EXHIBIT 4.5
WARRANT
TO PURCHASE COMMON STOCK OF
INLAND RESOURCES INC.
A WASHINGTON CORPORATION
ISSUED ON SEPTEMBER 23, 1997
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED
UNDER ANY STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED (EXCEPT AS PERMITTED PURSUANT TO THAT
CERTAIN WARRANT AGREEMENT DATED AS OF SEPTEMBER 23, 1997 AMONG INLAND
RESOURCES INC. (THE "COMPANY") AND TCW PORTFOLIO NO. 1555 DR V SUB-CUSTODY
PARTNERSHIP, L.P. (AS AMENDED FROM TIME TO TIME, THE "WARRANT AGREEMENT"),
TO THE EFFECT THAT THE PROPOSED TRANSACTION DOES NOT REQUIRE REGISTRATION
OR QUALIFICATION UNDER FEDERAL OR STATE SECURITIES LAWS. THE WARRANT
EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO CERTAIN RESTRICTIONS AS SET
FORTH IN THE WARRANT AGREEMENT.
THIS IS TO CERTIFY THAT:
TCW Portfolio No. 1555 DR V Sub-Custody Partnership, L.P., a California limited
partnership ("HOLDER"), or registered assigns, is entitled to purchase from the
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Company at any time on and after the earlier of (i) third (3rd) anniversary of
the date of issuance of this Warrant or (ii) the date on which the Company
prepays in full the Notes prior to their maturity, but in no event later than
5:00 p.m., Los Angeles Time, on the tenth (10th) anniversary of the date of
issuance of this Warrant (the "EXPIRATION DATE"), ONE HUNDRED THOUSAND (100,000)
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Stock Units, in whole or in part, at a per Stock Unit purchase price at any date
equal to the Purchase Price (as defined below), all on the terms and conditions
hereinbelow provided.
(S) 1. Certain Definitions. Initially capitalized terms not otherwise
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defined herein shall have the meanings ascribed to such terms in the Warrant
Agreement. As used in this Warrant:
"5-DAY AVERAGE PRICE" per share of Common Stock, for purposes of any
provision herein at the date specified in such provision, shall mean the average
closing price of the Common Stock on the securities exchange or a national
market system on which the Common Stock is then listed, or the average of the
closing "bid" and "ask" prices if quoted on The Nasdaq Stock Market or a similar
quotation system, over the 5-trading day period immediately prior to such date.
"$10MM NOTE" shall mean that certain Note in the original principal
amount of $10,000,000, initially issued by the Company to Trustco, and any other
note issued in substitution or as a replacement therefor.
"12.5% IRR" shall have the meaning assigned to such term in the Credit
Agreement.
"30-DAY AVERAGE PRICE" per share of Common Stock, for purposes of any
provision herein at the date specified in such provision, shall mean the average
closing price of the Common Stock on the securities exchange or a national
market system on which the Common Stock is then listed, or the average of the
closing "bid" and "ask" prices if quoted on The Nasdaq Stock Market or a similar
quotation system, over the 30-trading day period immediately prior to such date.
"ADDITIONAL SHARES OF NONPREFERRED STOCK" shall mean all shares of
Nonpreferred Stock issued by the Company after the Closing Date other than (i)
the Common Stock issued pursuant to the Warrants, (ii) an aggregate of 639,700
shares of Common Stock issued upon exercise of options granted pursuant to the
Company's Amended 1988 Stock Option Plan or the Company's 1997 Stock Option
Plan, (iii) so long as the Company remains a Public Company, all shares of
Common Stock issued for the benefit of officers, key employees, directors and
consultants of the Company, which issuances have been approved in advance by the
Board of Directors of the Company, a committee thereof or the shareholders of
the
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Company and which grants (A) have been issued as bonus stock to such persons
after the date hereof, or (B) have been or are to be issued upon exercise of
options or warrants issued after the date hereof, (iv) the shares of Common
Stock issued pursuant to the conversion of the Company's Series C Cumulative
Convertible Preferred Stock outstanding as of the date hereof; (v) 681,911
shares of Common Stock issued pursuant to warrants and options granted by the
Company to certain of its employees and consultants as more fully described on
Schedule 3.01(a) to the Warrant Agreement, (vi) the shares of Common Stock
issued in a public offering of Common Stock at a price per share of Common Stock
which is not less than the Current Warrant Price thereof on the earlier of the
date on which the Company shall enter into a firm commitment or contract for the
issuance of such Common Stock and the date such Common Stock is issued; (vii)
the shares of Common Stock issuable on exercise of the terms of any Convertible
Securities issued in a public or private offering where the aggregate of the
consideration received or receivable by the Company on the issuance of such
Convertible Securities and upon the issuance of Common Stock pursuant to the
terms of such Convertible Securities is not less than the Current Warrant Price
on the earlier of the date on which the Company enters into a firm commitment or
contract for the issuance of such Convertible Securities and the date on which
such Convertible Securities are issued; or (viii) shares of Common Stock issued
at a cash price, or fair market value of property, per share equal to or in
excess of the Current Warrant Price.
