the period it will be in
effect.
A reduction of the Exercise Price does not change or adjust the
Exercise Price otherwise in effect for purposes of subsections (a), (b), (c),
(d) and (e) of this Section 11.
(l) Notice of Certain Transactions.
If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b), (c), (d)
or (e) of this Section 11 and if the Company does not arrange for Warrant
holders to participate pursuant to subsection (i) of this Section 11;
(2) the Company takes any action that would require a
supplemental
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Warrant Agreement pursuant to subsection (m) of this Section 11; or
(3) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders a notice stating the
proposed record date for a dividend or distribution or the proposed
effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(m) Reorganization of Company.
If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person, upon consummation of
such transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the Holder of a
Warrant would have owned immediately after the consolidation, merger, transfer
or lease if the Holder had exercised the Warrant immediately before the
effective date of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation or
merger if other than the Company, or the person to which such sale or conveyance
shall have been made, shall enter into a supplemental Warrant Agreement so
providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this Section.
The successor Company shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement.
If the issuer of securities deliverable upon exercise of Warrants
under the supplemental Warrant Agreement is an affiliate of the formed,
surviving, transferee or lessee corporation, that issuer shall join in the
supplemental Warrant Agreement.
If this subsection (m) applies, subsections (a), (b), (c), (d) and
(e) of this Section 11 do not apply.
(n) Warrant Agent's Disclaimer.
The Warrant Agent has no duty to determine when an adjustment under
this Section 11 should be made, how it should be made or what it should be. The
Warrant Agent has no duty to determine whether any provisions of a supplemental
Warrant Agreement under subsection (m) of this Section 11 are correct. The
Warrant Agent makes no representation as to the validity or value of any
securities or assets issued upon exercise of Warrants. The Warrant Agent shall
not be responsible for the Company's failure to comply with this Section.
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(o) When Issuance or Payment May Be Deferred.
In any case in which this Section 11 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 (i)
issuing to the holder of any Warrant exercised after such record date the
Warrant Shares and other capital stock of the Company, if any, issuable upon
such exercise over and above the Warrant Shares and other capital stock of the
Company, if any, issuable upon such exercise on the basis of the Exercise Price
and (ii) paying to such holder any amount in cash in lieu of a fractional share
pursuant to Section 12; provided, however, that the Company shall deliver to
such holder a due xxxx or other appropriate instrument evidencing such holder's
right to receive such additional Warrant Shares, other capital stock and cash
upon the occurrence of the event requiring such adjustment.
(p) Adjustment in Number of Shares.
Upon each event that provides for an adjustment of the Exercise Price
pursuant to this Section 11, each Warrant outstanding prior to the making of the
adjustment shall thereafter evidence the right to receive upon payment of the
adjusted Exercise Price that number of shares of Common Stock (calculated to the
nearest ten millionth) obtained from the following formula:
N' = N x E
-
E'
where:
N'= the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise
of a Warrant by payment of the Exercise Price prior to
adjustment.
E'= the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(q) Form of Warrants.
Irrespective of any adjustments in the Exercise 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.
SECTION 12. Fractional Interests.
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(a) 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 12, be issuable on the exercise of any
Warrants (or specified portion thereof), the Company shall pay an amount in cash
equal to the fair market value on the day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
(b) Warrants may be issued in fractional interests. Holders of
fractional interests in Warrants will be entitled to purchase a number of
Warrant Shares equal to the product obtained by multiplying the number of
Warrant Shares issuable with respect to a full Warrant multipled by the
fractional interest owned by such Holder in the Warrant.
SECTION 13. Certain Covenants. Except with the consent of the Warrant
holders holding a majority of the outstanding and unexercised Warrants, the
Company, so long as any Warrant is outstanding and not exercised, shall not
issue any stock with a preference as to liquidation or dividends over the Common
Stock and shall not permit any of its direct or indirect subsidiaries to effect
a public offering or private sale of stock (except to the Company or any
subsidiary of the Company).
SECTION 14. Notices to Warrant holders. Upon any adjustment of the
Exercise Price pursuant to Section 11, the Company shall promptly thereafter; or
within five days, (i) cause to be filed with the Warrant Agent a certificate
executed by the Chief Financial Officer of the Company (or an assistant) setting
forth the Exercise Price after such adjustment and setting forth in reasonable
detail the method of calculation and the facts upon which such calculations are
based and setting forth the number of Warrant Shares (or portion thereof)
issuable after such adjustment in the Exercise Price, upon exercise of a Warrant
and payment of the adjusted Exercise Price, which certificate shall be
conclusive evidence of the correctness of the matters set forth therein, and
(ii) cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register written notice of
such adjustments by first-class mail, postage prepaid. Where appropriate, such
notice may be given in advance and included as a part of the notice required to
be mailed under the other provisions of this Section 14. The Warrant Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall not be deemed to have knowledge of such adjustment
unless and until it shall have received such certificate.
