EXHIBIT 10.13
CORPORATE ADVISOR / DIRECTOR ENGAGEMENT AGREEMENT
AGREEMENT made as of this 1st day of June, 20 1 1 by and between South
Uintah Gas Prope1ties, Inc. (the "Company"). address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇ ▇. ▇▇▇▇▇▇ (the "Consultant"), address:_____________.
WHEREAS, the Company desires professional guidance and advice regarding
public company and energy and desires Consultant to act as a Board Member: and
WHEREAS, Consultant has expertise in the area of public companies and
energy companies: and is willing to act as an advisor and Board Member to the
Company upon the terms and conditions set forth in this Agreement:
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained. the parties hereto agree as follows:
1. DUTIES, SCOPE OF AGREEMENT, AND RELATIONSHIP OF THE PARTIES
(a) The Company hereby agrees to retain Consultant as Board Member, and
Consultant agrees to act as Board Member for the Company during the term of this
Agreement. All parties understand that Consultant has many other business
interests and will devote as much time as in its discretion as necessary to
perform its duties under this Agreement. In addition, the company understands
that consultant's efforts on behalf of his other interests are the sole and
separate property of Consultant.
(b) The services rendered by consultant to the company pursuant to this
Agreement shall be as an independent contractor, and this Agreement does not
make Consultant the employee, agent, or legal representative of the Company for
any purpose whatsoever, including without limitation participation in any
benefits or privileges given or extended by the Company to its employees. No
right or authority is granted to Consultant to assume or to create any
obligation or responsibility, express or implied, on behalf of or in the name of
the company. except as may be set forth herein. The company shall not withhold
for Consultant any federal or state taxes from the amounts to be paid to
consultant hereunder and Consultant agrees that he will pay all taxes due on
such amounts.
(c) Consultant agrees to make available to Company its services as a Board
Member on an as needed basis on reasonable request with a total time requirement
not expected to exceed 100 hours in one year.
2. COMPENSATION
(a) The Company will issue 100,000 shares of restricted common stock plus
200,000 warrants to purchase shares of the Company's common stock as described
in Attachment A to Consultant as a retainer. Company shall issue said shares
within sixty (60) days from the execution of this Agreement by both parties.
(b) Other forms of compensation for additional services may occur depending
on the nature of a specific engagement and only upon the mutual agreement of
both parties.
3. EXPENSES
The Company shall reimburse Consultant for all pre-approved reasonable and
necessary expenses incurred by it in carrying out its duties under this
Agreement. Consultant shall submit related receipts and documentation with his
request for reimbursement.
4. RENEWAL; TERMINATION
(a) This Agreement shall continue this Agreement by giving the other part
thirty (30) days written notice. However, termination of Consultant by the
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Company shall not relieve the Company of its financial obligations to Consultant
as defined herein.
(b) Subject to the continuing obligations of Consultant under Section 5
below, either party may terminate this Agreement at any time if the other party
shall fail to fulfill any material obligation under this Agreement and shall not
have cured the breach within 10 days after having received notice thereof.
(c) Termination or expiration of this Agreement shall not extinguish any
rights of compensation that shall accrue prior to the termination.
5. CONFIDENTIAL INFORMATION
(a) "Confidential Information" as used in this Section 5 means information
that is not generally known and that is proprietary to the Company or that the
Company is obligated to treat as proprietary. This information includes. without
limitation:
(i) Trade secret information about the Company and its products;
(ii) Information concerning the Company's business as the Company has
conducted it since the Company's incorporation or as it may
conduct it in the future; and
(iii)Information concerning any of the Company's past, current. or
possible future products, including (without limitation)
information about the Company's research, development,
engineering, purchasing, manufacturing, accounting, marketing,
selling, or leasing efforts.
(b) Any information that Consultant reasonably considers Confidential
Information, or that the Company treats as Confidential Information, will be
presumed to be Confidential Information (whether Consultant or others originated
it and regardless of how it obtained it).
