FORTUNE NATURAL RESOURCES CORPORATION
WARRANT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of ___________________, 1998,
is between FORTUNE NATURAL RESOURCES CORPORATION, a Delaware corporation (the
"Company"), and U.S. STOCK TRANSFER CORPORATION, as warrant agent (the "Warrant
Agent").
WHEREAS, in connection with an offering in October 1993 to the public of
up to 1,035,000 units (the "Units"), each Unit consisting of two shares of the
Company's common stock, $.01 par value (the "Common Stock"), and two common
stock purchase warrants (the "Old Public Warrants"), the Company issued
1,917,000 Old Public Warrants evidencing the right to purchase an aggregate of
1,917,000 shares of Common Stock; and
WHEREAS, in connection with the Unit offering referred to above, the
Company issued, to the underwriters involved in the offering, representatives'
units consisting of two shares of Common Stock and two warrants, of which 31,500
such representatives' units remain outstanding (the Old Public Warrants
currently outstanding or issuable upon exercise of the representatives' units
are hereinafter collectively referred to as the "Old Warrants"); and
WHEREAS, the terms of the Old Public Warrants have been amended to
provide that each entitles the holder thereof to purchase 1.4375 shares of
Common Stock, for an aggregate of 2,846,250 shares of Common Stock being
issuable upon exercise of all outstanding and issuable Old Public Warrants; and
WHEREAS, the Company has registered with the Securities and Exchange
Commission an exchange offer to the existing holders of the Old Warrants to
exchange common stock purchase warrants issued pursuant to this Agreement (the
"New Warrants") for any and all of the outstanding Old Public Warrants, and the
Warrant Agent has concurrently agreed to serve as Exchange Agent relative to the
exchange of Old Public Warrants for the New Warrants issued hereunder;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, exercise and redemption of the New
Warrants;
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent of the Company for the New Warrants, and the
Warrant Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this Agreement.
SECTION 2. NEW WARRANTS AND FORM OF WARRANT CERTIFICATES.
(A) Each New Warrant shall entitle the registered holder of the
certificate representing such New Warrant to purchase, upon the exercise
thereof, 1.4375 shares of Common Stock, subject to the future adjustments
provided for in Section 9 hereof, until 5:00 p.m., Eastern Time, on September
28, 1999, unless earlier redeemed pursuant to Section 11 hereof.
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(B) The New Warrant certificates shall be in registered form only. The
text of the New Warrant certificate and the form of election to exercise a New
Warrant on the reverse side thereof shall be substantially in the form of
Exhibit A attached hereto. Each New Warrant certificate shall be dated as of the
date of issuance thereof by the Warrant Agent (whether upon initial issuance or
upon transfer or exchange), and shall be executed on behalf of the Company by
the manual or facsimile signature of its President or a Vice President, under
its corporate seal, affixed or in facsimile, and attested to by the manual or
facsimile signature of its Secretary or an Assistant Secretary. In case any
officer of the Company who shall have signed any New Warrant certificate shall
cease to be such officer of the Company prior to the issuance thereof, such New
Warrant certificate may nevertheless be issued and delivered with the same force
and effect as though the person who signed the same had not ceased to be such
officer of the Company. Any such New Warrant certificate may be signed on behalf
of the Company by persons who, at the actual date of execution of such New
Warrant certificate, are the proper officers of the Company, although at the
nominal date of such New Warrant certificate any such person shall not have been
such officer of the Company.
SECTION 3. EXERCISE OF NEW WARRANTS, DURATION AND WARRANT PRICE. Subject
to the provisions of this Agreement, each registered holder of one or more New
Warrant certificates shall have the right, which may be exercised as in such New
Warrant certificates expressed, to purchase from the Company (and the Company
shall issue and sell to such registered holder) the number of shares of Common
Stock to which the New Warrants represented by such certificates are at the time
entitled hereunder.
Each New Warrant not exercised by its expiration date shall become void,
and all rights thereunder and all rights in respect thereof under this Agreement
shall cease on such date.
