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EXHIBIT 99.2
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WARRANT AGREEMENT
between
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION
and
THE CHASE MANHATTAN BANK
Dated as of September 28, 1998
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TABLE OF CONTENTS
Page
SECTION 1. Definitions, Accounting Terms and Determinations............................. . . . . . . . . . . . . . . . 2
1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Accounting Terms and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2. Purchase and Sale of Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.01. Authorization and Issuance of Warrant Stock and Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.02 Issuance of the Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.03 Purchase for Investor's Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.04 Securities Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.05 Exercise of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.06 Cancellation of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.01 Existence; Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.02 No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.04 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.05 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.06 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.07 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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3.08 Private Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.09 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.10 SEC Documents; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4. Restrictions on Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.01 Transfers Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.02 Transfers of Restricted Securities Pursuant to Registration Statements, Rule 144 and Rule 144A . . . . . . . . 15
4.03 Notice of Certain Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.04 Restrictive Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.05 Termination of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5. Dispositions of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.01 Disposition of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.02 Transfer Restriction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.03 Repurchase of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.04 Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6. Adjustment of Stock Unit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.01 Stock Dividends, Subdivisions and Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.02 Issuance of Additional Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.03 Issuance of Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.04 Issuance of Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.05 Superseding Adjustment of Stock Unit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.06 Other Provisions Applicable to Adjustments Under this Section 6 . . . . . . . . . . . . . . . . . . . . . . . . 23
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6.07 Merger, Consolidation or Disposition of Asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.08 Distributions upon Declaration of Dividend or Other Distribution . . . . . . . . . . . . . . . . . . . . . . . 25
6.09 Dilution in Case of Other Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.10 Notice of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.11 Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7. Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.01 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.02 Proration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.03 Registration Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.04 Holdback on Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.06 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.07 Option to Purchase Registrable Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.08 No Other Registration Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 8. Holders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.01 Delivery Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.02 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.03 Replacement of Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.04 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9. Other Covenants of Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.01 Financial Statements, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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9.02 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.03 Restrictions on Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
9.04 Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
9.05 Reservation and Authorization of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.01 Office of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.02 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.04 Expenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.05 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.06 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.08 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.09 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.13 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ANNEX 1 - FORM OF WARRANT
ANNEX 2 - FORM OF ASSIGNMENT
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WARRANT AGREEMENT dated as of September 28, 1998 between
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION, a company duly organized and validly existing
under the laws of the State of Delaware (the "Issuer") and The Chase Manhattan
Bank, a New York State banking corporation (the "Investor").
WHEREAS, the Issuer, the Subsidiary Guarantors listed on the signature
pages thereof and The Chase Manhattan Bank (the "Lender") are parties to a
Second Amended and Restated Loan Agreement dated as of September 28, 1998 (as
originally executed, the "Loan Agreement"; references to the Loan Agreement
herein shall apply whether or not the Loan Agreement is then in force and
without regard to amendments thereto unless such amendments thereto have been
consented to by the Investor), providing, subject to the terms and conditions
thereof, for rendering loans to the Issuer in principal amount up to
$200,000,000 to be made by the Lender to the Issuer.
WHEREAS, the Issuer has agreed that if it has not signed a Purchase
and Sale Agreement (as defined below) prior to October 31, 1998, the Investor
will be entitled to receive (on the terms and conditions set forth in the
Escrow Agreement) Warrants (as defined below), to purchase 256,140 of the
shares of Common Stock (as defined below) of the Issuer (the Common Stock or
any security, cash or other property as shall result from the adjustments
specified in Section 6 issuable on exercise of the Warrants being referred to
herein as the "Stock Units"), at an initial exercise price of $.01 per share,
with each Warrant entitling the holder thereof to purchase one Stock Unit, and
if the Issuer has not satisfied the Purchase and Sale Conditions by November
30, 1998 or December 31, 1998, the Investor shall receive Warrants to purchase
768,420 Stock Units and 1,280,700 Stock Units, respectively, with an initial
exercise price of $.01 per share; and
WHEREAS, the Issuer has agreed that in consideration of entering into
the Loan Agreement, the Investor shall receive Warrants to purchase 256,140
Stock Units with an initial exercise price of $.01 per share.
NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth therein the parties hereto agree as follows:
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SECTION 1. Definitions, Accounting Terms and Determinations.
1.01 Definitions.
(a) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of this
Agreement in the singular to have the same meanings when used in the plural and
vice versa):
"Additional Common Stock" shall mean all shares of Common
Stock issued or sold by the Issuer on or after the date hereof.
"Affiliate" means, as to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly, controls, is
controlled by or is under common control with such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise. Notwithstanding the
foregoing, (i) no individual shall be an Affiliate of any Person solely by
reason of his or her being a director, officer or employee of such Person and
(ii) none of the Issuer and the Wholly Owned Subsidiaries of the Issuer shall
be Affiliates of each other.
"Bank Holding Company Affiliate" shall mean, with respect of
any Holder subject to the provisions of Regulation Y, (i) if such Holder is a
bank holding company, any company controlled by such bank holding company or
(ii) the bank holding company that controls such Holder and any other Person
controlled by such bank holding company.
"Board" shall mean the Board of Directors (or any duly
authorized committee thereof) of the Issuer.
"Business Day" shall mean any day that is not a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
or required by law to remain closed.
"Closing Date" shall mean the date of this Agreement.
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"Commission" shall mean the Securities and Exchange Commission
or any other similar or successor agency of the Federal government
administering the Securities Act and/or the Exchange Act.
"Common Stock" shall mean the Common Stock of the Issuer, par
value $0.01 per share, or any other common stock or other securities receivable
thereon, or into which the Common Stock is convertible or exchangeable, as a
result of any recapitalization, reclassification, merger or consolidation of,
or deposition of assets by, the Issuer.
"Convertible Securities" shall mean evidences of indebtedness,
interests or other securities or rights which are exchangeable for or
exercisable or convertible into shares of Common Stock either immediately or
upon the arrival of a specified date or the occurrence of a specified event.
"Convertible Security Value" shall mean the fair market value
of a Convertible Security on the date of issuance, reasonably determined in
good faith by the Board, less the proceeds received by the Issuer for such
conversion or exchange.
"Current Market Price", per share of Common Stock, for the
purposes of any provision hereof or of a Warrant at the date herein or therein
specified, shall be deemed to be (a) with respect to any Additional Common
Stock issued (or to be issued) in a public offering (other than a public
offering effected as a part of a merger or other acquisition transaction by the
Issuer, in which case paragraph (b) below shall apply), the offering price of
such shares of Additional Common Stock (less any customary underwriting
discounts or commissions) and (b) otherwise, the average of the daily market
prices for each day during the 15 consecutive trading days immediately
preceding such date as of which such a price can be established in the manner
set forth in the next sentence. The market price for each such trading day
shall be the last sale price on such day as reported in the Consolidated Last
Sale Reporting System or as quoted in the National Association of Securities
Dealers Automated Quotation System, or if such last sale price is not
available, the average of the closing bid and asked prices as reported in
either such system. Notwithstanding the foregoing, the "Current Market Price"
per share of Common Stock for shares to be issued in connection with an
acquisition of assets or stock, a tender or exchange offer, a merger or other
business combination shall be deemed to be the price per share as determined in
such acquisition, tender or exchange offer, merger or other business
combination agreement.
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"Current Warrant Price", for the purpose of any provision
hereof or of a Warrant at the date herein or therein specified, shall mean the
amount per share of Common Stock equal to the quotient resulting from dividing
the Exercise Price per Stock Unit in effect on such date by the number of
shares (including any fractional share) of Common Stock comprising a Stock Unit
on such date.
"Demand Notice" shall have the meaning assigned to such term
in Section 7.01 hereof.
"Demand Registration" shall have the meaning assigned to such
term in Section 7.01 hereof.
"Equity Securities" means Voting Securities, Convertible
Securities and Rights to Purchase Voting Securities.
"Escrow Agent" shall mean Chase Bank of Texas, National
Association as Escrow Agent under the Escrow Agreement.
"Escrow Agreement" shall mean the Escrow Agreement dated the
date hereof among the Issuer, the Investor and the Escrow Agent.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
"Exercise Price" shall have the meaning assigned to such term
in the form of Warrant attached as Annex 1 hereto.
"Existing Warrant Agreement" shall have the meaning assigned
to such term in Section 3.07(a) hereof.
"Expiration Date" shall have the meaning assigned to such term
in form of the Warrant attached as Annex 1 hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period.
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"Governmental Authority" shall mean the government of the
United States of America, any other nation or any political sub-division
thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory, monetary or administrative powers or
functions of or pertaining to government.
"Holder" shall mean any Person who acquires Warrants or
Warrant Stock pursuant to the provisions of this Agreement, including any
transferees of Warrants or Warrant Stock and, prior to the issuance of the
Warrants shall mean the Investors; provided, however, that a holder of Warrant
Stock purchased pursuant to an effective registration statement or pursuant to
Rule 144 shall not be deemed a Holder.
"include" and "including" shall be construed as if followed by
the phrase "without being limited to".
"Independent Appraiser" shall mean an appraiser which is a
recognized independent expert (including any Investment Banking Firm)
experienced in valuing businesses similar or related to the principal business
of the Issuer and its Subsidiaries.
"Investment Banking Firm" shall mean a nationally recognized
investment banking firm.
"Investor" shall have the meaning assigned to such term in the
preamble of this Agreement.
"Issuer" shall have the meaning assigned to such term in the
preamble of this Agreement.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, a Person shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
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"Loan Agreement" shall have the meaning assigned to such term
in the recitals of this Agreement.
"Majority Warrant Stock Holders" shall mean the Holders of a
majority of the Warrant Stock issued or issuable upon exercise of the Warrants.
For purposes of giving notices, waivers and consents hereunder, Holders of
Warrants shall be deemed holders of the Warrant Stock issued on exercise
thereof.
"NASDAQ" shall mean the National Association of Securities
Dealers automated quotation system.
"on a fully diluted basis" shall mean, with respect to the
Common Stock of the Issuer outstanding at any time, the number of shares of
such Common Stock then issued and outstanding, assuming full conversion,
exercise and exchange of all issued and outstanding Convertible Securities and
Options that shall be (or may become) exchangeable for, or exercisable or
convertible into, such Common Stock, including Warrants with respect thereto;
provided that the number of shares of Common Stock deemed to be outstanding "on
a fully diluted basis" shall be reduced (without duplication) by the number of
shares of Common Stock purchasable or issuable upon exercise, conversion or
exchange of (i) Options or Convertible Securities at the time of calculation
that are Out of the Money and (ii) Options issued under the Option Plan;
provided this clause (ii) shall be excluded in determining the number of shares
of Common Stock outstanding for the purposes of the definition "Purchase and
Sale Agreement" herein.
"Option" shall mean any warrant, option or other right to
subscribe for or purchase shares of Common Stock.