(c) Except as required in its duties to the Company, Consultant will never,
either during or after the term of this Agreement use or disclose confidential
Information to any person not authorized by the Company to receive it for a
period of two (2) years after termination of this Agreement. However,
information in the possession of Consultant as of the Effective Date of this
Agreement, information that is public or becomes public or information that is
required to be disclosed by a bona fide legal authority is exempt from this
Agreement.
(d) If this Agreement is terminated. Consultant will promptly tum over to
the Company all records and any compositions, articles, devices, apparatus and
other items that disclose, describe, or embody Confidential Information,
including all copies, reproductions. and specimens of the Confidential
Information in possession, regardless of who prepared them. The rights of the
Company set forth in this Section 5 are in addition to any rights of the Company
with respect to protection of trade secrets or confidential information arising
out of the common or statutory laws of the State of Colorado or any other state
or any country wherein Consultant may from time to time perform services
pursuant to this Agreement. This Section 5 shall survive the termination or
expiration of this Agreement.
(e) Consultant agrees to enter into a 16(b) Plan for any sales of shares of
company, subject to the Plans approval by the company in writing.
6. FALSE OR MISLEADING INFORMATION
The Company warrants that it will provide Consultant with accurate
financial, corporate, and other data required by Consultant and necessary for
full disclosure of all facts relevant to any efforts required of Consultant
under this Agreement. Such information shall be furnished promptly upon request.
If the Company fails to provide such information. or if any information provided
by the Company to Consultant shall be false or misleading or if the Company
omits or fails to provide or withholds relevant material information to
Consultant or to any professionals engaged pursuant to paragraph 5(d) above,
then, in such event, any and all fees paid hereunder will be retained by
Consultant as liquidated damages and this Agreement shall be null and void and
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Consultant shall have no further obligation hereunder. Further, by execution of
this Agreement. the Compan1 hereby indemnifies Consultant from any and all costs
for expenses or damages incurred, and holds Consultant harmless from any and all
claims and/or actions that may arise out of providing false or misleading
information or by omitting relevant information in connection with the efforts
required of Consultant under this Agreement.
7. CONSULTANT'S BEST EFFORTS AND NO WARRANTY OF INFORMATION
Consultant shall use its best efforts to use reliable infom1ation and
scientific techniques associated with the oil and gas business. However,
Consultant makes no warranty as to the completeness or interpretation of such
information, nor does Consultant warrant the information with regard to errors
or omissions contained therein. Any reserve estimates, price calculations, price
forecasts, exploration potential predictions or similar information provided by
Consultant are or may well be estimates only and should not be considered
predictions of actual results.
8. MISCELLANEOUS
(a) SUCCESSORS AND ASSIGns. This Agreement is binding on and ensures to the
benefit of the Company. Company cannot assign this Agreement without
Consultant's written agreement.
(b) MODIFICATION. This Agreement may be modified or amended only by a
writing signed by both the Company and Consultant.
(c) GOVERNING LAW. The laws of Colorado will govern the validity
construction. and performance of this Agreement. Any legal proceeding related to
this Agreement will be brought in an appropriate Colorado court, and both the
Company and Consultant hereby consent to the exclusive jurisdiction of that
court for this purpose.
(d) CONSTRUCTION. Wherever possible, each provision of this Agreement will
be interpreted so that it is valid under the applicable law. If any provision of
this Agreement is to any extent invalid under the applicable lav. , that
provision will still be effective to the extent it remains valid. The remainder
of this Agreement also will continue to be valid and the entire Agreement will
continue to be valid i n other jurisdictions.
(e) WAIVERS. No failure or delay by either the Company or Consultant in
exercising any right or remedy under this Agreement will waive any provision of
the Agreement, nor will any single or partial exercise by either the Company or
Consultant of any right or remedy under this Agreement preclude either of them
from otherwise or further exercising these rights or remedies, or any other
rights or remedies gran ▇▇▇ by any law or any related document.