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any
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other subscription rights or warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or distributions
referred to in subsection (a) of Section 11 hereof); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of the
conveyance or transfer of the properties and assets of the Company substantially
as an entirety, or of any reclassification or change of Common Stock issuable
upon exercise of the Warrants (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of a
subdivision or combination), or a tender offer or exchange offer for shares of
Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company proposes to take any action (other than actions of
the character described in Section 11(a)) which would require an adjustment of
the Exercise Price pursuant to Section 11; then the Company shall cause to be
filed with the Warrant Agent and shall cause to be given to each of the
registered holders of the Warrant Certificates at his address appearing on the
Warrant register, at least 20 calendar days (or 10 calendar days in any case
specified in clauses (a) or (b) above) prior to the applicable record date
hereinafter specified, or promptly in the case of events for which there is no
record date, by first-class mail, postage prepaid, a written notice stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such rights, options, warrants or distribution are to be
determined, or (ii) the initial expiration date set forth in any tender offer or
exchange offer for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is expected to become effective or consummated, and the date as of which it
is expected that holders of record of shares of Common Stock shall be entitled
to exchange such shares for securities or other property, if any, deliverable
upon such reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up. The failure to give the notice required
by this Section 14 or any defect therein shall not affect the legality or
validity of any distribution, right, option, warrant, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up, or the vote upon
any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of Directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company.
SECTION 15. Merger, Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the business of the Warrant Agent,
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shall be the successor to the Warrant Agent hereunder without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
warrant agent under the provisions of Section 17. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall have
been countersigned but not delivered, any such successor to the Warrant Agent
may adopt the countersignature of the original Warrant Agent; and in case at
that time any of the Warrant Certificates shall not have been countersigned, any
successor to the Warrant Agent may countersign such Warrant Certificates either
in the name of the predecessor Warrant Agent or in the name of the successor to
the Warrant Agent; and in all such cases such Warrant Certificates shall have
the full force and effect provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent whose name has been changed may adopt the
countersignature under its prior name, and in case at that time any of the
Warrant Certificates shall not have been countersigned, the Warrant Agent may
countersign such Warrant Certificates either in its prior name or in its changed
name, and in all such cases such Warrant Certificates shall have the full force
and effect provided in the Warrant Certificates and in this Agreement.
SECTION 16. Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement (and no implied duties or obligations
shall be read into this Agreement against the Warrant Agent) upon the following
terms and conditions, by all of which the Company and the holders of Warrants,
by their acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant Certificates
shall be taken as statements of the Company and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Warrant Agent or action taken or to be taken by it. The Warrant Agent
assumes no responsibility with respect to the distribution of the Warrant
Certificates except as herein otherwise provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel of its
own selection (who may be counsel for the Company) and the Warrant Agent shall
incur no liability or responsibility to the Company or to any holder of any
Warrant Certificate in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with the opinion or the advice of such
counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant Certificate for any action taken in
reliance on any Warrant Certificate,
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certificate of shares, notice, resolution, waiver, consent, order, certificate,
or other paper, document or instrument (whether in its original or facsimile
form) believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent (including fees and
expenses of its counsel) in the administration and execution of this Agreement,
to reimburse the Warrant Agent for all expenses, taxes and governmental charges
and other charges of any kind and nature incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent (and any
predecessor Warrant Agent) and save it harmless against any and all claims
(whether asserted by the Company, a holder or any other person), damages,
losses, expenses (including taxes other than taxes based on the income of the
Warrant Agent), liabilities, including judgments, costs and counsel fees and
expenses, for anything done or omitted by the Warrant Agent in the execution of
this Agreement except as a result of its gross negligence or willful misconduct.
The provisions of this Section 16(e) shall survive the expiration of the
Warrants and the termination of this Agreement.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity reasonably satisfactory to it for any costs and expenses which may be
incurred, but this provision shall not affect the power of the Warrant Agent to
take such action as it may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under any of
the Warrants may be enforced by the Warrant Agent without the possession of any
of the Warrant Certificates or the production thereof at any trial or other
proceeding relative thereto, and any such action, suit or proceeding instituted
by the Warrant Agent shall be brought in its name as Warrant Agent and any
recovery of judgment shall be for the ratable benefit of the registered holders
of the Warrants, as their respective rights or interests may appear.
