REGENT ENERGY CORPORATION
WARRANT AGREEMENT
Dated as of March 1, 2001
THIS WARRANT AGREEMENT (Agreement), dated as of March 1, 2001 by and among
REGENT ENERGY CORPORATION, a Texas corporation (Company), and DAVID A. RAPAPORT,
as Warrant Agent (Warrant Agent), and each of their successors and assigns.
W I T N E S S E T H:
WHEREAS, in accordance with the terms of a Financing Terms Agreement dated
as of March 1, 2001 (Financing Terms Agreement) by and among the Company,
various Purchasers (Purchasers) and David A. Rapaport, as escrow agent (Escrow
Agent), the Company has agreed to issue to up to 585,000 Warrants (up to 325,000
Warrants to Purchasers, 130,000 Warrants to Generation Capital Associates, and
up to 130,000 Warrants to Bathgate McColley Capital Group, LLC). A copy of the
Financing Terms Agreement has been provided to Warrant Agent. Each Warrant
entitles the holder thereof to purchase one share of Common Stock; and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of the Warrants, the issuance of
certificates representing the Warrants, the exercise of the Warrants and the
rights of the holders thereof (Holders).
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the Holders, and
the Warrant Agent, the parties hereto agree as follows:
1. DEFINITIONS. As used herein (and in addition to the definitions set forth
above in the Recitals), the following terms shall have the following meanings,
unless the context shall otherwise require:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Business Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its business shall be administered,
which office is located on the date hereof at 333 Sandy Springs Circle, Suite
230, Atlanta, GA 30328.
(c) "Cashless Exercise" shall have the meaning assigned to it Section 8 (a)
hereof.
(d) "Common Stock" shall have the meaning assigned to it in Section 8(i)
hereof.
(e) "Warrants" shall mean the Common Stock Purchase Warrants of the
Corporation which have been or may be issued pursuant to the Financing Terms
Agreement.
(f) Reserved
(g) "Commission" shall mean the Securities and Exchange Commission.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Exercise Date" shall mean, subject to the provisions of Section 5(b)
hereof, as to any Warrant, the date on which the Warrant Agent shall have
received both (i) the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder hereof or his
attorney duly authorized in writing; and (ii) payment in cash or by official
bank or certified check made payable to the Warrant Agent for the account of the
Company, in the amount in lawful money of the United States of America equal to
the applicable Purchase Price (as hereinafter defined) in good funds, or (iii)
in the case of a Cashless Exercise, the cashless exercise form thereon duly
executed by the Registered Holder hereof or his attorney duly authorized in
writing.
(j) "Exercise Price" shall mean, subject to modification and adjustment as
provided in Section 8 hereof, $1.50 per share for the Warrants, and further
subject to the Company's right, in its sole discretion, to decrease the Exercise
Price on not less than thirty (30) days prior written notice to the Registered
Holders.
(k) "Initial Warrant Exercise Date" shall mean the date of issuance of the
Warrants.
(l) "Market Price" shall mean
(i) if the Common Stock is listed, or admitted to unlisted trading
privileges on a national securities exchange, or is traded on the Nasdaq
National Market or Nasdaq, the last reported closing sale price on the each
trading day of any measurement period to which such Market Price relates,
in each case as officially reported by the principal securities exchange on
which the Common Stock is listed or admitted to unlisted trading privileges
or by the Nasdaq National Market or Nasdaq, or
(ii) if the Common Stock is not listed or admitted to unlisted trading
privileges, on any national securities exchange, or traded on the Nasdaq
National Market or Nasdaq, but is traded on the NASD OTCBB then the Market
Price is the last reported high bid price of the Common Stock reported by
the NASD OTCBB; or
(iii) if the Common Stock is not listed or admitted to unlisted
trading privileges, on any national securities exchange, or traded on the
Nasdaq National Market or Nasdaq, but is traded in the over-the-counter
market, then the Market Price is the last reported high bid price of the
Common Stock reported by the National Quotation Bureau, Inc. or similar
bureau if the National Quotation Bureau, Inc. is no longer reporting such
information on the date of the event to which such Market Price relates,
and if no such prices are reported on such date, then the average of the
last so reported bid and asked prices on the last five trading days on
which such prices are reported immediately preceding such date; or
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(iv) if the Common Stock is neither listed, nor admitted to unlisted
trading privileges on a national securities exchange, nor traded on the
Nasdaq National Market or Nasdaq, nor on the NASD OTCBB, no traded in the
over-the-counter market, then the fair market value of the Common Stock,
not less that the book value thereof, as of the date of the event to which
such Market Price relates, as determined in good faith (using customary
valuation methods) by the Board of Directors of the Company, which
determination shall be evidenced by a resolution of the Board of Directors
and based on the best information available to it.