(f) CAPTIONS. The headings in this Agreement arc for convenience only and
do not affect this Agreement's interpretation.
(g) ENTIRE AGREEMENT. This Agreement supersedes all previous and
contemporaneous oral negotiations, commitments, writings, and understandings
between the parties concerning the matters in this Agreement.
(h) NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing and sent by registered first-class
mail, postage prepaid, and shall be effective five days after mailing to the
addresses stated below. These addresses may be changed at any time by like
notice.
In the case of the Company:
South Uintah Gas Properties, Inc.
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▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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In the case of Consultant:
▇▇▇ ▇. ▇▇▇▇▇▇
(i) INDEMNIFICATION. Company agrees to indemnify and hold harmless
Consultant from any and all claims, actions, liabilities. costs, expenses,
including attorney fees arising from claims made against Consultant in
connection with Company's possession or use of advice, guidance, materials,
information. data or other services provided by Consultant under this Agreement.
(j) CONFLICTS OF INTEREST. Company acknowledges that Consultant is engaged
in the business of providing petroleum consulting for other oil and gas
companies within the United States and Canada. ln the event Consultant is
requested by Company to provide advice and guidance on or about geographical
areas that may create a potential conflict of interest between Consultant's
other business matters and the Company's operations. Consultant shall not be
required by Company to render advice and guidance on such an area. Company and
Consultant shall use their best efforts to notify each other of any potential
conflicts of interests. In any event, Consultant's general knowledge that
Company plans to engage. or is actively engaging, in oil and gas exploration
within an area shall in no way preclude Consultant, or Consultant's business
entities, from performing land services or consulting for other oil and gas
companies within the same area.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
"The Company" "Consultant"
South Uintah Gas Properties, Inc. ▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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EXHIBIT A
TERM SHEET
INITIAL WARRANTS AWARD
WARRANTS. Subject to the Vesting Requirements of the Consulting Agreement
and this Exhibit. Company will grant Consultant warrants to purchase up to
200,000 shares of Company common stock with 100,000 at $1 .00 per share and
100,000 at $3 per share in the form attached hereto as Exhibit B.
1. The warrants will be vested in Consultant and exercisable on the first
anniversary of the grant date.
2. Warrants will have a term of 3 years.
3. Company agrees to register the Company's shares subject to the warrant on
Form S-8 or such other registration form as may be available, and the
company shall provide a cashless exercise procedure.
4. Consultant agrees to execute a lock-up agreement if any financing for the
Company so requires.
SOUTH UINTAH GAS PROPERTIES, INC. WARRANT NUMBER: _____
_________, 2011 ("THE GRANT DATE")
EXHIBIT B
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT WERE
ISSUED IN A REGISTERED TRANSACTION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED,
THE "SECURITIES ACT"). THE SECURITIES EVIDENCED HEREBY MAY NOT BE TRANSFERRED
WITHOUT (1) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER
MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAW; OR (II) SUCH REGISTRATION.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
SOUTH UINTAH GAS PROPERTIES, INC.
THIS WARRANT TO PURCHASE SHARES OF COMMON STOCK ("WARRANT") CERTIFIES THAT, for
value received, ______________ (the "Holder"), is entitled to subscribe for and
purchase from SOUTH UINTAH GAS PROPERTIES, INC. (the "Company"), a corporation
organized and existing under the laws of the State of Colorado, at the Warrant
Exercise Price specified below during the exercise period specified below to and
including ________ thousand (___,000) fully paid and non-assessable shares of
Common Stock of the Company (the "Common Stock").
The exercise price of this Warrant (subject to adjustment as noted below)
shall be ____ dollars ($__.00) per share (The "Warrant Exercise Price").