"AGGREGATE PURCHASE PRICE" shall have the meaning given in (S) 2
below.
"APPRAISED VALUE" shall mean the fair market value of all outstanding
Common Stock, as determined by a written appraisal (the "APPRAISAL") prepared by
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a national or major regional investment bank acceptable to the Board of
Directors of the Company and the Holders of the Warrants exercisable for a
majority of the Warrant Stock then unissued. "Fair market value" is defined for
this purpose as the price in a single transaction determined on a going-concern
basis that would be agreed upon by the most likely hypothetical buyer for 100%
of the equity capital of the Company. In the event that the Company and said
Holders
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cannot, in good faith, agree upon an investment bank, then the Company, on the
one hand, and said Holders, on the other hand, shall each select an investment
bank, the two investment banks so selected shall select a third investment bank
who shall be directed to prepare the Appraisal and the term Appraised Value
shall mean the appraised value set forth in the Appraisal prepared in accordance
with this definition. The Company and the Holders shall each pay for one-half of
the cost of any such Appraisal.
"BOARD OF DIRECTORS" shall mean the duly appointed board of directors
of the Company.
"BUSINESS DAY" shall mean a day, other than a Saturday, Sunday or
legal holiday on which commercial banks are authorized or obligated by law or
executive order to close in the State of California.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COMMON STOCK" shall mean the Company's authorized common stock, $.001
par value, irrespective of class unless otherwise specified, as constituted on
the date of original issuance of this Warrant, and any stock into which such
common stock may thereafter be changed, and shall also include stock of the
Company of any other class, which is not preferred as to dividends or assets
over any other class of stock of the Company and which is not subject to
redemption, issued to the holders of shares of Common Stock upon any
reclassification thereof.
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, shares
of stock or other securities which are convertible into or exchangeable for
Additional Shares of Nonpreferred Stock, either immediately or upon the arrival
of a specified date or the happening of a specified event.
"CURRENT MARKET PRICE" per share of Common Stock for the purposes of
any provision of this Warrant at a date herein specified, shall mean the greater
of (i) the 30-Day Average Price of the Common Stock or (ii) the 5-Day Average
Price of the Common
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Stock; provided, that if the Current Market Price per share of Common Stock
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cannot be ascertained by such methods, then the Current Market Price per share
of Common Stock shall be the price agreed upon by the Company and the Holders of
Warrants exercisable for a majority of the Warrant Shares then unissued, and if
they cannot so agree within 30 days, then the Current Market Price of Common
Stock shall be deemed to be the greater of (i) the net book value per share of
Common Stock, determined in accordance with generally accepted accounting
principles, or (ii) the fair value per share of Common Stock determined pursuant
to the Appraised Value.
"CURRENT WARRANT PRICE" per share of Common Stock, for the purpose of
any provision of this Warrant at the date herein specified, shall mean the
amount equal to the quotient resulting from dividing the Purchase Price per
Stock Unit in effect on such date by the number of shares (including any
fractional share) of Common Stock comprising a Stock Unit on such date.
"NONPREFERRED STOCK" shall mean the Common Stock and shall also
include stock of the Company of any other class which is not preferred as to
dividends or rights in assets over any other class of stock of the Company and
which is not subject to redemption.
"NOTES" shall mean the Senior Subordinated Amortizing Term Notes due
December 31, 2006 of the Company issued pursuant to the Credit Agreement.
"OBLIGATIONS" shall have the meaning set forth therefor in the Credit
Agreement.
"PERSON" shall mean any individual, corporation, partnership,
association, joint stock company, trust or trustee thereof, estate or executor
thereof, unincorporated organization or joint venture, court or governmental
unit or any agency or subdivision thereof, or any other legally recognizable
entity.
"PUBLIC COMPANY" shall mean a company with one or more classes of
securities subject to the registration requirements of Section 12 or 15A of the
Securities Exchange Act of 1934, as amended.