(m) "NASD" shall mean the National Association of Securities Dealers, Inc.
(n) "NASD OTCBB" shall mean the electronic quotation reporting system for
over-the-counter securities operated by the NASD.
(o) "Nasdaq" shall mean the Nasdaq SmallCap Market.
(p) "Financing Terms Agreement" shall mean the Financing Terms Agreement by
and among the Company, various Purchasers and David A. Rapaport, as escrow agent
(Escrow Agent) dated as of March 1, 2001.
(q) Reserved
(r) Reserved
(s) "Registered Holder" shall mean each person in whose name a Warrant
Certificate representing any of the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(t) "Transfer Agent" shall mean Atlas Stock Transfer Company, or its
authorized successor.
(u) "Warrant Certificate" shall mean a certificate representing one or more
of the Warrants substantially in the form annexed as Exhibit A.
(v) "Warrant Expiration Date" shall mean, 5:00 p.m. (New York time on the
fifth anniversary of the issuance of any particular Warrants, as set forth on
the respective Warrant Certificate for such Warrants.
2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) Each Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase at the Exercise Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Common upon the exercise thereof in accordance with the terms
hereof (subject to modification and adjustment as provided in Section 8 hereof).
(b) From time to time, up to the Warrant Expiration Date, the Warrant Agent
shall countersign and deliver Warrant Certificates in required denominations of
one or whole number multiples thereof to the person entitled thereto in
connection with any transfer or exchange permitted under this Agreement. Except
as provided herein, no Warrant Certificates shall be
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(c) issued except: (i) Warrant Certificates initially issued hereunder and
those issued on or after the Initial Warrant Exercise Date, upon the exercise of
fewer than all Warrants held by the exercising Registered Holder, (ii) Warrant
Certificates Issued after the date hereof in accordance with the terms of the
Financing Terms Agreement, (iii) Warrant Certificates issued upon any transfer
or exchange of Warrants, (iv) Warrant Certificates issued in replacement of
lost, stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7,
and iv) at the option of the Company, Warrant Certificates may be issued in such
form as may be approved by its Board of Directors, to reflect any adjustment or
change in the Exercise Price, the number of shares of Common Stock purchasable
upon exercise of the Warrants. made pursuant to the Financing Terms Agreement or
Section 8 hereof.
3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibit A (the provisions of which are hereby incorporated herein) and
may have such letters, numbers or other marks of identification or designation
and such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any rule or regulation
of any stock exchange on which the Warrants may be listed, or to conform to
usage. The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates) and issued in registered form.
Warrants shall be numbered serially with the letters "WA."
(b) Warrant Certificates shall be executed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President or any Vice President
and by its Chief Financial Officer, Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company after the date of
signature but before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issuance and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company. After countersignature by the Warrant Agent, Warrant Certificates shall
be delivered by the Warrant Agent to the Registered Holder promptly and without
further action by the Company.
4. EXERCISE.
(a) Warrants in denominations of one or whole number multiples thereof may
be exercised by the Registered Holder thereof commencing at any time on or after
the Initial Warrant Exercise Date, but not after the Warrant Expiration Date,
upon the terms and subject to the conditions set forth herein and in the
applicable Warrant Certificate. Warrants may be exercised by their holders as
follows: The exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Subscription Form (cash
or cashless) on the reverse side thereof duly filled in and executed, to the
Warrant Agent at its business office, together with payment to the Warrant Agent
of the Exercise Price (as of the date of such surrender) of the Warrants then
being exercised (in the case of an exercise for cash) and an amount equal to any
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applicable transfer tax and, if requested by the Company, any other taxes or
governmental charges which the Company may be required by law to collect in
respect of such exercise.
