Exhibit 10.3
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. 2005-___
________________, 2005 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 _________________________, or his 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, $.0006665 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 Confidential Private Placement Memorandum in connection with the Company's
offering of $2,100,000 of 12% Convertible Subordinated Notes due February 15,
2010, as Amended December 29, 2004.
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 ______________, 2010 (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 $1.00 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 fifteen million (15,000,000)
shares of Common Stock, par value $0.0006665 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 4,969,565 fully paid and non-assessable
shares of Common Stock and 27,838 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: Herb Mee, Jr., President
The Beard Company
5600 North May Avenue, Suite 320
Oklahoma City, Oklahoma 73112
Phone: (405) 842-2333
Fax: (405) 842-9901
To the Holder: ___________________________
___________________________
___________________________
___________________________
___________________________
___________________________
Phone: ____________________
Fax: ______________________
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 _____________, 2005.
(the "Corporation")
THE BEARD COMPANY, an Oklahoma corporation
By______________________________________
Herb Mee, Jr., President
(the "Holder")
_______________________________
_______________________________
By_____________________________
Title:___________________________
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
1. Definitions
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
Board: The board of directors of the Company.
Common Stock: The common stock, par value $0.0006665 per share, of the
Company.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.
Holder: Any party hereto (other than the Company) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions of
this Agreement.
Initial Notice: See Section 3(a) hereof.
Investor: Investor and any of its Affiliates which hold Registrable
Securities, collectively.
NASD: National Association of Securities Dealers, Inc.
Person: An individual, partnership, limited liability company, joint
venture, corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.
Piggyback Notice: See Section 3(a) hereof.
Piggyback Registration: A registration pursuant to Section 3 hereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
Registrable Securities: All shares of Common Stock issued or issuable on
exercise of the Warrant and any securities of the Company which may be issued or
distributed with respect to, or in exchange or substitution for, or conversion
of, such Common Stock and such other securities pursuant to a stock dividend,
stock split or other distribution, merger, consolidation, recapitalization or
reclassification or otherwise; provided, however, that any Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of in accordance with the plan of distribution set forth in such
Registration Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force) promulgated under
the Securities Act, (iii) such Registrable Securities shall have been otherwise
transferred to a Person other than an Investor and new certificates for such
securities that do not bear a legend restricting further transfer under the
Securities Act shall have been delivered by the Company, or (iv) such
Registrable Securities have been held for a period of one (1) year. Any
securities that have ceased to be Registrable Securities cannot thereafter
become Registrable Securities and any security that is issued or distributed in
respect of securities that have ceased to be Registrable Securities is not a
Registrable Security.
Registration: A Piggyback Registration.
Registration Expenses: See Section 6 hereof.
Registration Statement: Any registration statement of the Company which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended from time to time.
Underwritten Registration or Underwritten Offering: A sale of securities of
the Company to an underwriter for reoffering to the public.
Warrant: The Warrants issued by the Company pursuant to the Confidential
Private Placement Memorandum as Amended December 29, 2004.
2. Securities Subject to this Agreement The securities entitled to the
benefits of this Agreement are the Registrable Securities.
3. Piggyback Registrations
(a) Participation. Subject to Section 3(b) hereof, if at any time after the
date hereof the Company proposes to file a Registration Statement (other than a
registration on Form S-4 or S-8 or any successor form to such Forms or any
registration of securities as it relates to an offering and sale to management
of the Company pursuant to any employee stock plan or other employee benefit
plan arrangement) with respect to an offering that includes any shares of Common
Stock, then the Company shall give notice of the proposed filing (the "Piggyback
Notice") to the Holders as promptly as practicable (but in no event less than
fifteen (15) days before the anticipated filing date). The Piggyback Notice
shall offer the Holders the opportunity to register such number of shares of
Registrable Securities as the Holders may request and shall set forth (i) the
anticipated filing date of such Registration Statement and (ii) the number of
shares of Common Stock that is proposed to be included in such Registration
Statement. The Company shall include in such Registration Statement such shares
of Registrable Securities for which it has received written requests to register
such shares within 10 days after the Piggyback Notice has been given.