"Option Plan" shall mean an Employee Stock Option Plan of the
Issuer approved by a majority of the non-employee directors of the Board.
"Other Equity Documents" shall mean any Option Plan, the
certificate of incorporation of the Issuer, the by-laws of the Issuer and any
other instrument or document of organization or governance of the Issuer.
"Other Securities" shall mean any stock (other than Warrant
Stock) and other securities of the Issuer or any other Person (corporate or
otherwise) which a Holder at any time shall be entitled to receive, or shall
have received, upon exercise of the
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Warrants held by such Holder or pursuant to Section 6 hereof, in lieu of or in
addition to Warrant Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Warrant Stock or Other
Securities received in an earlier exchange, exercise or replacement of Warrant
Stock.
"Out of the Money" shall mean (a) in the case of an Option,
that the fair market value of the shares of any Common Stock which the holder
thereof is entitled to purchase or subscribe for is less than the exercise
price of such Option and (b) in the case of a Convertible Security, that the
quotient resulting from dividing the fair market value of such Convertible
Security by the number of shares of any Common Stock into or for which such
Convertible Security is exercisable, convertible or exchangeable is greater
than the fair market value of a share of such Common Stock.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust, unincorporated
organization or government (or any agency, instrumentality or political
sub-division thereof).
"Principal Shareholder" shall mean either of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇.
"Purchase and Sale Agreement" shall mean an executed (x)
purchase and sale agreement with a buyer for the sale of not less than 65% of
the outstanding Common Stock of the Issuer on a fully diluted basis (the
"Required Amount"), such buyer to be a party which is capable, in the sole
discretion of the Investor, of purchasing the Required Amount or (y) merger
agreement between the Issuer and a Person acceptable to the Investor, in the
Investor's sole discretion, which agreement in the case of each of clause (x)
and (y), provides for the repayment of all obligations outstanding pursuant to
the Loan Agreement.
"Purchase and Sale Conditions" shall mean the conditions of
closing pursuant to the Purchase and Sale Agreement.
"Regulated Holder" shall mean a Holder which is a bank, a bank
holding company or an Affiliate of any of the foregoing.
A Regulated Holder shall be deemed to have a "Regulatory
Problem" when (i) such Regulated Holder's investment in the Warrants and/or
Warrant Stock exceeds any
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limitation to which it is subject, or is otherwise not permitted, under any
law, rule or regulation of any Governmental Authority (including any position
to that effect taken by such Governmental Authority), or (ii) restrictions are
imposed on such Regulated Holder which, in its reasonable judgment, make it
illegal or unduly burdensome for such Regulated Holder to continue to hold such
Warrants and/or Warrant Stock.
"Regulation Y" shall mean Regulation Y promulgated by the
Board of Governors of the Federal Reserve System (12 C.F.R.225) or any
successor regulation.
"Restricted Certificate" shall mean a certificate for Warrant
Stock or Warrants bearing or required to bear the restrictive legend set forth
in Section 4.03.
"Restricted Securities" shall mean Restricted Warrant Stock
and Restricted Warrants.
"Restricted Warrant Stock" shall mean Warrant Stock evidenced
by a Restricted Certificate.
"Restricted Warrants" shall mean Warrants evidenced by a
Restricted Certificate.
"Rule 144" shall mean Rule 144 promulgated by the Commission
under the Securities Act (or any successor or similar rule then in force).
"Rule 144A" shall mean Rule 144A promulgated by the Commission
under the Securities Act (or any successor or similar rule then in force).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Seller" shall have the meaning assigned to such term in
Section 7.01 hereof.
"Seller Notice" shall have the meaning assigned to such term
in Section 7.01 hereof.
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"Shareholder" shall mean any Person who directly or indirectly
owns any shares of Common Stock (including Warrant Stock).
"Stock Unit" shall have the meaning assigned to such term in
the recitals to this Agreement.
"Subsidiary" of a Person means (a) any corporation more than
50% of the outstanding securities having ordinary voting power of which shall
at the time be owned or controlled, directly or indirectly, by such Person or
by one or more of its Subsidiaries or by such Person and one or more of its
Subsidiaries, or (b) any company, partnership, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Unless otherwise expressly provided, all references herein to a "Subsidiary"
shall mean a direct or indirect Subsidiary of the Issuer.
"Voting Securities" means the Common Stock and any other
securities of the Issuer of any kind or class having power generally to vote
for the election of directors; "Rights to Purchase Voting Securities" means
options and rights issued by the Issuer (whether presently exercisable or not)
to purchase Voting Securities or Convertible Voting Securities.
"Warrant Stock" shall mean all shares of Common Stock issuable
from time to time upon exercise of a Warrant.
"Warrant" and "Warrants" shall mean the Warrants, if any,
issued by the Issuer pursuant to this Agreement, evidencing rights to purchase
up to an aggregate of 2,561,400 Stock Units (which represents 10% of the
outstanding shares of Common Stock on a fully diluted basis on the date hereof,
including the Common Stock represented by such Warrants), and all warrants
issued upon transfer, division or combination of, or in substitution for, any
thereof.
(b) Prior to the issuance of any Warrants hereunder, any reference
to the "holders" or the "holders of Warrants", "Warrant Stock Holders" or words
or phrases of similar meaning shall be deemed to be a reference to the
Investors.
1.02 Accounting Terms and Determinations. Except as otherwise may
be expressly provided herein, all accounting terms used herein shall be
interpreted, and all
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financial statements and certificates and reports as to financial matters
required to be delivered to the Holders hereunder shall be prepared, in
accordance with GAAP. All calculations made for the purposes of determining
compliance with the terms of this Agreement shall (except as otherwise may be
expressly provided herein) be made by application of GAAP.
SECTION 2. Purchase and Sale of Warrant.
2.01 Authorization and Issuance of Warrant Stock and Warrants. The
Issuer has authorized: (a) the issuance of the Warrants evidenced by warrant
certificates in the form of Annex 1; and (b) the issuance of such number of
shares of Common Stock as shall be necessary to permit the Issuer to comply
with its obligations to issue shares of Common Stock pursuant to the Warrants.
2.02 Issuance of the Warrant. In consideration of the loans from the
Investor to the Issuer pursuant to the Loan Agreement:
(a) on the date hereof the Issuer shall issue to the
Investor, for no cash consideration, a Warrant representing
256,140 Stock Units;
(b) on the date hereof the Issuer shall issue to the
Escrow Agent, for no cash consideration, Warrants representing
2,305,260 Stock Units;
(c) the Issuer shall deliver to the Investor a single
certificate for the Warrant specified in clause (a) above, to
be issued to such Investor, registered in the name of the
Investor, except that, if the Investor shall have notified the
Issuer in writing prior to such issuance that it desires
certificates for Warrants to be issued in other denominations
or registered in the name or names of any Affiliate, nominee
or nominees of such Investor for its or their benefit, then
the certificates for Warrants shall be issued to such Investor
in the denominations and registered in the name or names
specified in such notice;
(d) the Issuer shall deliver to the Escrow Agent three
certificates for the Warrants specified in clause (b) above
representing 11.1111%, 33.3333% and 55.5556%, respectively, in
each case rounded to the nearest dollar, of the Stock Units to
be delivered to the Escrow Agent, each registered in the
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name of the Investor, except that if the Investor shall have
notified the Issuer in writing prior to such issuance that it
desires certificates for Warrants to be registered in the name
or names of any Affiliate, nominee or nominees of such
Investor for its or their benefit, then the certificates for
Warrants shall be issued to the Escrow Agent registered in the
name or names specified in such notice; and
(e) the Issuer shall deliver to the Investor a legal
opinion from counsel to the Issuer in form and substance
satisfactory to the Investor.
2.03 Purchase for Investor's Account. The Investor represents and
warrants to the Issuer as follows:
(a) The Investor is acquiring the Warrants to be issued
on the date hereof, and will acquire the Warrants, as they are
released from escrow pursuant to the Escrow Agreement, for
investment for its own account, without a view to the
distribution thereof, all without prejudice, however, to the
right of the Investor at any time, in accordance with this
Agreement, lawfully to sell or otherwise to dispose of all or
any part of the Warrants or the Warrant Stock held by it.
(b) The Investor is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
2.04 Securities Act Compliance. The Investor understands that at the
time of the issuance of such Warrant, the Issuer has not registered the
Warrants or the Warrant Stock under the Securities Act or applicable state
securities laws, the Investor agrees that neither the Warrants nor the Warrant
Stock shall be sold or transferred or offered for sale or transfer without
registration or qualification under the Securities Act or applicable state
securities laws or the availability of an exemption therefrom, all as more
fully provided in Section 4.
2.05 Exercise of Warrants. On and after the date hereof and until
5.00pm, New York City time, on the Expiration Date, each Holder may, on one or
more occasions, on any Business Day, in whole or in part, exercise or convert
some or all of the Warrants as described in Annex 1 hereto.
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2.06 Cancellation of Warrants. Any Warrants which, pursuant to the
terms of the Escrow Agreement, have not been required to be delivered to the
Investor (or its designee or transferee) on or prior to December 31, 1998 (or
if such day is not a Business Day, the next succeeding Business Day) shall,
upon their delivery by the Escrow Agent to the Issuer in accordance with the
terms of the Escrow Agreement, be cancelled by the Issuer.
SECTION 3. Representations and Warranties. The Issuer represents and
warrants as follows:
3.01 Existence; Qualification. Each of the Issuer and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization. Each of the Issuer and its
Subsidiaries is duly qualified, licensed or admitted to do business and is in
good standing as a foreign corporation in every jurisdiction where the failure
to be so qualified would have a material adverse effect on the business,
financial condition, operations, assets, prospects, liabilities or
capitalization of the Issuer and its Subsidiaries taken as a whole and has all
requisite corporate power and authority to transact its business as now
conducted in all such jurisdictions.
3.02 No Breach. The execution, delivery and performance of this
Agreement and the Warrants, by the Issuer and the consummation by it of the
transactions contemplated hereby and thereby will not (a) violate the
certificate of incorporation or by-laws or any other instrument or document of
organization or governance of the Issuer, (b) violate, or result in a breach of
or default under, any other material instrument or agreement to which the
Issuer or any of its Subsidiaries is a party or is bound, (c) violate any
judgment, order, injunction, decree or award against or binding upon the Issuer
or any of its Subsidiaries, (d) result in the creation of any material Lien
upon any of the properties or assets of the Issuer or any of its Subsidiaries
(other than as contemplated by the Loan Agreement), or (e) violate any law,
rule or regulation relating to the Issuer or any of its Subsidiaries.