A New Warrant may be exercised by the surrender of the certificate
representing such New Warrant to the Company, at the office of the Warrant
Agent, or at the office of a successor to the Warrant Agent, with the
subscription form set forth on the reverse thereof duly executed and properly
endorsed with the signatures properly guaranteed, and upon payment in full to
the Warrant Agent for the account of the Company of the Warrant Price (as
hereinafter defined) for the number of shares of Common Stock as to which the
New Warrant is exercised. Such Warrant Price shall be paid in full in cash, or
by certified check or bank draft payable in United States currency to the order
of the Warrant Agent.
Subject to the further provisions of this Section 3 and of Section 6
hereof, upon such surrender of New Warrant certificates and payment of the
Warrant Price as aforesaid, the Company shall issue and cause to be delivered,
with all reasonable dispatch to or upon the written order of the registered
holder of such New Warrants and in such name or names as such registered holder
may designate, a certificate or certificates for the number of securities
purchased upon the exercise of such New Warrants, together with cash, as
provided in Section 10 of this Agreement, in respect of any fraction of a share
or security otherwise issuable upon such surrender. All shares of Common Stock
issued upon the exercise of a New Warrant shall be validly issued, fully paid
and nonassessable and shall be listed on any and all national securities
exchanges, or listed for quotation on any inter-dealer quotation system, upon
which any other shares of the Common Stock or securities otherwise issuable are
then listed.
Certificates representing such securities shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such securities as of the date of the surrender of
such New Warrants and payment of the Warrant Price as aforesaid; provided,
however, that if, at the date of surrender of such New Warrants and payment of
such Warrant Price, the transfer books for the Common Stock or other securities
purchasable upon the exercise of such New Warrants shall be closed, the
certificates for the securities in respect of which such New Warrants are then
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exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificate for such securities. The rights of purchase represented by each
Warrant certificate shall be exercisable, at the election of the registered
holders thereof, either as an entirety or from time to time for part of the
number of securities specified therein and, in the event that any Warrant
certificate is exercised in respect of less than all of the securities specified
therein at any time prior to the expiration date of the Warrant certificate, a
new Warrant certificate or certificates will be issued to such registered holder
for the remaining number of securities in the Warrant certificate so
surrendered.
SECTION 4. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall
maintain books (the "Warrant Register") for the registration and the
registration of transfer of the New Warrants. Upon the initial issuance of the
New Warrants, the Warrant Agent shall issue and register the New Warrants in the
names of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company. The
New Warrant certificates shall be countersigned manually or by facsimile by the
Warrant Agent (or by any successor to the Warrant Agent then acting as such
under this Agreement) and shall not be valid for any purpose unless so
countersigned. Warrant certificates may be so countersigned, however, by the
Warrant Agent and delivered by the Warrant Agent, notwithstanding that the
persons whose manual or facsimile signatures appear thereon as proper officers
of the Company shall have ceased to be such officers at the time of such
countersignature or delivery.
Prior to due presentment for registration of transfer of any New Warrant
certificate, the Company and the Warrant Agent may deem and treat the person in
whose name such New Warrant certificate shall be registered upon the Warrant
Register (the "registered holder") as the absolute owner of such New Warrant
certificate and of each New Warrant represented thereby (notwithstanding any
notation of ownership or other writing on the New Warrant certificate made by
anyone other than the Company or the Warrant Agent), for the purpose of any
exercise thereof, of any distribution or notice to the holder thereof, and for
all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
SECTION 5. TRANSFER AND EXCHANGE OF NEW WARRANTS. The Warrant Agent
shall register the transfer, from time to time, of any outstanding New Warrant
upon the Warrant Register, upon surrender of the certificate evidencing such New
Warrant for transfer, properly endorsed with signatures properly guaranteed and
accompanied by appropriate instructions for transfer, and accompanied by the
Company's written consent to such transfer. Upon any such approved underlying
transfer, a new New Warrant certificate representing an equal aggregate number
of New Warrants shall be issued to the transferee and the surrendered New
Warrant certificate shall be canceled by the Warrant Agent. The New Warrant
certificates so canceled shall be delivered by the Warrant Agent to the Company
from time to time upon request.
New Warrant certificates may be surrendered to the Warrant Agent,
together with a written request for exchange, and thereupon the Warrant Agent
shall issue in exchange therefor one or more new New Warrant certificates as
requested by the registered holder of the New Warrant certificate or
certificates so surrendered, representing an equal aggregate number of New
Warrants.