(b) Payment of the Exercise Price (if applicable) and other amounts may be
made by wire transfer of good funds, or by certified or bank cashier's check,
payable in lawful money of the United States of America for the benefit of the
Company and deliver such payment to the Warrant Agent who shall in turn deliver
the payment to the Company. No adjustment shall be made for any cash dividends,
whether paid or declared, on any securities issuable upon exercise of a Warrant.
A Warrant shall be deemed to have been exercised immediately prior to the close
of business on the Exercise Date and upon exercise thereof, the person entitled
to receive the securities deliverable upon such exercise shall be treated for
all purposes as the holder of the securities issuable thereby as of the close of
business on the Exercise Date. . As soon as practicable on or after the Exercise
Date and in any event within five business days after such date, if one or more
Warrants have been exercised in the manner described in this subsection (a), the
Warrant Agent on behalf of the Company shall cause to be issued to the person or
persons entitled to receive the same a Common Stock certificate or certificates
for the shares of Common Stock deliverable upon such exercise. Upon the exercise
of any one or more Warrants, the Warrant Agent shall promptly notify the Company
in writing of such fact and of the number of securities delivered upon such
exercise and shall cause payment in cash or by check made payable to the order
of the Company, equal to the Exercise Price of such Warrants (if applicable), to
be deposited promptly in the Company's bank account or paid directly to the
Company, as specified by the Company.
(c) The Company shall not be required to issue fractional shares on the
exercise of Warrants. Warrants may be exercised only in such multiples as are
required to permit the issuance by the Company of one or more whole shares. If
one or more Warrants shall be presented for exercise in full at the same time by
the same Registered Holder, the number of whole shares which shall be issuable
upon such exercise thereof shall be computed on the basis of the aggregate
number of shares purchasable on exercise of the Warrants presented. If any
fraction of a share would, except for the provisions provided herein, be
issuable on the exercise of any Warrant (or specified portion thereof), the
Company shall pay an amount in cash equal to such fraction multiplied by the
then current Market Price of a share of Common Stock.
5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery thereof, be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights, taxes, liens
and charges with respect to the issue thereof, and that upon issuance such
shares shall be listed on each securities exchange, if any, on which the other
shares of outstanding Common Stock of the Company are then listed.
(b) The Company has placed 585,000 shares of Common Stock in escrow with
Escrow Agent pursuant to Joint Escrow Instructions dated as of March 1, 2001
(Escrow Agreement) to be delivered by Escrow Agent upon exercise of Warrants.
(c) The Company covenants that it will file a registration statement under
the federal securities laws or a post-effective amendment (Registration
Statement) covering the Warrants and
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(d) the shares of Common Stock issuable upon exercise of the Warrants
(Warrants Shares), use its best efforts to cause the same to become effective
and to keep such Registration Statement current on or after the Initial Warrant
Exercise Date and while any of the Warrants are outstanding and deliver a
prospectus which complies with Section 10(a)(3) of the Act to the Registered
Holder exercising the Warrant (except, if in the opinion of counsel to the
Company, such registration is not required under the federal securities laws or
if the Company receives a letter from the staff of the Commission stating that
it would not take any enforcement action if such registration is not effected;
PROVIDED, HOWEVER, that if at the time of exercise of any Warrants the Company
does not have in place an effective Registration Statement or is otherwise, in
the good faith determination of the Board of Directors of the Company, precluded
by applicable laws from issuing the underlying shares of Common Stock, the
Company may, in lieu of issuance of the shares of Common Stock, elect to redeem
the Warrants duly surrendered for exercise for a price per Warrant equal to the
difference between the Market Price of the securities for which such Warrant is
exercisable on the date of such submission and the Exercise Price of such
Warrants, and in the event of such redemption, the Company will pay to the
holder of such Warrants the above-described redemption price in cash within ten
(10) business days after receipt of notice from the Warrant Agent that such
Warrants have been submitted for exercise. The Company will use its best efforts
to obtain appropriate approvals or registrations under state "blue sky"
securities laws with respect to any such securities. However, Warrants may not
be exercised by, or shares of Common Stock issued to, any Registered Holder in
any state in which such exercise or issuance would be unlawful.
