Exhibit 10.3
FIRST AMENDMENT TO
SECURITIES PURCHASE AGREEMENT
This First Amendment to Securities Purchase Agreement (this
"AMENDMENT") is made and entered into as of the 28th day of January, 2005 by and
among Amen Properties, Inc. (the "COMPANY") and the purchasers named on the
signature pages attached hereto (the "PURCHASERS"), with reference to the
following facts:
A. The Company and the Purchasers entered into that certain Securities
Purchase Agreement dated as of January 18, 2005 (the "ORIGINAL PURCHASE
AGREEMENT"). Capitalized terms used but not defined herein shall have the
meanings assigned thereto in the Original Purchase Agreement.
B. Pursuant to the Original Purchase Agreement, the Closing Date is set
at January 28, 2005 or such other time as is mutually agreed upon by the
parties. The parties acknowledge that there are delays in preparation for
closing, and have determined and agreed that the Closing Date should be extended
as provided herein.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual promises,
covenants and agreements set forth in the Original Purchase Agreement and this
Amendment, the parties hereto agree as follows:
1. AMENDMENT TO ORIGINAL PURCHASE AGREEMENT. The Original Purchase
Agreement is hereby amended to change the Closing Date from January 28, 2005 to
the following: "February 28, 2005 or such earlier time as the Company has
received all documents necessary for Closing and all conditions to Closing have
been satisfied or at such other time as the parties mutually agree."
2. RATIFICATION OF ORIGINAL PURCHASE AGREEMENT, AS AMENDED. Except as
expressly modified herein, the Original Purchase Agreement shall remain
unchanged and, as amended hereby, in full force and effect. The parties hereto
hereby acknowledge, ratify and confirm the Original Purchase Agreement, as
amended hereby, and agree to perform their obligations thereunder.
3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts so long as each party hereto executes at least one such
counterpart, and all such counterparts shall be taken together as one document.
Faxed signatures shall be considered and deemed original signatures for all
purposes.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date first above written.
THE COMPANY:
AMEN PROPERTIES, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇, President
THE PURCHASERS:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
MORIAH INVESTMENT PARTNERS
By:
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Name:
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Title:
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McGRAW BROTHER INVESTMENTS
By:
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Name:
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Title:
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/s/ Frosty ▇▇▇▇▇▇▇
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Frosty ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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LCM PARTNERSHIP, LP
By: ,
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its general partner
By:
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Name:
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Title:
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JMA CHEDDARS, LTD.
By: ,
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its general partner
By:
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Name:
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Title:
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/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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SECURITIES PURCHASE AGREEMENT
DATED AS OF JANUARY 18, 2005
BY AND AMONG
AMEN PROPERTIES, INC.
AND
THE PURCHASERS NAMED
ON THE SIGNATURE PAGES HERETO
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS....................................................1
SECTION 1.1 - DEFINITIONS.............................................1
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SECTION 1.2 - OTHER DEFINITIONS.......................................3
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SECTION 1.3 - CONSTRUCTION............................................3
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ARTICLE II ISSUANCE AND PURCHASE OF STOCK................................3
SECTION 2.1 - ISSUANCE AND PURCHASE OF STOCK..........................3
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SECTION 2.2 - THE CLOSING.............................................4
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................4
SECTION 3.1 - ORGANIZATION............................................4
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SECTION 3.2 - DUE AUTHORIZATION.......................................4
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SECTION 3.3 - NON-CONTRAVENTION.......................................5
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SECTION 3.4 - CAPITALIZATION..........................................5
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SECTION 3.5 - LEGAL PROCEEDINGS.......................................6
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SECTION 3.6 - NO VIOLATIONS...........................................6
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SECTION 3.7 - PERMITS.................................................6
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SECTION 3.8 - FINANCIAL STATEMENTS....................................6
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SECTION 3.9 - NO MATERIAL ADVERSE CHANGE..............................6
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SECTION 3.10 - DISCLOSURE.............................................6
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SECTION 3.11 - COMPLIANCE.............................................7
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SECTION 3.12 - REPORTING STATUS.......................................7
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SECTION 3.13 - PROPERTIES AND CONTRACTS...............................7
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SECTION 3.14 - ENVIRONMENTAL MATTERS..................................7
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SECTION 3.15 - INSURANCE..............................................8
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............8
SECTION 4.1 - AUTHORITY...............................................8
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SECTION 4.2 - CONSENTS AND APPROVAL; NO VIOLATION.....................8
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SECTION 4.3 - SECURITIES LAWS.........................................8
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ARTICLE V ADDITIONAL AGREEMENTS.........................................11
SECTION 5.1 - USE OF PROCEEDS........................................11
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SECTION 5.2 - ACCESS TO INFORMATION..................................11
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SECTION 5.3 - RESERVATION OF COMMON STOCK............................12
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SECTION 5.4 - LISTING OF COMMON STOCK................................12
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SECTION 5.5 - FUTURE SALES OF COMMON STOCK...........................12
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SECTION 5.6 - BEST EFFORTS...........................................12
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SECTION 5.7 - PUBLIC ANNOUNCEMENTS...................................12
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SECTION 5.8 - APPROVAL OF PREFERRED..................................13
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SECTION 5.9 - RESTRICTIVE LEGENDS....................................13
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ARTICLE VI PURCHASERS' CONDITIONS.......................................14
SECTION 6.1 - REPRESENTATIONS AND COVENANTS..........................14
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SECTION 6.2 - CERTIFICATE OF DESIGNATION.............................14
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SECTION 6.3 - REQUIRED CONSENTS AND APPROVALS........................14
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ARTICLE VII COMPANY'S CONDITIONS........................................14
SECTION 7.1 - REPRESENTATIONS AND COVENANTS..........................14
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SECTION 7.2 - REQUIRED CONSENTS AND APPROVALS........................14
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SECTION 7.3 - ADDITIONAL DOCUMENTS...................................15
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ARTICLE VIII TERMINATION AND SURVIVAL...................................15
SECTION 8.1 - TERMINATION............................................15
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SECTION 8.2 - SURVIVAL; FAILURE TO CLOSE.............................15
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ARTICLE IX MISCELLANEOUS................................................15
SECTION 9.1 - ENTIRE AGREEMENT.......................................15
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SECTION 9.2 - NOTICES................................................15
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SECTION 9.3 - GOVERNING LAW..........................................16
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SECTION 9.4 - SEVERABILITY...........................................16
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SECTION 9.5 - EXPENSES...............................................16
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SECTION 9.6 - DESCRIPTIVE HEADINGS...................................16
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SECTION 9.7 - COUNTERPARTS...........................................16
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SECTION 9.8 - ASSIGNMENT.............................................16
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SECTION 9.9 - AMENDMENTS; WAIVERS....................................17
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SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (the "AGREEMENT") is made and
entered into as of the 18th day of January, 2005, by and among Amen Properties,
Inc., a Delaware corporation (the "COMPANY"), and the purchasers whose names
appear on the Signature Pages hereto (the "PURCHASERS", and each a "PURCHASER").
ARTICLE I
DEFINITIONS
SECTION 1.1 - DEFINITIONS. As used in this Agreement, the following
terms have the meanings indicated:
"AGREEMENT" has the meaning ascribed to such term in the first
paragraph hereof.
"CERTIFICATE OF DESIGNATION" means the Certificate of Designations of
Series C Convertible Preferred Stock of Amen Properties, Inc. in substantially
the form attached hereto as EXHIBIT "A".
"CLOSING" has the meaning ascribed to such term in Section 2.2.
"CLOSING DATE" has the meaning ascribed to such term in Section 2.2.
"COMMON STOCK" means the common stock, $0.01 par value per share, of
the Company.
"COMPANY" has the meaning ascribed to such term in the first paragraph
hereof.
"CONTRACTS" means any indenture, mortgage, deed of trust, loan
agreement, note, lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or to which their respective material properties or
assets are subject.
"CONVERSION SHARES" means the shares of Common Stock issued or issuable
upon conversion of the Series C Preferred Stock pursuant to the terms thereof.
"ENVIRONMENTAL LAWS" means all (i) all federal statutes regulating or
prescribing restrictions regarding the use of property or other activities
affecting the environment (air, water, land, animal and plant life), including
but not limited to the following: the Clean Air Act, Clean Water Act,
Comprehensive Environmental Response, Compensation and Liability Act, Emergency
Planning and Community Right-to-Know Act, Hazardous Materials Transportation
Act, National Environmental Policy Act, Occupational Safety and Health Act, Oil
Pollution Act of 1990, Resource Conservation and Recovery Act, Safe Drinking
Water Act, and Toxic Substances Control Act; (ii) all regulations promulgated
under such federal statutes, (iii) all local and state laws, rules and
regulations regulating the use of or relating to or affecting the environment,
and (iv) all common law rights, duties and obligations relating to the use of or
matters affecting the environment.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GOVERNMENTAL AUTHORITY" means the United States, any foreign country,
state, county, city or other political subdivision, agency or instrumentality
thereof.
"GUARANTY" or "GUARANTIES" means the guaranty, letter of credit or
similar arrangement by each Purchaser in favor of the lender to the Company
and/or one or more of its Subsidiaries, pursuant to which such Purchaser will
guarantee or secure a portion of the indebtedness of the Company and/or one or
more of its Subsidiaries to such lender for a period of three (3) years in a
form acceptable to the lender. The total amount covered by the Guaranties of all
of the Purchasers will be $5,000,000. The portion of such indebtedness to be
guaranteed by each Purchaser shall be set forth on such Purchaser's Signature
Page.
"MATERIAL ADVERSE EFFECT" means any event or condition which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the business, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
"PERMITS" means any licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and all declarations and filings with,
all federal, state, local and other Governmental Authorities, all
self-regulatory organizations and all courts and other tribunals presently
required or necessary to own or lease, as the case may be, and to operate the
properties of the Company and its Subsidiaries and to carry on the business of
the Company and the Subsidiaries as now or proposed to be conducted as set forth
in the SEC Filings.
"PURCHASED SECURITIES" has the meaning ascribed to such term in Section
2.1.
"PURCHASER" has the meanings ascribed to such terms in the first
paragraph hereof.
"SEC" means the Securities and Exchange Commission.
"SEC FILINGS" means the Company's reports and other filings made with
the SEC for a period of two (2) years prior to the date hereof and all exhibits
thereto.
"SECURITIES" means the Series C Preferred Stock and the Warrants being
purchased pursuant to this Agreement and the Conversion Shares and Warrant
Shares issuable in connection therewith.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES A AND B PREFERRED STOCK" means the Series A Preferred Stock and
Series B Convertible Preferred Stock of the Company.
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"SERIES C PREFERRED STOCK" means the Series C Convertible Preferred
Stock of the Company, par value $0.001 per share, having the rights and
preferences substantially as set forth in EXHIBIT "A" attached hereto.
"SIGNATURE PAGE" means the counterpart signature page of this Agreement
signed by each Purchaser.
"SUBSIDIARY" means, when used with reference to an entity, any
corporation, a majority of the outstanding voting securities of which are owned
directly or indirectly by such entity. Such term shall also refer to any other
partnership, limited partnership, limited liability company, joint venture,
trust, or other business entity in which such entity has a material interest.
With respect to the Company, as of the date of this Agreement, the Company's
Subsidiaries are set forth on SCHEDULE 3.1 attached hereto.
"TRANSACTIONS" means the issuance and sale of the Purchased Securities
to the Purchasers and the other transactions and obligations contemplated by
this Agreement.
"WARRANT" or "WARRANTS" means the Company's Common Stock Purchase
Warrants, having terms substantially as set forth in EXHIBIT "B" attached
hereto.
"WARRANT CERTIFICATE" means a certificate evidencing a Warrant in
substantially the form attached hereto as EXHIBIT "B".
"WARRANT SHARES" means the shares of Common Stock purchased or
purchaseable upon the exercise of the Warrants pursuant to the terms thereof.
SECTION 1.2 - OTHER DEFINITIONS. Other terms defined in this Agreement
have the meanings so given them.
SECTION 1.3 - CONSTRUCTION. Whenever the context requires, the gender
of all words used in this Agreement includes the masculine, feminine, and
neuter. Except as specified otherwise, all references to Articles and Sections
refer to articles and sections of this Agreement, and all references to exhibits
and schedules are to Exhibits and Schedules attached to this Agreement, each of
which is made a part of this Agreement for all purposes. The word "including"
shall mean "including, without limitation" unless the context otherwise
requires.
ARTICLE II
ISSUANCE AND PURCHASE OF STOCK
SECTION 2.1 - ISSUANCE AND PURCHASE OF STOCK. Subject to the terms and
conditions of this Agreement, (i) the Company agrees to issue and sell to the
Purchasers a total of 125,000 shares of Series C Preferred Stock (convertible
into a total of 500,000 Conversion Shares) and Warrants for the purchase of a
total of 250,000 Warrant Shares (the "PURCHASED SECURITIES") for an aggregate
purchase price consisting of $2,000,000 in cash and the Guaranties, and (ii)
each Purchaser agrees to subscribe for and purchase from the Company the number
of shares of Series C Preferred Stock and a Warrant for the number of Warrant
Shares set forth on such Purchaser's Signature Page for a purchase price
consisting of the amount of cash and the amount of such Purchaser's Guaranty
also set forth on such Purchaser's Signature Page.
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SECTION 2.2 - THE CLOSING. Subject to the terms and conditions of this
Agreement, the issuance and purchase of the Purchased Securities shall take
place at a closing (the "CLOSING") to be held at the offices of the Company, ▇▇▇
▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, at 10:00 a.m. (Central time) on January 28,
2005, or such other place or time as may be agreed by the parties. The date on
which the Closing occurs is referred to herein as the "CLOSING DATE." At the
Closing, the Company will deliver to each Purchaser certificates representing
the Purchased Securities set forth on such Purchaser's Signature Page registered
in the name of such Purchaser, or in the name of such nominee or designee as the
Purchaser may request in writing at least five (5) days prior to Closing, upon
receipt of (i) the cash purchase price set forth on such Purchaser's Signature
Page therefor by wire transfer of immediately available funds to an account
designated by the Company, or by such other method as is mutually agreed to by
such Purchaser and the Company, and (ii) such Purchaser's duly executed Guaranty
in the amount set forth on such Purchaser's Signature Page. Such certificates
shall bear appropriate restrictive legends deemed necessary by the Company to
comply with applicable securities and corporate laws, including without
limitation those set forth in Section 5.9. Effective as of the Closing Date, the
Company shall have filed the Certificate of Designation with the Secretary of
State of the State of Delaware.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as of the date
hereof as follows:
SECTION 3.1 - ORGANIZATION. Each of the Company and its Subsidiaries
(i) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (ii) has full power and authority to own,
operate and occupy its properties and to conduct its business as presently
conducted, and (iii) is registered or qualified to do business and in good
standing in each jurisdiction in which it owns or leases property or tranasacts
business, except where the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect, and no proceeding has been
instituted in any such jurisdiction revoking, limiting or curtailing, or seeking
to revoke, limit or curtail, such power and authority or qualification. SCHEDULE
3.1 contains a list of the Company's Subsidiaries, including the jurisdiction of
organization of, and direct and indirect ownership of the Company in, each
Subsidiary (and whether such ownership is subject to a lien, security interest
or other encumberance).