This Warrant is subject to the following provisions, terms, and conditions:
1. EXERCISE. This Warrant or any portion thereof shall be exercisable at
any time from and after the date hereof, by the registered Holder by payment of
the Warrant Exercise Price per share in immediately available funds to the
Company at any time prior to 5:00 p.m., Colorado time, on August __, 2013 ("the
Expiration Date").
Holder may assign portions of the warrants hereunder by Letter of
Instruction to the Company prior to issue.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants
that:
(a) the Company has all requisite power and authority to execute, issue and
perform this Warrant and to issue the Common Stock;
(b) this Warrant has been duly authorized by all necessary corporate
action, has been duly executed and delivered, and is a legal and binding
obligation of the Company;
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(c) all shares which may be issued upon the exercise of the rights
represented by this Warrant according to the terms hereof or represented by the
Common Stock will, upon issuance, be duly authorized and issued, fully paid, and
nonassessable; and
(d) during the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized, and reserved
for the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
3. ADJUSTMENTS.
(a) In case the Company shall
(i) declare a dividend upon the Common Stock payable in Common Stock
(other than a dividend declared to effect a subdivision of the
outstanding shares of Common Stock, as described in subparagraph
(b) below) or any obligations or any shares of stock of the
Company which are convertible into or exchangeable for Common
Stock (such obligations or shares of stock being hereinafter
referred to as "Convertible Securities"), or in any rights or
options to purchase any Common Stock or Convertible Securities,
or
(ii) declare any other dividend or make any other distribution upon
the Common Stock,
then thereafter the holder of this Warrant upon the exercise hereof will be
entitled to receive the number of shares of Common Stock to which such holder
shall be entitled upon such exercise, and, in addition and without further
payment therefor, such number of shares of Common Stock, such that upon exercise
hereof, such holder would receive as a result of each dividend described in
clause (i) above and each dividend or distribution described in clause (ii)
above which such holder would have received by way of any such dividend or
distribution if, continuously since the record date for any such dividend or
distribution, such holder (x) had been the record holder of the number of shares
of Common Stock then received, and (y) had retained all dividends or
distributions in stock or securities (including Common Stock or Convertible
Securities, or in any rights or options to purchase any Common Stock or
Convertible Securities) payable in respect of such Common Stock or in respect of
any stock or securities paid as dividends or distributions and originating
directly or indirectly from such Common Stock.
(b) In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the number of shares subject to
this Warrant immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock of the
Company shall be combined into a smaller number of shares, the number of shares
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subject to this Warrant immediately prior to such combination shall be
proportionately reduced.
(c) If any capital reorganization or reclassification of the capital stock
of the Company, consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities, or assets with respect to or in exchange for
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger, or sale, lawful and adequate provision shall be made
whereby the holder hereof shall thereafter have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the shares of the Common Stock of the Company immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
such Common Stock equal to the number of shares of such stock immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby had such reorganization, reclassification, consolidation,
merger, or sale not taken place, and in any such case appropriate provision
shall be made with respect to the rights and interests of the holder of this
Warrant to the end that the provisions hereof (including without limitation
provisions for adjustments of the Warrant Exercise Price and of the number of
shares purchasable upon the exercise of this Warrant) shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities,
or assets thereafter deliverable upon the exercise hereof.