3.03 Corporate Action. The Issuer has all necessary corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Warrants; the execution, delivery and performance by the
Issuer of this Agreement and the Warrants have been duly authorized by all
necessary action (including all Shareholder action) on the part of the Issuer;
this Agreement has been, and the Warrants if issued, will be duly executed and
delivered by the Issuer and constitute the legal, valid and binding obligations
of the Issuer, enforceable against the Issuer in accordance with their
respective terms; the Warrant Stock initially covered by the Warrants will be
duly and
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validly authorized and reserved for issuance and shall, when paid for, issued
and delivered in accordance with the Warrants, be duly and validly issued,
fully paid and nonassessable and free and clear of any Liens; and none of the
Warrant Stock issued pursuant to the terms hereof will be in violation of any
preemptive rights of any Shareholder.
3.04 Approvals. Except in connection with the registration of the
Warrant Stock pursuant to Section 7, no authorizations, approvals or consents
of, and no filings or registrations with, any Governmental Authority or any
other Person are necessary for the execution, delivery or performance by the
Issuer of this Agreement or the Warrants or for the validity or enforceability
thereof. Any such action required to be taken as a condition to the execution
and delivery of this Agreement, or the execution, issuance and delivery of the
Warrants, has been duly taken by all such Governmental Authorities or other
Persons, as the case may be.
3.05 Investment Company Act. The Issuer is not an "investment
company", or a company "controlled by" an "investment company", within the
meaning of the Investment Company Act of 1940, as amended.
3.06 Public Utility Holding Company Act. The Issuer is not a
"holding company", or an "affiliate" of a "holding company" or a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
3.07 Capitalization.
(a) On the date hereof, the total number of shares of Common Stock
that the Issuer has authority to issue is 40,000,000 of which
25,614,000 are outstanding. As of the date hereof, the Issuer does
not have outstanding any Convertible Securities or Options exercisable
or convertible into or exchangeable for any interests or other equity
rights of the Issuer, nor does it have outstanding any agreements
providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, any interests or
equity rights of the Issuer or Convertible Securities exercisable or
convertible into or exchangeable for any interests or equity rights of
the Issuer other than (x) 500,000 shares of Common Stock which are
issuable pursuant to Option Plans and (y) 200,000 shares of Common
Stock which are issuable pursuant to warrants issued under the
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Warrant Agreement dated as of December 3, 1997 (the "Existing Warrant
Agreement") among the Issuer, the Investor and Banque Paribas.
(b) Other than the Other Equity Documents, the Existing Warrant
Agreement, the Registration Rights Agreement among the Issuer, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (a
copy of which has been initialled by the Investor) and this Agreement,
there is not in effect on the date hereof any agreement by the Issuer
pursuant to which any holders of securities of the Issuer have a right
to cause the Issuer to register such securities under the Securities
Act or any agreement to which the Issuer or (to its knowledge) any of
its Shareholders is a party relating to the voting, transfer or sale
of such securities.
(c) There is not in effect on the date hereof any agreement by the
Issuer which (i) restricts the transferability of the Warrants and/or
the Warrant Stock, except as provided in Sections 4 and 5, (ii)
restricts the transferability of the right of any Holder in this
Agreement to any transferee of all or a portion of the Holder's
Warrants and/or Warrant Stock, or (iii) requires any consent or other
approval of any Person to the exercise of the Warrants by the Holder
or the issuance of Warrant Stock upon such exercise.
3.08 Private Offering.
Assuming the truth and accuracy of each Investor's representations and
warranties contained in Section 2.03, the issuance and sale of the Warrants to
the Investor hereunder are exempt from the registration and prospectus delivery
requirements of the Securities Act.
3.09 Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Issuer's knowledge after due
inquiry, threatened against the Issuer or any of its Subsidiaries before any
Governmental Authority seeking to enjoin the transactions contemplated by this
Agreement or the Warrants.
3.10 SEC Documents; Financial Statements. The Issuer has filed in a
timely manner all documents that the Issuer was required to file with the
Commission under Sections 13, 14(a) and 15(d) of the Exchange Act, since its
initial public offering. As of their respective filing dates, all documents
filed by the Issuer with the Commission ("SEC Documents") complied in all
material respects with the requirements of the Exchange Act
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or the Securities Act, as applicable. None of the SEC Documents as of their
respective dates contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Issuer included in the
SEC Documents filed during 1997 (the "Financial Statements") comply as to form
in all material respects with applicable accounting requirements and with the
published rules and regulations of the Commission with respect thereto. The
Financial Statements have been prepared in accordance with GAAP and fairly
present the consolidated financial position of the Issuer and its Subsidiaries
at the dates thereof and the consolidated results of their operations and
consolidated cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, recurring adjustments).
SECTION 4. Restrictions on Transferability.
4.01 Transfers Generally. Except as otherwise provided in Section 5
and subject to the Issuer's consent, which shall not be unreasonably withheld
(as measured by the Registration Rights Agreement), the Restricted Securities
shall be transferable only upon the conditions specified in this Section 4 and
in Section 7, which conditions are intended to insure compliance with the
provisions of the Securities Act and applicable state securities laws in
respect of the transfer of any Restricted Securities.
4.02 Transfers of Restricted Securities Pursuant to Registration
Statements, Rule 144 and Rule 144A. The Restricted Securities may be offered
or sold by the Holder thereof pursuant to (a) an effective registration
statement under the Securities Act, (b) to the extent applicable, Rule 144 or
Rule 144A or (c) any other legally available means of transfer.
4.03 Notice of Certain Transfers. If any Holder of any Restricted
Security desires to transfer such Restricted Security other than pursuant to
(x) an effective registration statement, (y) Rule 144 under the Securities Act
or (z) in accordance with Section 5.01(a)(i), (ii) or (iii) hereof, such Holder
shall deliver to the Issuer at least 7 Business Days' prior written notice with
respect to the proposed transfer, together with an opinion (at such Holder's
expense) of Freshfields, or such other counsel reasonably satisfactory to the
Issuer, to the effect that an exemption from registration under the Securities
Act is available and specifying the applicable exemption.
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4.04 Restrictive Legends. Unless and until otherwise permitted by
this Section 4, the certificate for the Warrants issued under this Agreement,
each certificate for any Warrants issued to any subsequent transferee of any
such certificate, each certificate for any Warrant Stock issued upon exercise
of any Warrant and each certificate for any Warrant Stock issued to any
subsequent transferee of any such certificate, shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT
DATED AS OF SEPTEMBER 28 1998 (THE "WARRANT AGREEMENT"), AMONG
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION, A DELAWARE COMPANY (THE "ISSUER"),
AND THE CHASE MANHATTAN BANK, AS THE WARRANT AGREEMENT MAY BE MODIFIED
AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF THE
FORM OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY
THE PROVISIONS OF THE WARRANT AGREEMENT."
4.05 Termination of Restrictions. All of the restrictions imposed by
this Section 4 upon the transferability of the Restricted Securities shall
cease and terminate as to any particular Restricted Security when such
Restricted Security shall have been effectively registered under the Securities
Act and applicable state securities laws and sold by the Holder thereof in
accordance with such registration or sold under and pursuant to Rule 144 or is
eligible to be sold under and pursuant to paragraph (k) of Rule 144. Whenever
the restrictions imposed by this Section 4 shall terminate as to any Restricted
Security as hereinabove provided, the Holder thereof shall be entitled to
receive from the Issuer, without expense, a new certificate evidencing such
Restricted Security not bearing the restrictive legend otherwise required to be
borne by a certificate evidencing such Restricted Security.
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SECTION 5. Dispositions of Securities.
5.01 Disposition of Securities. Subject to compliance with all of
the provisions of Section 4 hereof, any Holder shall have the right to transfer
any Restricted Securities to any Person.
(a) Subject to compliance with the provisions of Section 4 hereof,
except with respect to the requirement for an opinion of counsel to
the Holder, which shall not be required under clauses (i), (ii) or
(iii) of this Section 5.01(a), any Holder shall have the right to
transfer any Restricted Securities:
(i) to any Person who at the time owns (directly or indirectly)
at least a majority of the voting capital stock or other equity
interests of such Holder;
(ii) to any Person at least a majority of whose voting capital
stock shall at the time be owned (directly or indirectly) by such
Holder or by any Person who owns (directly or indirectly) at least
a majority of the voting capital stock or other equity interests of
such Holder;
(iii) to another Investor; or
(iv) in amounts such that, after giving effect thereto, no single
transferee and its affiliates shall hold more that 2% of the
aggregate number of shares of voting stock of the Issuer (including
all warrants, options and similar rights exercisable or convertible
into shares of such voting stock).
(b) If, in the reasonable judgment of a Holder, a transfer is
required to be effected by such Holder because of a Regulatory
Problem, the Issuer shall use reasonable efforts to assist such Holder
in disposing of its Warrants and Warrant Stock, subject to and in
accordance with the terms of this Agreement and applicable law, to any
prospective purchaser which is a financial institution or other
institutional investor approved by the Issuer (which approval shall
not be unreasonably withheld or delayed) of the Warrants or Warrant
Stock owned by such Holder as such purchaser may reasonably request
(provided that, the Issuer shall not be required to make available to
such purchaser any documents or information if doing so would, in the
reasonable judgment of counsel to the Issuer, compromise
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any attorney-client privilege existing with respect thereto) or to a
direct or indirect competitor of the Issuer.
(c) In the event of any underwritten public offering of Restricted
Securities in which a Holder which is subject to the provisions of
Regulation Y is participating, the Issuer shall use its reasonable
efforts to assist the underwriter in ensuring that any Warrant Stock
issued by the Issuer and sold by such Holder are widely disseminated.
5.02 Transfer Restriction. Notwithstanding anything in this
Agreement or the Warrants to the contrary, no Holder subject to the provisions
of Regulation Y shall transfer any Warrants or shares of Warrant Stock issued
by the Issuer and held by it, if, as a result of such transfer or the right to
effect such transfer, such Holder would be deemed under Regulation Y to have
the power to exercise, directly or indirectly, a controlling influence over the
management or policies of, or otherwise control, the Issuer (and, for purposes
of this restriction, a reasoned opinion of counsel to such Holder delivered to
such Holder (which is based on facts and circumstances deemed appropriate by
such counsel) to the effect that such Holder does not have the power to
exercise such a controlling influence or otherwise control the Issuer shall be
conclusive).
5.03 Repurchase of Common Stock. The Issuer shall give 5 Business
Days prior written notice to each Investor before purchasing, redeeming,
retiring or otherwise acquiring any shares of Common Stock of the Issuer in
excess of 200,000 shares of Common Stock in any calendar year.
5.04 Transfer and Exchange. The Warrants, upon release by the Escrow
Agent (if applicable), may be exchanged for other Warrants upon presentation to
the Issuer, together with a written notice specifying the denominations in
which new Warrants are to be issued, signed by the Holder of such Warrant. The
Issuer shall execute and deliver a new Warrant or Warrants to such Holder in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice. The Issuer shall pay all expenses, taxes (other than any
transfer taxes) and other charges payable in connection with the preparation,
issuance and delivery of the Warrants, including any transfer or exchange
thereof.
