Exhibit 10.2
THE WARRANTS AND THE ORDINARY SHARES TO BE ISSUED PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER ANY FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF ABSENT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS AND
UNTIL THE HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY NECESSARY TO CONFIRM
THAT SUCH REGISTRATION IS NOT REQUIRED OR (ii) AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT NO. 2004-_____
June ___, 2004 For the Purchase of _______ shares of
Common Stock of The Beard Company
FOR VALUE RECEIVED, THE BEARD COMPANY, an Oklahoma corporation (the
"Corporation"), hereby grants to the ____________________________________, or
its registered assigns (collectively the "Holder"), the right (the "Warrants")
to purchase at any time before the Expiration Date (as hereafter defined)
_________________________ (_________) duly authorized, validly issued, fully
paid and non-assessable shares (the "Warrant Shares") of the Corporation's
Common Stock, $.001333 par value (the "Common Stock"), at the Exercise Price (as
hereafter defined) and on the terms and conditions herein set forth. The number
of Warrant Shares and the Exercise Price will be subject to adjustment as
provided in this Warrant. The Warrants are being issued pursuant to the terms of
the 10% Participating Notes due November 30, 2006 of the Corporation (the
"Notes").
This Warrant is issued subject to the following terms and conditions:
1. Exercise of Warrant. The Warrants are exercisable at the option of the Holder
in whole or in part at any time prior to the Expiration Date by the delivery to
the Corporation of written notice of the exercise of the Warrants specifying the
number of Warrant Shares to be acquired, surrender of this Warrant to the
Corporation and satisfaction of the Exercise Price for the Warrant Shares to be
acquired through such exercise. The Warrants will be deemed exercised
immediately prior to the close of business on the day that all of the foregoing
requirements for the exercise of the Warrants are completed and the person
entitled to receive the Warrant Shares will be treated for all purposes as the
holder of record of such Warrant Shares at such time including, without implied
limitation, the right to vote, receive dividends and to receive distributions
for which the record date falls on or after such date. As promptly as possible
after such date (in any event within five (5) business days) the Corporation
will deliver to the Holder a stock certificate evidencing the Warrant Shares
covered by the exercise. In the case of an exercise for less than all the
Warrant Shares the Corporation will cancel this Warrant on the surrender hereof
and will execute and deliver a new Warrant of like tenor for the balance of the
unexercised Warrant Shares within such five (5) day period. If an exercise of
all or part of the Warrants is to be made in connection with a registered public
offering or a transaction described in paragraph 10 of this Warrant, the
exercise of the Warrants may, at the election of the Holder, be conditioned on
the consummation of the public offering or other transaction under paragraph 10
of this Warrant. In that case the exercise will not be deemed to be effective
until the consummation of the specified condition.
2. Term. The Warrants may be exercised in full or in part at any time on or
before 11:59 p.m. Oklahoma City, Oklahoma, time on June ___, 2008 (the
"Expiration Date"). To the extent not exercised prior to the Expiration Date,
the Warrants and all of the rights of the Holder hereunder will expire and
terminate on such date without any action or notice by the Corporation.
3. Exercise Price. On the exercise of the Warrants, the Holder agrees to pay to
the Corporation for the Warrant Shares purchased by the Holder pursuant to the
terms of this Warrant an amount (the "Exercise Price") multiplied by the number
of Warrant Shares at the time of determination. The Exercise Price is $0.45 per
Warrant Share (as hereafter defined). The Exercise Price is subject to
adjustment pursuant to the terms of this Warrant. The Exercise Price shall be
paid in lawful money of the United States of America.
4. Representations, Warranties and Covenants. The Corporation represents to and
warrants, covenants and agrees with the Holder as follows:
4.1 Reservation of Shares. At all times while the Warrants are outstanding
the Corporation will reserve out of the Corporation's authorized but
unissued shares of Common Stock, free from preemptive rights and
solely for the purpose of effecting the exercise of the Warrants, a
sufficient number of shares of Common Stock to provide for the
exercise of the Warrants and all other options, warrants and
convertible securities of the Corporation. The Corporation will take
all such actions necessary to assure that all such Warrant Shares may
be issued without violation of any applicable law, governmental
regulation or requirements of any domestic securities exchange or
automated quotation system on which the shares of Common Stock are
listed or quoted (except for official notice of issuance, which will
be immediately delivered by the Corporation upon each such issuance).