SECTION 3.2 - DUE AUTHORIZATION. The Company has all requisite power
and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement has been duly authorized (except for the approval
of the designation, issuance and sale of the Series C Preferred Stock by the
holders of the Series A and B Preferred Stock) and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company enforceable against the Company in accordance with its terms, except
as rights to indemnity and contribution may be limited by state or federal
securities laws or the public policy underlying such laws, and except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Approval of this Agreement and the Transactions by the Board of Directors of the
Company constitutes approval by the Board of Directors of the Company of the
Purchasers becoming Interested Stockholders of the Company prior to the time the
Purchasers became Interested Stockholders within the meaning of Section 203 of
the Delaware General Corporation Law.
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SECTION 3.3 - NON-CONTRAVENTION. The execution and delivery of this
Agreement, the issuance and sale of the Securities and the consummation of the
Transactions will not (assuming the approval of the designation, issuance and
sale of the Series C Preferred Stock by the holders of the Series A and B
Preferred Stock) (a) conflict with or constitute a violation of, or default
(with the passage of time or otherwise) under (i) any material Contracts, (ii)
the charter, by-laws or other organizational documents of the Company or any of
its Subsidiaries, or (iii) to its knowledge, any law, administrative regulation,
ordinance or order of any court or governmental agency, arbitration panel or
authority binding upon the Company or any of its Subsidiaries or their
respective properties, except as to (i), (ii) and (iii) above those conflicts,
violations or defaults that would not reasonably be expected to have a Material
Adverse Effect, or (b) result in the creation or imposition of any material
lien, encumbrance, claim, security interest or restriction whatsoever upon any
of the material properties or assets of the Company or any of its Subsidiaries
or an acceleration of indebtedness pursuant to any material obligation,
agreement or condition contained in any material bond, debenture, note or any
other evidence of material indebtedness or any material indenture, mortgage,
deed of trust or any other material agreement or instrument to which the Company
or any of its Subsidiaries is a party or by which any of them is bound or to
which any of the material property or assets of the Company or any of its
Subsidiaries is subject. No consent, approval, authorization or other order of,
or registration, qualification or filing with, any regulatory body,
administrative agency, or other governmental body in the United States is
required for the execution and delivery of this Agreement and the valid issuance
and sale of the Purchased Securities, other than such as have been made or
obtained, except for any securities filings required to be made under federal or
state securities laws, and except where any failure to make or obtain any of the
foregoing would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.4 - CAPITALIZATION. The capitalization of the Company as of
September 30, 2004 is as set forth in SCHEDULE 3.4 attached hereto and in the
SEC Filings. The Company has not issued any capital stock since that date. The
Purchased Securities have been duly authorized, and when issued and paid for in
accordance with the terms of this Agreement, will be duly and validly issued,
fully paid and non-assessable. The outstanding shares of capital stock of the
Company have been duly and validly issued and are fully paid and non-assessable,
have been issued in compliance with all federal and state securities laws, and
were not issued in violation of any preemptive rights or similar rights to
subscribe for or purchase securities. Except as set forth in SCHEDULE 3.4 or
disclosed in the SEC Filings, there are no outstanding rights (including without
limitation, preemptive rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital stock or
other equity interest in the Company, or any contracts, commitments, agreements,
understandings or arrangements of any kind to which the Company is a party
relating thereto. Without limiting the foregoing and other than certain
registration rights previously granted by the Company to certain Company
stockholders, no preemptive rights, co-sale rights, rights of first refusal or
other similar rights exist with respect to the issuance and sale of the
Purchased Securities. The Company owns the equity interest in each of its
Subsidiaries specified in SCHEDULE 3.1, free and clear of any pledge, lien,
security interest, encumbrance or claim, other than as described in SCHEDULE
3.1. Except for certain agreements relating to the Series A and B Preferred
Stock and except as disclosed in the SEC Filings, there are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Common Stock to which the Company is a party.
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SECTION 3.5 - LEGAL PROCEEDINGS. There is no material legal or
governmental proceedings pending to which the Company or any of its Subsidiaries
is a party or of which the business or property of the Company or any of its
Subsidiaries is subject.
SECTION 3.6 - NO VIOLATIONS. Neither the Company nor any of its
Subsidiaries is in violation of its charter, bylaws or other organizational
document, or to its knowledge, in violation of any law, administrative
regulation, ordinance or order of any court or Governmental Authority,
arbitration panel or authority applicable to the Company or any of its
Subsidiaries, which violation, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, or is in default (and there
exists no condition which, with the passage of time or otherwise, would
constitute a default) in the performance of any material Contracts, which would
be reasonably likely to have a Material Adverse Effect.
SECTION 3.7 - PERMITS. Each of the Company and its Subsidiaries has all
necessary Permits that are currently necessary for the operation of the business
of the Company and its Subsidiaries as currently conducted and as described in
the SEC Filings, except where the failure to currently possess such Permits
would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.8 - FINANCIAL STATEMENTS. The financial statements of the
Company and the related notes contained in the SEC Filings present fairly, in
accordance with generally accepted accounting principles, the consolidated
financial position of the Company and its Subsidiaries as of the dates
indicated, except that such financial statements do not reflect the sale by a
Subsidiary of the Company in December 2004 of real estate in Lubbock, Texas as
disclosed in a recent SEC Filing. Such financial statements (including the
related notes) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
therein specified.
SECTION 3.9 - NO MATERIAL ADVERSE CHANGE. Except as disclosed in the
SEC Filings, since September 30, 2004, there has not been (i) any change in the
business, financial condition or operation of the Company which would reasonably
be expected to have a Material Adverse Effect, (ii) any obligation, direct or
contingent, that is material to the Company and its Subsidiaries considered as
one enterprise, incurred by the Company or its Subsidiaries, except obligations
incurred in the ordinary course of business, (iii) any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company, or (iv)
any loss or damage (whether or not insured) to the physical property of the
Company or any of its Subsidiaries which would reasonably be expected to have a
Material Adverse Effect.
SECTION 3.10 - DISCLOSURE. The information contained in the SEC Filings
as of the date of such information did not contain 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, in light of the circumstances under
which they were made, not misleading.
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SECTION 3.11 - COMPLIANCE. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on the Nasdaq SmallCap Market of
the Nasdaq Stock Market (the "NASDAQ STOCK MARKET"), and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the Nasdaq Stock Market, nor has the Company received any
notification within the 12 months preceding the date of this Agreement that the
SEC or the National Association of Securities Dealers, Inc. ("NASD") is
contemplating terminating such registration or listing.
SECTION 3.12 - REPORTING STATUS. The Company has filed in a timely
manner all documents that the Company was required to file under the Exchange
Act during the 12 months preceding the date of this Agreement. Copies of such
documents have been made available to each of the Purchasers.
SECTION 3.13 - PROPERTIES AND CONTRACTS. Each of the Company and its
Subsidiaries has good and defensible title to all property included in the
financial information provided to Purchasers (except for the real estate in
Lubbock, Texas sold by a Subsidiary of the Company in December 2004 and
disclosed in a recent SEC Filing), free and clear of all liens, charges,
encumbrances or restrictions, except (i) liens granted to a lender by the
Company or a Subsidiary of the Company, (ii) statutory liens in favor of taxing
authorities or others, and (iii) to the extent the failure to have such title or
the existence of such liens, charges, encumbrances or restrictions would not
reasonably be expected to have a Material Adverse Effect. All material Contracts
are valid, binding and enforceable against the Company or its Subsidiaries, as
applicable, and, to the knowledge of the Company, are valid, binding and
enforceable against the other party or parties thereto and are in full force and
effect with only such exceptions as would not reasonably be expected to have a
Material Adverse Effect. The Company and its Subsidiaries, and to their best
knowledge, the other parties thereto, are not in default under any of the
material Contracts, which default would reasonably be expected to have a
Material Adverse Effect.
SECTION 3.14 - ENVIRONMENTAL MATTERS. Except as would not reasonably be
expected to have a Material Adverse Effect and except as disclosed in the SEC
Filings, (i) each of the Company and its Subsidiaries is in compliance with and
not subject to liability under applicable Environmental Laws, (ii) each of the
Company and its Subsidiaries has made all filings and provided all notices
required under any applicable Environmental Law, and has in full force and
effect and is in compliance with all Permits required under any applicable
Environmental Laws, (iii) there is no civil, criminal or administrative action,
suit, demand, hearing, notice of violation, proceeding, notice or demand letter
or request for information pending or, to the knowledge of the Company,
threatened against the Company or its Subsidiaries under any Environmental Law,
(iv) no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company or its Subsidiaries, and (v)
neither the Company nor its Subsidiaries has received notice that it has been
identified as a potentially responsible party under any Environmental Law.
SECTION 3.15 - INSURANCE. Each of the Company and its Subsidiaries
carries insurance in such amounts and covering such risks in such amounts as is
customary for persons of a similar size in the businesses in which they are
engaged.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Each Purchaser hereby represents and warrants to the Company as
follows:
SECTION 4.1 - AUTHORITY. The Purchaser has all requisite capacity, and
if an entity requisite corporate, partnership or other organizational power and
authority, to execute and deliver this Agreement and to consummate the
Transactions to be performed by the Purchaser. If the Purchaser is an entity,
the execution and delivery of this Agreement and the consummation of the
Transactions to be performed by the Purchaser have been duly and validly
authorized by all necessary action on the part of the board of directors,
managers, general partner or similar body of the Purchaser, as the case may be,
and no other corporate or similar proceedings are necessary to authorize the
execution and delivery of this Agreement by the Purchaser or to consummate the
Transactions to be performed by the Purchaser. This Agreement has been duly and
validly executed and delivered by the Purchaser and, assuming this Agreement
constitutes valid and binding obligations of the Company, this Agreement
constitutes a valid and binding agreement of the Purchaser, enforceable against
him in accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
SECTION 4.2 - CONSENTS AND APPROVAL; NO VIOLATION. Neither the
execution and delivery of this Agreement by the Purchaser, the consummation of
the Transactions to be performed by the Purchaser, nor compliance by the
Purchaser, with any of the provisions hereof will (i) if the Purchaser is an
entity, conflict with or result in any breach of any provisions of the
Purchaser's organizational documents, (ii) require any material consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except for consents, approvals, authorizations, permits,
filings or notifications which have been obtained or made, (iii) result in a
default (with or without due notice or lapse of time or both) or give rise to
any right of termination, cancellation or acceleration under any of the terms,
conditions or provisions of any material indentures, loan or credit agreements,
receivables sale or financing agreements, lease financing agreements, capital
leases, mortgages, security agreements, bonds and notes and guaranties of any
such obligations to which the Purchaser is a party or by which the Purchaser may
be bound, except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained, or
(iv) violate any material order, writ, injunction, decree, statute, rule or
regulation applicable to the Purchaser.
SECTION 4.3 - SECURITIES LAWS. The Purchaser (on his behalf and on
behalf of any nominee or designee of the Purchaser who receives any of the
Securities) hereby represents and warrants to and covenants with the Company
that:
8
(a) Purchaser has adequate means of providing for his current
needs and possible contingencies, and has no need now, and anticipates
no need in the foreseeable future, to sell the Securities. Purchaser is
able to bear the economic risks of this investment, and consequently,
without limiting the generality of the foregoing, Purchaser is able to
hold the Securities for an indefinite period of time and has sufficient
net worth to sustain a loss of the entire investment in the Securities
in the event such loss should occur.
(b) Purchaser recognizes that its investment in the Securities
involves a high degree of risk which may result in the loss of the
total amount of the investment. Purchaser acknowledges that he is aware
of and has carefully considered all risks incident to the purchase of
the Securities, including without limitation those discussed in
SCHEDULE 4.3(B).
(c) Purchaser is acquiring the Securities for his own account
(as principal) for investment and not with a view to the distribution
or resale thereof. Purchaser has not offered or sold any portion of the
Securities and has no present intention of dividing the Securities with
others or of reselling or otherwise disposing of any portion of the
Securities.
(d) PURCHASER IS AWARE THAT HE MUST BEAR THE ECONOMIC RISK OF
ITS INVESTMENT IN THE SECURITIES FOR AN INDEFINITE PERIOD OF TIME
BECAUSE THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OR UNDER THE SECURITIES LAWS OF ANY STATE, AND THEREFORE CANNOT BE
SOLD UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT
AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION OR
EXCEPTION FROM SUCH REGISTRATION IS AVAILABLE AND, FURTHER, THAT ONLY
THE COMPANY CAN TAKE ACTION TO REGISTER THE SECURITIES, AND THE COMPANY
IS UNDER NO OBLIGATION TO DO SO. PURCHASER ALSO RECOGNIZES THAT NO
FEDERAL OR STATE AGENCY HAS PASSED UPON THE SECURITIES OR MADE ANY
FINDING OR DETERMINATION AS TO THE FAIRNESS OF AN INVESTMENT IN THE
SECURITIES.
(e) Purchase has reviewed, understands and agrees to the terms
of the Series C Preferred Stock as set forth in the Certificate of
Designations and the terms of his Warrant as set forth in the Warrant
Certificate. Purchaser acknowledges and agrees that the Series C
Preferred Stock has equal rights with either or both of the Series A
and B Preferred Stock with respect to dividends, voting rights,
conversion rights, redemption rights and liquidation preferences.
(f) Purchaser (i) acknowledges receipt of sufficient
information from the Company concerning the business of the Company and
its Subsidiaries in order for Purchaser to make a fully informed
investment decision, (ii) has had the opportunity to review and obtain
copies of any information which the Company possesses and is desired by
Purchaser relating to the Securities and the Company and its
Subsidiaries (including without limitation copies of the SEC Filings),
and (iii) has been given the opportunity to meet with officials of the
Company and to have said officials answer any questions regarding the
terms and conditions of this particular investment, and all such
questions have been answered to Purchaser's full satisfaction. While
the Company has attempted to provide information that is as accurate as
possible, Purchaser acknowledges and agrees that the Company and its
representatives cannot and do not make any assurances, representations
or warranties with respect to any such information, except for the
representations expressly set forth herein concerning information
included in the SEC Filings. All information described in this Section
4.3(f), including without limitation the information included in the
SEC Filings, is qualified in all respects by the Risk Factors discussed
in SCHEDULE 4.3(B). The Purchaser has sufficient knowledge and
experience in financial and business ---------------- matters to enable
him to evaluate the merits and risks of an investment in the
Securities. In addition, in reaching the conclusion that he desires to
acquire the Securities, Purchaser has carefully evaluated his financial
resources and investments, has consulted with such legal, accounting
and other experts as necessary or appropriate, and acknowledges and
represents that Purchaser is able to bear the economic risks of this
investment. Purchaser acknowledges and understands that none of the
information provided or made available by or on behalf of the Company
constitutes any legal, tax or investment advice.