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"PURCHASE PRICE" initially shall be $10.00, as adjusted from time to
time pursuant to (S) 4.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"STOCK UNIT" shall mean one share of Common Stock, as such Common
Stock was constituted on the date of original issue of this Warrant and
thereafter shall mean such number of shares (including any fractional shares) of
Common Stock as shall result from the adjustments specified in (S) 4.
"WARRANTS" shall mean the Warrants originally issued by the Company
pursuant to the Warrant Agreement, of which this Warrant is one, evidencing
rights to purchase shares of Common Stock, and all Warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the Common Stock for which they may be exercised.
"WARRANT STOCK" shall mean the shares of Common Stock purchasable by
the holder of a Warrant upon the exercise of such Warrant.
(S) 2. Exercise of Warrant. The holder of this Warrant may, at any time
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on or after the date hereof but not later than the Expiration Date, exercise
this Warrant in whole or in part for the number of Stock Units which such holder
is then entitled to purchase hereunder. In order to exercise this Warrant, in
whole or in part, the holder hereof shall deliver to the Company at its office
maintained for such purpose pursuant to (S) 16 (i) a written notice of such
holder's election to exercise this Warrant, (ii) this Warrant, and (iii) the
total purchase price for the shares being purchased upon such exercise (a) by
delivery of immediately
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available funds in an amount equal to the product of the Purchase Price
multiplied by the number of Stock Units being purchased upon such exercise (the
"AGGREGATE PURCHASE PRICE"), (b) upon notification to the holder at least 45
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days prior to the prepayment of the Notes in full by the Company, by credit of a
portion of the prepayment amount to be paid to the holder of the $10mm Note by
the Company pursuant to the terms of the Credit Agreement (the "Prepayment
Amount") in an aggregate amount equal to the Aggregate Purchase Price, such
credit being conditional upon receipt by the Company of a written release,
satisfaction or acknowledgement of credit delivered to the Company executed by
the holder of such $10mm Note, being released or credited in payment of the
Aggregate Purchase Price and setting forth the amount of the Prepayment Amount
so released or credited, (c) any combination of the foregoing clauses (a) and
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(b), or (d) to the extent permitted by applicable law, the delivery of a notice
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to the Company that the Holder is exercising the Warrant without payment of the
Purchase Price by authorizing the Company to deliver the number of shares of
Warrant Stock issuable upon exercise of the Warrant to be determined based upon
the following formula:
((MP - WP) x WS)/MP = the number of shares of Warrant Stock issuable upon
exercise of this Warrant without payment of the
Purchase Price
WHERE:
MP = Current Market Price
WP = Current Warrant Price
WS = The number of shares of Warrant Stock issuable upon exercise of
this Warrant (in whole or in part).
Such notice may be in the form of the Subscription set out at the end of this
Warrant. Upon receipt thereof, the Company shall, as promptly as practicable
and in any event within ten (10) Business Days thereafter, cause to be executed
and delivered to such
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holder a certificate or certificates representing the aggregate number of fully
paid and nonassessable shares of Warrant Stock issuable upon such exercise.
The stock certificate or certificates for Warrant Stock so delivered
shall be endorsed with a legend as set forth in Section 1.03 to the Warrant
Agreement and shall be in such denominations as may be specified in said notice
and shall be registered in the name of such holder or such other name or names
as shall be designated in said notice. Such certificate or certificates shall
be deemed to have been issued and such holder or any other Person so designated
to be named therein shall be deemed to have become a holder of record of such
shares, including to the extent permitted by law the right to vote such shares
or to consent or to receive notice as a stockholder, as of the time said notice
is received by the Company as aforesaid.
Except as otherwise provided in (S) 8 hereof, the Company shall pay
all expenses, transfer taxes and other charges payable in connection with the
preparation, issue and delivery of stock certificates under this (S) 2, except
that, in case such stock certificates shall be registered in a name or names
other than the name of the holder of this Warrant, funds sufficient to pay all
stock transfer taxes which shall be payable upon the issuance of such stock
certificate or certificates shall be paid by the holder hereof at the time of
delivering the notice of exercise mentioned above.
All shares of Warrant Stock issuable upon the exercise of this Warrant
shall be validly issued, fully paid and nonassessable, and free from all liens
and other encumbrances thereon.
The Company will not close its books against the transfer of this
Warrant or of any share of Warrant Stock in any manner which interferes with the
timely exercise of this Warrant. With the consent of the holder of this Warrant,
the Company will from time to time take all such action as may be necessary to
assure that the par value per share of the unissued Common Stock acquirable upon
exercise of this Warrant is at all times equal to or less than the Current
Warrant Price per share of Common Stock then in effect.