(e) The Company shall pay all documentary, stamp or similar taxes and other
governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any;
provided, however, that the Company shall not be required (i) to pay any tax
which may be payable in respect of any transfer involved in the transfer and
delivery of Warrant Certificates; or (ii) to issue or deliver any certificate
for shares of Common Stock or other securities upon the exercise of any Warrant
Certificate until any such tax shall have been paid, all such tax being payable
by the holder of such Warrant Certificate at the time of surrender.
(f) If the Warrant Agent is not also the Transfer Agent, the Warrant Agent
is hereby appointed attorney-in-fact for the Company to instruct the Transfer
Agent and/or the Escrow Agent to issue and deliver shares of Common Stock upon
the exercise of Warrants.
6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants of the same class or may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Business Office, and, promptly following
satisfaction of the terms and provisions hereof, the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor the
Warrant Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
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(b) The Warrant Agent shall keep, at its office, records in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with customary practice.
Upon due presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute and the Warrant Agent shall issue and
deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants of the same
class.
(c) With respect to all Warrant Certificates presented for registration of
transfer, or for exchange or exercise, the Subscription Form (cash or cashless)
on the reverse thereof shall be duly endorsed or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder
thereof or his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed on the Registered Holder by the Warrant
Agent for any exchange or registration of transfer of Warrant Certificates. In
addition, the Company may require payment by such holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange in
case of mutilated Warrant Certificates shall be promptly canceled by the Warrant
Agent and thereafter retained by the Warrant Agent until termination of this
Agreement.
(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof and of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a duly authorized officer of the Company or
the Warrant Agent) for all purposes and shall not be affected by any notice to
the contrary.
7. LOSS OR MUTILATION. Upon receipt by the Company and the Warrant Agent of
evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall (in the absence of notice to the Company and/or the
Warrant Agent that a new Warrant Certificate has been acquired by a bona fide
purchaser) countersign and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Applicants for substitute Warrant Certificates shall also comply with
such other reasonable regulations and pay such other reasonable charges and
provide a bond (if necessary) as the Warrant Agent may prescribe.
8. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE PRICE.
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:
(a) ADJUSTMENTS PURSUANT TO THE FINANCING TERMS AGREEMENT. The Warrants
shall be Cashless Exercise at any time there is not an effective Registration
Statement with current prospectus available covering the Warrants and the
Warrants Shares.
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(b) "Cashless Exercise" shall mean that the Warrant may be exercised
without the payment of any other consideration, commission or remuneration, by
execution of the Cashless Exercise Subscription Form. The number of shares of
Common Stock or other securities to be issued in exchange for the Warrant will
be computed by subtracting the exercise price from the Market Price on the date
of exercise, multiplying that amount by the number of Warrants being exercised,
and dividing by the Market Price as of the same date.
(c) DIVIDENDS, STOCK SPLITS, REVERSE SPLITS, ETC. In case the Company shall
(i) pay a dividend in, or make a distribution of, shares of Common Stock or of
capital stock convertible into Common Stock on its outstanding Common Stock,
(ii) subdivide its outstanding shares of Common Stock into a greater number of
such shares, or (iii) combine its outstanding shares of Common Stock into a
smaller number of such shares, the total number of shares of Common Stock
purchasable upon the exercise of each Warrant outstanding immediately prior
thereto shall be adjusted so that the Registered Holder of any Warrant
Certificate thereafter surrendered for exercise shall be entitled to receive, at
the same aggregate Exercise Price, the number of shares of Common Stock which
such holder would have owned or have been entitled to receive immediately
following the happening of any of the events described above had such Warrant
been exercised in full immediately prior to the occurrence of such event. Any
adjustment made pursuant to this subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this subsection, the
Registered Holder of any Warrant Certificate thereafter surrendered for exercise
shall become entitled to receive shares of two or more classes of capital stock
of the Company, the Board of Directors of the Company (whose determination shall
be conclusive and shall be evidenced by a Board resolution filed with the
Warrant Agent) shall determine the allocation of the Exercise Price among shares
of such classes of capital stock.