(g) The Warrant Agent, and any stockholder, director, officer or
employee of it, 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 it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not be liable for anything which it may do or refrain from
doing in connection with this Agreement except for its own gross negligence or
willful misconduct.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to be
made any adjustment of the Exercise Price or number of the Warrant Shares or
other securities or property deliverable as provided in this Agreement, or to
determine whether any facts exist which may require any of such adjustments, or
with respect to the nature or extent of any such adjustments, when made, or with
respect to the method employed in making the same. The Warrant Agent shall not
be accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property
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which may at any time be issued or delivered upon the exercise of any Warrant or
with respect to whether any such Warrant Shares or other securities will when
issued be validly issued and fully paid and nonassessable, and makes no
representation with respect thereto.
(j) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Warrant Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided that the Company must use its
reasonable best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.
(k) Any application by the Warrant Agent for written instructions
from the Company may, at the option of the Warrant Agent, set forth in writing
any action proposed to be taken or omitted by the Warrant Agent under this
Agreement and the date on and/or after which such action shall be taken or such
omission shall be effective. The Warrant Agent shall not be liable for any
action taken by, or omission of, the Warrant Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Warrant Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(l) No provision of this Agreement shall require the Warrant Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or in the exercise of its rights
if there shall be reasonable grounds for believing that repayment of such funds
or adequate indemnification against such risk or liability is not reasonably
assured to it.
(m) In addition to the foregoing, the Warrant Agent shall be
protected and shall incur no liability for, or in respect of, any action taken
or omitted by it in connection with its administration of this Agreement if such
acts or omissions are in reliance upon (i) the proper execution of the
certification concerning beneficial ownership appended to the form of assignment
and the form of the election attached hereto unless the Warrant Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
non-execution of such certification including, without limitation, any refusal
to honor any otherwise permissible assignment or election by reason of such
non-execution.
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SECTION 17. Change of Warrant Agent.
If the Warrant Agent shall become incapable of acting as Warrant
Agent, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after it
has been notified in writing of such incapacity by the Warrant Agent or by the
registered holder of a Warrant Certificate, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a successor to the Warrant Agent. Pending appointment of a
successor to such Warrant Agent, either by the Company or by such a court, the
duties of the Warrant Agent shall be carried out by the Company. The holders of
a majority of the unexercised Warrants shall be entitled at any time to remove
the Warrant Agent and appoint a successor to such Warrant Agent. Such successor
to the Warrant Agent need not be approved by the Company or the former Warrant
Agent. After appointment the successor to the Warrant Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent upon payment of all fees and expenses due it and its agents and
counsel shall deliver and transfer to the successor to the Warrant Agent any
property at the time held by it hereunder and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to give
any notice provided for in this Section 17, however, or any defect therein,
shall not affect the legality or validity of the appointment of a successor to
the Warrant Agent.
SECTION 18. Notices to Company and Warrant Agent. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent or
by the registered holder of any Warrant Certificate to or on the Company shall
be sufficiently given or made when and if deposited in the mail, first class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Key Energy Group, Inc.
Xxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxxxxxxx, XX 00000
Attention: General Counsel
In case the Company shall fail to maintain such office or agency or
shall fail to give such notice of the location or of any change in the location
thereof, presentations may be made and notices and demands may be served at the
principal office of the Warrant Agent.
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, first-class or
registered, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) to the Warrant Agent as follows:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
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SECTION 19. Supplements and Amendments.
The Company and the Warrant Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Warrant Certificates
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 Warrant Agent may deem necessary or
desirable and which shall not in any way adversely affect the interests of the
holders of Warrant Certificates. Notwithstanding anything in this Agreement to
the contrary, the prior written consent of the Warrant Agent must be obtained in
connection with any supplement or amendment which alters the rights or duties of
the Warrant Agent.
SECTION 20. Successors. 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 hereunder.
SECTION 21. Termination. This Agreement will terminate on any earlier
date if all Warrants have been exercised or expired without exercise. The
provisions of Section 16 shall survive such termination.
SECTION 22. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the internal laws of said State.
SECTION 23. Benefits of This Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrant Certificates 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, the
Warrant Agent and the registered holders of the Warrant Certificates.
SECTION 24. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
KEY ENERGY GROUP, INC.
By
-----------------------------------
Title:
THE BANK OF NEW YORK
By
-----------------------------------
Title:
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EXHIBIT A
[Form of Warrant Certificate]
[Face]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE 5:00 P.M. NEW YORK CITY TIME ON SEPTEMBER 14, 2008.
A-1
29
No. _____ 150,000 Warrants
Warrant Certificate
KEY ENERGY GROUP, INC.