The Warrants are not transferable except upon the prior written consent
of the Company. The Warrant Agent shall not be required to effect any
registration of transfer or exchange which will result in the issuance of a New
Warrant certificate for a fraction of a Warrant.
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The Warrant Agent is hereby authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the new New Warrant certificates
required to be issued pursuant to the provisions hereof, and the Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with New
Warrant certificates duly executed on behalf of the Company for such purpose.
SECTION 6. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of New Warrants; provided, however, that the Company
shall not be required to pay any tax or taxes which may be payable in respect of
any transfer involved in the issuance or delivery of any certificates for shares
of Common Stock in a name other than that of the registered holder of New
Warrants in respect of which such shares are issued, and in such case neither
the Company nor the Warrant Agent shall be required to issue or deliver any
certificate for shares of Common Stock or any New Warrant certificate until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company's satisfaction that such tax has been paid.
SECTION 7. MUTILATED OR MISSING NEW WARRANTS. In case any of the New
Warrant certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue, and the Warrant Agent shall countersign and deliver
in exchange and substitution for and upon cancellation of the mutilated New
Warrant certificate, or in lieu of and substitution for the New Warrant
certificate lost, stolen or destroyed, a new New Warrant certificate
representing an equal aggregate number of New Warrants, but only upon receipt of
evidence satisfactory to the Company and the Warrant Agent of such loss, theft
or destruction of such New Warrant certificate and reasonable indemnity, if
requested, also satisfactory to them. Applicants for such substitute New Warrant
certificates shall also comply with such other reasonable conditions and pay
such reasonable charges as the Company or the Warrant Agent may prescribe.
SECTION 8. RESERVATION OF COMMON STOCK. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the New Warrants then
outstanding, and the transfer agent for the Common Stock and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares as shall be requisite for such purpose.
Prior to the issuance of any shares of Common Stock upon exercise of the
New Warrants, the Company shall secure the listing of such shares on any and all
national securities exchanges upon which any of the other shares of the Common
Stock are then listed. So long as any unexpired New Warrants remain outstanding,
the Company will file such post-effective amendments to the Registration
Statement or supplements to the Prospectus filed pursuant to the Securities Act
of 1933, as amended (the "Act"), with respect to the Common Stock issuable upon
exercise of the New Warrants (or such other registration statements or
post-effective amendments or supplements) as may be necessary to permit trading
in the Common Stock issuable upon exercise of the New Warrants and to permit the
Company to deliver to each person exercising a New Warrant a Prospectus meeting
the requirements of Section 10(a)(3) of the Act, and otherwise complying
therewith; and the Company will, from time to time, furnish the Warrant Agent
with such Prospectuses in sufficient quantity to permit the Warrant Agent to
deliver such a Prospectus to each holder of a New Warrant upon the exercise
thereof. The Company will use its best efforts to obtain appropriate approvals
or registration under state "blue sky" securities laws to permit lawful exercise
of the New Warrants. Notwithstanding anything herein, New Warrants may not be
exercised by, or shares of Common Stock issued to, any Registered Holder in any
state or under any circumstance in which such
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exercise would be unlawful. The Company will keep a copy of this Agreement on
file with the transfer agent for the Common Stock and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the New Warrants.
The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such transfer agent stock certificates to honor outstanding
New Warrants. The Company will supply such transfer agent with duly executed
certificates for such purpose and will itself provide or otherwise make
available any cash as provided in Section 10 of this Agreement. All New Warrant
certificates surrendered in the exercise of the rights thereby evidenced shall
be canceled by the Warrant Agent and shall be delivered to the Company, and such
canceled New Warrant certificates shall constitute sufficient evidence of the
number of shares of Common Stock which have been issued upon the exercise of
such New Warrants. Promptly after the expiration date of the New Warrants, the
Warrant Agent shall certify to the Company the aggregate number of such New
Warrants which expired unexercised, and after the expiration date of the New
Warrants, no shares of Common Stock shall be subject to reservation in respect
of such New Warrants.