The Corporation will take all necessary actions to assure that all of
the Warrant Shares are authorized, approved for and listed on any
national securities exchange or quotation system on which the
Corporation's shares of Common Stock are listed or quoted. The
Corporation will not take any action that would cause the number of
authorized but unissued shares of Common Stock to be less than the
number of shares of Common Stock required to be reserved for issuance
on exercise of the Warrants.
4.2 Valid Issuance. All Warrant Shares that may be issued on exercise of
the Warrants will be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens, charges and encumbrances
on issuance by the Corporation. The Corporation will not take any
action or fail to take any action that will cause a contrary result
(including, without limitation, any action that would cause the
Exercise Price then in effect to be less than the par value of the
Common Stock).
4.3 Cooperation. The Corporation will: (a) not close its books against the
transfer of the Warrants or of any Warrant Shares in any manner which
interferes with the timely exercise of the Warrants; (b) assist and
cooperate with the Holder should the Holder be required to make any
governmental filings or obtain any governmental approvals prior to or
in connection with any exercise of the Warrants (including, without
limitation, making any filings required to be made by the
Corporation).
4.4 Authority. The Corporation has taken all necessary action to authorize
the execution and delivery of this Warrant and the issuance of the
Warrant Shares on the exercise of the Warrants. This Warrant is a
valid, binding and enforceable obligation of the Corporation subject
to applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium and similar laws now or hereafter in effect relating to
creditors' rights and remedies generally. The execution, delivery and
performance of this Warrant will not violate: (a) any provision of the
organizational documents or charter of the Corporation; (b) any order,
writ, injunction or decree of any court, administrative agency or
governmental body applicable to the Corporation or the Common Stock;
or (c) any contract, lease, note, bond, mortgage or other agreement to
which the Corporation is a party, by which the Corporation is bound or
to which any of the Corporation's assets are subject.
4.5 Capitalization. As of the date of this Warrant: the Corporation's
authorized capital stock consists of seven million five hundred
thousand (7,500,000) shares of Common Stock, par value $0.001333 per
share, and five million (5,000,000) shares of preferred stock, par
value $1.00 per share. As of the date of this Warrant the only shares
of capital stock issued and outstanding are ___________ fully paid and
non-assessable shares of Common Stock and _________ shares of
Preferred Stock.
4.6 Office. The Corporation will maintain an office for the purposes
specified in this Warrant (the "Warrant Office"). The Warrant Office
will initially be the Corporation's offices at Suite 320, 5600 North
May Avenue, Oklahoma City, Oklahoma 73112 and may subsequently be any
other office of the Corporation or any transfer agent for the Common
Stock in the continental United States as to which written notice has
previously been given to the Holder. The Corporation will maintain at
the Warrant Office a register for the Warrants in which the
Corporation will record the name and address of the person in whose
name this Warrant has been issued. The Holder will be able to take any
action permitted in this Warrant including, without implied
limitation, the exercise or transfer of the Warrants.
5. Restrictive Legend. The Warrants are being acquired and any Warrant Shares to
be acquired by the Holder pursuant to this Warrant (collectively, "Securities")
will be acquired for investment for the Holder's own account and not with a view
to, or for resale in connection with, any distribution of such Securities within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
The Securities will not be sold, transferred or otherwise disposed of without
registration under the Securities Act and state securities laws or qualification
for exemptions therefrom. The Holder agrees that each certificate evidencing the
Warrant Shares may be inscribed with a legend to the foregoing effect, which
legend will be as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
SUCH SHARES ARE FIRST REGISTERED UNDER THE
SECURITIES ACT OF 1933, ALL APPLICABLE STATE
SECURITIES LAWS AND ALL RULES AND REGULATIONS
PROMULGATED THEREUNDER OR UNLESS AND UNTIL THE
HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY
NECESSARY TO CONFIRM THAT SUCH REGISTRATION IS NOT
REQUIRED OR (ii) AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.