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No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. If the exercise of this Warrant
results in a required issuance of a fraction of a share, an amount equal to such
fraction multiplied by the Current Market Price per share of Common Stock on the
day of delivery of notice of exercise to the Company shall be paid to the holder
of this Warrant in cash by the Company.
(S) 3. Transfer, Division and Combination. Subject to (S) 11, this
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Warrant and all rights hereunder are transferable, in whole or in part, on the
books of the Company to be maintained for such purpose, upon surrender of this
Warrant at the office of the Company maintained for such purpose pursuant to (S)
16, together with a written assignment of this Warrant duly executed by the
holder hereof or its agent or attorney and payment of funds sufficient to pay
any stock transfer taxes payable upon the making of such transfer. Upon such
surrender and payment the Company shall, subject to (S) 11, 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 shall
promptly be cancelled. If and when this Warrant is assigned in blank (in case
the restrictions on transferability in (S) 11 shall have been terminated), the
Company may (but shall not be obliged to) treat the bearer hereof as the
absolute owner of this Warrant for all purposes and the Company shall not be
affected by any notice to the contrary. This Warrant, if properly assigned in
compliance with this (S) 3 and (S) 11, may be exercised by an assignee for the
purchase of shares of Common Stock without having a new Warrant issued.
This Warrant may, subject to (S) 11, be divided or combined with other
Warrants upon presentation at the aforesaid office of the Company, together with
a written notice specifying the names and denominations in which new Warrants
are to be issued, signed by the holder hereof or its agent or attorney. Subject
to compliance with the preceding paragraph and with (S) 11, as to any transfer
which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to
be divided or combined in accordance with such notice.
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The Company shall pay all expenses, taxes (other than income taxes, if
any, of the transferee) and other charges incurred by the Company in the
performance of its obligations in connection with the preparation, issue and
delivery of Warrants under this (S) 3.
The Company agrees to maintain at its aforesaid office books for the
registration and transfer of the Warrants.
(S) 4. Adjustment of Stock Unit. The number of shares of Common Stock
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comprising a Stock Unit shall be subject to adjustment from time to time as set
forth in this (S)4 with respect to any fact or event described herein occurring
after the date hereof. The Company will not take any action with respect to its
Nonpreferred Stock of any class requiring an adjustment pursuant to any of the
following Subsections A, B, or H without at the same time taking like action
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with respect to its Nonpreferred Stock of each other class; and the Company will
not create any class of Nonpreferred Stock which carries any rights to dividends
or assets differing in any respect from the rights of the Common Stock on the
date hereof. Anything contained in this (S) 4 notwithstanding, any adjustment
made pursuant to any provision of this (S) 4 shall be made without duplication
of an adjustment otherwise required by and made pursuant to another provision of
this (S) 4 on account of the same facts or events.
A. Stock Dividends, Subdivisions and Combinations. In case at any
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time or from time to time the Company shall:
(1) take a record of the holders of its Nonpreferred Stock for
the purpose of entitling them to receive a dividend payable in, or other
distribution of, Nonpreferred Stock, or
(2) subdivide its outstanding shares of Nonpreferred Stock into a
larger number of shares of Nonpreferred Stock, or
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(3) combine its outstanding shares of Nonpreferred Stock into a
smaller number of shares of Nonpreferred Stock,
then the number of shares of Common Stock comprising a Stock Unit immediately
after the happening of any event described in clauses (1) through (3) above
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shall be adjusted so as to consist of the number of shares of Common Stock which
a record holder of the number of shares of Common Stock constituting a Stock
Unit immediately prior to the happening of such event would own or be entitled
to receive after the happening of event described in clauses (1) through (3)
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above.