(b) Underwriter's Cutback. Notwithstanding the foregoing, if a Registration
pursuant to this Section 3 involves an Underwritten Offering and the managing
underwriter or underwriters of such proposed Underwritten Offering delivers an
opinion to the Holders that the total or kind of securities which such Holders
and any other persons or entities intend to include in such offering are
reasonably likely to adversely affect the price, timing or distribution of the
securities offered in such offering, then the Company shall include in such
Registration;
(i) If such Registration was a primary registration by the Company of
its securities, the Company will include in such Registration to the extent
of the number of securities which the managing underwriter advises can be
sold in such Underwritten Offering: first, the securities proposed by the
Company to be sold for its own account; second, any Registrable Securities
requested to be included in such Registration by the Holders, pro rata on
the basis of the number of securities sought to be sold by the requesting
Holders; and third, other securities of the Company proposed to be included
in such Registration, allocated among the Company and the holders thereof
in accordance with the priorities then existing among the Company and such
holders.
(ii) If such Registration was requested other than by the Holders or
the Company, the Company will include in such Registration to the extent of
the number of securities which the managing underwriter advises can be sold
in such Underwritten Offering: first, the securities proposed to be sold by
the security holder initiating the Registration; second, any Registrable
Securities requested to be included in such Registration, pro rata on the
basis of the number of securities sought to be sold by the requesting
Holders; third, any securities of the Company proposed by any other Persons
to be included in such Registration, pro rata on the basis of the number of
securities proposed to be sold by the requesting Persons; and fourth the
securities proposed by the Company to be sold for its own account.
(c) Expenses. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.
(d) Company Control. The Company may decline to file a Registration
Statement after giving the Initial Notice or the Piggyback Notice, or withdraw a
Registration Statement after filing and after such Piggyback Notice, but prior
to the effectiveness of the Registration Statement, provided that the Company
shall promptly notify each Holder in writing of any such action and provided
further that the Company shall bear all reasonable expenses incurred by such
Holder or otherwise in connection with such withdrawn Registration Statement.
4. Hold-Back Agreements
(a) Restrictions on Public Sale by Holder of Registrable Securities. Each
Holder whose Registrable Securities are covered by a Registration Statement
filed pursuant to Section 3 hereof agrees, if requested by the managing
underwriters in an Underwritten Offering, not to effect any public sale or
distribution of securities of the Company the same as or similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities, in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such Underwritten
Registration), during the 10-day period prior to, and during the 90-day period
(or such longer period of up to 180 days as may be required by such underwriter
of all Persons whose securities are covered by such Registration Statement)
beginning on, the effective date of any Registration Statement in which such
Holders are participating (except as part of such Registration) or the
commencement of the public distribution of securities, to the extent timely
notified in writing by the Company or the managing underwriters.
(b) Restrictions on Public Sale by the Company and Others. If and to the
extent requested by the managing underwriter, the Company agrees: (a) not to
effect any public or private sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such equity
securities, during the 10 day period prior to and the 90 day period (or such
longer period of up to 180 days as may be required by such underwriter) after
the effective date of the Registration Statement filed in connection with an
Underwritten Offering made pursuant to a Piggyback Registration (or for such
shorter period of time as is sufficient and appropriate, in the opinion of the
managing underwriter (except as part of such Underwritten Registration and
except pursuant to registrations on Form S-4 or Form S-8 promulgated by the
Commission or any successor or similar forms thereto; and (b) to cause each
officer, director, 10% shareholder and holder of its equity securities (or of
any securities convertible into or exchangeable or exercisable for such
securities) purchased from the Company at any time after the date of this
Agreement (other than in a public offering), to agree, to the extent permitted
by law, not to effect any such public or private sale or distribution of such
securities (including a sale under Rule 144), during such period, except as part
of such underwritten registration.