9
(g) Purchaser is an "ACCREDITED INVESTOR" as such term is
defined in Rule 501 under the Securities Act. Purchaser will provide to
the Company such information as may be reasonably requested by the
Company to enable it to satisfy itself as to such status and the
knowledge and experience of Purchaser and his ability to bear the
economic risk of an investment in the Shares. Unless otherwise
specified on such Purchaser's Signature Page, such Purchaser is a
current stockholder of the Company.
(h) All representations and warranties made by Purchaser in
this Agreement and all other oral or written information provided by
Purchaser to the Company is and are true, correct and complete in all
material respects, and, if there should be any material change in such
information prior to the acceptance of this Agreement, Purchaser will
immediately furnish such revised or corrected information to the
Company.
(i) The address and social security number or federal tax
identification number set forth on the Purchaser's Signature Page are
his true and correct state (or other jurisdiction) of residence and
social security number or federal tax identification number. Purchaser
has no present intention of becoming a resident of any other state or
jurisdiction. Purchaser is not subject to backup withholding and will
provide such forms and documents as may be required by the Company to
evidence his exemption from backup or other withholding taxes and
hereby consents to withholding of any applicable taxes from his
distributions from the Company.
(j) Purchaser acknowledges and understands that certain of the
information that he has received regarding the Company and its
Subsidiaries may be material, non-public information, and that
Purchaser will not be able to trade in the Common Stock while in
possession of such information until that information has been properly
disseminated to the public or becomes immaterial to the Company and its
Subsidiaries.
10
(k) Purchaser acknowledges and agrees that if Purchaser is
more than one person, the obligations of the Purchaser are and shall be
joint and several, and the representations and warranties herein
contained are and shall be deemed to be made by and be binding upon
each such person and his heirs, executors, administrators, successors
or assigns; that if the Purchaser is purchasing the Purchased
Securities in a fiduciary capacity, the representations, warranties and
agreements contained herein shall be deemed to have been made on behalf
of the person or persons for whom the Purchaser is so purchasing; and
that the representations and warranties of the Purchaser as set forth
herein shall continue in effect following the sale of the Purchased
Securities pursuant hereto. In the event that execution hereof by
Purchaser is performed by any person as agent for or other
representative of the Purchaser, such person represents that he is duly
authorized and empowered to sign and deliver this document on behalf of
the Purchaser in the capacity stated and that the Purchaser will be
bound by this Agreement.
(l) Purchaser acknowledges that it understands the meaning and
legal consequences of the representations, warranties and covenants set
forth in this Section 4.3 and that the Company has relied and will rely
upon such representations, warranties, covenants and certifications,
AND PURCHASER HEREBY AGREES TO INDEMNIFY, DEFEND AND HOLD HARMLESS THE
COMPANY AND ITS OFFICERS, DIRECTORS, CONTROLLING PERSONS, AGENTS AND
EMPLOYEES, FROM AND AGAINST ANY AND ALL LOSS, DAMAGE OR LIABILITY,
JOINT OR SEVERAL, AND ANY ACTION IN RESPECT THEREOF, TO WHICH ANY SUCH
PERSON MAY BECOME SUBJECT DUE TO OR ARISING OUT OF A BREACH OF ANY OF
PURCHASER'S REPRESENTATIONS, WARRANTIES OR COVENANTS.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 - USE OF PROCEEDS. The cash proceeds to the Company from
the issuance of the Purchased Securities shall be used by the Company on and
after the Closing Date to develop its Subsidiary's electricity retail business
and for general corporate purposes.
SECTION 5.2 - ACCESS TO INFORMATION.
(a) Between the date hereof and the Closing Date, the Company
will afford to the Purchasers and their authorized representatives full
access during normal business hours to the facilities and properties
and to the books and records of the Company and its Subsidiaries, will
permit the Purchasers and their authorized representatives to make such
reasonable inspections as they may require and will cause its officers
and those of its Subsidiaries to furnish the Purchasers and their
authorized representatives with such financial and operating data and
other information with respect to the business, assets and properties
of the Company and its Subsidiaries, as applicable, as the Purchasers
and their authorized representatives may from time to time request.
(b) Purchasers shall hold strictly confidential all
information they obtain with respect to the Company or its
Subsidiaries; PROVIDED, THAT Purchasers shall not be obligated to hold
confidential information which (i) was or becomes generally available
to the public other than as a result of a disclosure by any Purchaser
or its representatives, (ii) was or becomes available to the Purchasers
on a non-confidential basis from a source other than the Company or its
representatives, so long as such source is not bound by a
confidentiality agreement with the Company or otherwise prohibited from
transmitting the information to the Purchasers, or (iii) is required to
be disclosed in order to comply with any applicable law, order,
regulation or ruling; provided further, that each Purchaser shall
notify the Company prior to any disclosure under (iii) above and
provide the Company the opportunity to dispute or contest such
disclosure before any disclosure is made.
11
SECTION 5.3 - RESERVATION OF COMMON STOCK. The Company has and will
reserve and keep reserved for issuance, out of the authorized and unissued
shares of the Common Stock, a number of shares of Common Stock sufficient to
provide for issuance upon the exercise of the conversion of the outstanding
Series C Preferred Stock and upon exercise of the outstanding Warrants and shall
keep such shares free of any legal or contractual preemptive rights. The Company
will take all steps necessary to keep the Conversion Shares and the Warrant
Shares duly authorized for issuance by all requisite corporate and other action,
and to assure that such Conversion Shares and Warrant Shares when issued upon
conversion of the shares of Series C Preferred Stock or exercise of the
Warrants, as the case may be, will be validly issued, fully paid and
non-assessable.
SECTION 5.4 - LISTING OF COMMON STOCK. The Company shall use its
commercially reasonable efforts to comply with all requirements of the NASD with
respect to the potential future issuance of the Conversion Shares and the
Warrant Shares and the listing thereon on the Nasdaq Stock Market.
SECTION 5.5 - FUTURE SALES OF COMMON STOCK. Each Purchaser agrees that
if the Company engages in an underwritten public offering for the sale by the
Company of shares of Common Stock during the one-year period following the
Closing Date and thereafter so long as the Purchaser owns more than one percent
(1%) of the total number of shares of Common Stock then outstanding, the
Purchaser will, if so requested by the managing underwriter for such offering,
execute and deliver to such managing underwriter a "lock-up" letter in a form
acceptable to such managing underwriter. The obligations of and restrictions on
the Purchaser under such "lock-up" letter shall be in effect for a maximum of
180 days as specified by the managing underwriter.
SECTION 5.6 - BEST EFFORTS. Subject to the terms and conditions herein
provided, the Company and each Purchaser agree to use their best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the Transactions.
SECTION 5.7 - PUBLIC ANNOUNCEMENTS. The Purchasers shall not issue any
press release or otherwise make any public statements with respect to the
existence of this Agreement or the Transactions, and the Company shall issue
such press releases or make such public statements as may be required by law or
the rules of the Nasdaq Stock Market.
12
SECTION 5.8 - APPROVAL OF PREFERRED. The Company shall submit (either
by calling a special meeting or by soliciting written consents) the designation,
issuance and sale of the Series C Preferred Stock to the holders of the Series A
and Series B Preferred Stock for approval in accordance with the terms of those
securities.
SECTION 5.9 - RESTRICTIVE LEGENDS. Each certificate evidencing the
Securities shall bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO A
SECURITIES PURCHASE AGREEMENT DATED AS OF JANUARY 18, 2005,
COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED TO THE HOLDER ON REQUEST TO THE
SECRETARY OF THE COMPANY. SUCH SECURITIES PURCHASE AGREEMENT
PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON
SALE, TRANSFER, OR OTHER DISPOSITION OF THE SECURITIES
EVIDENCED BY THIS CERTIFICATE."
In addition, unless counsel to the Company shall have advised the
Company that such legend is no longer needed, each certificate evidencing the
Securities shall bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE
REGISTERED AND QUALIFIED IN ACCORDANCE WITH APPLICABLE STATE
AND FEDERAL SECURITIES LAWS, OR IN THE OPINION OF COUNSEL
RESONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND
QUALIFICATION ARE NOT REQUIRED."
SECTION 5.10 - STOCKHOLDER APPROVAL. The parties hereto acknowledge
that pursuant to rules of the Nasdaq Stock Market the conversion and exercise
rights of the Purchasers under the Purchased Securities are subject to a cap on
the number of shares of Common Stock issuable upon such conversion or exercise
equal to twenty percent (20%) of the number of shares of Common Stock
outstanding on the Closing Date (the "COMMON STOCK CAP") unless and until the
issuance and sale of the Purchased Securities is approved by the stockholders of
the Company under such rules of the Nasdaq Stock Market (the "STOCKHOLDER
APPROVAL"). The Company agrees to solicit the Stockholder Approval in connection
with its next stockholders meeting, but is under no obligation to hold a special
meeting regarding such approval. The Purchasers acknowledge and agree (i) to the
limitations imposed by the Common Stock Cap as more fully set forth in the
Certificate of Designations and the Warrant Certificate, (ii) that without
Stockholder Approval they will not be able to acquire all of the Conversion
Shares and will likely not be able to acquire any of the Warrant Shares, which
will adversely effect the value of the Securities they are purchasing hereunder,
and (iii) that the Series C Preferred Stock will not be entitled to vote in
connection with the Stockholder Approval.
13
ARTICLE VI
PURCHASERS' CONDITIONS
The obligations of the Purchasers to effect the Closing are subject to
the satisfaction of the following conditions, any one or more of which may be
waived by the Purchasers.
SECTION 6.1 - REPRESENTATIONS AND COVENANTS. The representations and
warranties contained in Article III hereof shall be true and correct in all
material respects on and as of the Closing Date as if made, and shall be deemed
to have been remade, on and as of the Closing Date. The Company shall have
complied with all of its obligations contained herein the performance of which
is required on or prior to the Closing Date.
SECTION 6.2 - CERTIFICATE OF DESIGNATION. The Certificate of
Designation in the form of Exhibit A shall have been duly adopted by all
requisite corporate action and filed with the Secretary of State of the State of
Delaware on or before the Closing Date, and shall not have been amended or
modified.
SECTION 6.3 - REQUIRED CONSENTS AND APPROVALS. (i) The designation,
issuance and sale of the Series C Preferred Stock shall have been approved by
the holders of the Series A and Series B Preferred Stock, and (ii) all other
filings, consents, approvals and waivers necessary to the consummation of the
purchase and sale of the Securities and the Transactions shall have been
obtained.
ARTICLE VII
COMPANY'S CONDITIONS
The obligations of the Company to issue and sell the Purchased
Securities are subject to the satisfaction of the following conditions any one
or more of which may be waived by the Company:
SECTION 7.1 - REPRESENTATIONS AND COVENANTS. The representations and
warranties contained in Article IV hereof as to each Purchaser shall be true and
correct in all material respects on and as of the Closing Date as if made, and
shall be deemed to be remade, on and as of the Closing Date. Each Purchaser
shall have complied with all of his obligations contained herein performance of
which is required on or prior to the Closing Date.
SECTION 7.2 - REQUIRED CONSENTS AND APPROVALS. (i) The designation,
issuance and sale of the Series C Preferred Stock shall have been approved by
the holders of the Series A and B Preferred Stock, and (ii) all other consents,
approvals and waivers necessary to the consummation of the purchase and sale of
the Securities and the Transactions shall have been obtained.
14
SECTION 7.3 - ADDITIONAL DOCUMENTS. The Company shall have received
such other certificates, instruments and documents from each Purchaser (and any
of its nominees or designees which acquire Securities hereunder) as it may
reasonably request pursuant to this Agreement.
ARTICLE VIII
TERMINATION AND SURVIVAL
SECTION 8.1 - TERMINATION. The Transactions contemplated hereby may be
abandoned at any time prior to the Closing, as follows:
(a) by the mutual written consent of the Company and all of
the Purchasers;
(b) by either the Company, on one hand, or the Purchasers, on
the other hand, in the event the designation, issuance and sale of the
Series C Preferred Stock are not approved by the holders of the Series
A and B Preferred Stock; or
(c) by the Company, on one hand, or the Purchasers, on the
other hand collectively as one party, if there shall have been a breach
by the other party of any of the covenants contained herein or if any
representation or warranty made by any other party is untrue in any
material respect, in either case in a manner not capable of being cured
on or before the Closing Date.
SECTION 8.2 - SURVIVAL; FAILURE TO CLOSE. If this Agreement is
terminated without Closing, all representations, warranties, indemnities, and
covenants contained herein or made in writing by any party in connection
herewith will automatically terminate and be of no further force or effect,
except the provisions of this Section 8.2 and Sections 4.3, 5.2(b) and 9.5 shall
survive any such termination.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 - ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
SECTION 9.2 - NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile, with confirmation of receipt,
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties as follows (or to such other address as a party may
designate in a notice to the other party given pursuant to this Section 9.2):
15
IF TO THE COMPANY:
Amen Properties, Inc.
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇, President
IF TO THE PURCHASERS:
To each Purchaser at the address or fax number specified for
such Purchaser on his Signature Page.
SECTION 9.3 - GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS IN THE STATE OF TEXAS, WITHOUT REFERENCE
TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT GOVERNED BY THE DELAWARE
GENERAL CORPORATION LAW AS IT APPLIES TO THE COMPANY AND THE SECURITIES.
SECTION 9.4 - SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement unless the consummation of the Transactions contemplated
hereby is materially and adversely affected thereby.
SECTION 9.5 - EXPENSES. Except as otherwise provided herein, each party
shall bear and pay all costs and expenses incurred by him or it or on his or its
behalf in connection with transactions contemplated hereby, including fees and
expenses of his or its representatives.
SECTION 9.6 - DESCRIPTIVE HEADINGS. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.
SECTION 9.7 - COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same agreement. Faxed signatures of this Agreement
shall be deemed and shall constitute binding signatures for all purposes.
SECTION 9.8 - ASSIGNMENT. Except as provided in this Section 9.8, none
of the Purchasers or the Company may assign his or its rights or obligations
hereunder; PROVIDED, HOWEVER, a Purchaser may assign his rights to acquire the
Purchased Securities to a nominee or designee, provided such assignment shall be
completed and notice thereof given to the Company at least five (5) days prior
to Closing, such assignment shall not relieve such Purchaser of his obligations
hereunder, and any such nominee or designee shall be deemed to have made all of
the representations, warranties and covenants of such Purchaser herein.
16
SECTION 9.9 - AMENDMENTS; WAIVERS. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Company or any
Purchaser therefrom, shall in any event be effective unless the same shall be in
writing and signed by all Purchasers and the Company in the case of amendments,
and the affected Purchaser(s) or the Company, as the case may be, in the case of
waivers.