B. Certain Other Dividends and Distributions. In case at any time
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or from time to time the Company shall take a record of the holders of its
Nonpreferred Stock for the purpose of entitling them to receive any dividend or
other distribution of:
(1) cash (other than a cash distribution made as a dividend and
payable out of earnings or earned surplus legally available for the payment
of dividends under the laws of the jurisdiction of incorporation of the
Company), or
(2) any evidence of its indebtedness (other than Convertible
Securities) or any other property of any nature whatsoever (other than cash
and other than Convertible Securities or Additional Shares of Nonpreferred
Stock), or
(3) any warrants, options or other rights to subscribe for or
purchase (i) any evidences of its indebtedness (other than Convertible
Securities), (ii) any shares of its stock (other than Additional Shares of
Nonpreferred Stock) or (iii) any other property of any nature whatsoever
(other than cash and other than Convertible Securities or Additional Shares
of Nonpreferred Stock),
then the number of shares of Common Stock thereafter comprising a Stock Unit
shall be adjusted to that number determined by
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multiplying the number of shares of Common Stock comprising a Stock Unit
immediately prior to such adjustment by a fraction (i) the numerator of which
shall be the Current Market Price per share of Common Stock at the date of
taking such record, and (ii) the denominator of which shall be such Current
Market Price per share of Common Stock minus the portion applicable to one share
of Common Stock of any such cash so distributable (if any) and of the fair value
of any and all such evidences of indebtedness, other property, or warrants,
options or other subscription or purchase rights, so distributable (if any).
Such fair value shall be determined in good faith by the Board of Directors of
the Company, provided that if such determination is objected to by the holders
of Warrants entitled to purchase a majority of the Stock Units covered thereby,
such determination shall be made by an independent appraiser selected by such
Board of Directors and not objected to by such holders. The Company and the
Holders shall each pay one-half of the fees and expenses of such appraiser. A
reclassification (other than a change in par value) of the Nonpreferred Stock
into shares of Nonpreferred Stock and shares of any other class of stock shall
be deemed a distribution by the Company to the holders of its Nonpreferred Stock
of such shares of such other class of stock within the meaning of this
Subsection and, if the outstanding shares of Nonpreferred Stock shall be changed
into a larger or smaller number of shares of Nonpreferred Stock as a part of
such reclassification, shall be deemed a subdivision or combination, as the case
may be, of the outstanding shares of Nonpreferred Stock within the meaning of
Subsection A of this (S) 4.
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C. Issuance of Additional Shares of Nonpreferred Stock. In case at
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any time or from time to time the Company shall (except as hereinafter provided)
issue, whether in connection with the merger of a corporation into the Company
or otherwise, any Additional Shares of Nonpreferred Stock for a consideration
per share less than the Current Warrant Price per share of Common Stock, then
the number of shares of Common Stock thereafter comprising a Stock Unit shall be
adjusted to be the greater of (A) that number determined by multiplying the
number of shares of Common Stock comprising a Stock Unit immediately prior to
such adjustment by a fraction (i) the numerator of which shall be the Current
Warrant Price per share of Common Stock, and
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(ii) the denominator of which shall be the consideration per share received by
the Company for such Additional Shares of Nonpreferred Stock or (B) that number
determined by multiplying the number of shares of Common Stock comprising a
Stock Unit immediately prior to such adjustment by a fraction (i) the numerator
of which shall be the number of shares of Nonpreferred Stock outstanding
immediately prior to such issuance, plus the number of such Additional Shares of
Nonpreferred Stock so issued, and (ii) the denominator of which shall be the
number of shares of Nonpreferred Stock immediately prior to such issuance, plus
the number of shares of Nonpreferred Stock which the aggregate consideration for
the total number of such Additional Shares of Nonpreferred Stock would purchase
at the Current Warrant Price. For purposes of this Subsection, the date as of
which the Current Warrant Price shall be computed shall be the earlier of (a)
the date on which the Company shall enter into a firm contract for the issuance
of such Additional Shares of Nonpreferred Stock, or (b) the date of actual
issuance of such Additional Shares of Nonpreferred Stock. The provisions of this
Subsection shall not apply to any issuance of Additional Shares of Nonpreferred
Stock for which an adjustment is provided under Subsection A of this (S) 4. No
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adjustment of the number of shares of Common Stock comprising a Stock Unit shall
be made under this Subsection upon the issuance of any Additional Shares of
Nonpreferred Stock which are issued pursuant to the exercise of any warrants,
options or other subscription or purchase rights or pursuant to the exercise of
any conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such warrants,
options or other rights or upon the issuance of such Convertible Securities (or
upon the issuance of any warrants, options or other rights therefor) pursuant to
Subsection D or E of this (S) 4.