The Issuer shall maintain with its transfer agent or at its office,
books for the registration and transfer of the Warrants.
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SECTION 6. Adjustment of Stock Unit. The number of shares of Common
Stock comprising a Stock Unit shall be subject to adjustment from time to time
as set forth in this Section 6. The Issuer shall not create any class of
Common Stock ("Other Common Stock") which carries any rights to dividends or
assets differing in any respect from the rights of the Common Stock on the date
hereof without adjusting the number of shares of Common Stock comprising a
Stock Unit in accordance with Section 6.02 hereof (if such Other Common Stock
is not converted into Common Stock) or Section 6.03 hereof (if such Other
Common Stock is converted into Common Stock).
6.01 Stock Dividends, Subdivisions and Combinations. If at any time
the Issuer shall:
(a) declare or pay a dividend payable in Additional Common Stock, or
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the occurrence of any such event shall be adjusted to equal the number of
shares of Common Stock which a record holder of the number of shares of Common
Stock comprising a Stock Unit immediately prior to the happening of such event
would own or be entitled to receive after the happening of such event.
6.02 Issuance of Additional Common Stock. If at any time the Issuer
shall (except as hereinafter provided) issue or sell any Additional Common
Stock in exchange for consideration in an amount per share of Additional Common
Stock less than the Current Market Price at the time the Additional Common
Stock is issued, then the number of shares of Common Stock thereafter
comprising a Stock Unit shall be adjusted to that number determined by
multiplying the number of shares of Common Stock comprising a Stock Unit
immediately prior to such adjustment by a fraction (a) the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Common Stock plus the number of such shares of
Additional Common Stock so issued, and (b) the denominator of which shall be
the number of shares
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of Common Stock outstanding immediately prior to the issuance of such shares of
Additional Common Stock plus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Additional
Common Stock so issued would purchase at the Current Market Price. For
purposes of this Section 6.02, for all issuances of shares of Additional Common
Stock except for those shares issued in connection with an acquisition of
assets or stock, a tender or exchange offer, a merger or other business
combination or in a public offering, the date as of which the Current Market
Price shall be computed shall be the earlier of (i) the date on which the
Issuer shall enter into a firm contract for the issuance of such Additional
Common Stock and (ii) the date of actual issuance of such Additional Common
Stock. Subject to Section 6.05 hereof, no further adjustment of the number of
shares of Common Stock comprising a Stock Unit shall be made under this Section
6.02 upon the issuance of any shares of Additional Common Stock:
(a) for which an adjustment is provided under Section 6.01 hereof;
(b) which are issued pursuant to the exercise of any Options
(including warrants outstanding pursuant to the Existing Warrant
Agreement) or the Warrants or the conversion, exchange or exercise of
any Convertible Securities, if any such adjustment shall previously
have been made upon the issuance of such Options or Convertible
Securities (or upon the issuance of any Option therefor) pursuant to
Section 6.03 or 6.04 hereof; or
(c) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 6.08 hereof.
6.03 Issuance of Options. If at any time (other than pursuant to an
Option Plan except with respect to options issued to (i) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or
▇▇▇▇ ▇▇▇▇▇, (ii) any of their Affiliates or (iii) any of their immediate family
members) the Issuer shall issue or sell, or shall fix a record date for the
determination of holders of any class of securities entitled to receive, any
Options, whether or not the rights to purchase thereunder are immediately
exercisable, and the consideration received by the Issuer in payment for such
Options (determined in accordance with Section 6.06(a) hereof) shall be less
than the Current Market Price in effect on the date of and immediately prior to
such issuance, sale or fixing of a record date, then the number of shares of
Common Stock thereafter comprising a Stock Unit shall be adjusted as provided
in Section 6.02 hereof on the basis that (a) the maximum number of shares of
Additional Common Stock issuable pursuant to
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all such Options shall be deemed to have been issued as of (and, accordingly,
the date as of which the Current Market Price shall be computed shall be) the
computation date specified in the next succeeding sentence of this Section
6.03, and (b) the aggregate consideration for such maximum number of shares of
Additional Common Stock shall be (subject to Section 6.05 hereof) the
consideration received by the Issuer for the issuance or sale of such shares of
Additional Common Stock pursuant to the terms of such Options or pursuant to
the terms of such Convertible Securities. For purposes of this Section 6.03,
the computation date for clause (a) above shall be the earlier of (i) the date
on which the Issuer shall take a record of the holders of its Common Stock for
the purpose of entitling them to receive any such Options, (ii) the date on
which the Issuer shall enter into a firm contract for the issuance or sale of
such Options and (iii) the date on which the Issuer shall issue or sell such
Options. No further adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made under this Section 6.03 upon the issuance
or sale of any Options to subscribe for or purchase any shares of Additional
Common Stock or any Convertible Securities or upon the subsequent issue or sale
of shares of such Additional Common Stock upon the exercise of such Options, if
any such adjustment shall previously have been made upon the issuance or sale
of such Option or upon the setting of a record date therefor, or upon any
deemed issuance or sale of such shares of Additional Common Stock, as a
distribution or a dividend which is distributed or declared and paid in
accordance with Section 6.08 hereof. Notwithstanding the foregoing, any
issuance of an Option which is issued together with a debt security of the
Issuer, as a unit, shall be treated for the purpose of this Section 6 as the
issuance of a Convertible Security.
6.04 Issuance of Convertible Securities. If at any time the Issuer
shall issue or sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the
consideration received by the Issuer in payment for such Convertible Securities
shall be less than the Convertible Security Value thereof, then the number of
shares of Common Stock thereafter comprising a Stock Unit shall be increased to
a number of shares of Common Stock having a value immediately following the
computation date (as established below) equal to the value of the number of
shares comprising such Stock Unit immediately before such increase. For this
purpose, the value before the increase will be the Current Market Price of the
Common Stock (determined as at the date immediately preceding such increase)
divided by the number of shares of Common Stock outstanding on a fully diluted
basis, and the value immediately following the computation date shall be the
foregoing value, except that the numerator shall be the Current Market Price
plus the cash amount paid to the Issuer for such
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Convertible Securities less the Convertible Security Value of such Convertible
Securities on issuance and the denominator shall be increased by the number of
shares of Additional Common Stock issuable on exercise of such Convertible
Securities. For purposes of this Section 6.04, the computation date shall be
the earliest of (i) the date on which the Issuer shall take a record of the
holders of its Common Stock for the purpose of entitling them to receive any
such Convertible Securities, (ii) the date on which the Issuer shall enter into
a firm contract for the issuance or sale of such Convertible Securities and
(iii) the date of actual issuance or sale of such Convertible Securities. No
further adjustment of the number of shares of Common Stock comprising a Stock
Unit shall be made under this Section 6.04 upon the issuance or sale of any
Convertible Securities or the conversion or exchange of such Convertible
Securities into shares of Additional Common Stock:
(A) which are issued or sold pursuant to the exercise of any Option
therefor, if any such adjustment shall previously have been made upon
the issuance or sale of an Option relating to such Convertible
Securities pursuant to Section 6.03 hereof; or
(B) if any such adjustment in respect thereof shall previously have
been made upon the setting of a record date therefor, or upon any
deemed issuance or sale of such Convertible Securities; or
(C) as a distribution or a dividend which is distributed or declared
and paid in accordance with Section 6.08 hereof.
6.05 Superseding Adjustment of Stock Unit. If, at any time after any
adjustment of the number of shares of Common Stock comprising a Stock Unit
shall have been made pursuant to Section 6.03 or 6.04 hereof as a result of the
issuance of Options or Convertible Securities, or after any new adjustment of
the number of shares of Common Stock comprising a Stock Unit shall have been
made pursuant to this Section 6.05, (a) such Options or the right of
conversion, exchange or exercise of such Convertible Securities shall expire,
and all or a portion of such Options or the right of conversion, exchange or
exercise with respect to all or a portion of such Convertible Securities, as
the case may be, shall not have been exercised or treated as having been
exercised or otherwise canceled or acquired by the Issuer in connection with
any settlement (including, without limitation, any cash settlement) of such
Options or the rights of conversion, or exchange or exercise of such
convertible Securities, or (b) there has been any change (whether by the
passage of time or otherwise) in the number of shares issuable upon exercise,
conversion or exchange of such Options or Convertible Securities (including as
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a result of the operation of antidilution provisions applicable thereto), or
(c) the consideration per share, for which shares of Additional Common Stock
are issuable pursuant to such Options or the terms of any Convertible
Securities, or the maturity of any such Convertible Security, shall be changed
(whether by the passage of time or otherwise) then such previous adjustment
shall be rescinded and annulled and the shares of Additional Common Stock which
were deemed to have been issued by virtue of the computation made in connection
with the adjustment so rescinded and annulled shall no longer be deemed to have
been issued by virtue of such computation. Thereupon, a recomputation shall be
made of the effect of such Options or Convertible Securities on the basis of:
(a) treating the number of shares of Additional Common Stock, if any,
theretofore actually issued or sold pursuant to the previous exercise
of such Options or such right of conversion or exchange, as having
been issued or sold on the date or dates of such issuance as
determined for purposes of such previous adjustment and for the
consideration actually received therefor;
(b) treating the maximum number of shares of Additional Common Stock
(A) issuable pursuant to all Options which then remain outstanding and
(B) necessary to effect the conversion or exchange of all Convertible
Securities which then remain outstanding, as having been issued
(subject, however, to further adjustment under this Section 6.05); and
(c) making the computations called for in Section 6.04 hereof on the
basis of the revised terms of such Convertible Securities as if the
securities being subject to recomputation were newly issued as of the
relevant recomputation date and, if and to the extent called for by
the foregoing provisions of this Section 6 on the basis aforesaid, a
new adjustment of the number of shares of Common Stock comprising a
Stock Unit shall be made, and such new adjustment shall supersede the
previous adjustment so rescinded and annulled.
6.06 Other Provisions Applicable to Adjustments Under this Section 6.
The following provisions shall be applicable to the making of adjustments of
the number of shares of Common Stock comprising a Stock Unit hereinbefore
provided for in this Section 6, irrespective of the accounting treatment of any
consideration described below:
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(a) Computation of Consideration. To the extent that any shares of
Additional Common Stock, any Options or any Convertible Securities
shall be issued for cash consideration, the consideration received by
the Issuer therefor shall be deemed to be the amount of cash received
by the Issuer therefor, or, if such shares of Additional Common Stock,
Options or Convertible Securities are offered by the Issuer for
subscription, the subscription price, or, if such shares of Additional
Common Stock, Options or Convertible Securities are sold to
underwriters or dealers for public offering without a subscription
offering, the initial public offering price. To the extent that such
issuance or sale shall be for consideration other than cash, then the
amount of such consideration shall be deemed to be the fair market
value of such consideration at the time of such issuance, as
reasonably determined by the Board. The consideration for any shares
of Additional Common Stock issuable pursuant to any Option to
subscribe for or purchase the same shall be the consideration received
or receivable by the Issuer for the sale or issuance of such Option
plus the additional consideration payable to the Issuer upon the
exercise thereof in full. The consideration for any shares of
Additional Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration paid or payable to
the Issuer in respect of the subscription for, sale or issuance of
such Convertible Securities plus the additional consideration payable
to the Issuer upon the conversion or exchange thereof in full. In
case of the issuance at any time of any shares of Additional Common
Stock in payment or satisfaction of any dividend upon any class of
stock other than Common Stock, the Issuer shall be deemed to have
received for such shares of Additional Common Stock consideration
equal to the amount of such dividend so paid or satisfied.