SECTION 9. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
New Warrants and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
9.1 Adjustments. The number of shares of Common Stock purchasable upon
the exercise of each New Warrant and the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common Stock
or make a distribution in Common Stock, (ii) subdivide its outstanding Common
Stock, (iii) combine its outstanding Common Stock into a smaller number of
shares of Common Stock, or (iv) issue, by reclassification of its Common Stock,
other securities of the Company, the number of shares of Common Stock
purchasable upon exercise of a New Warrant immediately prior thereto shall be
adjusted so that the holder of a New Warrant shall be entitled to receive the
kind and number of shares of Common Stock or other securities of the Company
which such holder would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had the
New Warrant been exercised immediately prior to the happening of such event or
any record date with respect thereto. Any adjustment made pursuant to this
subsection 9.1(a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) No adjustment in the number of shares of Common Stock
purchasable pursuant to the New Warrants shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
number of shares of Common Stock then purchasable upon the exercise of the New
Warrants; provided, however, that any adjustments which by reason of this
subsection 9.1(b) are not required to be made immediately shall be carried
forward and taken into account in any subsequent adjustment.
(c) Whenever the number of shares of Common Stock purchasable
upon the exercise of a New Warrant is adjusted as herein provided, the Warrant
Price payable upon exercise of the Warrant shall be adjusted by multiplying such
Warrant Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of shares of Common Stock purchasable upon the
exercise of such New Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of shares of Common Stock so purchasable
immediately thereafter.
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(d) Whenever the number of shares of Common Stock purchasable
upon the exercise of a New Warrant or the Warrant Price is adjusted as herein
provided, the Company shall cause to be promptly mailed to the Warrant Agent and
each registered holder of a New Warrant by first class mail, postage prepaid,
notice of such adjustment or adjustments and, with regard to the Warrant Agent
only, a certificate of the chief financial officer of the Company setting forth
the number of shares of Common Stock purchasable upon the exercise of a New
Warrant and the Warrant Price after such adjustment, a brief statement of the
facts requiring such adjustment and the computation by which such adjustment was
made.
(e) For the purpose of this Section 9, the term "Common Stock"
shall mean (i) the class of stock designated as the Common Stock of the Company
at the date of this Agreement, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value. In the event that at any time, as a result of an adjustment made
pursuant to this Section 9, a registered holder shall become entitled to
purchase any securities of the Company other than Common Stock, (i) if the
registered holder's right to purchase is on any other basis than that available
to all holders of the Company's Common Stock, the Company shall obtain an
opinion of an investment banking firm valuing such other securities and (ii)
thereafter the number of such other securities so purchasable upon exercise of a
New Warrant and the Warrant Price of such securities shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this
Section 9.
9.2 No Adjustment for Dividends. Except as provided in Section 9.1
hereof, no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of a New Warrant or upon the exercise of
a New Warrant.
9.3 No Adjustment in Certain Cases. No adjustments shall be made
pursuant to Section 9 hereof in connection with the issuance of the New Warrants
(or the underlying shares of Common Stock), or any of the securities underlying
the Old Public Warrants or the Representatives' Warrants . No adjustments shall
be made pursuant to Section 9 hereof in connection with the grant or exercise of
presently authorized or outstanding options to purchase, or the issuance of
shares of Common Stock under the Company's existing stock options plans.
9.4 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale of conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrant Agent
an agreement that the registered holders of the New Warrants shall have the
right thereafter, upon payment of the Warrant Price in effect immediately prior
to such action, to purchase, upon exercise of each New Warrant, the kind and
amount of shares and other securities and property which it would have owned or
have been entitled to receive after the happening of such consolidation, merger,
sale or conveyance had each New Warrant been exercised immediately prior to such
action. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended, in which the Company is the surviving
corporation, the right to purchase shares of Common Stock under the New Warrants
shall terminate on the date of such merger and thereupon the New Warrants shall
become null and void, but only if the controlling corporation shall agree to
substitute for the New Warrants its warrants which entitle the holders thereof
to purchase upon their exercise the kind and amount of shares and other
securities and property which they would have owned or been entitled to receive
had the New Warrants been exercised immediately prior to such merger. Any such
agreements, referred to in this
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subsection 9.4 shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 9
hereof. The provisions of this subsection 9.4 shall similarly apply to
successive consolidations, mergers, sales or conveyances.
9.5 Par Value of Shares of Common Stock. Before taking any action which
would cause an adjustment reducing the Warrant Price below the then par value of
the Common Stock issuable upon exercise of the New Warrants, the Company will
take any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Warrant Price.