[Remainder of Page Intentionally Left Blank]
17
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed and delivered as of the day and year first above written.
AMEN PROPERTIES, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇, President
SIGNATURE PAGES OF PURCHASERS FOLLOW
18
PURCHASER SIGNATURE PAGE
Purchased Securities:
14,062 Shares of Series C Preferred Stock
-----------
A Warrant for 28,124 Warrant Shares
--------
Payment of Purchase Price (check and complete applicable spaces):
$ 224,992 Total Cash Purchase Price
-----------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 562,480 Amount of Purchaser's Guaranty
-----------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
14,063 Shares of Series C Preferred Stock
-----------
A Warrant for 28,126 Warrant Shares
---------
Payment of Purchase Price (check and complete applicable spaces):
$ 225,008 Total Cash Purchase Price
-----------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 562,520 Amount of Purchaser's Guaranty
-----------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇
----------------------------
▇▇▇▇ ▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
25,000 Shares of Series C Preferred Stock
-----------
A Warrant for 50,000 Warrant Shares
Payment of Purchase Price (check and complete applicable spaces):
$ 400,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 1,000,000.00 Amount of Purchaser's Guaranty
--------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
Mariah Investment Partners
By: ,
----------------------------
its general partner
By:_____________________________
Name:___________________________
Title:__________________________
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
25,000 Shares of Series C Preferred Stock
-----------
A Warrant for 50,000 Warrant Shares
--------
Payment of Purchase Price (check and complete applicable spaces):
$ 400,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 1,000,000.00 Amount of Purchaser's Guaranty
--------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
McGRAW BROTHER INVESTMENTS
By:___________________________
Name:_________________________
Title:________________________
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
12,500 Shares of Series C Preferred Stock
-----------
A Warrant for 25,000 Warrant Shares
--------
Payment of Purchase Price (check and complete applicable spaces):
$ 200,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 500,000.00 Amount of Purchaser's Guaranty
-------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s/ Frosty ▇▇▇▇▇▇▇
------------------------------
Frosty ▇▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
12,500 Shares of Series C Preferred Stock
-----------
A Warrant for 25,000 Warrant Shares
-------
Payment of Purchase Price (check and complete applicable spaces):
$ 200,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 500,000.00 Amount of Purchaser's Guaranty
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
6,250 Shares of Series C Preferred Stock
-----------
A Warrant for 12,500 Warrant Shares
--------
Payment of Purchase Price (check and complete applicable spaces):
$ 100,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 250,000.00 Amount of Purchaser's Guaranty
-------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
6,250 Shares of Series C Preferred Stock
----------
A Warrant for 12,500 Warrant Shares
--------
Payment of Purchase Price (check and complete applicable spaces):
$ 100,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 250,000.00 Amount of Purchaser's Guaranty
-------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
LCM PARTNERSHIP, LP
By: ,
---------------------------
its general partner
By:_____________________________
Name:___________________________
Title:__________________________
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
6,250 Shares of Series C Preferred Stock
----------
A Warrant for 12,500 Warrant Shares
Payment of Purchase Price (check and complete applicable spaces):
$ 100,000.00 Total Cash Purchase Price
-------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 250,000.00 Amount of Purchaser's Guaranty
-------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
JMA CHEDDARS, LTD.
By: ,
--------------------------
its general partner
By:____________________________
Name:__________________________
Title:_________________________
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
PURCHASER SIGNATURE PAGE
Purchased Securities:
3,125 Shares of Series C Preferred Stock
----------
A Warrant for 6,250 Warrant Shares
-------
Payment of Purchase Price (check and complete applicable spaces):
$ 50,000.00 Total Cash Purchase Price
------------
________ Enclosed Certified or Cashier's Check or Money Order
________ Wire Transfer
$ 125,000.00 Amount of Purchaser's Guaranty
-------------
_____ Check here if Purchaser is not a stockholder of the Company on the date
hereof.
IN WITNESS WHEREOF, the Purchaser has executed this Securities Purchase
Agreement as of the date first above written.
SIGNATURE OF PURCHASER:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Purchaser's Social Security
or Tax Identification Number:
Purchaser's Address:
-------------------- ---------------- ------ ----------
(Number and Street) (City) (State) (Zip Code)
---------------------
Purchaser's Fax Number
SCHEDULE 3.1
TO
SECURITIES PURCHASE AGREEMENT
DATED JANUARY 18, 2005
BY AND AMONG
AMEN PROPERTIES, INC.
AND THE PURCHASERS NAMED THEREIN
SUBSIDIARIES OF THE COMPANY
NEMA PROPERTIES, LLC ("NEMA") is a wholly-owned subsidiary of Amen
Properties, Inc. NEMA is organized under the laws of the State of Nevada.
AMEN MINERALS, L.P. is owned 99% by NEMA as the sole limited partner
and 1% by Amen Properties, Inc., as the sole general partner, and is organized
under the laws of the State of Delaware.
AMEN DELAWARE, L.P. is owned 99% by NEMA as the sole limited partner
and 1% by Amen Properties, Inc., as the sole general partner, and is organized
under the laws of the State of Delaware.
W POWER AND LIGHT, LP is owned 99% by NEMA as the sole limited partner
and 1% by Amen Properties, Inc., as the sole general partner, and is organized
under the laws of the State of Delaware.
TCTB PARTNERS, LTD. in which the Company owns 71.3% of the outstanding
partnership interests.(1)
(1) A 6.485533% interest in TCTB Partners, Ltd. is pledged to secure an
obligation incurred in connection with the acquisition of such interest.
SCHEDULE 3.4
TO
SECURITIES PURCHASE AGREEMENT
DATED JANUARY 18, 2005
BY AND AMONG
AMEN PROPERTIES, INC.
AND THE PURCHASERS NAMED THEREIN
I. Common Stock, $.01 par value
A. Authorized and Issued
1. 20,000,000 shares authorized
2. 2,201,356 shares issued and outstanding
B. Stock Options and Warrants
1. 498,958 shares reserved for issuance for stock
options, including 252,947 shares subject to
currently outstanding stock options
2. 22,014 shares reserved for issuance upon exercise of
currently outstanding warrants
C. Reserved for Conversion
1. 333,333 shares reserved for issuance upon conversion
of the Series A Preferred Stock
2. 233,276 shares reserved for issuance upon conversion
of the Series B Convertible Preferred Stock
II. Preferred Stock, $.001 par value
A. Authorized - 5,000,000 shares authorized
B. Designated, Issued and Outstanding
1. 80,000 shares of Series A Preferred Stock
2. 80,000 shares of Series B Convertible Preferred Stock
SCHEDULE 4.3(B)
TO
SECURITIES PURCHASE AGREEMENT
DATED JANUARY 18, 2005
BY AND AMONG
AMEN PROPERTIES, INC.
AND THE PURCHASERS NAMED THEREIN
AMEN PROPERTIES, INC.
RISK FACTORS
Investment in the Securities involves a significant degree of risk,
including the possible loss of the entire investment. No guarantee or
representation is or can be made as to the Company's performance. The Company
encourages each Purchaser to seek advice from legal, accounting and financial
professionals prior to purchasing the Securities. In considering investing in
the Securities, Purchasers should carefully review and consider the terms of
this Agreement, the SEC Filings and the other information provided by the
Company, and the investment considerations and risks associated with this
investment including, but not limited to, the following (references to "we,"
"our" or "us" refer to the Company and its Subsidiaries:
CAP ON CONVERSION AND EXERCISE
The conversion of the Series C Preferred Stock and the exercise of the
Warrants is subject to a limitation on the number of shares of Common Stock that
can be issued without Stockholder Approval under the rules of the Nasdaq Stock
Market. If such Stockholder Approval is not obtained, the total number of
Conversion Shares and Warrant Shares will be limited to no more than twenty
percent (20%) of the number of outstanding shares of Common Stock on the Closing
Date. As a result, without Stockholder Approval the Purchasers will not be
entitled to acquire all of the Conversion Shares and will likely not be able to
acquire any of the Warrant Shares, which will adversely effect the value of the
Securities purchased by the Purchasers.
LACK OF OPERATING HISTORY
In recent years, the Company has substantially changed its business
plan. As a result, the Company's operating history under its current business
plan is limited. In addition, one of the Company's Subsidiaries is a recent
start-up electricity retail business. Such limited operating history of the
Company and its Subsidiaries may not provide sufficient information for
Purchasers to base an evaluation of likely performance.
S-1
RISKS RELATED TO PROJECTIONS AND ESTIMATES
All statements other than statements of historical facts included in
the SEC Filings or any other information provided to a potential investor
regarding the financial position, business strategy, plans and objectives of
management for future operations of the Company and its Subsidiaries are
projections and estimates based upon current information available to the
Company. While we believe that such projections and estimates are based upon
reasonable assumptions, there are significant risks and uncertainties that could
significantly effect expected results. Important factors that could cause actual
results to differ materially from those in the projections and estimates
include, without limitation, the Risk Factors discussed herein, and many of
those factors are beyond our control. All written and oral projections and
estimates and "forward looking" statements attributable to the Company, whether
contained in the SEC Filings or otherwise, are expressly qualified in their
entirety by such factors. Purchasers should expect the assumptions and related
projections and estimates to change as additional information becomes available.
However, the Company does not intend to update or otherwise revise the
projections and estimates provided to reflect events or circumstances after the
date of such information or to reflect the occurrence of unanticipated events. A
Purchaser should carefully review and consider the assumptions and estimates,
and obtain the advice of legal and accounting experts and other professionals
regarding these matters. Actual results may differ materially from any business
descriptions and operating estimates contained in the information provided or
available to a Purchaser.
DETERMINATION OF OFFERING PRICE
The Purchase Price for the Securities was determined arbitrarily by the
Company, based upon, among other things, the short-term capital needs of the
Company and recent market prices for the Common Stock. However, the Purchase
Price should not be considered as any indication of the future market price or
value of the Common Stock or the other Securities.
DEPENDENCE ON KEY PERSONNEL
The Company depends to a large extent on the services of its executive
officers and the officers and managers of its Subsidiaries. Particularly, the
Company's newest Subsidiary, an electricity retail business, is heavily
dependent upon the knowledge and expertise of the president of the Subsidiary.
The loss of the services of any of those persons could have a material adverse
effect on the Company and its Subsidiaries.
COMPETITION
The Company and its Subsidiaries encounter substantial competition in
acquiring rental property and oil and gas royalties, leasing rental space, and
securing trained personnel. Most competitors have substantially larger financial
resources, staffs and facilities than the Company and its Subsidiaries, and the
Company and its Subsidiaries may be at a significant disadvantage in many
competitive situations. See also "RELIANCE UPON NEW BUSINESS - THE RETAIL
ELECTRICITY MARKET IS HIGHLY COMPETITIVE."
ADVERSE MARKET CONDITIONS
The economic performance and value of the Company's properties are
subject to all of the risks associated with owning and operating real estate,
including
S-2
o changes in the national, regional and local economic climate
o the attractiveness of our properties to tenants o the ability of
tenants to pay rent
o competition from other available properties
o changes in market rental rates
o the need to periodically pay for costs to repair, renovate and re-let
space
o changes in operating costs, including costs for maintenance, insurance
and real estate taxes
o changes in laws and governmental regulations, including those governing
usage, zoning, the environment and taxes
FAILURE BY TENANTS TO MAKE RENTAL PAYMENTS
The Company's performance will depend on our ability to collect rent
from tenants. At any time our tenants may experience a change in business
conditions or a downturn in their business that may significantly weaken their
financial condition. As a result, our tenants may delay a number of lease
commencements, decline to extend or renew a number of leases upon expiration,
fail to make rental payments when due under a number of leases, close a number
of offices or declare bankruptcy. Any of these actions could result in the
termination of the tenant's leases and the loss of rental income.
ACQUISITIONS OF PROPERTIES MAY NOT YIELD EXPECTED RETURNS
Newly acquired properties may fail to perform as expected. Management
may underestimate the costs necessary to bring acquired properties up to
standards established for their intended market position. In addition, we may
not achieve expected cost savings and planned operating efficiencies. Acquired
properties may not perform as well as we anticipate due to various factors,
including changes in macro-economic conditions and the demand for office space
or oil and gas royalties. As the Company grows, we have to invest further in
overhead to assimilate and manage a portfolio of potentially unrelated
properties.
We may face significant competition for acquisitions of properties,
which may increase the costs of acquisitions. We may compete for acquisitions
of, and investments in, properties with an indeterminate number of investors,
including investors with access to significant capital such as domestic and
foreign corporations and financial institutions, publicly traded and privately
held REITs, private institutional investment funds, investment banking firms,
life insurance companies and pension funds. This competition may increase prices
for the types of properties in which we invest. In addition, the cost and
availability of capital necessary to increase our asset base and revenue
generating capability is difficult to predict and in and of itself may be a
barrier to pursuing future acquisitions.
THE COMPANY'S ASSET INVESTMENTS ARE ILLIQUID
Real estate property investments and oil and gas royalties generally
cannot be disposed of quickly. The Company's recent start-up electricity retail
business is also illiquid. Therefore, we may not be able to vary our mix of
assets or achieve potentially required liquidity in response to economic or
other conditions promptly or on favorable terms.
S-3
SOME POTENTIAL LOSSES MAY NOT BE COVERED BY INSURANCE
The Company carries insurance on our properties that we consider
appropriate and consistent with industry practices. Though we plan to assure to
the best of our ability that policy specifications and insured limits of these
policies are adequate and appropriate, there may be however, certain types of
losses, including lease and other contract claims, acts of war, acts of terror
and acts of God that generally may not be insured. Should an uninsured loss or a
loss in excess of insured limits occur, we could lose all or a portion of the
capital we have invested in a property, as well as the anticipated future
revenue from the property. If that happened, we might nevertheless remain
obligated for any mortgage debt or other financial obligations related to the
property. Though we plan to maintain insurance policies with carriers with
sufficient assets and capital to cover all insured perils, there may be however,
failures or receiverships of carriers providing insurance to the Company. If
this occurs, the Company could be essentially without coverage for perils and
losses.
ABILITY TO SERVICE LONG-TERM DEBT
Certain of the Company's activities are subject to risks normally
associated with debt financing. The timing and amount of cash flows could be
insufficient to meet required payments of principal and interest. We may not be
able to refinance acquired debt, which in virtually all cases requires
substantial principal payments at maturity, and, even if we can, refinancing
might not be available on favorable terms. If principal payments due at maturity
cannot be refinanced, extended or paid with proceeds of other capital
transactions, including new equity capital, cash flow may not be sufficient in
all years to repay all maturing debt. Prevailing interest rates or other factors
at the time of refinancing, including the possible reluctance of lenders to make
commercial real estate loans, may result in higher interest rates and increased
interest expenses.