(b) When Adjustments to be Made. The adjustments required by this
Section 6 shall be made whenever and as often as any specified event
requiring an adjustment shall occur except that any adjustment of the
number of shares of Common Stock comprising a Stock Unit that would
otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided
for in Section 6.01 hereof) up to but not beyond the date of exercise
if such adjustment either by itself or with other adjustments not
previously made adds or subtracts less than 1% of the aggregate
Exercise Price for all Warrants then outstanding. Any adjustment
representing a change of less than such minimum percent (except as
aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this Section 6
and not previously made, would result in a minimum adjustment on the
date of
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exercise. For the purpose of any adjustment, any specified event
shall be deemed to have occurred at the close of business on the date
of its occurrence.
(c) Fractional Interests. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be taken into
account to the nearest one-hundredth of a share.
(d) When Adjustment Not Required. (i) If the Issuer shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution thereof to
Shareholders, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then no
adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled, and no adjustment in the number of shares of
Common Stock thereafter comprising a Stock Unit under Section 6.02,
6.03 or 6.04 hereof shall be made in respect of the Warrants held by
such Holder. (ii) No adjustment shall be made hereunder in respect of
the issuance of Common Stock pursuant to an Option Plan or options
representing the right to acquire Common Stock pursuant to an Option
Plan.
6.07 Merger, Consolidation or Disposition of Assets. If the Issuer
shall merge or consolidate with another corporation, or shall sell, transfer or
otherwise dispose of all or substantially all of its assets to another
corporation and pursuant to the terms of such merger, consolidation or
disposition of assets, collectively, the "Merger Transaction", cash, shares of
common stock or other securities of the successor or acquiring corporation, or
property of any nature is to be received by or distributed to the holders of
Common Stock of the Issuer, then each holder of Warrants which are by their
terms then exercisable shall, at such holder's election (such election to be
made at any time prior to the consummation of such Merger Transaction), have
the right to receive (whether or not such holder exercises such Warrants) the
amount it would have been entitled to receive if such holder had exercised such
Warrants immediately prior to the occurrence of such Merger Transaction, net of
the exercise price of such Warrants, and shall thereupon be deemed to have
exercised such Warrants. In case of any such Merger Transaction in which the
foregoing election is not made, the successor or acquiring corporation (and any
affiliate thereof issuing securities) shall expressly assume the due and
punctual observance and performance of each and every covenant and condition of
this Warrant to be performed and observed by the Issuer and all of the
obligations and liabilities
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hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board and reasonably acceptable to the holders
of a majority in interest of the Warrants) in order to provide for adjustments
of Stock Units which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section but which shall provide for the
issuance of the common stock of the Person being issued to the holders of
Common Stock of the Issuer pursuant to such Merger Transaction. In the event
the election is not made pursuant to the first sentence of this Section 6.07,
the Issuer shall have the right, exercisable within 30 days following such
merger, to purchase in cash all (but not less than all) of the outstanding
Warrants at a price equal to the amount such Holder would have been entitled to
receive if such holder had exercised such Warrants immediately prior to the
occurrence of such merger, consolidation or disposition of assets, net of the
exercise price of such Warrants. The foregoing provisions shall similarly
apply to successive Merger Transactions.
6.08 Distributions upon Declaration of Dividend or Other
Distribution. So long as any Warrants remain outstanding, the Issuer shall
pay, upon the declaration and payment of any dividend or distribution (whether
such dividend or distribution is in the form of cash, debt securities, equity
securities or other property) on any class of Common Stock, to each Holder the
dividend or distribution that such Holder would be otherwise entitled to
receive had such Holder exercised the Warrants held by it in full immediately
prior to the taking of record of those holders of Common Stock entitled to any
such dividend or distribution, provided that, this provision shall apply only
to dividends or distributions in respect of the Common Stock other than
ordinary, periodic cash dividends paid out of earned surplus of the Issuer. If
such dividend or distribution is in the form of a voting equity security, such
Holder will be entitled to receive, at its option, in its stead non-voting
equity securities otherwise identical to and convertible at such Holder's
option into the equity securities to which such Holder is otherwise entitled
thereunder and continuing benefiting from antidilution provisions similar to
those herein. This provision shall not apply to stock dividends of shares of
Additional Common Stock, or to a reclassification or recapitalization, provided
that the Issuer adjusts the number of shares of Common Stock comprising a Stock
Unit pursuant to Section 6.01 hereof.
6.09 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold or shall become subject to issue or sale
upon the conversion or exchange of any stock (or Other Securities) of the
Issuer (or any issuer of Other Securities or any other Person referred to in
Section 6.08 hereof) or to subscription, purchase or other acquisition pursuant
to any rights, options, warrants to subscribe for, purchase or otherwise
acquire
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either shares of Additional Common Stock or securities directly or indirectly
convertible into or exchangeable for shares of Additional Common Stock, issued
or granted by the Issuer (or any such other issuer or Person) for a
consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of Section 6 hereof, the purchase rights
granted by the Warrants, then, and in each such case, the computations,
adjustments and readjustments provided for in said Section 6 with respect to
the Stock Units shall be made as nearly as possible in the manner so provided
and applied to determine the amount of Other Securities from time to time
receivable upon the exercise of the Warrants, so as to protect the Holders
against the effect of such dilution.
6.10 Notice of Adjustments. Whenever the number of shares of Warrant
Stock comprising a Stock Unit shall be adjusted pursuant to this Agreement, the
Issuer shall forthwith obtain a certificate signed by the Issuer's chief
financial officer, setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated and
specifying the number of shares of Warrant Stock comprising a Stock Unit
(whether or not any Warrants have been issued hereunder or whether or not any
Warrants are then exercisable) and, if applicable, describing the number and
kind of any other securities comprising a Stock Unit, and any change in the
Exercise Price, after giving effect to such adjustment or change. The Issuer
shall promptly cause a signed copy of such certificate to be delivered to each
holder of Warrants. The Issuer shall keep at its office copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any holder of Warrants or any prospective
purchaser of Warrants designated by the registered holder hereof.
6.11 Notice of Certain Corporate Action. If the Issuer shall propose
(i) to pay any dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock; (ii) to offer to the holders
of its Common Stock rights to subscribe for or to purchase any additional
shares of Common Stock (or options or rights with respect thereto); (iii) to
effect any reclassification of its Common Stock; (iv) to otherwise issue any
Common Stock or other securities; (v) to effect any capital reorganization;
(vi) to effect any consolidation, merger or sale, transfer or other disposition
of all or substantially all of its assets; or (vii) to effect the liquidation,
dissolution or winding up of the Issuer, then, in each such case, the Issuer
shall give to each holder of Warrants a notice of such proposed action, which
shall specify the date on which a record is to be taken for the purposes of
such dividend, distribution or rights offer, or the date on which such
reclassification, issuance, reorganization, consolidation,
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merger, sale, transfer, disposition, liquidation, dissolution or winding up is
to take place and the date of participation therein by the holders of Common
Stock, if any such date is to be fixed, and shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the effect of
such action on the Common Stock, and the number of shares of Warrant Stock
which will comprise a Stock Unit (whether or not any Warrants have been issued
hereunder or whether or not any Warrants are then exercisable) after giving
effect to any adjustment which will be required as a result of such action.
Such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 15 days prior to the record date for determining holders
of the Common Stock for purposes of such action, and in the case of any other
such action, at least 15 days prior to the date of the taking of such proposed
action or the date of participation therein by the holders of Common Stock,
whichever shall be the earlier.
SECTION 7. Registration.
7.01 Notice.
(a) (i) Upon receipt of notice (a "Demand Notice") from a Holder of
any Warrants or shares of Warrant Stock given at any time after the
issuance of the Warrants requesting that the Issuer effect the
registration of the shares of Warrant Stock held by such holder, or
(ii) whenever the Issuer otherwise proposes to effect the registration
of all or any part of the Common Stock under the Securities Act, other
than pursuant to a Registration Statement on Form S-8 or Form S-4 or
any successor form, the Issuer shall promptly, and in any event at
least 30 days prior to the effective date of the proposed registration
statement, give written notice of such proposed registration to all
holders of Warrants or shares of Warrant Stock. Each holder of any
Warrants or shares of Warrant Stock that wishes to register its shares
of Warrant Stock (each, a "Seller") shall, within 15 days after
receipt of such notice from the Issuer, deliver to the Issuer a notice
(a "Seller Notice") stating that such Seller wishes to participate in
such offering and setting forth the number of shares of Warrant Stock
that such Seller desires to include in such offering. The Issuer
thereupon shall, subject to Section 7.01(b) as expeditiously as
practicable, use its best efforts to effect the registration under the
Securities Act of such shares of Warrant Stock (any such registration
effected or undertaken pursuant to a Demand Notice being herein
referred to as a "Demand Registration"); provided, however, that the
Issuer shall not be required to effect a Demand Registration pursuant
to a Demand Notice from any holder of Warrants or shares of Warrant
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Stock unless the holders of 20% in interest (on an aggregate basis) of
the then outstanding Warrants and shares of Warrant Stock notify the
Issuer of their wish to participate in an offering pursuant to such
registration; and, provided, further, that the Issuer shall not be
required to effect more than four Demand Registrations. In the event
that (i) the amount of securities proposed to be sold by Sellers
pursuant to a Demand Notice shall be reduced pursuant to this Section
7.02(a) to an amount which is less than 75% of the amount of
securities originally proposed to be sold by Sellers, or (ii) any
Demand Notice shall be withdrawn by the holder or holders originally
giving such Demand Notice at any time prior to the filing by the
Issuer of a preliminary registration statement in connection with such
Demand Notice, then, in such event, no right to a Demand Registration
shall be deemed to have been exercised or forfeited and such Demand
Notice shall not operate to eliminate the Issuer's obligation to
effect a Demand Registration pursuant to a Demand Notice.