(c) Exclusions. Notwithstanding the foregoing provisions, this section will
not prevent the grant of compensatory stock options or similar grants to
employees of the Company pursuant to the Company's stock based incentive plans
and will not prevent the exercise, conversion or exchange of any securities
pursuant to the terms of such securities.
5. Registration Procedures
In connection with the Company's Registration obligations pursuant to
Section 3 hereof, the Company will use its best efforts to effect such
Registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement relating to the
Piggyback Registration including all exhibits and financial statements required
by the SEC to be filed therewith; prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for a period of 90 days (or such
shorter period which will terminate when all Registrable Securities covered by
such Registration Statement have been sold or withdrawn), or, if such
Registration Statement relates to an Underwritten Offering, such longer period
as in the opinion of counsel for the underwriters a Prospectus is required by
law to be delivered in connection with sales of Registrable Securities by an
underwriter or dealer; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(b) notify the selling Holders and the managing underwriters, if any, and
(if requested) confirm such advice in writing, as soon as practicable after
notice thereof is received by the Company (i) when the Registration Statement or
any amendment thereto has been filed or becomes effective, the Prospectus or any
amendment or supplement to the Prospectus has been filed, and, to furnish such
selling Holders and managing underwriters with copies thereof, (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary Prospectus or
Prospectus or the initiation or threatening of any proceedings for such
purposes, (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (l) below cease to be true and correct and (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;
(c) (i) promptly notify the selling Holders and the managing underwriters,
if any, at any time during the period contemplated by a paragraph (a) above,
when the Company becomes aware of the happening of any event as a result of
which the Prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the case of the Prospectus and
any preliminary Prospectus, in light of the circumstances under which they were
made) when such Prospectus was delivered not misleading or, if for any other
reason it shall be necessary during such time period to amend or supplement the
Prospectus in order to comply with the Securities Act and, (ii) in either case
as promptly as practicable thereafter, prepare and file with the SEC, and
furnish without charge to the selling Holders and the managing underwriters, if
any, a supplement or amendment to such Prospectus which will correct such
statement or omission or effect such compliance;
(d) make every reasonable effort to prevent the entry, or obtain the
withdrawal, of any stop order or other order suspending the use of any
preliminary Prospectus or Prospectus or suspending any qualification of the
Registrable Securities;
(e) if requested by the managing underwriter or underwriters or a Holder of
Registrable Securities being sold in connection with an Underwritten Offering,
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters and the Holders of a majority of the
Registrable Securities being sold agree should be included therein relating to
the plan of distribution with respect to such Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
Underwritten (or best efforts underwritten) Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(f) furnish to each selling Holder and each managing underwriter, without
charge, one executed copy and as many conformed copies as they may reasonably
request, of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);
(g) deliver to each selling Holder and the underwriters, if any, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request
(it being understood that the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto) and such other documents as such selling Holder may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
Holder;
(h) on or prior to the date on which the Registration Statement is declared
effective, use its best efforts to register or qualify, and cooperate with the
selling Holders, the managing underwriter, if any, and their respective counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of each
state and other jurisdiction of the United States as any such seller,
underwriter reasonably requests in writing and do any and all other acts or
things reasonably necessary or advisable to keep such registration or
qualification in effect for so long as such Registration Statement remains in
effect and so as to permit the continuance of sales and dealings therein for as
long as may be necessary to complete the distribution of the Registrable
Securities covered by the Registration Statement; provided that the Company will
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(i) cooperate with the selling Holders and the managing underwriter, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at least two
business days prior to any sale of Registrable Securities to the underwriters;
(j) use its best efforts to cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other U.S. governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(k) not later than the effective date of the applicable Registration,
provide a CUSIP number for all Registrable Securities and provide the applicable
trustee or transfer agent with printed certificates for the Registrable
Securities;
(l) make such representations and warranties to the Holders of Registrable
Securities being registered, and the underwriters, if any, in form, substance
and scope as are customarily made by issuers in primary underwritten public