The Holder agrees that the Corporation may place a stop transfer order with the
Corporation's transfer agent, if any, with respect to any noncomplying transfer
of the certificates representing any Warrant Shares, which stop transfer order
will be removed by the Corporation on compliance with the foregoing.
6. Registration Rights. The Holder and any other holder of Warrant Shares will
have the registration rights provided for in Exhibit A hereto.
7. Anti-Dilution Adjustments. In order to prevent dilution of the rights granted
with respect to the Warrants, the Exercise Price and the number of Warrant
Shares obtainable on the exercise of a Warrant are subject to adjustment from
time to time as follows:
7.1 Issuance of Common Stock. If and whenever on or after the date of this
Warrant the Corporation issues or sells, or in accordance with
paragraph 7.2 of this Warrant is deemed to have issued or sold, any
shares of Common Stock for a consideration per share less than the
Exercise Price in effect immediately prior to such time, then
immediately on such issuance or sale the Exercise Price will be
reduced to the new Exercise Price determined by dividing:
7.1.1 the sum of (a) the product derived by multiplying the Exercise
Price in effect immediately prior to such issue or sale times the
number of shares of Common Stock Deemed Outstanding (as hereafter
defined) immediately prior to such issue or sale, plus (b) the
consideration, if any, received by the Corporation on such
issuance or sale, divided by
7.1.2 the number of shares of Common Stock Deemed Outstanding
immediately after such issuance or sale.
7.2 Effect on Exercise Price of Certain Events. For purposes of
determining the adjusted Exercise Price under paragraph 7.1 of this
Warrant, the following will be applicable:
7.2.1 Issuance of Rights or Options. If the Corporation in any manner
grants, issues or sells any Options (as hereafter defined), other
than the Corporation's employee or director benefit plans, and
the price per share for which shares of Common Stock are issuable
on the exercise of such Options (or on the conversion or exchange
of any Convertible Securities (as hereafter defined) issuable on
the exercise of such Options) is less than the Exercise Price in
effect immediately prior to the time of the grant, issuance or
sale of such Options, then the total maximum number of shares of
Common Stock issuable on the exercise of such Options (or on the
conversion or exchange of the total maximum amount of such
Convertible Securities issuable on the exercise of such Options)
will be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph,
the "price per share for which shares of Common Stock are
issuable on exercise of such Options or on the conversion or
exchange of any Convertible Securities" is determined by dividing
(a) the total amount, if any, received or receivable by the
Corporation as consideration for the granting or sale of such
Options, plus the minimum aggregate amount of additional
consideration payable to the Corporation on the exercise of all
such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Corporation on
the issuance or sale of such Convertible Securities and the
conversion or exchange thereof, by (b) the total maximum number
of shares of Common Stock issuable on exercise of such Options or
on the conversion or exchange of all such Convertible Securities
issuable on the exercise of such Options. No further adjustment
of the Exercise Price will be made on the actual issuance of such
shares of Common Stock or of such Convertible Securities on the
exercise of such Options or on the actual issuance of shares of
Common Stock as a result of the conversion or exchange of such
Convertible Securities.
7.2.2 Issuance of Convertible Securities. If the Corporation in any
manner issues or sells any Convertible Securities and the price
per share for which shares of Common Stock are issuable on
conversion or exchange thereof is less than the Exercise Price in
effect immediately prior to the time of such issue or sale, then
the maximum number of shares of Common Stock issuable on
conversion or exchange of such Convertible Securities will be
deemed to be outstanding and to have been issued and sold by the
Corporation at the time of the issue or sale of such Convertible
Securities for such price per share. For the purposes of this
paragraph, the "price per share for which shares of Common Stock
are issuable on conversion or exchange thereof" is determined by
dividing (a) the total amount received or receivable by the
Corporation as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Corporation on
the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable on the conversion or
exchange of all such Convertible Securities. No further
adjustment of the Exercise Price will be made on the actual issue
of such shares of Common Stock on conversion or exchange of such
Convertible Securities, and if any such issue or sale of such
Convertible Securities is made on exercise of any Options for
which adjustments of the Exercise Price had been or are to be
made pursuant to other provisions of this paragraph 7.2, no
further adjustment of the Exercise Price will be made by reason
of such issue or sale.