(d) NO CHANGE IN AGGREGATE EXERCISE PRICE. In the event of any adjustment
of the total number of shares of Common Stock purchasable upon the exercise of
Warrants pursuant to subsection (a) above, the aggregate Exercise Price of each
such Warrant shall remain unchanged, but the number of shares of capital stock
obtainable on exercise of each such Warrant shall be adjusted as provided in
subsection (a) above.
(e) REORGANIZATION OR RECLASSIFICATION. In the event of a capital
reorganization or a reclassification of the Common Stock (except as provided in
subsection (b) above or subsection (f) below), each Registered Holder of a
Warrant, upon exercise of such Warrant, shall be entitled to receive at the same
aggregate Exercise Price, in substitution for the Common Stock to which such
Registered Holder would have become entitled upon exercise immediately prior to
such reorganization or reclassification, the shares or other securities or
property of the Company (or cash) that he would have been entitled to receive
upon such reorganization or reclassification if such Warrant had been exercised
immediately prior thereto; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, after consultation with
outside counsel to the Company, whose determination shall be conclusive and
shall be evidenced by a certified Board resolution filed with the Warrant Agent)
shall be made for the application of this Section 8 with respect to the rights
and interests thereafter of the Registered Holders of all then outstanding
Warrants (including but not limited to the allocation of the Exercise Price
among shares of classes of capital stock), to the end that this Section 8
including the adjustments of the number of shares of Common Stock or other
securities purchasable and the Exercise Price thereof) shall hereafter be
reflected, as nearly as reasonably practicable, in all subsequent exercises of
the Warrants for any shares or securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrants.
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(e) CERTIFICATE OF ADJUSTMENT. Whenever the number of shares of Common
Stock or other securities purchasable upon exercise of a Warrant is adjusted as
provided in the Financing Terms Agreement or this Section 8, the Company will
promptly file with the Warrant Agent a certificate signed by a Chairman or
Vice-Chairman of the Board or the President or a Vice President of the Company
and by the Chief Financial Officer, Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Company setting forth the number and
kind of securities or other property purchasable upon exercise of a Warrant, as
so adjusted, stating that such adjustments in the number or kind of shares or
other securities or property conform to the requirements of the Financing Terms
Agreement or this Section 8, and setting forth a brief statement of the facts
accounting for such adjustments. Promptly after receipt of such certificate, the
Company, or the Warrant Agent at the Company's request, will deliver, by
first-class mail, postage pre-paid, a brief summary thereof (to be supplied by
the Company) to all Registered Holders of the outstanding Warrant Certificates;
provided, however, that failure to file or to give any notice required under
this subsection, or any defect therein, shall not affect the legality or
validity of any such adjustments under the Financing Terms Agreement or this
Section 8; and provided, further, that, where appropriate, such notice may be
given in advance and included as part of the notice required to be given
pursuant to Section 12 hereof.
(f) MERGER OR CONSOLIDATION. In case of any consolidation of the Company
with, or merger of the Company into another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety in a transaction involving as an element thereof the distribution of
the consideration received by the Company therefrom, the corporation formed by
such consolidation or merger or the corporation which shall have acquired such
assets, as the case may be, shall execute and deliver to the Warrant Agent a
supplemental warrant agreement provided that the Registered Holder of each
Warrant then outstanding shall have the right thereafter (until the expiration
of such Warrant) to receive, upon exercise of such Warrant, solely the kind and
amount of shares of stock and other securities and property (or cash) receivable
upon such consolidation, merger, sale or transfer by a holder of the number of
shares of Common Stock of the Company for which such Warrant could have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments, which shall
be as nearly equivalent as may be practicable to the adjustments provided in
this Section 8. The above provision of this Subsection 8(f) shall similarly
apply to successive consolidations, mergers, sales or transfers.
(g) EFFECT OF ADJUSTMENTS ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number or kind of shares or other securities issuable upon
exercise of Warrants, Warrant Certificates theretofore or thereafter issued may
continue to express the same price and number and kind of shares as are stated
in the Warrant Certificates initially issuable pursuant to this Warrant
Agreement.