offerings;
(m) enter into such customary agreements (including an underwriting
agreement) and take all such other actions as the Holders of a majority of the
Registrable Securities being sold or the managing underwriter, if any,
reasonably request in order to expedite or facilitate the Registration and
disposition of such Registrable Securities;
(n) obtain for delivery to the Holders of Registrable Securities being
registered and to the underwriter an opinion or opinions from counsel for the
Company, upon consummation of the sale of such Registrable Securities to the
underwriters (the "Closing Date") in customary form and in form, substance and
scope reasonably satisfactory to such Holders and their counsel, and the
underwriters and their counsel;
(o) obtain for delivery to the Company and the underwriter, with copies to
the Holders, a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the managing underwriter or the Holders of a
majority of the Registrable Securities being sold reasonably request, dated the
effective date of the Registration Statement and brought down to the Closing
Date;
(p) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD;
(q) make available for inspection by a representative of the Holders of a
majority of the Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration; provided that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records, information
or documents is required by law;
(r) use its best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its security holders, as
soon as reasonably practicable (but not more than eighteen months) after the
effective date of the Registration Statement, an earnings statement satisfying
the provisions of Section 11 (a) of the Securities Act and the rules and
regulations promulgated thereunder;
(s) as promptly as practicable after filing with the SEC of any document
which is incorporated by reference into the Registration Statement or the
Prospectus, provide copies of such document to counsel for the selling Holders
and to the managing underwriters, if any;
(t) provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by such Registration Statement from and after
a date not later than the effective date of such Registration Statement;
(u) use its best efforts to list (if such Registrable Securities are not
already listed) all Registrable Securities covered by such Registration
Statement on the principal stock exchange or market on which the Company's
Common Stock is then listed; and
(v) Take such further actions as are reasonably requested by the Holders in
order to expedite or facilitate the disposition of the Registrable Securities.
The Company may require each Holder of Registrable Securities as to which
any Registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information
relating to such Holder and its ownership of Registrable Securities as the
Company may from time to time reasonably request in writing. Each Holder agrees
to furnish such information to the Company and to cooperate with the Company as
necessary to enable the Company to comply with the provisions of this Agreement.
Each Holder agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(i) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to such Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(c)(ii) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company, such Holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event that the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective by the number of days during the period from and including the date of
the giving of notice pursuant to Section 5(c)(i) hereof to the date when the
Company shall make available to the Holders a Prospectus supplemented or amended
to conform with the requirements of Section 5(c)(ii) hereof.
6. Registration Expenses
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation (i) all registration and filing
fees, and any other fees and expenses associated with filings required to be
made with any stock exchange, the SEC and the NASD (including, if applicable,
the fees and expenses of any "qualified independent underwriter" and its counsel
as may be required by the rules and regulations of the NASD), (ii) all fees and
expenses of compliance with state securities or blue sky laws (including fees
and disbursements of counsel for the underwriters or selling Holders in
connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or the Holders of a majority of the
Registrable Securities being sold may designate), (iii) all printing and related
messenger and delivery expenses (including expenses of printing certificates for
the Registrable Securities and of printing Prospectuses), (iv) all fees and
disbursements of counsel for the Company and of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v)
Securities Act liability insurance if the Company so desires or the underwriters
so require, (vi) all fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange and all rating agency
fees, (vii) all reasonable fees and disbursements of one counsel selected by the
Holders of the Registrable Securities being registered to represent such Holders
in connection with such registration, up to a maximum of $15,000, (viii) all
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities, excluding underwriting discounts and commissions and
transfer taxes, if any, and fees and disbursements of counsel to underwriters
(other than such fees and disbursements incurred in connection with any
registration or qualification of Registrable Securities under the securities or
blue sky laws of any state), and (ix) fees and expenses of other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company, regardless of whether the Registration
Statement becomes effective. The Company will, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any audit and the fees and expenses of any Person, including special experts,
retained by the Company.