7.2.3 Change in Option Price or Conversion Rate. If the purchase price
provided for in any Options, the additional consideration, if
any, payable on the issue, conversion or exchange of any
Convertible Securities, or the rate at which any Convertible
Securities are convertible into or exchangeable for shares of
Common Stock changes at any time, the Exercise Price in effect at
the time of such change will be adjusted immediately to the
Exercise Price which would have been in effect at such time had
such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or
changed conversion rate, as the case may be, at the time
initially granted, issued or sold and the number of shares of
Common Stock issuable hereunder will be correspondingly adjusted.
For purposes of this paragraph 7.2, if the terms of any Option or
Convertible Security which was outstanding as of the date of this
Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and
the shares of Common Stock deemed issuable on exercise,
conversion or exchange thereof will be deemed to have been issued
as of the date of such change. Notwithstanding the foregoing no
such change will at any time cause the Exercise Price hereunder
to be increased.
7.2.4 Expired Options and Securities. On the expiration of any Option
or the termination of any right to convert or exchange any
Convertible Securities without the exercise of such Option or
right, the Exercise Price then in effect and the number of shares
of Common Stock acquirable hereunder will be adjusted immediately
to the Exercise Price and the number of shares which would have
been in effect at the time of such expiration or termination had
such Option or Convertible Securities, to the extent outstanding
immediately prior to such expiration or termination, never been
issued. For purposes of this paragraph 7.2, the expiration or
termination of any Option or Convertible Security which was
outstanding on or before the date of execution of this Warrant
will not cause the Exercise Price hereunder to be adjusted
unless, and only to the extent that, a change in the terms of
such Option or Convertible Security caused it to be deemed to
have been issued after the date of this Warrant.
7.2.5 Calculation of Consideration Received. If any shares of Common
Stock, Options or Convertible Securities are issued or sold or
deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the amount received by the
Corporation therefor. In case any shares of Common Stock, Options
or Convertible Securities are issued or sold for consideration
other than cash, the amount of the consideration other than cash
received by the Corporation will be the fair value of such
consideration, except where such consideration consists of
securities, in which case the amount of consideration received by
the Corporation will be the Current Market Price thereof as of
the date of receipt. In case any shares of Common Stock, Options
or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the
Corporation is the surviving entity the amount of consideration
therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined at
the reasonable discretion of the board of directors of the
Corporation consistent with the value assigned for generally
accepted accounting principles for purposes of financial
reporting. Notice of such determination will be given to the
Holder.
7.2.6 Integrated Transactions. In case any Option or Convertible
Security is issued in connection with the issue or sale of other
securities of the Corporation, together comprising one integrated
transaction in which no specific consideration is allocated to
such Options or Convertible Security by the parties thereto, the
Options or Convertible Security will be deemed to have been
issued for consideration determined at the reasonable discretion
of the board of directors of the Corporation consistent with the
value assigned for purposes of generally accepted accounting
principles. Notice of such determination will be given to the
Holder.
7.2.7 Treasury Shares. The number of shares of Common Stock
outstanding at any given time will not include shares of Common
Stock owned or held by or for the account of the Corporation or
any subsidiary, and any issuance or disposition of any shares of
Common Stock so owned or held will be considered an issuance or
sale of shares of Common Stock.
7.2.8 Record Date. If the Corporation takes a record of the holders of
shares of Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in shares of
Common Stock, Options or in Convertible Securities or (b) to
subscribe for or purchase shares of Common Stock, Options or
Convertible Securities, then such record date will be deemed to
be the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold on the declaration of such
dividend or the making of such other distribution or the date of
the granting of such right of subscription or purchase, as the
case may be.
7.3 Stock Splits and Reverse Splits. In the event that the Corporation at
any time after the date of this Warrant subdivides its outstanding
shares of Common Stock into a greater number of shares (by stock
split, stock dividend, recapitalization or otherwise), the Exercise
Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares purchasable
on the exercise of the Warrants immediately prior to such subdivision
will be proportionately increased. Conversely, in the event that the
outstanding shares of Common Stock at any time are combined into a
smaller number of shares (by reverse stock split or otherwise), the
Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares purchasable
on the exercise of the Warrants immediately prior to such combination
will be proportionately reduced.