(b) Deferral of Filing. The Issuer may defer the filing (but not
the preparation) of a registration statement required by Section
7.01(a) until a date not later than 90 days after the date of the
Demand Notice if (i) at the time the Issuer receives the Demand
Notice, the Issuer or any of its Subsidiaries is engaged in
confidential negotiations or other confidential business activities,
disclosure of which would be required in such registration statement
(but would not be required if such registration statement were not
filed), and the Board determines in good faith that such disclosure
would be materially detrimental to the Issuer and its shareholders or
would have a material adverse effect on any such confidential
negotiations or other confidential business activities or (ii) prior
to receiving the Demand Notice, the Board had determined to effect a
registered underwritten public offering of the Issuer's securities and
the Issuer had taken substantial steps (including, but not limited to,
selecting a managing underwriter for such offering) and is proceeding
with reasonable diligence to effect such offering. A deferral of the
filing of a registration statement pursuant to this Section 7.01(b)
shall be lifted, and the requested registration statement shall be
filed forthwith, if the negotiations or other activities are disclosed
or terminated. In order to defer the filing of a registration
statement pursuant to this Section 7.01(b), the Issuer shall promptly
(but in any event within 10 days), upon determining to seek such
deferral, deliver to each Seller a certificate signed by an executive
officer of the Issuer setting forth a statement of the reason for such
deferral and an approximation of the anticipated delay, which
information the Sellers shall treat as confidential. Within 20 days
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after receiving such certificate, Sellers holding a majority in
interest of the Warrant Stock for which registration was previously
requested may withdraw such request by giving notice to the Issuer; if
withdrawn, the Demand Notice shall be deemed not to have been made for
all purposes of this Agreement. The Issuer may not invoke its right
to defer the filing of a registration statement under this Section
7.01(b) more than once in any twelve month period.
(c) If the Majority Warrant Stock Holders so elect, the offering
of the Warrants, the Warrant Stock and/or the other securities
pursuant to a Demand Registration shall be in the form of an
underwritten offering. If any Demand Registration is in the form of
an underwritten offering, the Issuer will select and obtain the
investment banker or investment bankers that will administer the
offering (such investment banker or investment bankers to be
reasonably satisfactory to the Majority Warrant Stock Holders);
provided, that such investment banker shall be reasonably satisfactory
to the Issuer.
7.02 Proration.
(a) In the case of a Demand Registration, if the underwriter (or, if
the offering is not underwritten, an independent financial advisor to
the Sellers) determines that marketing factors require a limitation on
the number of securities to be offered and sold, there shall be
included in such registration only that number of securities that the
underwriter, or financial advisor, as the case may be, believes will
not jeopardize the success of the offering. Any reduction in the
number of securities to be so offered shall first be pro-rata among
all Persons (other than the Issuer) proposing to sell securities
pursuant to such offering who are not Sellers, based on the number of
securities originally proposed to be sold by each of them, and then,
if necessary, pro-rata among all Sellers based on the number of
securities originally proposed to be sold by each of them.
(b) In the case of a registration to be effected pursuant to Section
7.01(a)(ii) hereof, if the underwriter (or, if the offering is not
underwritten, an independent financial advisor to the Issuer)
determines that marketing factors require a limitation on the number
of securities to be offered and sold in the offering, including
securities requested to be offered and sold by Sellers, there shall be
included in the offering only that number of securities that the
underwriter, or financial advisor, as the case may be, believes will
not jeopardize the success of
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the offering. Any reduction in the number of securities to be so
offered shall be pro-rata among the Sellers and all other Persons
(other than the Issuer or securityholders who are exercising "demand"
registration rights), proposing to sell securities pursuant to such
offering, based on the number of securities originally proposed to be
sold by each such person.
Nothing contained herein shall be construed to limit in any way the Issuer's
right, in its sole discretion, to withdraw any registration statement (other
than a registration statement filed pursuant to a Demand Notice) before such
registration statement becomes effective, or to postpone the offering of
securities contemplated by any such registration statement.
7.03 Registration Procedures. If and whenever the Issuer is required
by the provisions of Section 7.01(a)(i) hereof or, with respect to subsections
(i), (ii), (iii), (vi), (vii), (viii), (ix), (x), (xi) and (xii) of this
Section 7.03, by the provisions of Section 7.01(a)(i) or (ii) hereof, to use
its best efforts to effect the registration of any of its securities under the
Securities Act, the Issuer shall, as expeditiously as possible,
(i) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for a period of
not less than 90 days, to permit the sale of such securities in
accordance with the plan of distribution chosen by the Seller or
Sellers and the underwriter;
(ii) prepare and file with the Commission 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 and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
securities covered by such registration statement;
(iii) furnish to each Seller such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such
Seller may reasonably request in order to facilitate the public sale
or other disposition of the securities owned by such Seller;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such other securities or
blue sky laws of such jurisdictions within the United States as each
Seller shall reasonably request, and
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do such other reasonable acts and things as may be requested of it to
enable such Seller to consummate the public sale or other disposition
in such jurisdictions of the securities owned by such Seller, except
that the Issuer shall not for any such purpose be required to qualify
to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified;
(v) use its best efforts to cause the securities covered by such
registration statement to be registered with or approved by such other
governmental agencies or authorities in the United States or any state
thereof as may be necessary and as would be customary for the offering
of securities by companies engaged in the oil and gas business to
enable the Seller or Sellers thereof to consummate the disposition of
such securities;
(vi) notify each Seller of any securities covered by such
registration statement, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, of the Issuer's
becoming aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing (upon
receipt of which each Seller agrees to forthwith cease making offers
and sales of such securities pursuant to such prospectus and to
deliver to the Issuer any copies of such prospectus then in the
possession of such Seller), and at the request of any such Seller
promptly prepare and furnish to such Seller a reasonable number of
copies of a prospectus supplemented or amended so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing;
(vii) make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least
twelve months, but not more than eighteen months, beginning with one
of the first three months after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(viii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission;
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(ix) use its best efforts to list such securities on any securities
exchange on which the Common Stock of the Issuer is then listed, or,
if not so listed, on a national securities exchange, if the listing of
such securities is then permitted under the rules of such exchange;
(x) provide a transfer agent and registrar for all the securities
covered by such registration statement not later than the effective
date of such registration statement;
(xi) enter into such agreements (including an underwriting
agreement in customary form containing without limitation customary
indemnity and contribution provisions for the benefit of the
underwriter or underwriters and the Seller or Sellers) and take such
other actions as the Seller or Sellers shall reasonably request in
order to expedite or facilitate the disposition of such securities;
(xii) in connection with any underwritten offering of the Warrants
or Warrant Stock, obtain an opinion from the Issuer's counsel and a
"cold comfort" letter from the Issuer's independent public accountants
in customary form and covering such matters as the Seller or Sellers
shall reasonably request;
(xiii) make available for inspection by any Seller of securities
covered by such registration statement, the lead underwriter
participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such Seller or such underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of the Issuer, and cause all of the Issuer's officers,
directors and employees to supply all information reasonably requested
by any such Seller, underwriter, attorney, accountant or agent in
connection with such registration statement (provided that the Sellers
shall use reasonable efforts to retain common attorneys, accountants
and agents and to conduct any such investigations as a group); and
(xiv) permit any Seller of securities covered by such registration
statement to require the insertion therein of material, furnished to
the Issuer in writing with respect to the Seller or the plan of
distribution (or any other matter that counsel for such Seller has
advised the Seller in writing is required to be included therein to
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avoid an untrue statement of a material fact or the omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading), which in the reasonable judgment
of such Seller should be included.
If any such registration or comparable statement refers to any Seller by name
or otherwise as the holder of any securities of the Issuer, then such Seller
shall have the right to require (A) the insertion therein of language, in form
and substance satisfactory to such Seller, to the effect that the holding by
such Seller of such securities is not to be construed as a recommendation by
such Seller of the investment quality of the Issuer's securities covered
thereby and that such holding does not imply that such Seller will assist in
meeting any future financial requirements of the Issuer, or (B) in the event
that such reference to such Seller by name or otherwise is not required by the
Securities Act, the deletion of the reference to such Seller.
The Issuer may require each Seller of securities to, and each such
Seller, as a condition to including Securities in such registration, shall,
furnish the Issuer with such information and affidavits regarding such Seller
and the distribution of such securities as the Issuer may from time to time
reasonably request in writing in connection with such registration. No Seller
may participate in any underwritten registration hereunder unless such Seller
(a) agrees to sell such Seller's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.
Each Seller of securities agrees that upon receipt of any notice from
the Issuer of the happening of any event of the kind described in Section
7.03(vi), such Seller will forthwith discontinue such Seller's disposition of
securities pursuant to the registration statement relating to such securities
until such Seller's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 7.03(vi) and, if so directed by the Issuer,
will deliver to the Issuer (at the Issuer's expense) all copies, other than
permanent file copies, then in such Seller's possession of any prospectus
relating to such securities at the time of receipt of such notice.
7.04 Holdback on Sales. The Issuer and the Holders hereby agree not
to effect any public sale or distribution of any securities similar to those
registered in accordance with Section 7.03 hereof during the 14 day period
prior to, and during the 90 day period
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beginning on, the effective date of any registration statement (except as part
of such registration statement).
7.05 Expenses. All reasonable expenses incurred in complying with
this Section 7, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel for the Issuer, the
reasonable fees and disbursements of one counsel for the Seller or the Sellers
(to be chosen by the Seller or the Sellers holding a majority of the securities
to be included by Sellers in a registration statement), expenses of any special
audits incident to or required by any such registration and expenses of
complying with the securities or blue sky laws of any jurisdictions, shall be
paid by the Issuer; provided, that in no event shall the Issuer be required to
pay any underwriting discounts, commissions or fees attributable to the sale of
Warrant Shares by a Seller hereunder.
7.06 Indemnification.
(a) In the event of any registration of any of its securities under
the Securities Act pursuant to this Section, the Issuer shall, and
hereby agrees to, indemnify and hold harmless each Seller of such
securities, its directors and officers, and each other person, if any,
who controls such Seller within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages, liabilities or
expenses ("Losses") to which such Seller or any such director, officer
or person may become subject under the Securities Act or any other
statute or at common law, insofar as such Losses (or actions in
respect thereof) arise out of or are based upon any alleged untrue
statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus with respect thereto,
or any amendment or supplement thereto, or any alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall
reimburse such Seller or such director, officer or controlling person
for any legal or any other expenses reasonably incurred by such Seller
or such director, officer or controlling person in connection with
investigating or defending any such Loss; provided, however, that the
Issuer shall not be liable in any such case to the extent that any
such Loss arises out of or is based upon any alleged untrue statement
or alleged omission made in such registration statement, preliminary
prospectus, prospectus, or amendment or supplement in reliance upon
and in conformity with written information furnished
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to the Issuer for inclusion therein by such Seller; provided further,
however that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this paragraph shall
not apply to the extent that any such Loss results from the fact that
a current copy of the prospectus was not sent or given to the person
asserting any such Loss at or prior to the written confirmation of the
sale of the securities concerned to such person if the Issuer had
prior thereto given such Seller the notice referred to in Section
7.03(vi) hereof and provided to such Seller a supplemented or amended
prospectus as contemplated by Section 7.03(vi), and such current copy
of the prospectus would have cured the defect giving rise to such
Loss. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Seller or such
director, officer or controlling person, and shall survive the
transfer of such securities by such Seller.