(d) Excluding a potential merger with a public company candidate currently
in contemplation (the "Merger"), to which warrant holder consents by its
subscription hereto and in which, if completed, the public company will assume
and accede to all of the liabilities and obligations of the company hereunder,
and under which the public company will issue an equal number of notes with
identical terms and conditions as those in the Company, and common shares,
preferred shares of identical classes and warrants in exchange for the notes,
shares and warrants of South Uintah Gas Properties, Inc., and excluding those
events set forth in the two paragraphs following this paragraph, if (i) all or
any portion of the warrant shall be exercised subsequent to any share dividend,
split-up, recapitalization, merger, consolidation, or liquidation occurring
after the date hereof, as a result of which shares of any class shall be issued
in respect to outstanding Common Stock or Common Stock shall be changed into the
same or a different number of shares of the same or another class or classes (a
"Reorg Event"), or (ii) if Common Stock or securities exercisable for or
convertible into Common Stock are issued at a price less than $2.00 (as adjusted
for stock splits, stock dividends and the like)(a "Dilutive Event") the person
or persons so converting the Convertible Promissory Note shall receive, for the
aggregate price paid upon such conversion, the aggregate number and class of
shares which such person would have received, if Common Stock (as authorized at
the date hereof) had been purchased at the date hereof for the same aggregate
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price as those shares offered and sold at a price (equal to the price in the
Dilutive Event) and all such share dividends, split-ups, recapitalizations,
mergers, consolidations, combinations, or exchanges of shares, separations,
reorganizations, or liquidations in all Reorg Events; provided, however, that no
fractional shares shall be issued upon any such exercise, and the aggregate
price paid shall be appropriately reduced on account of any fractional share not
issued.
The Company has pending subscriptions for or convertible promissory notes in the
amount of $500,000 convertible to common stock at $0.25 and appurtenant options
to purchase shares for 2 years at $0.50 per share, and such subscriptions shall
not trigger any adjustment under this section 4. The conversion rights under the
Secured Convertible Promissory Note for $500,000 @ $.20 and appartent shall not
be deemed to trigger this adjustment clause.
The sale of private placement shares of up to 5,000,000 common shares at $1.00
shall not be deemed to trigger the anti-dilution clause herein.
Further, the anti-dilution clause herein shall not be triggered upon the
intended merger/business combinations with a public shell or upon the
acquisition of the Lexico and Uinta/Natural Buttes assets.
(e) Excluding those events set forth in (d) above, if the Company issues or
grants any rights or options to subscribe for or to purchase shares of Common
Stock at a price per share of Common Stock less than either (I) the Warrant
Exercise Price, and (II) after 6 months from date hereof, the then-current
Market Price (as defined below) per share of Common Stock, then the total number
of shares of Common Stock issuable upon exercise of this Warrant shall be
increased by an amount determined by multiplying (I) the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment by (II) an amount determined by dividing (i) the number of shares of
Common Stock underlying the rights or options giving rise to such adjustment by
(ii) the total number of shares of Common Stock then outstanding.
(f) Upon each adjustment in the number of shares the Holder is entitled to
purchase upon exercise of this Warrant, the Warrant Exercise Price hereunder
shall be appropriately adjusted such that the Holder shall hold Warrants
entitling Holder to purchase the number of shares as so adjusted for an
aggregate Warrant Exercise Price equal to the aggregate Warrant Exercise Price
in effect immediately prior to such adjustment.
(g) In case any time:
(i) any of the adjustments required by 4(a) through (e) occur;
(ii) the Company shall make any distribution to the holders of its
capital stock;
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(iii)the Company shall offer for subscription pro rata to the holders
of its capital stock any additional shares of stock of any class
or other rights; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written notice,
by first-class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, of
the date on which (x) the books of the Company shall close or a record shall be
taken for such dividend, subdivision, distribution, or subscription rights, or
(y) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or conversion or redemption shall take
place, as the case may be. Such notice shall also specify the date as of which
the holders of capital stock of record shall participate in such dividend,
distribution, or subscription rights, or shall be entitled to exchange their
capital stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, or conversion or redemption, as the case may be. Such
written notice shall be given at least ten (10) days prior to the action in
question and not less than ten (10) days prior to the record date or the date on
which the Company's transfer books are closed in respect thereto.