POTENTIAL ENVIRONMENTAL LIABILITIES
Under various environmental laws, a current or previous owner or
operator of real property may be liable for the costs of removal or remediation
of hazardous or toxic substances, including asbestos-containing materials that
are located on or under the property. Specific asbestos remediation has taken
place in certain of our rental buildings. Environmental laws often impose
liability whether the owner or operator knew of, or was responsible for, the
presence of those substances. In connection with our ownership and operation of
properties, we may be liable for these costs, which could be substantial. Also,
our ability to arrange for financing secured by that real property might be
adversely affected because of the presence of hazardous or toxic substances or
the failure to properly remediate any contamination. In addition, we may be
subject to claims by third parties based on damages and costs resulting from
environmental contamination at or emanating from our properties.
S-4
NON-COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT ("ADA")
Under the ADA, all public accommodations are required to meet certain
federal requirements related to physical access and use by disabled persons.
While we believe our properties comply in all material respects with these
physical requirements or would be eligible for applicable exemptions from
material requirements because of adaptive assistance provided, a determination
that we are not in compliance with the ADA could result in the imposition of
fines or an award of damages to private litigants. If we were required to make
modifications to comply with the ADA, our ability to meet financial obligations
could be adversely affected.
POTENTIAL ADVERSE EFFECTS ON OUR NET OPERATING LOSS ("NOL")
There are significant limitations of utilization of the NOL under
applicable tax law as it relates to a change in ownership among five-percent
(5%) owners exceed fifty percent (50%), and a business continuity test. If we
are unable to meet these standards, utilization of the NOL could be limited or
reduced to zero.
VOLATILITY OF OIL AND GAS PRICES
Anticipated results from our oil and gas royalty investments are
substantially dependent on prices of oil and gas. Prices for oil and gas are
subject to large fluctuations in response to relative minor changes in the
supply of, and demand for, oil and gas, market uncertainty and a variety of
additional factors beyond our control. These factors include weather conditions,
the economy, actions of the government regulation, political stability in the
Middle East and elsewhere, the foreign supply of oil and gas, the price of
foreign imports and the availability of alternate fuel sources. Any substantial
extended decline in the price of oil and gas could have an adverse impact on our
revenue generating capability.
UNCERTAINTY OF ESTIMATED OIL AND GAS RESERVES
Estimates of economically recoverable oil and gas reserves are based
upon a number of variable factors and assumptions, which are speculative and not
under our control. Actual production and reserve data used to value future
acquisitions will be estimates only and will be subject to uncertainties.
Estimated quantities of oil and natural gas may differ considerably from amounts
actually recovered and thus future cash flows could be impaired or accelerated
beyond management's expectations.
AVAILABILITY OF CAPITAL RESOURCES
Currently, the Company's capital resources are expected to be limited
to the net proceeds obtained through the sale of the Purchased Securities, net
proceeds from the sale of real estate, borrowing covered by the Guaranties and
the net income from operations of the Company and its Subsidiaries. However, the
operations of the Company's newest Subsidiary are in an initial development
phase and we do not anticipate significant operating revenues from that business
for several months. As a result, the net proceeds from this sale of the
Purchased Securities and the guaranteed borrowings will be a primary capital
resource during this period. In the event our current capital resources are
insufficient to fund our operations and capital expenditures, the Company may be
forced to seek other sources of financing, including without limitation,
incurrence of debt and issuances of additional equity securities. There can be
no assurance that such financing will be available on terms acceptable to the
Company or on any terms. If additional financing is not available, it will have
a material adverse effect on our operations.
S-5
MARKETABILITY OF THE SECURITIES
The Series C Preferred and the Warrants will not be readily marketable,
will not be redeemable at the option of the holder, have not been registered
under applicable securities laws and we have no intention to so register those
securities. Acquisition, ownership and transfer of the Series C Preferred and
the Warrants will be restricted in order for the Company to maintain an
exemption from registration under applicable state and federal securities laws.
There is no public market for the Series C Preferred and the Warrants, and none
is expected to develop. An investor must plan to retain the Series C Preferred
and the Warrants for an indefinite period of time.
The Common Stock is traded on the Nasdaq Stock Market. However, the
Conversion Shares and the Warrant Shares have not been registered under
applicable securities laws, and therefore cannot be transferred unless so
registered or pursuant to an exemption from registration. The Company is not
obligated to register the Conversion Shares or the Warrant Shares. In addition,
the market in the Common Stock is not actively traded, and the low volume of
trading may have a significant effect on the trading price of the Common Stock
unrelated to the performance of the Company. Due to the foregoing an investor
may not be able to liquidate such shares when he desires to do so, and may be
required to retain the investment for an indefinite period of time.
DILUTION
The conversion price of the Series C Preferred and the exercise price
of the Warrants represent a purchase price share per share of Common Stock that
is in excess of the net tangible book value per share of Common Stock as of
September 30, 2004. As a result, Purchasers may experience immediate dilution in
the book value of the shares acquired, in which case the existing stockholders
of the Company will have an immediate increase in the net book value of the
partnership interests owned prior to this transaction.
RELIANCE UPON NEW BUSINESS
The Company recently formed a new Subsidiary, W Power and Light, LP, to
commence operations in the electricity retail business. In addition to the
general risks discussed above, this new business is subject to additional risks
including those discussed below.
THE RETAIL ELECTRICITY MARKET IS HIGHLY COMPETITIVE. The market for
retail electricity customers is very competitive. In certain markets, our
principal competitors include the local regulated electric utility or its
non-regulated affiliate. In other markets, we face competition from independent
electric providers, independent power producers and wholesale power providers.
In most cases, our competitors have the advantage of long-standing relationships
with customers, longer operating histories and/or larger and better capital
resources. As a result, it may not be profitable for us to enter into some
markets and our ability to increase market share may be hindered.
S-6
In general, we compete on the basis of price, our commercial and
marketing skills relative to other market participants, service and our
financial position. Other factors affecting our competitive position include our
ability to obtain electricity for resale and related transportation/transmission
services. Since many of our energy customers, suppliers and transporters require
financial guarantees and other assurances regarding contract performance, our
access to letters of credit, surety bonds and other forms of credit support is
another factor affecting our ability to compete in the market.
OUR BUSINESS IS SUBJECT TO MARKET RISKS. Unlike a traditional regulated
electric utility, we are not guaranteed a rate of return on our capital
investments. Our results of operations, financial condition and cash flows
depend, in large part, upon prevailing market prices for electricity in our
markets and the impact of regulatory decisions on prices charged to our retail
customers. Market prices may fluctuate substantially over relatively short
periods of time, potentially adversely affecting our business. Changes in market
prices for electricity may result from the following factors among others:
o weather conditions;
o seasonality;
o demand for energy commodities;
o general economic conditions;
o forced or unscheduled interruptions in electricity available;
o disruption of electricity transmission or transportation,
infrastructure or other constraints or inefficiencies;
o financial position of market participants;
o changes in market liquidity;
o natural disasters, wars, embargoes, acts of terrorism and other
catastrophic events; and
o governmental regulation and legislation.
DEPENDENCE UPON THIRD PARTY PROVIDERS. The Company does not own any
generating resources to supply electricity for our retail business in this
market. As a result, we must purchase all of the generation capacity necessary
to supply our retail energy business from third parties. In addition, we depend
on power transmission and distribution facilities owned and operated by
utilities and others to deliver energy products to our customers. If
transmission or distribution is inadequate or disrupted, our ability to sell and
deliver our products may be hindered. Any infrastructure failure that interrupts
or impairs delivery of electricity could have an adverse effect on our business.
We are dependent on the transmission and distribution utilities for
reading our customers' energy meters. We also rely on the local transmission and
distribution utility or, in some cases, the independent system operator, to
provide us with our customers' information regarding energy usage; and we may be
limited in our ability to confirm the accuracy of the information. If we receive
incorrect or untimely information from the transmission and distribution
utilities, we could have difficulty properly billing our customers and
collecting amounts owed to us. Failure to receive correct and timely information
could have an adverse effect on our business.
S-7
REGULATION OF ELECTRICITY RETAIL BUSINESS. The Company's electricity
retail business operates in a regulatory environment that is undergoing
significant changes as a result of varying restructuring initiatives at both the
state and federal levels. We cannot predict the future direction of these
initiatives or the ultimate effect that this changing regulatory environment
will have on our business. Moreover, existing regulations may be revised or
reinterpreted and new laws and regulations may be adopted or become applicable
to our facilities or our commercial activities. Such future changes in laws and
regulations may have an adverse effect on our business. Regulators, regional
transmission organizations and independent system operators have imposed and may
continue to impose price limitations, bidding rules and other mechanisms in an
attempt to address price volatility and other issues in power markets. If the
trend toward competitive restructuring of the power market is reversed,
discontinued or delayed, our business growth prospects and financial results
could be adversely affected.
ERCOT. The Electric Reliability Counsel of Texas ("ERCOT") is
responsible for handling scheduling and settlement for all electricity supply
volumes in the ERCOT Region. ERCOT plays a vital role in the collection and
dissemination of metering data from the transmission and distribution utilities
to the retail electric providers. We and other retail electric providers
schedule volumes based on forecasts, which are based, in part, on information
supplied by ERCOT. To the extent that these amounts are not accurate or timely,
we could have incorrectly estimated our scheduled volumes and supply costs.
In the event of a default by a retail electric provider of its payment
obligations to ERCOT, the portion of the obligation that is unrecoverable by
ERCOT is assumed by the remaining market participants in proportion to each
participant's load ratio share. We would pay a portion of the amount owed to
ERCOT should such a default occur if ERCOT is not successful in recovering such
amount. The default of a retail electric provider in its obligations to ERCOT
could have an adverse effect on our business.
OUR STRATEGIC PLANS MAY NOT BE SUCCESSFUL. The Company's retail energy
business operates in the deregulated segments of the electric power industry.
The success of our long-term strategic plans are predicated upon the
continuation of the trend toward greater competitive markets in this industry.
If the trend towards competitive restructuring of the electric power industry is
reversed, discontinued or delayed, our business could be adversely affected.
NON-PERFORMANCE BY COUNTERPARTIES. Our operations are exposed to the
risk that counterparties who owe us money or commodities and services will not
perform their obligations. When such parties fail to perform their obligations,
we might be forced to replace the underlying commitment at then-current market
prices. In this event, we could incur reduced operating results or losses.
S-8
THE FOREGOING SUMMARY OF CERTAIN CONSIDERATIONS AND RISKS DO NOT PURPORT TO BE A
COMPLETE EXPLANATION OF THE RISKS INVOLVED IN THIS INVESTMENT. PROSPECTIVE
INVESTORS SHOULD READ THE ENTIRE SECURITIES PURCHASE AGREEMENT, THE SEC FILINGS
AND OTHER INFORMATION PROVIDED BY THE COMPANY BEFORE DETERMINING TO INVEST IN
THE SECURITIES.
S-9
EXHIBIT "A"
CERTIFICATE OF DESIGNATION OF SERIES
AND DETERMINATION OF RIGHTS AND PREFERENCES
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
AMEN PROPERTIES, INC.
AMEN PROPERTIES, INC., a Delaware corporation (the "COMPANY"), acting
pursuant to Section 151 of the General Corporation Law of Delaware, does hereby
submit the following Certificate of Designation of Series and Determination of
Rights and Preferences of its Series C Convertible Preferred Stock (this
"CERTIFICATE").
FIRST: The name of the Company is Amen Properties, Inc.
SECOND: By unanimous consent of the Board of Directors (the "BOARD") of
the Company dated January __, 2005, the following resolutions were duly adopted:
WHEREAS the Certificate of Incorporation of the Company (the
"CERTIFICATE OF INCORPORATION") authorizes 5,000,000 shares of preferred stock,
par value $.001 per share ("PREFERRED STOCK"), issuable from time to time in one
or more series;
WHEREAS, the Company has previously designated two series of Preferred
Stock, the Series A Preferred Stock, par value $.001 per share (the "SERIES A
PREFERRED") and the Series B Preferred Stock, par value $.001 per share (the
"SERIES B PREFERRED"), each with such rights and preferences as are set forth in
the respective Certificate of Designation of Series and Determination of Rights
and Preferences, as amended, for each (the "SERIES A AND B DESIGNATIONS");
WHEREAS the Board of the Company is authorized, subject to limitations
prescribed by law and by the provisions of paragraph four (4) of the Company's
Certificate of Incorporation, to establish and fix the number of shares to be
included in any series of Preferred Stock and the designation, rights,
preferences, powers, restrictions and limitations of the shares of such series;
and
WHEREAS it is the desire of the Board to establish and fix the number
of shares to be included in a new series of Preferred Stock and the designation,
rights, preferences and limitations of the shares of such new series.
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NOW, THEREFORE, BE IT RESOLVED that pursuant to paragraph four of the
Company's Certificate of Incorporation, there is hereby established a new series
of Preferred Stock, and that the Board does hereby fix and determine the
designation, rights, preferences, powers, restrictions and limitations set forth
as follows:
SECTION 1. DESIGNATION; RANK.
This series of cumulative convertible Preferred Stock shall be
designated and known as the "SERIES C PREFERRED STOCK." The number of shares
constituting the Series C Preferred Stock shall be 125,000 shares. The Series C
Preferred Stock shall, with respect to rights upon liquidation, dissolution or
winding up, whether voluntary or involuntary, rank equal to the Series A
Preferred Stock and the Series B Preferred Stock, and prior to the common stock
of the Company, par value $.01 per share (the "COMMON STOCK").
SECTION 2. DIVIDENDS.
The holders of outstanding shares of Series C Preferred Stock shall be
entitled to receive any dividend declared in respect of the Common Stock based
upon the number of shares of Common Stock into which the outstanding shares of
Series C Preferred Stock are convertible at the time the dividend is declared as
if such shares of Common Stock issuable upon conversion of the Series C
Preferred Stock were outstanding for purposes of the Common Stock dividend.
SECTION 3. LIQUIDATION PREFERENCE.
(a) Upon any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, but before any distribution or payment shall
be made to the holders of any Common Stock, and in equal preference to the
holders of the Series A Preferred and the Series B Preferred, the holders of
Series C Preferred Stock shall be entitled to be paid out of the remaining
assets of the Company legally available for distribution with respect to each
share of Series C Preferred Stock an amount equal to the sum of (i) $16.00 per
share, as adjusted for any stock dividends, combinations or splits with respect
to such shares (the "ORIGINAL SERIES C ISSUE PRICE") plus (ii) any declared but
unpaid dividends thereon (such sum, the "SERIES C LIQUIDATION VALUE"). If upon
any such liquidation, dissolution or winding up of the Company the remaining
assets of the Company available for distribution to its stockholders shall be
insufficient to pay the holders of shares of Series A Preferred, Series B
Preferred and Series C Preferred Stock the full liquidation amount to which each
is entitled under the Series A and B Designations and this Certificate, as the
case may be, then the holders of shares of Series A Preferred, Series B
Preferred and Series C Preferred Stock shall share ratably in any distribution
of the remaining assets of the Company in proportion to the respective amounts
which would otherwise be payable in respect of the shares of such Preferred
Stock held by them upon such distribution if all amounts payable on or with
respect to such shares were paid in full.