9.6 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be any
such firm regularly employed by the Company) to make any computation required
under this Section 9, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section 9.
9.7 Statement on Warrant Certificates. Irrespective of any adjustments
in the Warrant Price or the number of securities issuable upon exercise of New
Warrants, New Warrant certificates theretofore or thereafter issued may continue
to express the same price and number of securities as are stated in the similar
New Warrant certificates initially issuable pursuant to this Agreement. However,
the Company may, at any time in its sole discretion (which shall be conclusive),
make any change in the form of New Warrant certificate that it may deem
appropriate and that does not affect the substance thereof; and any New Warrant
certificate thereafter issued, whether upon registration of transfer of, or in
exchange or substitution for, an outstanding New Warrant certificate, may be in
the form so changed.
9.8 No Rights as Stockholder; Notices to Holders of New Warrants. If, at
any time prior to the expiration of a New Warrant and prior to its exercise, any
one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to
subsection 9.1 or 9.4 hereof; or
(b) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an
entirety) shall be proposed;
then the Company shall give notice in writing of such event to the registered
holders of the New Warrants, as provided in Section 18 hereof, at least 20 days
prior to the date fixed as a record date or the date of closing the transfer
books for the determination of the stockholders entitled to any relevant
dividend, distribution, subscription rights or other rights or for the
determination of stockholders entitled to vote on such proposed dissolution,
liquidation or winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. Failure to mail or
receive such notice or any defect therein shall not affect the validity of any
action taken with respect thereto.
SECTION 10. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional shares of Common Stock on the exercise of a New Warrant. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 10, be issuable on the exercise of a New Warrant (or specified portion
thereof), the Company shall in lieu thereof pay an amount in cash equal to the
then Current Market Price multiplied by such fraction. For purposes of this
Agreement, the term "Current Market Price" shall mean (i) if the Common Stock is
traded in the over-the-counter market and not in the NASDAQ National Market
System nor on any national securities exchange, the average of the per share
closing bid prices of
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the Common Stock on the 30 consecutive trading days immediately preceding the
date in question, as reported by NASDAQ or an equivalent generally accepted
reporting service, or (ii) the Common Stock is traded in the NASDAQ National
Market System or on a national securities exchange, the average for the 30
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Stock in the NASDAQ National Market
System or on the principal stock exchange on which it is listed, as the case may
be. For purposes of clause (i) above, if trading in the Common Stock is not
reported by NASDAQ, the bid price referred to in said clause shall be the lower
bid price as reported in the "pink sheets" published by National Quotation
Bureau, Incorporated. The closing price referred to in clause (ii) above shall
be the last reported sale price or, in the case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices, in
either case in the NASDAQ National Market System or on the national securities
exchange on which the Common Stock is then listed.
SECTION 11. REDEMPTION.
(A) The then outstanding New Warrants may be redeemed, at the option of
the Company, at $.05 per share of Common Stock purchasable upon exercise of such
New Warrants, at any time after the Daily Market Price per share of the Common
Stock for a period of at least 20 consecutive trading days ending not more than
10 days prior to the date of the notice given pursuant to Section 11(B) hereof
has equaled or exceeded $5.50, and prior to expiration of the New Warrants. The
Daily Market Price of the Common Stock shall be determined by the Company in the
manner set forth in Section 11(E) as of the end of each trading day (or, if no
trading in the Common Stock occurred on such day, as of the end of the
immediately preceding trading day in which trading occurred) and verified to the
Warrant Agent before the Company may give notice of redemption. All outstanding
New Warrants must be redeemed if any are redeemed, and any right to exercise an
outstanding New Warrant shall terminate at 5:00 p.m. (Eastern Time) on the
business day immediately preceding the date fixed for redemption. A trading day
shall mean a day in which trading of securities occurred on the New York Stock
Exchange.
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(B) The Company may exercise its right to redeem the New Warrants only
by giving the notice set forth in the following sentence by the end of the tenth
day after the provisions of Section 11(A) have been satisfied. In case the
Company shall exercise its right to redeem, it shall give notice to the Warrant
Agent and the registered holders of the outstanding New Warrants, by mailing to
such registered holders a notice of redemption, first class, postage prepaid, at
their addresses as they shall appear on the records of the Warrant Agent. Any
notice mailed in the manner provided herein shall be conclusively presumed to
have been duly given whether or not the registered holder actually receives such
notice.