7. Indemnification
(a) Indemnification by Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, each Holder and each Person who
controls such Holder (within the meaning of the Securities Act), and each of
their respective partners, members, officers, directors, employees and agents
(collectively, the "Company Indemnified Persons"), against any and all losses,
claims, damages, liabilities, reasonable attorneys fees, costs or expenses and
costs and expenses of investigating and defending any such claim (collectively,
"Damages"), joint or several, and any action in respect thereof to which any
such Company Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in respect thereof) arise out
of, or are based upon, any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary Prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such Holder expressly for use therein,
and shall promptly reimburse each Company Indemnified Person for any legal and
other expenses reasonably incurred by that Company Indemnified Person in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any such preliminary Prospectus if (i) such offering does not involve an
underwriter, (ii) such Holder failed to deliver or cause to be delivered a copy
of the Prospectus to the Person asserting such loss, claim, damage, liability or
expense after the Company had timely furnished such Holder with a sufficient
number of copies of the same and (iii) the Prospectus completely corrected in a
timely manner such untrue statement or omission; and provided, further, that the
Company shall not be liable in any such case to the extent that any such Damages
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if (x) such offering does not
involve an underwriter, (y) such untrue statement or alleged untrue statement,
omission or alleged omission is completely corrected in an amendment or
supplement to the Prospectus and (z) the Holder thereafter fails to deliver such
Prospectus as so amended or supplemented prior to or concurrently with the sale
of the Registrable Securities to the Person asserting such loss, claim, damage,
liability or expense after the Company had furnished such Holder with a
sufficient number of copies of the same. The Company also agrees to indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the Holders.
(b) Indemnification by Selling Holder of Underlying Securities. In
connection with each Registration, each selling Holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus and
agrees to indemnify and hold harmless, to the full extent permitted by law, the
Company and each Person who controls the Company (within the meaning of the
Securities Act), and each of their respective directors, officers, employees and
agents, against any and all Damages resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such selling Holder to the Company
specifically for inclusion in such Registration Statement or Prospectus and has
not been corrected in a subsequent writing prior to or concurrently with the
sale of the Registrable Securities to the Person asserting such Damages. In no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt (but in any event within 30 days
after such Person has actual knowledge of the facts constituting the basis for
indemnification) written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided, however, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure; provided further, however, that any Person
entitled to indemnification hereunder shall have the right to select and employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (a)
the indemnifying party has agreed in writing to pay such fees or expenses, or
(b) the indemnifying party shall have failed to assume the defense of such claim
within a reasonable time after receipt of notice of such claim from the Person
entitled to indemnification hereunder and employ counsel reasonably satisfactory
to such Person or (c) in the reasonable judgment of any such Person, based upon
advice of its counsel, a conflict of interest may exist between such Person and
the indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld),
provided that an indemnified party shall not be required to consent to any
settlement involving the imposition of equitable remedies or involving the
imposition of any material obligations on such indemnified party other than
financial obligations for which such indemnified party will be indemnified
hereunder. No indemnifying party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. Whenever
the indemnified party or the indemnifying party receives a firm offer to settle
a claim for which indemnification is sought hereunder, it shall promptly notify
the other of such offer. If the indemnifying party refuses to accept such offer
within 20 business days after receipt of such offer (or of notice thereof), such
claim shall continue to be contested and, if such claim is within the scope of
the indemnifying party's indemnity contained herein, the indemnified party shall
be indemnified pursuant to the terms hereof. If the indemnifying party notifies
the indemnified Party in writing that the indemnifying party desires to accept
such offer, but the indemnified party refuses to accept such offer within 20
business days after receipt of such notice, the indemnified party may continue
to contest such claim and, in such event, the total maximum liability of the
indemnifying party to indemnify or otherwise reimburse the indemnified party
hereunder with respect to such claim shall be limited to and shall not exceed
the amount of such offer, plus reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and disbursements) to the date of notice
that the indemnifying party desires to accept such offer, provided that this
sentence shall not apply to any settlement of any claim involving the imposition
of equitable remedies or to any settlement imposing any material obligations on
such indemnified party other than financial obligations for which such
indemnified party will be indemnified hereunder. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim in any one
jurisdiction, unless in the written opinion of counsel to the indemnified party,
reasonably satisfactory to the indemnifying party, use of one counsel would be
expected to give rise to a conflict of interest between such indemnified party
and any other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and expenses of
one such additional counsel.