This Warrant Certificate certifies that ________________________, or
registered assigns, is the registered holder of 150,000 Warrants expiring
September 14, 2008 (the "WARRANTS") to purchase Common Stock, $0.10 (the "COMMON
STOCK"), of KEY ENERGY GROUP, INC., a Maryland corporation (the "COMPANY"). Each
Warrant entitles the holder upon exercise to receive from the Company on or
before 5:00 p.m. New York City Time on September 14, 2008, that number of fully
paid and nonassessable shares of Common Stock (each, a "WARRANT SHARE") as set
forth below at the exercise price (the "EXERCISE PRICE") as determined pursuant
to the Warrant Agreement referenced below payable in lawful money of the United
States of America upon surrender of this Warrant Certificate and payment of the
Exercise Price at the office or agency of the Warrant Agent, but only subject to
the conditions set forth herein and in the Warrant Agreement referred to on the
reverse hereof. Notwithstanding the foregoing, Warrants may be exercised without
the exchange of funds pursuant to the net exercise provisions of Section 6 of
the Warrant Agreement. The Exercise Price and number of Warrant Shares issuable
upon exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
The number of Warrant Shares for which one Warrant is initially
exercisable shall be equal to: 0.15 times the number of shares of Common Stock
outstanding on such date on a fully diluted basis (after giving effect to the
exercise of all options, warrants and rights to acquire Common Stock and the
conversion of all convertible securities for the maximum number of shares of
Common Stock obtainable whether or not such options, warrants or rights are then
exercisable or vested and whether or not such convertible securities are then
convertible) divided by 150,000. According to the Company's calculations, that
number is __________ shares.
The initial Exercise Price per share of Common Stock for any Warrant
shall be equal to 110% of the fair market value of one share of Common Stock as
of the Escrow Release Date for such Warrant. The fair market value shall be as
determined in the Warrant Agreement. The initial Exercise Price is $_______ per
share.
No warrant may be exercised before the Escrow Release Date or after
5:00 p.m. New York City Time on September 15, 2008 and to the extent not
exercised by such time such warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further provisions shall
for all purposes have the same effect as though fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
This Warrant Certificate shall be governed and construed in
accordance with the
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internal laws of the State of New York.
IN WITNESS WHEREOF, ____________________ has caused this Warrant
Certificate to be signed by its President and by its Secretary.
KEY ENERGY GROUP, INC.
By
------------------------------
Xxxxxxx X. XxXxxxxx
Executive Vice President
By
------------------------------
Xxxx X. Xxxxxx, Xx.
Secretary
Countersigned:
Dated:
THE BANK OF NEW YORK,
as Warrant Agent
By
----------------------------
Authorized Signatory
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[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring September 14, 2008 entitling the holder on
exercise to receive shares of Common Stock, par value $0.10 per share, of the
Company (the "COMMON STOCK"), and are issued or to be issued pursuant to a
Warrant Agreement dated as of September 14, 2008 (the "WARRANT AGREEMENT"), duly
executed and delivered by the Company to The Bank of New York, a New York
banking corporation, as warrant agent (the "WARRANT AGENT"), which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent,
the Company and the holders (the words "HOLDERS" or "HOLDER" meaning the
registered holders or registered holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the
Company.
Warrants may be exercised at any time on or before 5:00 p.m. New York
City time on September 14, 2008. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price as specified in the
Warrant Agreement at the office of the Warrant Agent. In the event that upon any
exercise of Warrants evidenced hereby the number of Warrants exercised shall be
less than the total number of Warrants evidenced hereby, there shall be issued
to the holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised. No adjustment shall be made for any dividends
on any Common Stock issuable upon exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in a Registration Rights Agreement
dated as of September 14, 1998, among the Company and certain investors named
therein. A copy of the Registration Rights Agreement may be obtained by the
holder hereof upon written request to the Company or the Warrant Agent.
Warrant Certificates, when surrendered at the principal corporate
trust office of the Warrant Agent by the registered holder thereof in person or
by legal representative or attorney duly authorized in writing, may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, but without payment of any service charge, for another Warrant
Certificate or Warrant Certificates of like tenor evidencing in the aggregate a
like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and
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evidencing in the aggregate a like number of Warrants shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided in the Warrant Agreement, without charge except for any tax
or other governmental charge imposed in connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
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Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith tenders payment for such shares to the order of KEY ENERGY
GROUP, INC. in the amount of $______ in accordance with the terms hereof unless
the holder is exercising Warrants pursuant to the net exercise provisions of
Section 6 of the Warrant Agreement. The undersigned requests that a certificate
for such shares be registered in the name of ________________, whose address is
__________________________ and that such shares be delivered to _______________
whose address is _________________________________. If said number of shares is
less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of ______________, whose
address is _________________________, and that such Warrant Certificate be
delivered to ________________________, whose address is ______________________.
Signature:
Date:
Signature Guaranteed:
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SIGNATURES
Dated as of September 14, 1998
KEY ENERGY GROUP, INC.
By: /s/ XXXXXXX X. XXXXXXXX
------------------------
Name:
Title:
THE BANK OF NEW YORK
By: /s/ XXXXXX X. XXXXXX
-----------------------
Name: XXXXXX X. XXXXXX
Title: ASSISTANT VICE PRESIDENT