(b) After payment in full of the liquidation amounts to which all
outstanding shares of Series A Preferred, Series B Preferred and Series C
Preferred Stock are entitled, then the remaining assets of the Company legally
available for distribution, if any, shall be distributed to the holders of
Common Stock.
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(c) The following events shall be considered a liquidation for purposes
of Section 3(a) above and Section 6 (a) below unless the holders of at least a
majority of the voting power of all then outstanding shares of Series A
Preferred, Series B Preferred and the Series C Preferred Stock, voting together
as a single class, vote otherwise:
(i) any merger, consolidation or other business combination of
the Company in which the stockholders of the Company immediately prior
to such transaction will, immediately after such transaction (by virtue
of securities issued in the transaction or otherwise), beneficially own
(as determined pursuant to rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") capital stock representing
less than fifty percent (50%) of the voting power of the surviving
entity's voting stock immediately after such transaction; or
(ii) a sale of all or substantially all of the assets of the
Company to any other entity, where the Company's stockholders
immediately prior to such sale will, immediately after such sale (by
virtue of securities issued as consideration for the Company's sale or
otherwise), beneficially own (as determined pursuant to Rule 13d-3
under the Exchange Act) capital stock representing less than fifty
percent (50%) of the voting power of the acquiring entity's voting
stock.
(d) In either of the events in Section 3(c) above, if the consideration
received by the Company is other than cash, its value will be deemed its fair
market value as determined in good faith by the Board. Any securities shall be
valued as follows:
(i) Securities not subject to investment letter or other
similar restrictions on free marketability covered by (ii) below:
(A) If traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the
average of the closing prices of the securities on such
quotation system over the thirty (30) day period ending three
(3) days prior to the closing;
(B) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid or sale
prices (whichever is applicable) over the thirty (30) day
period ending three (3) days prior to the closing; and
(C) If there is no active public market, the value
shall be the fair market value thereof, as mutually determined
by the Board and the holders of at least a majority of the
voting power of all then outstanding shares of Series A
Preferred, Series B Preferred and Series C Preferred Stock.
(ii) The method of valuation of securities subject to
investment letter or other restrictions on free marketability (other
than restrictions arising solely by virtue of a stockholder's status as
an affiliate or former affiliate) shall be to make an appropriate
discount from the market value determined as above in (i) (A), (B) or
(C) to reflect the approximate fair market value thereof, as mutually
determined by the Board and the holders of at least a majority of the
voting power of all then outstanding shares of Series A Preferred,
Series B Preferred and Series C Preferred Stock.
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SECTION 4. VOTING RIGHTS.
(a) Each holder of outstanding shares of Series C Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of Common
Stock into which all of the shares of Series C Preferred Stock held by such
holder are convertible (subject to the Conversion Cap described in, and as
adjusted from time to time pursuant to, Section 6 hereof) at each meeting of
stockholders of the Company (and written actions of stockholders in lieu of
meetings) with respect to any and all matters presented to the stockholders of
the Company for their action or consideration. Except as provided by law, by the
express provisions hereof, or by the provisions establishing any other series of
Preferred Stock, holders of Series C Preferred Stock and of any outstanding
other series of Preferred Stock shall vote together with the holders of Common
Stock as a single class.
(b) Notwithstanding the foregoing, the Series C Preferred Stock will
not be entitled (i) to vote with respect to any approval or ratification by the
stockholders of the Company of the designation, issuance and sale of the Series
C Preferred Stock by the Company in accordance with the rules of the Nasdaq
Stock Market, and (ii) to the number of votes equal to the number of shares of
Common Stock into which the Series C Preferred Stock is convertible that are in
excess of the Conversion Cap unless and until Stockholder Approval is obtained
(as such capitalized terms are defined in Section 6 hereof).
SECTION 5. COVENANTS.
In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of at least fifty percent (50%) of the outstanding shares of the Series
A Preferred, Series B Preferred and Series C Preferred Stock, voting together as
a single class, (i) authorize or create (by reclassification or otherwise) any
new class or series of shares of capital stock with rights senior or equal to
the Series A Preferred, Series B Preferred or Series C Preferred Stock; (ii)
amend or waive any provision of this Corporation's Certificate of Incorporation
or Bylaws in any manner that adversely affects the preferences, privileges or
rights of the Series A Preferred, Series B Preferred or Series C Preferred
Stock; (iii) redeem or repurchase Common Stock or any other junior equity
security, except for shares repurchased upon the termination of an employee,
officer, director or consultant pursuant to a restricted stock purchase
agreement; (iv) pay or declare any dividend on the Common Stock or any other
junior equity security other than a dividend payable in shares of Common Stock;
or (v) liquidate or wind up the Corporation.
SECTION 6. CONVERSION RIGHTS.
The holders of the Series C Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
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(a) RIGHT TO CONVERT. Each share of Series C Preferred Stock shall be
convertible, at the option of the holder thereof, at any time and from time to
time, into such number of fully paid and nonassessable shares of Common Stock as
is determined by dividing the Original Series C Issue Price by the Conversion
Price (as defined below) in effect at the time of conversion. Subject to the
Conversion Cap provided under Section 6(l) and other limitations set forth
herein, the Series C Preferred Stock is convertible into an aggregate of 500,000
shares of Common Stock. The Conversion Price (the "CONVERSION PRICE") is $4.00
per share of Common Stock. The Conversion Price is the price at which shares of
Common Stock shall be deliverable upon conversion of Series C Preferred Stock,
without the payment of additional consideration by the holder thereof. Such
initial Conversion Price and the rate at which shares of Series C Preferred
Stock may be converted into shares of Common Stock, shall be subject to
adjustment as provided below.
(b) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of the Series C Preferred Stock. In lieu of fractional
shares, the Company shall round such fraction to the nearest whole number.
(c) MECHANICS OF CONVERSION.
(i) In order to convert shares of Series C Preferred Stock
into shares of Common Stock, the holder shall surrender the certificate
or certificates for such shares of Series C Preferred Stock at the
office of the transfer agent (or at the principal office of the Company
if the Company serves as its own transfer agent), together with written
notice that such holder elects to convert all or any number of the
shares represented by such certificate or certificates. Such notice
shall state the number of shares of Series C Preferred Stock which the
holder seeks to convert. The number of shares of Common Stock into
which each share of Series C Preferred Stock is convertible is subject
to and limited by the Conversion Cap provided in Section 6(l). If
required by the Company, certificates surrendered for conversion shall
be endorsed or accompanied by a written instrument or instruments of
transfer, in form satisfactory to the Company, duly executed by the
registered holder or his or its attorney duly authorized in writing.
The date of receipt of such certificates and notice by the transfer
agent or the Company shall be the conversion date ("Conversion Date").
As soon as practicable after the Conversion Date, the Company shall
promptly issue and deliver at such office to such holder a certificate
or certificates for the number of shares of Common Stock to which such
holder is entitled. Such conversion shall be deemed to have been made
at the close of business on the date of such surrender of the
certificate representing the shares of Series C Preferred Stock to be
converted, and the person entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date.
(ii) The Company shall at all times during which the Series C
Preferred Stock shall be outstanding, reserve and keep available out of
its authorized but unissued Common Stock, for the purpose of effecting
the conversion of the Series C Preferred Stock, such number of its duly
authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series C
Preferred Stock. Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value of
the shares of Common Stock issuable upon conversion of the Series C
Preferred Stock, 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 shares of
Common Stock at such adjusted Conversion Price.
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(iii) All shares of Series C Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer be
deemed to be outstanding and all rights with respect to such shares,
including the rights, if any, to receive dividends, notices and to
vote, shall immediately cease and terminate on the Conversion Date,
except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor, and if applicable, cash for any
fractional shares of Common Stock. Any shares of Series C Preferred
Stock so converted shall be retired and cancelled and shall not be
reissued, and the Company may from time to time take such appropriate
action as may be necessary to reduce the number of shares of authorized
Series C Preferred Stock accordingly.
(d) ADJUSTMENTS TO CONVERSION PRICE FOR DILUTING ISSUES.
(i) SPECIAL DEFINITIONS. For purposes of this Subsection 6(d),
the following definitions shall apply:
(A) "OPTION" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire Common Stock
or Convertible Securities, excluding rights or options granted
to employees, vendors, officers, directors and executives of,
and consultants or shareholders to, the Company in an amount
not exceeding the number of Reserved Employee Shares.
(B) "ORIGINAL ISSUE DATE" shall mean the date on
which the first share of Series C Preferred Stock is first
issued.
(C) "CONVERTIBLE SECURITIES" shall mean any evidences
of indebtedness, shares or other securities directly or
indirectly convertible into or exchangeable for Common Stock.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean
all shares of Common Stock issued (or, pursuant to Subsection
6(d)(iii) below, deemed to be issued) by the Company after the
Original Issue Date, other than Reserved Employee Shares and
other than shares of Common Stock issued or issuable:
(1) by reason of a dividend, stock split,
split-up or other distribution on shares of Common
Stock;
(2) upon the exercise of Options as set
forth in Subsection 6(d)(i)(A);
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(3) upon conversion of shares of Series C
Preferred Stock;
(E) "RESERVED EMPLOYEE SHARES" shall mean shares of
Common Stock issued to employees, officers, directors,
shareholders and executives of, and consultants or vendors to,
the Company upon the exercise of options granted under the
Company's employee stock option plans, which plans have been
approved by the Company's stockholders, or as payment of
compensation.
(F) "RIGHTS TO ACQUIRE COMMON STOCK" (or "RIGHTS")
shall mean all rights issued by the Company to acquire Common
Stock whether by exercise of a warrant, option or similar
call, or conversion of any existing instruments, in either
case for consideration fixed, in amount or by formula, as of
the date of issuance.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in the
number of shares of Common Stock into which the Series C Preferred
Stock is convertible shall be made, by adjustment in the applicable
Conversion Price thereof, unless (A) the consideration per share
(determined pursuant to Subsection 6(d)(v) below) for an Additional
Share of Common Stock issued or deemed to be issued by the Company is
less than the Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares, or (B) prior
to such issuance, the Company receives written notice from the holders
of at least a majority of the voting power of all then outstanding
shares of Series A Preferred, Series B Preferred and Series C Preferred
Stock, voting together as a single class, agreeing that no such
adjustment shall be made as the result of the issuance of Additional
Shares of Common Stock.
(iii) ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF
COMMON STOCK. If the Company at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities
or Rights to Acquire Common Stock, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without
regard to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options, Rights or,
in the case of Convertible Securities, the conversion or exchange of
such Convertible Securities, shall be deemed to be Additional Shares of
Common Stock issued as of the time of such issue; provided, however,
that Additional Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined pursuant to
Subsection 6(d)(v) hereof) of such Additional Shares of Common Stock
would be less than the Conversion Price in effect on the date of and
immediately prior to such issue, or such record date, as the case may
be, and provided, further, that in any such case:
(A) No further adjustment in the Conversion Price
shall be made upon the subsequent issue of shares of Common
Stock upon the exercise of such Options, Rights or conversion
or exchange of such Convertible Securities;
(B) Upon the expiration or termination of any
unexercised Option, Right or Convertible Security, the
Conversion Price shall be adjusted immediately to reflect the
Conversion Price which would have been in effect had such
Option, Right or Convertible Security (to the extent
outstanding immediately prior to such expiration or
termination) never been issued; and
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(C) In the event of any change in the number of
shares of Common Stock issuable upon the exercise, conversion
or exchange of any Option, Right or Convertible Security,
including, but not limited to, a change resulting from the
anti-dilution provisions thereof, the Conversion Price then in
effect shall forthwith be readjusted to such Conversion Price
as would have been obtained had the Conversion Price
adjustment that was originally made upon the issuance of such
Option, Right or Convertible Security which were not exercised
or converted prior to such change been made upon the basis of
such change, but no further adjustment shall be made for the
actual issuance of Common Stock upon the exercise or
conversion of any such Option, Right or Convertible Security.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. If the Company shall at any time
after the Original Issue Date issue Additional Shares of Common Stock
(including Additional Shares of Common Stock deemed to be issued
pursuant to Subsection 6(d)(iii), but excluding shares issued as a
dividend or distribution as provided in Subsection 6(f) or upon a stock
split or combination as provided in Subsection 6(e)), without
consideration, or for a consideration per share less than the
Conversion Price in effect on the date of and immediately prior to such
issue, or without the requisite number of notices contemplated by
Subsection 6(d)(ii) hereof, then and in such event, the Conversion
Price shall be reduced by a full ratchet anti-dilution adjustment to
such lesser price (calculated to the nearest cent), but in no case will
convert at a price below $2.80 per share, concurrently with such
issuance at a price less than the original Conversion Price.
Notwithstanding the foregoing, the applicable Conversion Price shall
not be reduced if the amount of such reduction would be an amount less
than $.20, but any such amount shall be carried forward and reduction
with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other
amount or amounts so carried forward, shall aggregate $.20 or more.
(v) DETERMINATION OF CONSIDERATION. For purposes of this
Subsection 6(d), the consideration received by the Company for the
issue of any Additional Shares of Common Stock shall be computed as
follows:
(A) Cash and Property. Such consideration shall:
(1) insofar as it consists of cash, be
computed at the aggregate of cash received by the
Company, excluding amounts paid or payable for
accrued interest or accrued dividends;
(2) insofar as it consists of property other
than cash, be computed at the fair market value
thereof at the time of such issue, as determined in
good faith by the Board; and
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(3) in the event Additional Shares of Common
Stock are issued together with other shares or
securities or other assets of the Company for
consideration which covers both, be the proportion of
such consideration so received, computed as provided
in clauses (1) and (2) above, as determined in good
faith by the Board.
(B) Options, Rights and Convertible Securities. The
consideration per share received by the Company for Additional
Shares of Common Stock deemed to have been issued pursuant to
Subsection 6(d)(iii), relating to Options, Rights and
Convertible Securities, shall be determined by dividing
(1) the total amount, if any, received or
receivable by the Company as consideration for the
issue of such Options, Rights or Convertible
Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the
instruments relating thereto, without regard to any
provision contained therein for a subsequent
adjustment of such consideration) payable to the
Company upon the exercise of such Options, Rights or
the conversion or exchange of such Convertible
Securities, by
(2) the maximum number of shares of Common
Stock (as set forth in the instruments relating
thereto, without regard to any provision contained
therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options, Rights or
the conversion or exchange of such Convertible
Securities.
(e) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company shall
at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Conversion Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Company shall at any time or from time to time after the Original Issue Date
combine the outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event
the Company at any time or from time to time after the Original Issue Date shall
make or issue a dividend or other distribution payable in shares of Common
Stock, then and in each such event the Conversion Price shall be decreased as of
the time of such issuance, by multiplying the Conversion Price by a fraction,
the numerator of which shall be the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such issuance, and the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance plus the number
of shares of Common Stock issuable in payment of such dividend or distribution.