(h) No fractional shares of Common Stock shall be issued upon the exercise
of this Warrant, but, instead of any fraction of a share which would otherwise
be issuable, the Company shall pay a cash adjustment (which may be effected as a
reduction of the amount to be paid by the holder hereof upon such exercise) in
respect of such fraction in an amount equal to the same fraction of the Market
Price per share of Common Stock as of the close of business on the date of the
notice required by Section 4(g). "Market Price" shall mean, if the Common Stock
is traded on a securities exchange or on the NASDAQ System, the average of the
closing prices of the Common Stock on such exchange or the NASDAQ System on the
twenty (20) trading days ending on the trading day prior to the date of
determination, or, if the Common Stock is otherwise traded in the
over-the-counter market, the average of the closing bid prices on the twenty
(20) trading days ending on the trading day prior to the date of determination.
If at any time the Common Stock is not traded on an exchange or the NASDAQ
System, or otherwise traded in the over-the-counter market, the Market Price
shall be deemed to be the higher of
(i) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board
of Directors of the Company as of the last day of any month
ending within sixty (60) days preceding the date as of which the
determination is to be made, or
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(ii) the fair value thereof determined in good faith by the Board of
Directors of the Company as of a date which is within fifteen
(15) days of the date as of which the determination is to be
made.
4. NO VOTING RIGHTS. This Warrant shall not entitle the Holder hereof to
any voting rights or other rights as a stockholder of the Company.
5. RESTRICTIONS ON TRANSFER. This Warrant and the shares of Common Stock
issued or issuable through the exercise of this Warrant are "restricted
securities" under the Securities Act of 1933 (the "Securities Act") and the
rules and regulations promulgated thereunder and may not be sold, transferred,
pledged, or hypothecated without such transaction being registered under the
Securities Act and applicable state laws or the availability of an exemption
therefrom ; a legend to this effect shall appear on this Warrant and, unless the
issuance is a registered transaction, on all shares of Common Stock issued upon
the exercise hereof. The holder of this Warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant or
transferring any Common Stock issuable or issued upon the exercise hereof of
such holder's intention to do so, describing briefly the manner of any proposed
transfer of this Warrant or such holder's intention as to the disposition to be
made of shares of Common Stock issuable or issued upon the exercise hereof. Such
holder shall also provide the Company with an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer of this
Warrant or disposition of shares may be effected without registration or
qualification (under any federal or state law) of this Warrant or the shares of
Common Stock issuable or issued upon the exercise hereof. Upon receipt of such
written notice and opinion by the Company, such holder shall be entitled to
transfer this Warrant, or to exercise this Warrant in accordance with its terms
and dispose of the shares received upon such exercise or to dispose of shares of
Common Stock received upon the previous exercise of this Warrant, all in
accordance with the terms of the notice delivered by such holder to the Company,
provided that an appropriate legend respecting the aforesaid restrictions on
transfer and disposition may be endorsed on this Warrant or the certificates for
such shares. Transfers to family of Holder as "restricted" shall be allowed by
Company, as a matter of course.
6. TRANSFER PROCEDURES. Subject to the provisions of Section 5, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that the bearer of this Warrant, when endorsed, may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until such transfer on
such books, the Company may treat the registered holder hereof as the owner for
all purposes.
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7. REGISTRATION RIGHTS.
(a) Demand Registration Rights. During the two (2) year period commencing
the Date of Issuance, upon the written request of the Holders of those
securities representing at least a majority of the sum of the Shares issuable
upon the exercise of this Warrant, the Company agrees to prepare and file with
the Commission, no more than once, a post-effective Amendment, or a registration
statement under the Act, registering or qualifying the securities underlying
this Warrant. The Company agrees to use its best efforts to cause the above
filing to become effective.
(b) If at any time the Company proposes to register the sale of shares of
Common Stock (whether for itself or any of its security holders) under the
Securities Act and the registration form to be used may be used for the
registration of shares underlying this Warrant (a "Piggyback Registration"), the
Company shall give prompt written notice to the Holder of its intention to
effect such a registration and, subject to Section 7(b) below, shall include in
such registration all shares of Common Stock underlying this Warrant with
respect to which the Company has received Holder's written request for inclusion
in such registration, provided that such request must be received by Company
within 20 days after the date of the Company's notice to Holder. The
Registration Expenses in all Piggyback Registrations shall be paid by the
Company.