(h) ASSISTANCE OF ACCOUNTING FIRM IN MAKING COMPUTATIONS. The Company shall
retain a firm of independent public accountants of recognized standing, which
may be the accountants regularly retained by the Company, selected by the Board
of Directors of the Company or the Executive Committee of said Board, and not
disapproved by the Warrant Agent, to make any computation required under this
the Agreement, and a certificate signed by such firm shall, in the absence of
fraud or gross negligence, be conclusive evidence of the correctness of any
computation made under this Section.
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(i) "COMMON STOCK". The term "Common Stock" shall mean (i) the class of
stock designated as Common Stock in the Certificate of Incorporation of the
Company, as amended, at the date of this Agreement; or (ii) any other class of
stock resulting from successive changes or reclassifications of such Common
Stock consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. In the event that at any time as a
result of an adjustment made pursuant to this Section 8, the Registered Holder
of any Warrant thereafter surrendered for exercise shall become entitled to
receive any shares of capital stock of the Company other than shares of Common
Stock, thereafter the number of such other shares obtainable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in this Section 8, and all other provisions of this
Agreement, with respect to the Common Stock, shall apply on like terms to any
such other shares.
9. CONCERNING THE WARRANT AGENT.
(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity
for the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not, by issuing and delivering Warrant
Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates (except its countersignature thereof) or the Warrants represented
thereby or of any securities or other property delivered upon exercise of any
Warrant or whether any stock issued upon exercise of any Warrant is fully paid
and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Exercise Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such adjustments,
when made, or with respect to the method employed in making the same (except
with respect to the exercise of Warrant Certificates after actual notice of any
adjustment of the Exercise Price). The Warrant Agent shall not (i) be liable for
any recital or statement of fact contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties (except its
countersignature on the Warrant Certificates and such statements or recitals as
describe the Warrant Agent or action taken or to be taken by it); (ii) be
responsible for any failure on the part of the Company to comply with any of its
covenants and obligations contained in this Agreement or in any Warrant
Certificate; or (iii) be liable for any act or omission in connection with this
Agreement except for its own gross negligence, bad faith or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board of Directors, Chief Executive Officer, Chief Financial
Officer, President or any Vice President (unless other evidence in respect
thereof is herein specifically prescribed). The Warrant Agent shall not be
liable for any action taken, suffered or omitted by it in accordance with such
notice, statement, instruction, request, direction, order or demand reasonably
believed by it to be genuine.
10
(e) The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder; the Company further agrees to indemnify the Warrant Agent and save it
harmless from and against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's gross
negligence, bad faith or willful conduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities resulting as a
result of the Warrant Agent's own gross negligence or willful misconduct), after
giving thirty (30) days' prior written notice to the Company. At least fifteen
(15) days prior to the date such resignation is to become effective, the Warrant
Agent shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, or any inability of the Warrant Agent to act as such
hereunder, the Company shall appoint in writing a new warrant agent.
If the Company shall fail to make such appointment within a period of
fifteen (15) days after it has been notified in writing of such resignation by
the resigning Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new warrant agent. Any new warrant agent, whether appointed by the Company
or by such a court, shall be a bank or trust company having a capital and
surplus, as shown by its last published report to its stockholders deemed by the
Company to be adequate, or a stock transfer company. After acceptance in writing
of such appointment by the new warrant agent is received by the Company, such
new warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant Agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent. Not later than the effective date of any such appointment the Company
shall file notice thereof with the resigning Warrant Agent and shall forthwith
cause a copy of such notice to be mailed to the Registered Holder of each
Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent or
any new warrant agent shall be a successor warrant agent under this Agreement
without any further act, provided that such corporation is eligible for
appointment as successor to the Warrant Agent under the provisions of the
preceding paragraph. Any such successor warrant agent shall promptly cause
notice of its succession as warrant agent to be mailed to the Company and to the
Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two (2) years from the
date of exercise, any Warrant Certificate received by it upon such exercise.
11
(j) The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.
10. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates; provided,
however, that this Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the Registered
Holders representing not less than 51% of the Warrants then outstanding;
provided, further, that no change in the number or nature of the securities
purchasable upon the exercise of any Warrant, or to increase the Exercise Price
therefor or to accelerate the Warrant Expiration Date shall be made without the
consent in writing of the Registered Holder of the Warrant Certificate
representing such Warrant, other than such changes as are presenting
specifically prescribed by this Agreement as originally executed.