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(g) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event the
Company at any time, or from time to time after the Original Issue Date shall
make or issue, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event provision
shall be made so that the holders of shares of the Series C Preferred Stock
shall receive upon conversion thereof in addition to the number of shares of
Common Stock receivable thereupon, the amount of securities of the Company that
they would have received had their Series C Preferred Stock been converted into
Common Stock on the date of such event and had thereafter, during the period
from the date of such event to and including the Conversion Date, retained such
securities receivable by them as aforesaid during such period given application
to all adjustments called for during such period, under this paragraph with
respect to the rights of the holders of the Series C Preferred Stock.
(h) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. If the
Common Stock issuable upon the conversion of the Series C Preferred Stock shall
be changed into the same or a different number of shares of any class or classes
of stock, whether by capital reorganization, reclassification, or otherwise
(other than a subdivision or combination of shares or stock dividend provided
for above), then and in each such event the holder of each share of Series C
Preferred Stock shall have the right thereafter to convert such share into the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Series C Preferred
Stock might have been converted immediately prior to such reorganization,
reclassification, or change, all subject to further adjustment as provided
herein.
(i) NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series C Preferred Stock against impairment to the extent required hereunder.
(j) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Prices pursuant to this Section 6,
the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and shall file a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based with its corporate records.
The Company shall, upon the reasonable written request of any holder of Series C
Preferred Stock, furnish or cause to be furnished to such holder a similar
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price(s) then in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which then would be received
upon the conversion of Series C Preferred Stock. Despite such adjustment or
readjustment, the form of each or all Series C Preferred Stock certificates, if
the same shall reflect the initial or any subsequent Conversion Price, need not
be changed in order for the adjustments or readjustments to be valid in
accordance with the provisions of this Certificate, which shall control.
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(k) NOTICE OF RECORD DATE. In the event
(i) that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Company;
(ii) that the Company subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock of the
Company (other than a subdivision or combination of its outstanding
shares of Common Stock or a stock dividend or stock distribution
thereon); or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be filed at its principal office and
shall cause to be mailed to the holders of the Series C Preferred Stock
at their last addresses as shown on the records of the Company, or such
transfer agent, at least 10 days prior to the record date specified in
(A) below or 20 days before the date specified in (B) below, a notice
stating
(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be
taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution,
subdivision or combination are to be determined, or
(B) the date on which such reclassification,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to
exchange their shares of Common Stock for securities or other
property deliverable upon such reclassification, dissolution
or winding up.
(l) LIMITATION ON CONVERSION RIGHTS. Notwithstanding anything stated
herein to the contrary, unless and until the issuance and sale of the Series C
Preferred Stock is approved or ratified by the stockholders of the Company in
accordance with the rules of the Nasdaq Stock Market (the "STOCKHOLDER
APPROVAL"), the Series C Preferred Stock cannot be converted into a total number
of shares of Common Stock equal to or greater than twenty percent (20%) of the
number of shares of Common Stock outstanding immediately prior to the issuance
of the Series C Preferred Stock (the "CONVERSION CAP"). The Conversion Rights
are expressly limited by and subject to the Conversion Cap for all purposes,
unless and until the Stockholder Approval is obtained. The Conversion Cap shall
be applied pro rata to the Conversion Rights of each outstanding share of Series
C Preferred Stock, reducing the number of shares of Common Stock into which each
share of Series C Preferred Stock is convertible equally. In no event shall the
number of shares of Common Stock into which the Series C Preferred Stock is
convertible exceed the Conversion Cap prior to the Stockholder Approval. Upon
Stockholder Approval, the Conversion Cap shall terminate for all purposes and
this Certificate shall be deemed amended to delete all references to the
Conversion Cap and the conversion limitation set forth in this Section 6(l). The
Company may, but shall not be required to, file an amendment to its Certificate
of Incorporation to reflect the Stockholder Approval.
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SECTION 7. REDEMPTION.
(a) Upon and at any time subsequent to the third anniversary of the
Original Issue Date (as defined in Section 6(d)(i) above), the Company at its
option may redeem, out of its available cash or cash equivalents, any amount of
the then outstanding and not previously converted (pursuant to Section 6) Series
C Preferred Stock issued on the Original Issue Date, at a price per share equal
to the Original Series C Issue Price, plus any declared, but unpaid dividends
thereon upon notice provided in accordance with Section 7(b). Shares subject to
redemption pursuant to this Section shall be redeemed from each holder of Series
C Preferred Stock on a pro rata basis.
(b) At least thirty (30) days prior to the dates that the Company
elects to redeem shares of the Series C Preferred Stock pursuant to Section 7(a)
(each a "REDEMPTION DATE," together the "REDEMPTION DATES"), the Company shall
send a notice (the "REDEMPTION NOTICE") to all holders of the outstanding Series
C Preferred Stock of such redemption to be effected, specifying the number of
shares to be redeemed from such holder, the Redemption Date, the price per share
to be paid (the "REDEMPTION PRICE") and the place at which payment may be
obtained.
(c) On or prior to the Redemption Date, the Company shall deposit the
Redemption Price of all shares to be redeemed as of such date with a bank or
trust company having aggregate capital and surplus in excess of $50,000,000, as
a trust fund, with irrevocable instructions and authority to the bank or trust
company to pay, upon receipt of notice from the Company that such holder has
surrendered the Series C Preferred Stock share certificates in accordance with
Section 7(d), the Redemption Price of the shares to their respective holders.
Any moneys deposited by the Company pursuant to this Section 7 for the
redemption of shares thereafter converted into shares of Common Stock pursuant
to Section 6 hereof no later than the fifth (5th) day preceding the Redemption
Date shall be returned to the Company forthwith upon such conversion. The
balance of any funds deposited by the Company pursuant to this Section 7
remaining unclaimed at the expiration of one (1) year following such Redemption
Date shall be returned to the Company promptly upon its written request.
(d) On such Redemption Date, each holder of shares of Series C
Preferred Stock to be redeemed shall surrender such holder's certificates
representing such shares to the Company in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. In the event less than all the shares represented
by such certificates are redeemed, a new certificate shall be issued
representing the unredeemed shares. From and after such Redemption Date, all
rights of the holder of such redeemed shares as a holder of Series C Preferred
Stock (except the right to receive the Redemption Price without interest upon
surrender of their certificates) shall cease and terminate with respect to such
shares.
A-12
(e) In the event of a call for redemption of any shares of Series C
Preferred Stock, the Conversion Rights (as defined in Section 6) for such Series
C Preferred Stock shall terminate as to the shares designated for redemption at
the close of business on the fifth (5th) day preceding the Redemption Date,
unless default is made in payment of the Redemption Price.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed this ____ day of January, 2005.
AMEN PROPERTIES, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
President
A-13
EXHIBIT "B"
FORM OF WARRANT CERTIFICATE
THIS WARRANT AND ANY WARRANT SHARES ISSUED UPON EXERCISE OF THIS
WARRANT ARE SUBJECT TO A SECURITIES PURCHASE AGREEMENT, DATED AS OF JANUARY ___,
2005, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL
BE FURNISHED TO THE HOLDER ON REQUEST TO THE SECRETARY OF THE COMPANY. SUCH
SECURITIES PURCHASE AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN
RESTRICTIONS ON DISPOSITION OF THE SECURITIES EVIDENCED BY THIS CERTIFICATE.
THIS WARRANT, THE PURCHASE RIGHTS EVIDENCED BY THIS WARRANT AND ANY
WARRANT SHARES WHICH MAY BE ISSUED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW, AND THIS WARRANT, SUCH PURCHASE RIGHTS AND
WARRANT SHARES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE
SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND QUALIFICATION ARE NOT
REQUIRED.
No. 3 Warrant to Purchase
_______ shares of Common Stock
Dated: January ___, 2005
(subject to adjustment
as described herein)
WARRANT CERTIFICATE
Representing Common Stock Purchase Warrant
AMEN PROPERTIES, INC.
Purchase Price of Common Stock: $4.00 per share
(subject to adjustment)
THIS WARRANT CERTIFICATE (THIS "WARRANT") CERTIFIES that, for value
received, __________________________________, his registered assigns or the
Holder (as defined below) hereof, is entitled, at any time prior to the close of
business on the Expiration Date defined below, to purchase the number of shares
stated above (subject to adjustment as herein provided) of Common Stock of Amen
Properties, Inc., a Delaware corporation (the "COMPANY"), at the purchase price
per share stated above (subject to adjustment as herein provided) (the "PURCHASE
PRICE") upon surrender of this Warrant at the Principal Office of the Company
and payment of such Purchase Price in cash or by bank cashier's or certified
check.
1
This Warrant is one of the Warrants originally issued by the Company,
initially covering an aggregate of 250,000 shares of Common Stock, pursuant to a
Securities Purchase Agreement dated as of January ___, 2005 between the Company
and the purchasers named on the signature pages thereto (the "PURCHASE
AGREEMENT").
SECTION 1. DEFINITIONS. The following terms have the meanings set forth
below. Additional terms are defined elsewhere herein.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Company.
"EXERCISE DATE" with respect to any Warrant means each date on which
Warrant Shares are to be issued upon exercise of such Warrant.
"EXPIRATION DATE" means January ___, 2008
"HOLDER" means the registered holder or holders of this Warrant and any
related Warrant Shares.
"HOLDERS" means the registered holders of all Warrants and any related
Warrant Shares.
"PRINCIPAL OFFICE" means the principal office of the Company which, on
the date hereof, is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇.
The Company shall notify each Warrantholder of any change in its principal
office.
"PURCHASE PRICE" has the meaning assigned to that term in the
introductory paragraph hereof.
"PURCHASERS" means all of the initial Holders of the Warrants who
purchased the Warrants from the Company.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERIES C PREFERRED STOCK" means the Series C Convertible Preferred
Stock, par value $.001 per share, of the Company.
"WARRANTS" means the Company's Common Stock Purchase Warrants and any
Warrant Certificates representing such Common Stock Purchase Warrants (including
the Warrant represented by this Warrant Certificate) issued pursuant to the
Purchase Agreement, each identical as to the terms and conditions of this
Warrant Certificate except as to the number of shares of Common Stock for which
they may be exercised, evidencing, in the aggregate, the right to purchase
initially 250,000 shares of Common Stock, all Warrants issued in exchange,
transfer or replacement thereof.
"WARRANT SHARES" means the shares of Common Stock purchased or
purchasable by the Holder upon the exercise of this Warrant pursuant to Section
2 hereof, and, where the context so requires, the shares of Common Stock
issuable upon exercise of any other Warrant by the Holder thereof.
2
Any capitalized term not otherwise defined herein shall have the
meaning specified in the Purchase Agreement.
SECTION 2. EXERCISE.
A. GENERAL. Subject to the limitation set forth in Section 2E
and any other limitation set forth herein or in the Purchase Agreement or
imposed by applicable law, each Holder shall be entitled to exercise any Warrant
held by it, in whole or in part, at any time or from time to time commencing on
the date of issuance of the Warrant until 5:00 p.m., Midland, Texas time, on the
Expiration Date.
B. MANNER OF EXERCISE. In order to exercise any Warrant in
whole or in part, the Holder shall complete one of the subscription forms
attached hereto, deliver the Warrant to the Company at its Principal Office and
make payment of the Purchase Price pursuant to one of the payment options
provided in this Section 2.B. Payment of the Purchase Price shall be made at the
option of the Holder by one or more of the following methods: (1) by delivery to
the Company of cash, a certified check or a bank cashier's check in an amount
equal to the then aggregate Purchase Price, (2) by instructing the Company to
withhold a number of Warrant Shares then issuable upon exercise of the
particular Warrant with an aggregate Fair Market Value (as defined below) equal
to such Purchase Price, or (3) by surrendering to the Company shares of Common
Stock previously acquired by the Holder with an aggregate Fair Market Value
equal to such Purchase Price, or any combination of the foregoing. Upon receipt
thereof by the Company, the Holder shall immediately be deemed to be a holder of
record of the shares of Common Stock specified in said subscription form, and
the Company shall, as promptly as practicable, and in any event within 10
business days thereafter, execute and deliver or cause to be delivered to the
Holder a certificate or certificates representing the aggregate number of shares
of Common Stock specified in said subscription form. Each stock certificate so
delivered shall be registered in the name of such Holder or such other name as
shall be designated by such Holder, subject to compliance with federal and state
securities laws and Section 4 hereof. If the Warrant shall have been exercised
only in part, the Company shall, at the time of delivery of said stock
certificate or certificates, deliver to the Holder a Warrant in the form of this
Warrant representing the right to purchase the remaining number of shares
purchasable thereunder. The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, execution and delivery of
stock certificates pursuant to this Section 2, except that, in case such stock
certificates shall be registered in a name or names other than the name of the
Holder, funds sufficient to pay all stock transfer taxes which shall be payable
upon the execution and delivery of such stock certificate or certificates shall
be paid by the Holder to the Company at the time of delivering the Warrant to
the Company. As used herein "FAIR MARKET VALUE" on any day shall mean (i) the
average of the daily closing sale prices of the Common Stock during the 20
trading days immediately preceding the day as of which "FAIR MARKET VALUE" is
being determined, on the principal securities exchange on which the Common Stock
is then listed, or if there shall have been no sales of the Common Stock on such
exchange on such day, the mean of the closing bid and asked prices on such
exchange at the end of such day, or (ii) if the Common Stock is not so listed,
the average of the high and low bid and prices on such day in a domestic
over-the-counter market, or (iii) any time the Common Stock is not listed on any
domestic exchange or quoted in a domestic over-the-counter market, the "FAIR
MARKET VALUE" shall be determined by the Board of Directors of the Company.
3
C. TRANSFER RESTRICTION LEGEND. Each Warrant shall bear the
legends set forth on the face of this Warrant. Each certificate for Warrant
Shares issued upon exercise or conversion of this Warrant, unless at the time of
exercise or conversion such Warrant Shares are registered under the Securities
Act, shall bear the legends described in Section 5.9 of the Purchase Agreement.
D. CHARACTER OF WARRANT SHARES. All shares of Common Stock
issuable upon the exercise of the Warrants shall be duly authorized, validly
issued, fully paid and nonassessable.