(d) Contribution. If for any reason the indemnification provided for in the
preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such Damages in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations, provided that no selling Holder shall be required to
contribute in an amount greater than the dollar amount of the proceeds received
by such selling Holder with respect to the sale of any securities. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Each selling Holder's
obligation to contribute pursuant to this Section 7(d) is several and not joint.
The provisions of this Section 8 shall survive, notwithstanding any transfer of
the Registrable Securities by any Holder or any termination of this Agreement.
8. Rule 144.
The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemption provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.
9. Participation in Underwritten Registrations
No Person may participate in any underwritten registration hereunder unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement; provided that (i) no selling Holder shall be required to make any
representations or warranties except those which relate solely to such selling
Holder and its intended method of distribution, and (ii) the liability of each
selling Holder to any underwriter under such underwriting agreement will be
limited to liability arising from misstatements or omissions regarding such
selling Holder and its intended method of distribution and any such liability
shall not exceed an amount equal to the amount of net proceeds such selling
Holder derives from such registration; provided, however, that in an offering by
the Company in which any Holder requests to be included in a Piggyback
Registration, the Company shall use its reasonable best efforts to arrange the
terms of the offering such that the provisions set forth in clauses (i) and (ii)
of this Section 9 are true; provided further, that if the Company fails in its
reasonable best efforts to so arrange the terms, the Holder may withdraw all or
any part of its Registrable Securities from the Piggyback Registration and the
Company shall reimburse such Holder for all reasonable out-of-pocket expenses
(including counsel fees and expenses) incurred prior to such withdrawal.
10. Miscellaneous
(a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. Remedies for breach by any Holder of its
obligations under this Agreement shall be as set forth in Section 8.
(b) Term. This Agreement shall terminate on the earlier to occur of (i) the
first anniversary of the date of exercise of the Warrant or (ii) the first date
on which there are no longer any Registrable Securities.
(c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of the Holders of a majority
of the outstanding Registrable Securities; provided, however, that the Company
and the Investor together may amend, modify or supplement the provisions of this
Agreement and may waive or consent to departures from the provisions hereof,
without the consent of the Holders of a majority of the outstanding Registrable
Securities so long as such amendment, modification, supplement, waiver or
consent does not adversely affect the rights of Holders of Registrable
Securities hereunder or so long as such amendment, modification, supplement,
waiver or consent affects the rights of the Investor and other Holders of
Registrable Securities hereunder equally.
(d) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express or facsimile, and shall be deemed given (i) if delivered by
nationally recognized overnight carrier, one (1) business day after so mailed,
(ii) if delivered by International Federal Express, two (2) business days after
so mailed, and (iii) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows:
(x) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 10(d); and
(y) if to the Company, initially at the address set forth below and
thereafter at such other address, notice of which is given in accordance
with the provisions of this Section 10(d): The Beard Company, 5600 North
May Avenue, Suite 320, Oklahoma City, Oklahoma 73112.
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment
subsequent Holders of Registrable Securities.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma, without regard to the
principles of conflicts of laws.
(i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities issued pursuant to the Warrant. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matters.