11. NOTICES. All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class registered or certified mail, postage prepaid, or by
overnight courier, or by hand delivery, as follows: if to the Registered Holder
of a Warrant Certificate, at the last address of such holder as shown on the
records maintained by the Warrant Agent; if to the Company at 650 North Sam
Houston Parkway E., Suite 500, Houston, TX 77060, Attention: CEO, or at such
other address as may have been furnished to the Warrant Agent in writing by the
Company; and if to the Warrant Agent, to David A. Rapaport, 333 Sandy Springs
Circle, Suite 230, Atlanta, GA 30328 or at such other address as any such party
may have been furnished to the Company and the Warrant Agent in writing.
12. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without reference to conflicts
of laws or choice of law principles.
13. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Company, the Warrant Agent and their respective successors and
assigns and the Registered Holders from time to time of Warrant Certificates or
any of them. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
14. TERMINATION. This Agreement shall terminate at the close of business on the
Expiration Date of all of the Warrants or such earlier date upon which all
Warrants have been exercised or redeemed, except that the Warrant Agent shall
account to the Company for all Warrants outstanding and all cash held by it and
the provisions of Section 9 hereof shall survive such termination.
15. COUNTERPARTS. This Agreement may be executed in several counterparts each of
which shall be an original, but all of which taken together shall constitute a
single instrument.
16. HOLDERS OF WARRANTS NOT DEEMED SHAREHOLDERS. No holder of a Warrant, as
such, shall be entitled to vote, receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Warrants represented thereby for any purpose
whatever, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon any holder of a Warrant, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of directors
12
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change of
stock to no par value, consolidation, merger, conveyance or otherwise), or to
receive dividend or subscription rights, or otherwise, until such Warrant shall
have been exercised in accordance with the provisions hereof, including the
receipt by the Company of the Exercise Price and any other amounts payable upon
such exercise to the Warrant Agent; provided holders of Warrants shall be
entitled to receive notice of meetings or other actions affecting shareholders,
to the same extent as if they were shareholders and the Warrant Agent shall
provide to the Company, upon request, a list of the names and addresses of
Registered Holders of Warrants.
17. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other than
the Company, the Warrant Agent, and their respective successors and assigns
hereunder and the Registered Holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent, their
respective successors and assigns hereunder and the Registered Holders of the
Warrant Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
REGENT ENERGY CORPORATION
By: /s/ John N. Ehrman
-----------------------------------------------------
John N. Ehrman, President
ATTEST:
By: /s/ Kenneth W. Jackson
-----------------------------------------------------
Kenneth W. Jackson, Secretary
--------------------------------------------------
(Print Name & Title)
WARRANT AGENT
/s/ David A. Rapaport
---------------------------------------------------------
David A. Rapaport
13
Exhibit A
No. Wa VOID AFTER , 2006
------ ---------
WARRANTS
- ---------------------------
REGENT ENERGY CORPORATION
WARRANT CERTIFICATE TO PURCHASE ONE SHARE OF COMMON STOCK
CUSIP # 75-886-4-10-6
-------------
THIS CERTIFIES THAT, FOR VALUE RECEIVED ___________________________ or its
registered assigns (the "Registered Holder") is the owner of the number of
Warrants (the "Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined):
one fully paid and nonassessable share of Common Stock of Regent Energy
Corporation, a Nevada corporation (the "Company")
at any time commencing on the date hereof, and the Expiration Date (as
hereinafter defined) upon the presentation and surrender of this Warrant
Certificate with the Subscription Form on the reverse hereof duly executed, at
the business office of David A. Rapaport, as Warrant Agent, or his successor
(the "Warrant Agent"), accompanied by payment of $1.50 per share, subject to
adjustment (the "Exercise Price"), in lawful money of the United States of
America in cash or by check made payable to the Warrant Agent for the account of
the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated as of March 1,
2001, by and between the Company and the Warrant Agent. A copy of the Warrant
Agreement will be furnished without charge to any Registered Holder upon written
request to the Company or the Warrant Agent
In the event of certain contingencies provided for in the Warrant
Agreement, the Exercise Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
THIS WARRANT SHALL BE CASHLESS EXERCISE (AS SET FORTH IN SECTION 8 (A) OF THE
WARRANT AGREEMENT) AT ANY TIME THERE IS NOT AN EFFECTIVE REGISTRATION STATEMENT,