(b) Each Seller of securities which are included in a registration
statement hereunder, as a condition to including securities in such
registration statement, shall indemnify and hold harmless the Issuer,
its directors and officers and each other Person, if any, who controls
the Issuer within the meaning of Section 15 of the Securities Act,
against any Losses to which the Issuer or any such director, officer
or person may become subject under the Securities Act or otherwise,
insofar as such Losses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in
the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, if such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Issuer by such Seller specifically for use in the preparation
thereof; provided, however, that the obligation to provide
indemnification pursuant to this Section 7.06(b) shall be several, and
not joint and several, among such Sellers on the basis of the number
of securities included by each in such registration statement and the
aggregate amount which may be recovered from any holder of securities
pursuant to the indemnification provided for in this Section 7.06(b)
in connection with any sale of securities shall be limited to the
total proceeds received by such holder from the sale of such
securities. Such
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indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Issuer or any such other
Person and shall survive the transfer of such securities by such
Seller.
(c) Promptly after receipt by any Person under this Section of notice
of the commencement of any action, such Person (an "Indemnified
Party") shall, if a claim in respect thereof is to be made against any
other Person (an "Indemnifying Party") for indemnity under this
Section, notify the Indemnifying Party in writing of the commencement
thereof; but the omission so to notify the Indemnifying Party shall
not relieve it from any liability which it may have to any Indemnified
Party, except to the extent that the Indemnifying Party is prejudiced
thereby. The Indemnifying Party may, upon being notified of such
action, assume the defense thereof, with counsel satisfactory to such
Indemnified Party, and, after such assumption, the Indemnifying Party
shall not be liable to such Indemnified Party under this Section for
any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such Indemnified Party, in connection
with the defense thereof; provided, however, that the Indemnifying
Party may not assume the defense of the action, and shall remain
liable to the Indemnified Party for its legal expenses of counsel and
other expenses, in the event that the Indemnified Party determines
that a conflict of interest may exist between the Indemnified Party
and the Indemnifying Party.
(d) If the indemnification provided for in this Section is
unenforceable although available, or insufficient to hold harmless an
Indemnified Party hereunder for any Losses (or actions in respect
thereof) in respect of which the provisions of Section 7.06(a) or (b)
would otherwise apply by their terms, then the Indemnifying Party
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such Losses (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and the Indemnified Party on the
other hand in connection with the statements or omissions which
resulted in such Losses (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative fault shall
be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact relates to information
supplied by the Indemnifying Party on the one hand or such Indemnified
Party on the other hand and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The parties agree that it would not be just
and equitable if
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contribution pursuant to this subsection were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in this
subsection. The amount paid or payable as a result of the Losses (or
actions in respect thereof) referred to above in this subsection shall
be deemed to include any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or
defending any such action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
7.07 Option to Purchase Registrable Stock. For a period of 20
calendar days commencing on the date that the Issuer receives a request by the
Sellers to include Warrant Stock in a registration statement pursuant to this
Section 7, the Issuer shall have the right and option, in lieu of including
such Warrant Stock in such registration, to purchase for cash from such Sellers
of the Warrant Stock requested to be included in such registration and to
require such holders to sell, at the Current Market Price, all of such Warrant
Stock proposed to be registered. In order to exercise its option to purchase
Warrant Stock pursuant to this Section 7.07, the Issuer must give written
notice to the Sellers of such exercise (the "Purchase Notice") during such
20-day period. The closing of any purchase of Warrant Stock pursuant to this
Section 7.07 shall take place at the offices of the Issuer at 11:00 a.m., New
York time, on a Business Day which shall be no earlier than 15 calendar days
after the date of the Purchase Notice. If the Issuer exercises its option to
purchase Warrant Stock under this Section 7.07 in lieu of a registration under
Section 7.01, upon the payment of the purchase price in cash for such Warrant
Stock, the Issuer shall be considered as effecting the registration pursuant to
Section 7.01.
7.08 No Other Registration Rights. The Issuer shall not grant any
registration rights to any holder of securities of the Issuer in respect of
such securities if such registration rights would rank senior to, or otherwise
adversely affect, the registration rights granted in this Section 7. This
section 7.08 shall not prohibit the grant of registration rights to others on a
"pari passu" basis with those granted in this Section 7.
SECTION 8. Holders' Rights.
8.01 Delivery Expenses. If any Holder surrenders any certificate for
Warrants or Warrant Stock to the Issuer or a transfer agent of the Issuer for
exchange for instruments of other denominations or registered in another name
or names, the Issuer shall cause
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such new instruments to be issued and shall pay the cost of delivering to or
from the office of such Holder from or to the Issuer or its transfer agent,
duly insured, the surrendered instrument and any new instruments issued in
substitution or replacement for the surrendered instrument.
8.02 Taxes. The Issuer shall pay all taxes (other than Federal,
state or local income taxes) which may be payable in connection with the
execution and delivery of this Agreement or the issuance of the Warrants and
Warrant Stock hereunder or in connection with any modification of this
Agreement or the Warrants and shall hold each Holder harmless without
limitation as to time against any and all liabilities with respect to all such
taxes. The obligations of the Issuer under this Section 8.02 shall survive any
redemption, repurchase or acquisition of Warrants or Warrant Stock by the
Issuer, any termination of this Agreement, and any cancellation or termination
of the Warrants.
8.03 Replacement of Instruments. Upon receipt by the Issuer of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Stock, and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, or
(b) in the case of mutilation, upon surrender or cancellation thereof,
the Issuer, at its expense, shall execute, register and deliver, in lieu
thereof, a new certificate or instrument for (or covering the purchase of) an
equal number of Warrants or Warrant Stock.
8.04 Indemnification. The Issuer shall indemnify and hold harmless
each of the Investor and the Holders and each of their respective directors,
officers, employees, shareholders, Affiliates and agents (each, an "indemnified
person") on demand from and against any and all losses, claims, damages,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) and expenses that arise out of, result from, or in any way relate to,
this Agreement or the Warrants, or in connection with the other transactions
contemplated hereby and thereby, and to reimburse each indemnified person, upon
its demand, for any legal or other expenses incurred in connection with
investigating, defending or participating in the defense of any such loss,
claim, damage, liability, action or other proceeding (whether or not such
indemnified person is a party to
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any action or proceeding out of which any such expenses arise), other than any
of the foregoing claimed by any indemnified person to the extent incurred by
reason of the gross negligence or willful misconduct of such indemnified
person. No indemnified person shall be responsible or liable to either the
Issuer or any other Person for any damages which may be alleged as a result of
or relating to this Agreement or the Warrants (other than in connection with a
breach of this Agreement), or in connection with the other transactions
contemplated hereby and thereby. Any claim for indemnity in connection with or
relating to a registration of securities pursuant to Section 7 hereof shall be
governed by Section 7.06 hereof, without regard to the provisions of this
Section 8.04.
SECTION 9. Other Covenants of Issuer. The Issuer agrees with each
Holder that, so long as any of the Warrants and/or Warrant Stock shall be
outstanding:
9.01 Financial Statements, Etc. If at any time the Issuer is not
required to file reports pursuant to Sections 13, 14(a) and 15(d) of the
Exchange Act, the Issuer shall deliver the information specified below to each
Holder:
(a) within 90 days after the end of each fiscal year of the Issuer,
its audited consolidated and consolidating balance sheet and related
statements of operations, stockholders' equity and cash flows as of
the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, together
with, in the case of such consolidated financial statements, the
report thereon by the Issuer's independent public accountants of
recognized national standing (without any qualification or exception
as to the scope of such audit) to the effect that such consolidated
financial statements present fairly in all material respects the
financial condition and results of operations of the Issuer and its
consolidated Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied and, in the case of such consolidating
financial statements, certified by its chief financial officer as
presenting fairly in all material respects the financial condition and
results of operations of the Issuer and each of its consolidated
subsidiaries in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(b) within 45 days after the end of each of the first three fiscal
quarters of the Issuer's fiscal year, the Issuer's consolidated and
consolidating balance sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and for such
month and the then elapsed portion of the fiscal year, setting forth
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in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the
end of) the previous fiscal year, all certified by its chief financial
officer as presenting fairly in all material respects the financial
condition and results of operations of the Issuer and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes; and
(c) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
by the Issuer or any Subsidiary with the Commission, or any
Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or
distributed by the Issuer to its Shareholders generally.
9.02 Transactions with Affiliates. Except as expressly permitted by
this Agreement, the Issuer shall not, nor shall it permit any of its
Subsidiaries to, directly or indirectly, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Issuer or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties unless
approved by a majority of the Issuer's non-employee directors, (b) transactions
between or among the Issuer and its wholly owned Subsidiaries or Thai ▇▇▇▇
Limited not involving any other Affiliate, (c) any Restricted Payment permitted
by Section 9.09 of the Loan Agreement or (d) any transactions or arrangements
existing on the date hereof.
9.03 Restrictions on Performance. The Issuer shall not at any time
enter into an agreement or other instrument expressly limiting in any manner
its ability to perform its obligations under this Agreement or the Warrants, or
making such performance or the issuance of Warrant Stock upon the exercise of
any Warrant a default under any such agreement or instrument.
9.04 Rule 144. The Issuer will file the reports required to be filed
by it under the Securities Act and the Exchange Act so long as the Issuer is
registered under the Exchange Act. Upon the request of any Holder, the Issuer
will deliver to such Holder a written statement as to whether it has complied
with such requirements.
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9.05 Reservation and Authorization of Common Stock. The Issuer shall
at all times reserve and keep available for issue upon the exercise or
conversion of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants from time to time. All shares of Common Stock which shall
be so issuable, when issued upon exercise of any Warrant and payment of the
applicable Exercise Price therefor in accordance with the terms hereof and of
the Warrants, shall be duly and validly issued by the Issuer, fully paid and
non-assessable and free and clear of all Liens.
SECTION 10. Miscellaneous.
10.01 Office of the Issuer. So long as any of the Warrants remains
outstanding, the Issuer shall maintain an office in the continental United
States of America where the Warrants may be presented for exercise, transfer,
division or combination provided herein and in the Warrants. Such office shall
be at the address of the Issuer set forth in Section 10.03 hereof unless and
until the Issuer shall designate and maintain some other office for such
purposes and give notice thereof to all Holders.