(C) The notice of redemption shall specify the redemption price, the
date fixed for redemption (which shall be between the thirtieth and forty-fifth
day after such notice is mailed), the place where the Warrant certificates shall
be delivered and the redemption price shall be paid, and that the right to
exercise the New Warrant shall terminate at 5:00 p.m. (Eastern Time) on the
business day immediately preceding the date fixed for redemption.
(D) Appropriate adjustment shall be made to the redemption price and to
the minimum Daily Market Price prerequisite to redemption set forth in Section
11(A) hereof, in each case on the same basis as provided in Section 9 hereof
with respect to adjustment of the Warrant Price.
(E) For purposes of this Agreement, the term "Daily Market Price" shall
mean (i) if the Common Stock is traded in the over-the-counter market and not in
the NASDAQ National Market System nor on any national securities exchange, the
closing bid price of the Common Stock on the trading day in question, as
reported by NASDAQ or an equivalent generally accepted reporting service, or
(ii) if the Common Stock is traded in the NASDAQ National Market System or on a
national securities exchange, the daily per share closing price of the Common
Stock in the NASDAQ National Market System or on the principal stock exchange on
which it is listed on the trading day in question, as the case may be. For
purposes of clause (i) above, if trading in the Common Stock is not reported by
NASDAQ, the bid price referred to in said clause shall be the lowest bid price
as reported in the "pink sheets" published by National Quotation Bureau,
Incorporated. The closing price referred to in clause (ii) above shall be the
last reported sale price or, in case no such reported sale takes place on such
day, the average of the reported closing bid and asked prices, in either case in
the NASDAQ National Market System or on the national securities exchange on
which the Common Stock is then listed.
SECTION 12. RIGHTS AS WARRANT HOLDERS. Nothing contained in this
Agreement or in any of the New Warrants shall be construed as conferring upon
the holders thereof, as such, any of the rights of stockholders of the Company,
including, without limitation, the right to receive dividends or other
distributions, to exercise any preemptive rights, to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter. Anything herein to the
contrary notwithstanding, the Company shall cause copies of all financial
statements and reports, proxy statements and other documents as it shall send to
its stockholders to be sent by the same class mail as sent to its stockholders,
postage prepaid, on the date of the mailing to such stockholders, to each
registered holder of New Warrants at his address appearing on the Warrant
Register as of the record date for the determination of the stockholders
entitled to such documents.
SECTION 13. DISPOSITION OF PROCEEDS ON EXERCISE OF NEW WARRANTS. The
Warrant Agent shall account promptly to the Company with respect to New Warrants
exercised, and shall promptly pay to the Company all monies received by it upon
the exercise of such New Warrants, and shall keep copies of this Agreement
available for inspection by holders of New Warrants during normal business
hours.
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SECTION 14. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto; provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of Section 16 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement and any of the Warrant certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such New Warrant
certificates so countersigned; and in case at that time any of the New Warrant
certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such New Warrant certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent, and in
all such cases the New Warrants represented by such New Warrant certificates
shall have the full force provided in the New Warrant certificates and in this
Agreement. Any such successor Warrant Agent shall promptly give notice of its
succession as Warrant Agent to the Company and to the registered holder of each
Warrant certificate.
SECTION 15. DUTIES OF WARRANT AGENT. The Warrant Agent hereby undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, all of which shall bind the Company and the holders of New
Warrants by their acceptance thereof;
(A) The statements of fact and recitals contained herein and in the New
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the New
Warrants except as herein expressly provided.
(B) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the New Warrants to be complied with by the Company.
(C) The Warrant Agent may consult at any time with counsel satisfactory
to it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any New Warrant
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinions or the advice of such counsel.
(D) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any New Warrant for any action taken in reliance on
any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(E) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in connection with
the execution of, and performance of its services as Warrant Agent under, this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement, except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
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(F) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action on behalf of the
Company or any registered holder, but this provision shall not affect the power
of the Warrant Agent to take such action as the Warrant Agent may consider
proper. All rights of action under this Agreement or under any of the New
Warrants may be enforced by the Warrant Agent without the possession of any of
the New Warrants or the production thereof at any trial or other proceeding
relative thereto, and any such action, suit or proceeding instituted by the
Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of
judgment shall be for the ratable benefit of all the registered holders of the
New Warrants, as their respective rights or interests may appear.