7.4 Certain Events. If any event occurs of the type contemplated by the
provisions of this paragraph 7 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity
features, other than the Corporation's employee or director benefit
plans), then the Corporation's board of directors will make an
appropriate adjustment in the Exercise Price and the number of shares
of Common Stock obtainable on exercise the Warrants so as to protect
the rights of the holders of the Warrants. Notwithstanding anything
herein to the contrary, no such adjustment will increase the Exercise
Price or decrease the number of shares of Common Stock as otherwise
determined pursuant to this paragraph 7.
7.5 Notice of Adjustment. Whenever the Exercise Price or the number of
Warrant Shares issuable on the exercise of the Warrants will be
adjusted as herein provided, or the rights of the Holder hereof will
change by reason of other events specified herein, the Corporation
will compute the adjusted Exercise Price and the adjusted number of
Warrant Shares in accordance with the provisions hereof and will
prepare an Officer's Certificate setting forth the adjusted Exercise
Price and the adjusted number of Warrant Shares issuable on the
exercise of the Warrants or specifying the other shares of stock,
securities or assets receivable as a result of such change in rights,
and showing in reasonable detail the facts and calculations on which
such adjustments or other changes are based. The Corporation will
promptly cause to be mailed to the Holder copies of such Officer's
Certificate together with a notice stating that the Exercise Price and
the number of Warrant Shares purchasable on exercise of the Warrants
have been adjusted and setting forth the adjusted Exercise Price and
the adjusted number of Warrant Shares purchasable on the exercise of
the Warrants.
7.6 Exceptions to Anti-Dilution Adjustment. Notwithstanding anything to
the contrary contained in this Warrant, there will be no adjustment in
the Exercise Price or the number of Warrant Shares obtainable on
exercise of the Warrants as a consequence of the issuance by the
Corporation of: (a) any option, warrant, convertible security or other
right to acquire shares of Common Stock outstanding or in effect as of
the date of this Warrant and not amended after the date of this
Warrant; (b) any options, stock purchase rights or other rights to
acquire shares of Common Stock of the Corporation on exercise of
options granted or that may be granted under the Corporation's
compensatory stock option plans at an exercise price no less than the
Current Market Price on the date of issuance; or (c) the issuance of
shares of Common Stock as a result of the exercise of any of the
foregoing.
7.7 Definitions. For purposes of this Warrant the following terms will
have the designated meanings: (a) "shares of Common Stock Deemed
Outstanding" means at any given time, the number of shares of Common
Stock actually outstanding at such time, plus the number of shares of
Common Stock deemed to be outstanding pursuant to paragraph 7 hereof
regardless of whether the Options or Convertible Securities are
actually exercisable at such time; (b) "Convertible Securities" means
any stock or securities (directly or indirectly) convertible into or
exchangeable for shares of Common Stock; and (c) "Options" means any
rights or options to subscribe for or purchase shares of Common Stock
or Convertible Securities.
7.8 Current Market Price. For purposes of this Warrant the "Current Market
Price" means: (a) with respect to a security which is traded on an
organized national exchange or market the average of the last bid and
asked prices as quoted on the applicable exchange or market for the
immediately preceding twenty (20) trading days; and (b) if the
security is not traded on such an organized exchange or market, the
price per share of the security as determined in good faith by the
Corporation's board of directors and set forth in a notice of such
valuation to the Holder.