WITH CURRENT PROSPECTUS AVAILABLE, COVERING THE WARRANTS AND THE WARRANTS SHARES
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on the date
which is set forth on the first page hereof. If such date shall in the State of
New York be a holiday or a day on which banks located in the State of New York
are authorized to close, then the Expiration Date shall mean 5:00 p.m. (New York
time) the next following day which in the State of New York is neither a holiday
nor a day on which such banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, following the date hereof and while any of the Warrants are
outstanding, and deliver a prospectus which complies with Section 10(a)(3) of
the Act to the Registered Holder exercising this Warrant; provided however, that
(i) if at the time of exercise of any of the Warrants, the Company does not have
in place an effective registration statement or is otherwise, in the good faith
determination of the Board of Directors of the Company, precluded by applicable
laws from issuing the shares of Common Stock issuable upon such exercise, the
Company may, in lieu of issuance of those shares, elect to redeem the Warrants
duly surrendered for exercise for a price per Warrant equal to the difference
between the Market Price (as defined below) of a share of Common Stock on the
date of such submission and the Exercise Price, and in the event of such
redemption, the Company will pay to the Registered Holder the above-described
Redemption Price in cash within ten (10) business days after receipt of notice
from the Warrant Agent that such Warrants have been submitted for exercise. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the business office of the Warrant Agent, for a new Warrant
Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Prior to due presentment for registration of transfer hereof, the Company
and the Warrant Agent may deem and treat the Registered Holder as the absolute
owner hereof and of each Warrant represented hereby (notwithstanding any
notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and the
Company's right so to treat the Registered Holder shall not be affected by any
notice to the contrary, except as provided in the Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of Nevada without reference to conflict of laws or
choice of law principles.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two
of its officers thereunto duly authorized and a facsimile of its
corporate seal to be imprinted hereon.
Dated:
--------------------------------
[SEAL] REGENT ENERGY CORPORATION
By: /s/ Kenneth W. Jackson By: /s/ John N. Ehrman
---------------------- -------------------------
Kenneth W. Jackson, Secretary John N. Ehrman, President
-------------------
COUNTERSIGNED:
DAVID A. RAPAPORT
as Warrant Agent
-----------------
SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO
EXERCISE WARRANTS FOR CASH
The undersigned Registered Holder hereby irrevocably elects to exercise ________
Warrants represented by this Warrant Certificate, and to purchase the securities
issuable upon the exercise of such Warrants, and requests that certificates for
such securities shall be issued in the name of (PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER): .
and be delivered to (if different):
(please print or type name and address) (please print or type name and address)
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:
--------------------
(NAME MUST BE SIGHED AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
SUBSCRIPTION FORM TO BE EXECUTED BY THE REGISTERED HOLDER IN
ORDER TO EXERCISE WARRANTS ON A CASHLESS BASIS
The undersigned Registered Holder hereby irrevocably elects to subscribe to that
number of shares of the Common Stock of Regent Energy Corporation as are
issuable in accordance with Section 8 (a) of the Warrant Agreement and makes
payment therefore in full by surrender and delivery of Warrants, and requests
that certificates for such securities shall be issued in the name of (PLEASE
INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER): (SS or Tax I.D. # ).
and be delivered to (if different):
(please print or type name and address) (please print or type name and address)
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:
-------------------- ----------------------------------------
(NAME MUST BE SIGHED AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
ASSIGNMENT TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO ASSIGN WARRANTS
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER) .
- -------------------------------------------
(please print or type name and address)
- ------------------------------------------
- ------------------------------------------
- ------------------------------------------
- ----------------------------------------------------------------- of the
Warrants represented by this Warrant Certificate, and hereby irrevocably
constitutes and appoints ----------------------------------- Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated:
-------------------- -----------------------------------------
(NAME MUST BE SIGNED AS IT APPEARS ON THE
FRONT OF THE CERTIFICATE)
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE SIGNATURE(S)
MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS,
SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.