(G) The Warrant Agent and any stockholder, director, officer or employee
of the Warrant Agent may buy, sell or deal in any of the New Warrants or other
securities of the Company or become pecuniary interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Warrant Agent
under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(H) The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement, except for its
own negligence, willful misconduct or bad faith.
(I) Any request, direction, election, order or demand of the Company
shall be sufficient if evidenced by an instrument signed in the name of the
Company by its President, a Vice President or chief financial officer (unless
other evidence in respect thereof is therein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
SECTION 16. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving the Company at least
30 days' prior notice in writing, and by mailing notice in writing to the
registered holders at their addresses appearing on the Warrant Register, of such
resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and by like mailing of notice to the registered holders of the New
Warrants. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within 30 days after
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Warrant Agent or by the registered
holder of a Warrant (who shall, with such notice, submit his New Warrant
certificate for inspection by the Company), then the registered holder of any
New Warrant may apply to any court of competent jurisdiction for the appointment
of a successor to the Warrant Agent. Any successor Warrant Agent, whether
appointed by the Company or by such a court, shall be registered and otherwise
authorized to serve as a transfer agent pursuant to the Securities Exchange act
of 1934, as amended. If at any time the Warrant Agent shall cease to be eligible
in accordance with the provisions of this Section 16, it shall resign
immediately in the manner and with the effect specified in this Section 16.
After acceptance in writing of the appointment, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed; but
the former Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Upon
request of any successor Warrant Agent, the Company shall make, execute,
acknowledge and deliver any and all instruments in writing for more fully and
effectually vesting in and confirming to such successor Warrant
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Agent all such powers, rights, duties and responsibilities. Failure to file or
mail any notice provided in this Section 16, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor Warrant Agent, as the case may
be.
SECTION 17. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment
of any transfer agent for the Common Stock or of any subsequent transfer agent
for shares of the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the New
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such transfer agent.
SECTION 18. NOTICES. All notices, requests and other communications
pursuant to this Agreement shall be in writing and shall be sufficiently given
or made when delivered or mailed by first class mail, postage prepaid, addressed
as follows:
(a) if to the Company, to (until another address is filed in
writing by the Company with the Warrant Agent);
Fortune Natural Resources Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
(b) if to the Warrant Agent, to (until another address is filed
in writing by the Warrant Agent with the Company):
U.S. Stock Transfer Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
(c) if to the registered holder of a New Warrant, to the address
of such holder as shown in the Warrant Register.
SECTION 19. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of New Warrants (i) in order to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or (ii) to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Warrant Agent may deem necessary or desirable and which shall not be
inconsistent with the provisions of the New Warrants, or (iii) subject to the
provisions of the last paragraph of Section 3, to make amendments which shall
not adversely affect the interests of the holders of New Warrants (including
reducing the Warrant Price or extending the redemption or expiration date).
SECTION 20. NONTRANSFERABLITY; SUCCESSORS. The New Warrants are not
transferable except with the prior written consent of the Company. All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Warrant Agent or the registered holders of the New Warrants shall bind
and inure to the benefit of their respective successors and assigns hereunder.
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SECTION 21. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of California and for all purposes
shall be construed in accordance with the laws of said State applicable to
contracts entered into and performed in said State, and without regard to any
conflicts of laws principles thereof.
SECTION 22. BENEFITS OF THIS AGREEMENT. Except as provided in the last
paragraph of Section 3, nothing in this Agreement shall be construed to give to
any person or corporation other than the Company, the Warrant Agent and the
registered holders of the New Warrants any legal or equitable right, remedy or
claim under this Agreement. Except as provided in the last paragraph of Section
3, this Agreement shall be for the sole and exclusive benefit of the Company,
the Warrant Agent and the registered holders of the New Warrants.
SECTION 23. COUNTERPARTS. This Agreement may be executed in counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.
SECTION 24. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
FORTUNE NATURAL RESOURCES CORPORATION
By: ________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President
U.S. STOCK TRANSFER CORPORATION
By: ________________________________
▇▇▇▇ ▇▇▇▇▇
President
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