(c) If a Piggyback Registration is an underwritten primary registration on
behalf of the Company or a successor, and the managing underwriters advise the
Company in writing that in their opinion the number of shares of Common Stock
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall exclude from such registrations the excess amount of
shares of Common Stock, and shall include in such registration (i) first, the
securities the Company proposes to sell; (ii) second, shares of Common Stock
requested to be included in such registration by the holders of all securities
of the Company having registration rights, prorata among the owners of such
securities on the basis of the number of shares of Common Stock or equivalent
shares of Common Stock owned by each such owner, and (iii) third, other
securities requested to be included in such registration, in the Company's
discretion.
(d) Whenever the Holder has requested that any shares of Common Stock
underlying this Warrant be registered pursuant to this Section 7, the Company
shall use its best efforts to effect the registration and the sale of such
shares in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:
(i) notify the Holder of the effectiveness of each registration
statement filed hereunder and prepare and file with the
Securities and Exchange 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 for a period of not less than
180 days and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
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registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth
in such registration statement;
(ii) furnish the Holder such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each
preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of
the shares of Common Stock underlying this Warrant;
(v) use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and in the
event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any equity securities included in
such registration statement for sale in any jurisdiction, the
Company shall use its best efforts promptly to obtain the
withdrawal of such order.
(e) In connection with any registration statement in which Holder is
participating, each Holder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers and
each person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by Holder.
(e) Holder may not participate in any registration under this Section 7
which is underwritten unless Holder (i) agrees to sell Holder's shares of Common
Stock on the basis provided in any underwriting arrangements approved by the
Company and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
8. MISCELLANEOUS.
(a) NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, by facsimile transmission or electronic mail,
or otherwise delivered by hand or by messenger, addressed
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(i) if to a holder of this Warrant, at such holder's address set
forth on the books of the Company, or at such other address as
such holder shall have furnished to the Company in writing; or
(ii) if to the Company, one copy should be sent to the Company's
current address at ______________________, or at such other
address as the Company shall have designated by notice.
Each such notice or other communication shall for all purposes of this Agreement
be treated as effective or having been given when delivered if delivered
personally; if sent by first class, postage prepaid mail, at the earlier of its
receipt or seventy-two (72) hours after the same has been deposited in a
regularly maintained receptacle for the deposit of the United States mail,
addressed and mailed as aforesaid; or, if sent by facsimile transmission or
electronic mail as of the date delivery is confirmed by the sender's equipment.
(b) SEVERABILITY. If any provision of this Agreement shall be held to be
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid, or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid, or unenforceable provision were not contained herein.
(c) GOVERNING LAW. This Warrant will be governed in accordance with federal
law to the extent applicable and by the internal law, not the law of conflicts,
of the State of Colorado.
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IN WITNESS WHEREOF, South Uintah Gas Properties, Inc. has caused this
Warrant to be signed by its duly authorized officer and dated as of
_______________, 2011.
SOUTH UINTAH GAS PROPERTIES, INC.
By: ___________________________________
Chief Financial Officer
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if
such Holder Desires to Exercise this Warrant in
Whole or in Part:
To: South Uintah Gas Properties, Inc. (the "Company")
The undersigned ___________________________ (Social Security number
_____________or taxpayer identification number of Subscriber:
_________________________) hereby irrevocably elects to exercise the right of
purchase represented by this Warrant for, and to purchase thereunder,
____________ shares of the Common Stock (the "Common Stock") provided for
therein and tenders payment herewith to the order of the Company in the amount
of $______________, such payment being made as provided on the face of this
Warrant.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Deliver to: ____________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated: ______________________
Signature
________________________________________
Note: The signature on this Subscription
Form must correspond with the name as
written upon the face of this Warrant in
every particular, without alteration or
enlargement or any change whatever.
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