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D. Issuance of Warrants, Options or Other Rights. In case at any
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time or from time to time the Company shall take a record of the holders of its
Nonpreferred Stock for the purpose of entitling them to receive a distribution
of, or shall otherwise issue, any warrants, options or other rights to subscribe
for or purchase any Additional Shares of Nonpreferred Stock or any Convertible
Securities and the consideration per share for which Additional Shares of
Nonpreferred Stock may at
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any time thereafter be issuable pursuant to such warrants, options or other
rights or pursuant to the terms of such Convertible Securities shall be less
than the Current Warrant Price per share of Common Stock, then the number of
shares of Common Stock thereafter comprising a Stock Unit shall be adjusted to
be the number determined pursuant to the first sentence of Subsection C of this
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(S) 4. All adjustments made pursuant to this Subsection D shall be made on the
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basis that (i) the maximum number of Additional Shares of Nonpreferred Stock
issuable pursuant to all such warrants, options or other rights or necessary to
effect the conversion or exchange of all such Convertible Securities shall be
deemed to have been issued as of the date specified in the last sentence of this
Subsection, (ii) the aggregate consideration for such maximum number of
Additional Shares of Nonpreferred Stock shall be deemed to be the consideration
received and receivable by the Company for the issuance of such Additional
Shares of Nonpreferred Stock pursuant to such warrants, options or other rights
or pursuant to the terms of such Convertible Securities and (iii) the
consideration per share received by the Company for such Additional Shares of
Nonpreferred Stock shall be that number determined by dividing (x) the aggregate
consideration for such maximum number of Additional Shares of Nonpreferred Stock
(determined as set forth in clause (ii) of this sentence) by (y) the maximum
number of Additional Shares of Nonpreferred Stock issuable pursuant to all such
warrants, options or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities (determined as set forth in clause
(i) of this sentence). For purposes of this Subsection, the computation date for
subclause (i) above and as of which the Current Warrant Price shall be computed
shall be the earliest of (a) the date on which the Company shall take a record
of the holders of its Nonpreferred Stock for the purpose of entitling them to
receive any such warrants, options or other rights, (b) the date on which the
Company shall enter into a firm contract for the issuance of such warrants,
options or other rights, and (c) the date of actual issuance of such warrants,
options or other rights.
E. Issuance of Convertible Securities. In case at any time or from
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time to time the Company shall take a record of the holders of its Nonpreferred
Stock for the purpose of
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entitling them to receive a distribution of, or shall otherwise issue, any
Convertible Securities and the consideration per share for which Additional
Shares of Nonpreferred Stock may at any time thereafter be issuable pursuant to
the terms of such Convertible Securities shall be less than the Current Warrant
Price per share of Common Stock, then the number of shares of Common Stock
thereafter comprising a Stock Unit shall be adjusted to be the number determined
pursuant to the first sentence of Subsection C of this (S) 4. All adjustments
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made pursuant to this Subsection E shall be made on the basis that (i) the
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maximum number of Additional Shares of Nonpreferred Stock necessary to effect
the conversion or exchange of all such Convertible Securities shall be deemed to
have been issued as of the computation date specified in the penultimate
sentence of this Subsection, (ii) the aggregate consideration for such maximum
number of Additional Shares of Nonpreferred Stock shall be deemed to be the
consideration received and receivable by the Company for the issuance of such
Additional Shares of Nonpreferred Stock pursuant to the terms of such
Convertible Securities and (iii) the consideration per share received by the
Company for such Additional Shares of Nonpreferred Stock shall be that number
determined by dividing (x) the aggregate consideration for such maximum number
of Additional Shares of Nonpreferred Stock (determined as set forth in clause
(ii) of this sentence) by (y) the maximum number of Additional Shares of
Nonpreferred Stock necessary to effect the conversion or exchange of all such
Convertible Securities (determined as set forth in clause (i) of this sentence).
For purposes of this Subsection, the computation date for clause (i) above and
as of which the Current Warrant Price shall be computed shall be the earliest of
(a) the date on which the Company shall take a record of the holders of its
Nonpreferred Stock for the purpose of entitling them to receive any such
Convertible Securities, (b) the date on which the Company shall enter into a
firm contract for the issuance of such Convertible Securities, and (c) the date
of actual issuance of such Convertible Securities. No adjustment of the number
of shares of Common Stock comprising a Stock Unit shall be made under this
Subsection upon the issuance of any Convertible Securities which are issued
pursuant to the exercise of any warrants, options or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants, options or other rights pursuant to
Subsection D of this (S) 4.