8. Reorganizations and Asset Sales. If any recapitalization, reorganization or
reclassification of the capital stock of the Corporation, or any consolidation,
merger or share exchange of the Corporation with another person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another person will be effected in such a way that a holder of shares of Common
Stock of the Corporation will be entitled to receive capital stock, securities
or assets with respect to or in exchange for shares of Common Stock, then the
following provisions will apply:
8.1 Replacement Instrument. As a condition of such recapitalization,
reorganization, reclassification, consolidation, merger, share
exchange, sale, transfer or other disposition (except as otherwise
provided below in paragraph 8.2) lawful and adequate provisions in
form and substance reasonably satisfactory to the holders of a
majority of the Warrants will be made whereby the holders of Warrants
will thereafter have the right to purchase and receive on the terms
and conditions specified in this Warrant and in lieu of or addition to
(as the case may be) the Warrant Shares immediately theretofore
receivable on the exercise of the rights represented hereby, such
shares of capital stock, securities or assets as may be issued or
payable with respect to or in exchange for a number of outstanding
shares of such shares of Common Stock equal to the number of Warrant
Shares immediately theretofore so receivable had such
recapitalization, reorganization, reclassification, consolidation,
merger, share exchange or sale not taken place. In any such case
appropriate provision (in form and substance reasonably satisfactory
to the holders of majority of the Warrants) will be made with respect
to the rights and interests of the holders of the Warrants to the end
that the provisions hereof (including, without limitation, in the case
of any such consolidation, merger or sale in which the successor
entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Exercise Price to the value for the shares
of Common Stock reflected by the terms of such consolidation, merger
or sale, and a corresponding immediate adjustment in the number of
shares of Common Stock acquirable and receivable on exercise of the
Warrants, if the value so reflected is less than the Exercise Price in
effect immediately prior to such consolidation, merger or sale) will
thereafter be applicable, as nearly as possible, in relation to any
shares of capital stock, securities or assets thereafter deliverable
on the exercise of the Warrants.
8.2 Assumption. The Corporation will not effect any such consolidation,
merger, share exchange, sale, transfer or other disposition unless
prior to or simultaneously with the consummation thereof the successor
person (if other than the Corporation) resulting from such
consolidation, share exchange or merger or the person purchasing or
otherwise acquiring such assets will have assumed by written
instrument executed and mailed or delivered to the Holder hereof at
the last address of the Holder appearing on the books of the
Corporation, (a) the obligation to deliver to the Holder such shares
of capital stock, securities or assets as, in accordance with the
foregoing provisions, the Holder may be entitled to receive, and (b)
all other liabilities and obligations of the Corporation hereunder.
The foregoing will be performed by issuing a new warrant identical to
the terms of this Warrant revised to reflect the new parties thereto,
a provision indicating the replacement nature of the new warrant and
any modifications in Exercise Price and number of shares of stock or
equity interests obtainable on the exercise of the new warrant as
provided herein.
9. Notices to Holder. If at any time the Corporation proposes to:
9.1 declare any dividend on its shares of Common Stock payable in capital
stock or make any dividend or other distribution (including cash
dividends) to the holders of the shares of Common Stock;
9.2 offer for subscription pro rata to all of the holders of the shares of
Common Stock any additional shares of capital stock of any class or
other rights other than the Series A Notes or Series A Warrants;
9.3 effect any capital reorganization, or reclassification of the capital
stock of the Corporation, or consolidation, merger or share exchange
of the Corporation with another person, or sale, transfer or other
disposition of all or substantially all of its assets; or 9.4 effect a
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, then, as a condition to taking any one or more of the
foregoing actions and in addition to any other obligation under this
Warrant, the Corporation will give the Holder: (a) at least thirty
(30) days (but not more than 90 days) prior written notice of the date
on which the books of the Corporation will close or a record will be
taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of such issuance,
recapitalization, reorganization, reclassification, consolidation,
merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, and (b) in the case of any such issuance,
recapitalization, reorganization, reclassification, consolidation,
merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up, at least thirty (30) days (but not more
than 90 days) prior written notice of the date when the same will take
place. Any notice under foregoing clause (a) will specify the date on
which the holders of shares of Common Stock will be entitled to any
such dividend, distribution or subscription rights, and any notice
under foregoing clause (b) will specify the date on which the holders
of shares of Common Stock will be entitled to exchange their shares of
Common Stock, as the case may be, for securities or other property
deliverable on such reorganization, reclassification, consolidation,
merger, share exchange, sale, transfer, disposition, dissolution,
liquidation or winding up.
10. Fractional Shares. Fractional shares will not be issued on the exercise of
the Warrants. If the Holder would be entitled to receive a fractional share, the
Corporation will pay to the Holder an amount equal to the fractional share
multiplied by the Current Market Price for one share of shares of Common Stock
less the Exercise Price.