E. LIMITATION ON EXERCISE. Notwithstanding anything stated
herein to the contrary, unless and until the issuance and sale of the Series C
Preferred Stock and the Warrants are approved or ratified by the stockholders of
the Company in accordance with the rules of the Nasdaq Stock Market (the
"STOCKHOLDER APPROVAL"), the Series C Preferred Stock and the Warrants cannot be
converted into or exercised for (as the case may be) a total number of shares of
Common Stock equal to or greater than twenty percent (20%) of the number of
shares of Common Stock outstanding immediately prior to the issuance of the
Series C Preferred Stock and the Warrants (the "COMMON STOCK CAP"). The exercise
of the Warrants is expressly limited by and subject to this Section 2E for all
purposes unless and until the Stockholder Approval is obtained. Within the
Common Stock Cap, the exercise rights of the Warrants are subordinated to the
conversion rights of the Series C Preferred Stock, such that no Warrant may be
exercised if the number of shares of Common Stock into which the outstanding
shares of Series C Preferred Stock are convertible is equal to or exceeds the
Common Stock Cap. In the event the Common Stock Cap exceeds the number of shares
of Common Stock issuable upon conversion of the Series C Preferred Stock but
less than the number of shares of Common Stock into which the outstanding
Warrants are exercisable, the exercise right of the Warrants shall be reduced
pro rata among the outstanding Warrants. In no event shall the total number of
shares of Common Stock into which the Series C Preferred Stock is convertible
and the Warrants are exercisable exceed the Common Stock Cap prior to the
Stockholder Approval. Upon Stockholder Approval, the Common Stock Cap shall
terminate and the Warrants shall be exercisable in accordance with the terms
hereof excluding this Section 2E.
SECTION 3. OWNERSHIP AND EXCHANGE OF THE WARRANTS.
A. REGISTERED HOLDER. The Company may deem and treat the
person in whose name each Warrant is registered as the Holder and owner thereof
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of such Warrant for exchange or transfer as
provided in this Section 3.
4
B. EXCHANGE AND REPLACEMENT. Any Warrant is exchangeable upon
the surrender thereof by the Holder to the Company at its Principal Office for a
new Warrant or Warrants of like tenor and date representing in the aggregate the
right to purchase the number of shares purchasable thereunder, each new Warrant
to represent the right to purchase such number of shares as shall be designated
by the Holder at the time of surrender. Subject to compliance with Section 4,
each Warrant and all rights thereunder are transferable in whole or in part upon
the books of the Company by the Holder thereof in person or by duly authorized
attorney, and a new Warrant shall be made and delivered by the Company, of the
same class, tenor and date as the Warrant but registered in the name of the
transferee, upon surrender of the Warrant, duly endorsed, at the Principal
Office of the Company. The Company will issue replacement Warrant certificates
upon the loss, theft, destruction or mutilation thereof. Warrants shall be
promptly canceled by the Company upon the surrender thereof in connection with
any exchange, transfer or replacement. The Company shall pay all expenses, taxes
(other than stock transfer taxes) and other charges payable in connection with
the preparation, execution and delivery of Warrants pursuant to this Section 3.
SECTION 4. TRANSFER OF WARRANTS OR WARRANT SHARES. This Warrant and the
related Warrant Shares shall not be transferable except in accordance with the
terms and conditions specified in the Purchase Agreement and in accordance with
applicable law.
SECTION 5. ADJUSTMENT PROVISIONS. The aggregate number of shares of
Common Stock issuable upon exercise of the Warrants, and the Purchase Price per
share, shall be subject to adjustment in the events and to the extent set forth
in EXHIBIT I.
SECTION 6. NOTIFICATIONS BY THE COMPANY. The Holder shall be entitled
to notices of certain events related to the Company to the same extent and in
the same manner as the holders of the Series C Preferred Stock pursuant to the
terms of the Certificate of Designations of the Series C Preferred Stock.
SECTION 7. NOTICES. Any notice or other document required or permitted
to be given or delivered to Holders shall be delivered at, or sent by certified
or registered mail to each Holder at, the address set forth for such Holder on
the signature page hereof or to such other address as shall have been furnished
to the Company in writing by such Holder. Any notice or other document required
or permitted to be given or delivered to the Company shall be sent by certified
or registered mail to the Company, at its Principal Office, attention:
President, or other such address as shall have been furnished to the Holders by
the Company.
SECTION 8. NO RIGHTS AS STOCKHOLDER; LIMITATION OF LIABILITY. This
Warrant shall not entitle any Holder thereof to any of the rights of a
stockholder of the Company. No provision hereof, in the absence of affirmative
action by the Holder to purchase shares of Common Stock, and no enumeration
herein of the rights or privileges of the Holder of a Warrant, shall give rise
to any liability of such Holder for the Purchase Price or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.
SECTION 9. MISCELLANEOUS. This Warrant shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware.
This Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party (or any
predecessor in interest thereof) against which enforcement of the same is
sought. The headings in this Warrant are for purposes of reference only and
shall not affect the meaning or construction of any of the provisions hereof.
5
WITNESS the due execution of this Warrant by a duly authorized officer
of the Company.
AMEN PROPERTIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇, President
ATTEST:
Secretary
ACCEPTED this ____ day of January, 2005:
[Holder] [Holder's address]
6
FULL SUBSCRIPTION FORM
____ To Be Executed by the Registered Holder
if He Desires to Exercise the Warrant in Full
The undersigned hereby exercises the right to purchase the __________
shares of Common Stock covered by the attached Warrant at the date of this
subscription and herewith makes payment of the sum of $____________ representing
the Purchase Price of $______________ per share in effect at this date.
Certificates for such shares shall be issued in the name of and delivered to the
undersigned, unless otherwise specified in written instructions signed by the
undersigned and accompanying this subscription.
Dated: _________, ____ [ ]
Signature ____________________
Address: _____________________
---------------------
7
PARTIAL SUBSCRIPTION FORM
___ To Be Executed by the Registered Holder
if He Desires to Exercise the Warrant in Part
The undersigned hereby exercises the right to purchase __________
shares of the total number of shares of Common Stock covered by the attached
Warrant at the date of this subscription and herewith makes payment of the sum
of $__________ representing the Purchase Price of __________ per share in effect
at this date. Certificates for such shares and a new Warrant of like tenor and
date for the balance of the shares not subscribed for shall be issued in the
name of and delivered to the undersigned, unless otherwise specified in written
instructions signed by the undersigned and accompanying this subscription.
(THE FOLLOWING PARAGRAPH NEED BE COMPLETED ONLY IF THE PURCHASE PRICE
AND NUMBER OF SHARES OF COMMON STOCK SPECIFIED IN THE ATTACHED WARRANT HAVE BEEN
ADJUSTED PURSUANT TO EXHIBIT I THEREOF.)
The shares hereby subscribed for constitute __________ shares of Common
Stock (rounded to the nearest whole share) resulting from adjustment of
______________ shares of the total of _______________ shares of Common Stock
covered by the attached Warrant, as said shares were constituted at the date of
the Warrant, leaving a balance of ________ shares of Common Stock, as
constituted at the date of the Warrant, to be covered by the new Warrant.
Dated: _________,____ [ ]
Signature _______________________
Address: _______________________
-----------------------
8
EXHIBIT I
ANTI-DILUTION PROVISIONS
The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Purchase Price shall be subject to adjustment from time to time
upon the happening of certain events as hereinafter described.
1. SPECIAL DEFINITIONS. For purposes of this EXHIBIT I, the following
definitions shall apply:
(A) "OPTION" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or
Convertible Securities, excluding rights, options or shares granted or
issued to employees, vendors, officers, directors and executives of,
and consultants or shareholders to, the Company in an amount not
exceeding the number of Reserved Employee Shares.
(B) "ORIGINAL ISSUE DATE" shall mean the date of this Warrant.
(C) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock, except for the
Series C Preferred Stock issued on the Original Issue Date.
(D) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares
of Common Stock issued (or, pursuant to Section 3 below, deemed to be
issued) by the Company after the Original Issue Date, other than
Reserved Employee Shares and other than shares of Common Stock issued
or issuable:
(1) by reason of a stock dividend, stock split,
split-up or other distribution on shares of Common Stock;
(2) upon the exercise of Options;
(3) upon conversion of shares of Series C Preferred
Stock;
(E) "RESERVED EMPLOYEE SHARES" shall mean shares of Common
Stock issued to employees, officers, directors, shareholders and
executives of, and consultants or vendors to, the Company either
directly as compensation or upon the exercise of options granted by the
Company.
(F) "RIGHTS TO ACQUIRE COMMON STOCK" (or "RIGHTS") shall mean
all rights issued by the Company to acquire Common Stock whether by
exercise of a warrant, option or similar call, or conversion of any
existing instruments, in either case for consideration fixed, in amount
or by formula, as of the date of issuance.
9
2. NO ADJUSTMENT OF CONVERSION PRICES. No adjustment in the number of
Warrant Shares shall be made unless (i) the consideration per share (determined
pursuant to Section 5 below) for an Additional Share of Common Stock issued or
deemed to be issued by the Company is less than the Purchase Price in effect on
the date of, and immediately prior to, the issue of such Additional Shares of
Common Stock, or (ii) prior to such issuance, the Company receives written
consent from the holders of at least a majority of the voting power of all then
outstanding Warrants agreeing that no such adjustment shall be made as the
result of the issuance of Additional Shares of Common Stock.
3. ISSUE OF SECURITIES DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON
STOCK. If the Company at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or Rights to Acquire
Common Stock, then the maximum number of shares of Common Stock (as set forth in
the instrument relating thereto without regard to any provision contained
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options, Rights or, in the case of Convertible Securities, the
conversion or exchange of such Convertible Securities, shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue; provided,
however, that Additional Shares of Common Stock shall not be deemed to have been
issued unless the consideration per share (determined pursuant to Section 5
hereof) of such Additional Shares of Common Stock would be less than the
Purchase Price in effect on the date of and immediately prior to such issue, or
such record date, as the case may be, and provided, further, that in any such
case:
(A) No further adjustment in the Purchase Price shall be made
upon the subsequent issue of shares of Common Stock upon the exercise
of such Options, Rights or conversion or exchange of such Convertible
Securities;
(B) Upon the expiration or termination of any unexercised
Option, Right or Convertible Security, the Purchase Price shall be
adjusted immediately to reflect the Purchase Price which would have
been in effect had such Option, Right or Convertible Security (to the
extent outstanding immediately prior to such expiration or termination)
never been issued; and
(C) In the event of any change in the number of shares of
Common Stock issuable upon the exercise, conversion or exchange of any
Option, Right or Convertible Security, including, but not limited to, a
change resulting from the anti-dilution provisions thereof, the
Purchase Price then in effect shall forthwith be readjusted to such
Purchase Price as would have been obtained had the Purchase Price
adjustment that was originally made upon the issuance of such Option,
Right or Convertible Security which were not exercised or converted
prior to such change been made upon the basis of such change, but no
further adjustment shall be made for the actual issuance of Common
Stock upon the exercise or conversion of any such Option, Right or
Convertible Security.
4. ADJUSTMENT OF CONVERSION PRICES UPON ISSUANCE OF ADDITIONAL SHARES
OF COMMON STOCK. If the Company shall at any time after the Original Issue Date
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3, but excluding shares issued as
a dividend or distribution as provided in Section 7 or upon a stock split or
combination as provided in Section 6, without consideration, or for a
consideration per share less than the Purchase Price in effect on the date of
and immediately prior to such issue, or without the requisite consent
contemplated by Section 2 hereof, then and in such event, the Purchase Price
shall be reduced by a full ratchet anti-dilution adjustment to such lesser price
(calculated to the nearest cent), but in no case will the Purchase Price be
reduced below $2.80 per share, concurrently with such issuance at a price less
than the original Purchase Price. Notwithstanding the foregoing, the applicable
Purchase Price shall not be reduced if the amount of such reduction would be an
amount less than $.20, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $.20 or more.
10
5. DETERMINATION OF CONSIDERATION. For purposes of this Exhibit I, the
consideration received by the Company for the issue of any Additional Shares of
Common Stock shall be computed as follows:
(A) CASH AND PROPERTY. Such consideration shall:
(1) insofar as it consists of cash, be computed at
the aggregate of cash received by the Company, excluding
amounts paid or payable for accrued interest or accrued
dividends;
(2) insofar as it consists of property other than cash, be
computed at the fair market value thereof at the time of such
issue, as determined in good faith by the Board; and
(3) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (1) and (2)
above, as determined in good faith by the Board.
(B) OPTIONS, RIGHTS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Company for Additional Shares
of Common Stock deemed to have been issued pursuant to Section 3,
relating to Options, Rights and Convertible Securities, shall be
determined by dividing
(1) the total amount, if any, received or receivable
by the Company as consideration for the issue of such Options,
Rights or Convertible Securities, plus the minimum aggregate
amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such
consideration) payable to the Company upon the exercise of
such Options, Rights or the conversion or exchange of such
Convertible Securities, by
(2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options,
Rights or the conversion or exchange of such Convertible
Securities.
11
6. ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Company shall
at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Stock, the Purchase Price then in effect
immediately before that subdivision shall be proportionately decreased. If the
Company shall at any time or from time to time after the Original Issue Date
combine the outstanding shares of Common Stock, the Purchase Price then in
effect immediately before the combination shall be proportionately increased.
Any adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
7. ADJUSTMENT FOR CERTAIN DIVIDENDS AND DISTRIBUTIONS. In the event the
Company at any time or from time to time after the Original Issue Date shall
make or issue a dividend or other distribution payable in shares of Common
Stock, then and in each such event the Purchase Price shall be decreased as of
the time of such issuance, by multiplying the Purchase Price by a fraction, the
numerator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance, and the
denominator of which shall be the total number of shares of Common Stock issued
and outstanding immediately prior to the time of such issuance plus the number
of shares of Common Stock issuable in payment of such dividend or distribution.
8. ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. In the event the
Company at any time, or from time to time after the Original Issue Date shall
make or issue, a dividend or other distribution payable in securities of the
Company other than shares of Common Stock, then and in each such event provision
shall be made so that the Holders shall receive upon exercise of the Warrant in
addition to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Company that they would have received had the
Warrants been exercised into Warrant Shares on the date of such event and had
thereafter retained such securities receivable by them as aforesaid during such
period given application to all adjustments called for during such period, under
this paragraph with respect to the rights of the Holders.
9. ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE, OR SUBSTITUTION. If the
Warrant Shares shall be changed into the same or a different number of shares of
any class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above), then and in each such event the
Holder shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the number of
shares of Common Stock into which the Warrant might have been exercised
immediately prior to such reorganization, reclassification, or change, all
subject to further adjustment as provided herein.
10. NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
EXHIBIT I and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holders against
impairment to the extent required hereunder.
12
11. CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Purchase Price pursuant to this EXHIBIT I, the
Company at its expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and shall file a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based with its corporate records. The Company
shall, upon the reasonable written request of any Holder furnish or cause to be
furnished to such Holder a similar certificate setting forth (i) such
adjustments and readjustments, (ii) the Purchase Price then in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which then would be received upon the exercise of this Warrant. Despite such
adjustment or readjustment, the form of each or all Warrants, if the same shall
reflect the initial or any subsequent Purchase Price, need not be changed in
order for the adjustments or readjustments to be valid in accordance with the
provisions of this Warrant, which shall control.
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