10.02 Waiver. No failure on the part of the Investor to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under this Agreement or the Warrants shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Warrant preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
10.03 Notices.
(a) All notices, requests and other communications provided for
herein and the Warrants (including any waivers or consents under this
Agreement and the Warrants) shall be given or made in writing,
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(i) if to the Issuer:
Address for Notices:
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ Oil Corporation
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
(ii) if to the Investors:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
(iii) if to any other Person who is the registered Holder
of any Warrants or Warrant Stock, to the address for
such Holder as it appears in the stock or warrant
ledger of the Issuer;
or, in the case of any Holder, at such other address as shall be
designated by such party in a notice to the Issuer; or, in the case of
the Issuer, at such other address as the Issuer may designate in a
notice to the Investor and all other Holders.
(b) All such notices, requests and other communications shall be:
(i) personally delivered, sent by courier guaranteeing overnight
delivery or sent by registered or certified mail, return receipt
requested, postage prepaid, in each case given or addressed as
aforesaid; and (ii) effective upon receipt.
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10.04 Expenses, Etc. The Issuer agrees to pay or reimburse each
Investor and the Holders for: (a) all reasonable out-of-pocket costs and
expenses of each such Investors and the Holders (including the reasonable fees
and expenses of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ and/or Freshfields, special New
York counsel to the Investors), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement and the issuance of
Warrants hereunder, and (ii) any amendment, modification or waiver of (or
consents in respect of) any of the terms of this Agreement or the Warrants; and
(b) all reasonable costs and expenses of the Investors and the Holders
(including reasonable legal fees and expenses) in connection with (i) any
default by the Issuer hereunder or under the Warrants or any enforcement
proceedings resulting therefrom, and (ii) the enforcement of this Section
10.04.
10.05 Amendments, Etc. Except as otherwise expressly provided in
this Agreement, any provision of this Agreement may be amended or modified only
by an instrument in writing signed by the Issuer and the holders of two-thirds
of the Warrant Stock issued or issuable upon exercise of the Warrants;
provided, however, that (a) the consent of the holders of any Warrant Stock or
Warrants shall not be required with respect to any amendment or waiver which
does not affect the rights or benefits of such class under this Agreement, and
(b) no such amendment or waiver shall, without the written consent of all
holders of such Warrant Stock and Warrants at the time outstanding, amend this
Section 10.05.
10.06 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
10.07 Survival. All representations and warranties made by the
Issuer herein or in any certificate or other instrument delivered by it or on
its behalf under this Agreement shall be considered to have been relied upon by
each of the Investors and shall survive the issuance of the Warrants or the
Warrant Stock regardless of any investigation made by or on behalf of the
Investors. All statements in any such certificate or other instrument so
delivered shall constitute representations and warranties by the Issuer
hereunder. All representations and warranties made by the Investors herein
shall be considered to have been relied upon by the Issuer and shall survive
the issuance to the Investors of the Warrants or the Warrant Stock regardless
of any investigation made by the Issuer or on its behalf.
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10.08 Specific Performance. Damages in the event of breach of this
Agreement by an Investor, a Holder or the Issuer would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each Investor, each
Holder and the Issuer, in addition to and without limiting any other remedy or
right it may have, will have the right to an injunction or other equitable
relief in any court of competent jurisdiction, enjoining any such breach, and
enforcing specifically the terms and provisions hereof, and each Investor,
Holder and the Issuer hereby waives any and all defenses it may have on the
ground of lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief. The existence of this right will not
preclude the Investors, Holders or the Issuer from pursuing any other rights
and remedies at law or in equity which the Investors, Holders or the Issuer may
have.
10.09 Captions. The captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
10.10 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart signature page or counterpart.
10.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York without giving
effect to the conflicts of law principles thereof, except to the extent that
New York conflicts of laws principles would apply the Delaware General
Corporation Law to matters relating to corporations organized thereunder.
10.12 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
10.13 Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and together with the Warrants contains the sole and entire
agreement between the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION
By
------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By
------------------------------
Name:
Title:
52
Annex 1
to
Warrant Agreement
[Form of Warrant]
WARRANT
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE CONDITIONS SPECIFIED IN THAT CERTAIN WARRANT AGREEMENT DATED AS OF
SEPTEMBER 28, 1998 (THE "WARRANT AGREEMENT"), BETWEEN ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL
CORPORATION, A DELAWARE COMPANY (THE "ISSUER") AND THE CHASE MANHATTAN BANK AS
THE WARRANT AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME
TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY
OF THE FORM OF THE WARRANT AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF THE
WARRANT AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
AND ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.
No. of Stock Units Covered Hereby: __
Warrant No. ________
WARRANT
to Purchase Common Stock of
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION
53
2
THIS IS TO CERTIFY THAT [INSERT NAME OF HOLDER], or its
registered assigns (the "Holder"), is entitled to purchase in whole or in part
from time to time from ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION, a Delaware company
(the "Issuer"), at any time on and after the date hereof, but not later than
5:00 p.m., New York time, on September [__], 2008 (the "Expiration Date"), ____
Stock Units (as hereinafter defined and subject to adjustment as provided
herein) at a purchase price of $.01 per share of Common Stock (the "Exercise
Price"), subject to the terms and conditions hereinbelow provided. "Stock
Unit" shall mean one share of Common Stock, as such Common Stock is constituted
on the date hereof, and thereafter shall mean such number of shares (including
any fractional shares) of Common Stock and other securities, cash or other
property as shall result from the adjustments specified in Section 6 of the
Warrant Agreement. "Common Stock" shall mean the Common Stock of the Issuer,
par value $.01 per share, or any other common stock or other securities
receivable thereon, or into which the Common Stock is convertible or
exchangeable, as a result of any recapitalization, reclassification, merger or
consolidation of, or deposition of assets by, the Issuer. All capitalized
terms unless otherwise defined herein shall have the meanings set forth in the
Warrant Agreement.
On and after the date hereof and until 5:00 p.m., New York time, on
the Expiration Date, the Holder may exercise this Warrant, on one or more
occasions, on any Business Day, in whole or in part, by delivering to the
Issuer,
(a) a written notice of the Holder's election to exercise this
Warrant, which notice shall specify the number of Stock Units
to be purchased (the "Exercise Notice");
(b) payment of the aggregate Exercise Price for the number of
Stock Units as to which this Warrant is being exercised
(payable as set forth below); and
(c) this Warrant.
The Exercise Price shall be payable (a) in cash or by
certified or official bank check payable to the order of the Issuer or by wire
transfer of immediately available funds to the account of the Issuer or (b) by
delivery of this Warrant Certificate to the Issuer for cancellation in
accordance with the following formula: in exchange for each share of Common
Stock issuable on exercise of each Warrant represented by this Warrant
Certificate that is being exercised, the holder shall receive such number of
shares of Common Stock as is equal to (a)(i) the product of (x) the number of
shares of Common Stock comprising a Stock Unit at the time of such conversion
and (y) the Current Market Price per share of Common Stock at the time of such
conversion minus the Exercise Price
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3
per share of Common Stock at such time, divided by (b) the Current Market Price
per share of Common Stock at the time of conversion, all as provided in the
Warrant Agreement. Such Exercise Notice may be substantially in the form of
Annex A hereto. Upon receipt thereof, the Issuer shall, as promptly as
practicable and in any event within 5 Business Days thereafter, execute or
cause to be executed and deliver or cause to be delivered to the Holder a
certificate or certificates representing the aggregate number of Warrant Stock
and other securities issuable upon such exercise and any other property to
which such Holder is entitled.
If a Holder is subject to the provisions of Regulation Y, such
Holder shall not, and shall not permit any of its Bank Holding Company
Affiliates to, exercise any Warrant if, after giving effect to such exercise,
(i) such Holder and its Bank Holding Company Affiliates would own more than 5%
of the total issued and outstanding shares of Common Stock on a fully-diluted
basis or (ii) such Holder would be deemed under Regulation Y to have the power
to exercise, directly or indirectly, a controlling influence over the
management or policies of, or would otherwise control, the Issuer (and for the
purposes of this clause (ii), a reasoned opinion of counsel to such Holder
delivered to such Holder (which is based on facts and circumstances deemed
appropriate by such counsel) to the effect that such Holder does not have the
power to exercise such a controlling influence or otherwise control the Issuer
shall be conclusive).
The certificate or certificates for Warrant Stock so delivered
shall be in such denominations as may be specified in the Exercise Notice and
shall be registered in the name of the Holder or such other name or names as
shall be designated in such Exercise Notice. Such certificate or certificates
shall be deemed to have been issued and the Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of
record of Warrant Stock, including, to the extent permitted by law, the right
to vote Warrant Stock or to consent or to receive notice as a Shareholder, as
of the date on which the last of the Exercise Notice, payment of the Exercise
Price and this Warrant is received by the Issuer as aforesaid, and all taxes
required to be paid by the Holder, if any, pursuant to the Warrant Agreement,
prior to the issuance of Warrants Units have been paid. If this Warrant shall
have been exercised only in part, the Issuer shall, at the time of delivery of
the certificate or certificates representing Warrant Stock and other
securities, execute and deliver to the Holder a new Warrant evidencing the
rights of the Holder to purchase the unpurchased Stock Units called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or, at the request of the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.
55
4
The Issuer shall not be required to issue a fractional amount
of Warrant Stock upon exercise of this Warrant. As to any fraction of a
Warrant Stock which the Holder would otherwise be entitled to purchase upon
such exercise, the Issuer shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Market Price
per share of Warrant Stock on the date of exercise.
THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: September __, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION
By
------------------------------
Name:
Title:
Attest:
--------------------------------
Secretary
56
Annex A
to
Warrant
FORM OF EXERCISE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of [the number of] [ ] Stock Units of
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ OIL CORPORATION, a Delaware company, and herewith makes
payment therefor, all at the price and on the terms and conditions specified in
this Warrant, and requests that certificates for the shares of Common Stock be
issued in accordance with the instructions given below, and, if such Stock
Units shall not include all of the Stock Units to which the Holder is entitled
under this Warrant, that a new Warrant of like tenor and date for the
unpurchased balance of the Stock Units issuable hereunder be delivered to the
undersigned.
Dated:
------------------ --------------------------------
(Signature of Registered Holder)
Instructions for issuance and
registration of Common Stock:
--------------------------------
Name of Registered Holder
(please print)
Social Security or Other Identifying
Number:
---------------------------
Please deliver certificate to
the following address:
------------------------------------
▇▇▇▇▇▇
-------------------------------------
▇▇▇▇, ▇▇▇▇▇ and Zip Code
57
Annex 2
to
Warrant Agreement
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the assignee named below all
the rights of the undersigned under this Warrant with respect to the number of
shares of Warrant Stock covered thereby set forth hereinbelow unto:
Number of Shares
Name of Assignee Address of Common Stock
------------------------------------------------------------------------------
Dated:
------------------
--------------------------------
Signature of Registered Holder
--------------------------------
Name of Registered Holder
(Please Print)
Witness:
----------------------