11. Fully Paid Stock; Taxes. The Corporation covenants and agrees that the
shares of stock represented by each and every certificate for its shares of
Common Stock to be delivered on the exercise of the Warrants will be duly
authorized, validly issued and outstanding, fully paid, nonassessable and free
from all taxes, liens, charges and encumbrances. The Corporation agrees to pay
when due and payable any and all federal and state taxes (including, without
limitation, all documentary, stamp, transfer or other transactional taxes but
excluding income taxes) which may be payable in respect of the Warrants, any
Warrant Shares or certificates therefor on the exercise of the Warrants.
12. Notices. Any notice, demand or communication required or permitted to be
given by any provision of this Warrant will be in writing and will be deemed to
have been given and received when delivered personally or by telefacsimile to
the party designated to receive such notice, or on the date following the day
sent by overnight courier, or on the third (3rd) business day after the same is
sent by certified mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses in the continental United
States of America as any party might designate by written notice to the other
parties:
To the Corporation: Mr. Herb Mee, Jr.
President
The Beard Company
Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
Phone: (405) 842-2333
Fax: (405) 842-9901
To the Holder:
13. Assignment. Subject to conditions set forth herein, this Warrant and all
rights hereunder are transferable, in whole or in part, on the books of the
Corporation to be maintained for such purpose, on surrender of this Warrant at
the office of the Corporation maintained for such purpose, together with a
written assignment of this Warrant duly executed by the Holder and payment of
funds sufficient to pay any stock transfer taxes payable on the making of such
transfer. On such surrender and payment, the Corporation will, subject to
conditions set forth herein, execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant will promptly be canceled. The
conditions to transferability specified in this Warrant are intended to ensure
compliance with the provisions of the Securities Act and applicable state
securities laws in respect of the transfer of any Warrant or any Warrant Shares
and are to be strictly construed.
14. Governing Law. This Warrant is being delivered and is intended to be
performed in Oklahoma and will be construed and enforced in accordance with, and
the rights of the parties will be governed by, the law of such state.
15. Headings. The headings of the paragraphs of this Warrant are inserted for
convenience only and will not be deemed to constitute a part of this Warrant.
16. Lost, Stolen, Destroyed or Mutilated Warrant. In case this Warrant is
mutilated, lost, stolen or destroyed, the Corporation agrees to issue a new
Warrant of like date, tenor and denomination and deliver the same in exchange
and substitution for and on surrender and cancellation of this mutilated
Warrant, or in lieu of this Warrant being lost, stolen or destroyed, on receipt
of evidence reasonably satisfactory to the Corporation of the loss, theft or
destruction of this Warrant and on receipt of indemnity satisfactory to the
Corporation.
17. Consent to Amendments; Waivers. The provisions of this Warrant may be
amended or waived at any time only by the written agreement of the Corporation
and the Holder. Any waiver, permit, consent or approval of any kind or character
on the part of the Holder of any provisions or conditions of this Warrant must
be made in writing and will be effective only to the extent specifically set
forth in such writing. No course of dealing between the Corporation and the
Holder and no delay in exercising any right, remedy, or power conferred hereby
or now or hereafter existing at law or under equity, by statute or otherwise,
will operate as a waiver of or otherwise prejudice any such right, power or
remedy.
18. Warrant Holder Not Shareholder. This Warrant does not confer on the Holder
hereof any right to vote or to consent as a shareholder of the Corporation, as
such, in respect of any matters whatsoever, or any other rights or liabilities
as a shareholder, prior to the exercise hereof as hereinbefore provided.
19. Severability. Should any part of this Warrant for any reason be declared
invalid, such decision will not affect the validity of any remaining portion,
which remaining portion will remain in full force and effect as if this Warrant
had been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed and
accepted the remaining portion of this Warrant without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.
IN WITNESS WHEREOF, this Warrant has been executed effective the ____ day
of June, 2004.
(the "Corporation")
THE BEARD COMPANY, an Oklahoma corporation
By______________________________________
Herb Mee, Jr., President
(the "Holder")
By______________________________________