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F. Superseding Adjustment of Stock Unit. If, at any time after any
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adjustment of the number of shares of Common Stock comprising a Stock Unit shall
have been made pursuant to the foregoing Subsection D or E of this (S) 4 on the
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basis of the issuance of warrants, options or other rights or the issuance of
other Convertible Securities, or after any new adjustment of the number of
shares of Common Stock comprising a Stock Unit shall have been made pursuant to
this Subsection,
(1) such warrants, options or rights or the right of conversion
or exchange in such other Convertible Securities shall expire, and a
portion or all of such warrants, options or rights, or the right of
conversion or exchange in respect of a portion of such other Convertible
Securities, as the case may be, shall not have been exercised, or
(2) the consideration per share for which Additional Shares of
Nonpreferred Stock are issuable pursuant to such warrants, options or
rights or the terms of such other Convertible Securities, shall be
increased solely by virtue of provisions therein contained for an automatic
increase in such consideration per share upon the arrival of a specified
date or the happening of a specified event,
such previous adjustment shall be rescinded and annulled and the Additional
Shares of Nonpreferred Stock which were deemed to have been issued by virtue of
the computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of such warrants, options
or rights or other Convertible Securities on the basis of:
(3) treating the number of Additional Shares of Nonpreferred
Stock, if any, theretofore actually issued or issuable pursuant to the
previous exercise of such warrants, options or rights or such right of
conversion or exchange,
-16-
as having been issued on the date or dates of such issuance as determined
for purposes of such previous adjustment and for the consideration actually
received and receivable therefor, and
(4) treating any such warrants, options or rights or any such
other Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such expiration or of such
increase of the consideration per share for which such Additional Shares of
Nonpreferred Stock are issuable under such warrants, options or rights or
other Convertible Securities, at the increased per share consideration,
and, if and to the extent called for by the foregoing provisions of this (S) 4
on the basis aforesaid, a new adjustment of the number of shares of Common Stock
comprising a Stock Unit shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
G. Other Provisions Applicable to Adjustments Under this Section.
-------------------------------------------------------------
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock comprising a Stock Unit hereinbefore provided
for in this (S) 4:
(1) Treasury Stock. The sale or other disposition of any issued
--------------
shares of Nonpreferred Stock, other than any Additional Shares of
Nonpreferred Stock, owned or held by or for the account of the Company
shall be deemed an issuance thereof for purposes of this (S) 4.
(2) Computation of Consideration. To the extent that any
----------------------------
Additional Shares of Nonpreferred Stock or any Convertible Securities or
any warrants, options or other rights to subscribe for or purchase any
Additional Shares of Nonpreferred Stock or any Convertible Securities shall
be issued solely for cash consideration, the consideration received by the
Company therefor shall be deemed to be the amount of cash received by the
Company therefor, or, if such Additional Shares of Nonpreferred Stock or
Convertible Securities are offered by the Company for subscription, the
-17-
subscription price, or, if such Additional Shares of Nonpreferred Stock or
Convertible Securities are sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering
price, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of any
compensation, discounts or expenses paid or incurred by the Company for and
in the underwriting of, or otherwise in connection with, the issue thereof.
To the extent that such issuance shall be for a consideration other than
solely for cash, then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the fair value of such
consideration at the time of such issuance as determined in good faith by
the Board of Directors of the Company, provided that if such determination
is objected to by the holders of Warrants entitled to purchase a majority
of the Stock Units covered thereby, such determination shall be made by an
independent appraiser selected by such Board of Directors and not objected
to by such holder. The Company, on the one hand, and the holders of
Warrants, on the other, shall each pay one-half of the fees and expenses of
such appraiser. The consideration for any Additional Shares of
Nonpreferred Stock issuable pursuant to any warrants, options or other
rights to subscribe for or purchase the same shall be the consideration
received or receivable by the Company for issuing such warrant, options or
other rights, plus the additional consideration payable to the Company upon
the exercise of such warrants, options or other rights. The consideration
for any Additional Shares of Nonpreferred Stock issuable pursuant to the
terms of any Convertible Securities shall be the consideration received or
receivable by the Company for issuing any warrants, options or other rights
to subscribe for or purchase such Convertible Securities (if any), plus the
consideration paid or payable to the Company in respect of the subscription
for or purchase of such Convertible Securities, plus the additional
consideration, if any, payable to the Company upon the exercise of the
right of conversion or exchange in such Convertible Securities.
-18-
(3) When Adjustments To Be Made. The adjustments required by the
---------------------------
preceding Subsections of this (S) 4 shall be made whenever and as often as
any specified event requiring an adjustment shall occur, except that no
adjustment of the number of shares of Common Stock comprising a Stock Unit
that would otherwise be required shall be made (except in the case of a
subdivision or combination of shares of the Nonpreferred Stock, as provided
for in Subsection A) unless and until such adjustment, either by itself or
------------
with other adjustments not previously made, adds or subtracts at least
$0.005 to the Current Warrant Price per share of Common Stock, as
determined in good faith by the Board of Directors of the Company, provided
that, in any event such adjustment shall be made if such adjustment either
by itself or with other adjustments not previously made adds or subtracts
at least 1/20th of a share to or from the number of shares of Common Stock
comprising a Stock Unit immediately prior to the making of such adjustment.
Any adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by this (S) 4 and not
previously made, would result in a minimum adjustment. For the purpose of
any adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(4) Fractional Interests. In computing adjustments under this
--------------------
Section, fractional interests in Non preferred Stock shall be taken into
account to the nearest 1/100th of a share.
(5) When Adjustment Not Required. If the Company shall take a
----------------------------
record of the holders of its Nonpreferred Stock for the purpose of
entitling them to receive a dividend or distribution or subscription or
purchase rights and shall, thereafter and before the distribution thereof
to shareholders, legally abandon its plan to pay or deliver such dividend,
distribution, subscription or purchase rights, then thereafter no
adjustment shall be required by reason of the taking of such record and any
such adjustment previously made in respect thereof shall be rescinded and
annulled.
-19-
H. Merger, Consolidation or Disposition of Assets. In case the
----------------------------------------------
Company shall merge or consolidate into another corporation and the Company is
not the surviving entity, or the Company shall sell, transfer or otherwise
dispose of all or substantially all of its property, assets or business to
another corporation, then each holder of a Warrant (regardless of whether this
Warrant is then exercisable) shall have the right to receive notice from the
Company of such merger, consolidation or disposition at least forty-five (45)
days prior to the closing of such merger, consolidation or disposition, which
notice shall include a copy of the operative merger, consolidation or
disposition documents or a summary of their operative terms and shall include a
statement from the surviving or acquiring entity that it does not wish to assume
the Company's obligations under this Warrant. Thereafter, the holder of this
Warrant shall have until ten (10) days prior to the closing date of the merger,
consolidation or disposition, to exercise this Warrant and participate in such
merger, consolidation or disposition on the terms negotiated by the Company,
regardless of whether this Warrant had yet become exercisable in accordance with
its terms. If this Warrant is not then exercised, it shall terminate effective
as of the closing date of such merger, consolidation or disposition.
I. Other Action Affecting Nonpreferred Stock. In case at any time
-----------------------------------------
or from time to time the Company shall take any action affecting its
Nonpreferred Stock, other than an action described in any of the foregoing
Subsections A to H, inclusive, of this (S) 4 and the actions described in
- ------------- -
clauses (i) through (viii) of the definition of Additional Shares of
Nonpreferred Stock, then, unless in the reasonable opinion of the Board of
Directors of the Company such action will not have a materially adverse effect
upon the rights of the holders of the Warrants, the number of shares of Common
Stock or other stock comprising a Stock Unit, or the purchase price thereof,
shall be adjusted in such manner and at such time as the Board of Directors of
the Company may in good faith determine to be equitable in the circumstances.
-20-
J. No Adjustments for Certain Transactions. Anything contained in
---------------------------------------
this Warrant notwithstanding, the number of shares of Common Stock comprising a
Stock Unit and the Purchase Price per Stock Unit shall not be adjusted, nor be
subject to adjustment, on account of the granting of any rights under a phantom
stock plan, stock appreciation rights plan or other deferred compensation plan
to officers, directors or employees of the Company or its affiliates, and (i) no
shares of Nonpreferred Stock are issued or required to be issued under any such
plan and (ii) the only consideration paid or payable to any participant in such
plan is cash.
K. Special Adjustments for Certain Transactions. Anything contained
--------------------------------------------
in this Warrant notwithstanding, if any Affiliate of the Company that owns ten
percent (10%) or more of the Common Stock of the Company (calculated on a fully-
diluted basis) sells or otherwise transfers (other than to a family member or
trust for tax planning purposes or to an Affiliate of such Person) in the
aggregate more than 1,000,000 shares of Common Stock or an equivalent number of
shares of the Company's capital stock which is convertible into Common Stock (in
such case based on the number of shares of Common Stock for which such share is
then convertible) at a price less than the Current Warrant Price, then such sale
or transfer shall be deemed an issuance by the Company of Additional Shares of
Nonpreferred Stock under (S) 4.C hereof and shall be subject to the adjustments
set forth therein. The consideration for such sale or transfer under this (S)
4.K, for purposes of the adjustments to be made pursuant to (S) 4.C, shall be
equal to the average weighted sale price per share of Common Stock sold (or in
the case of shares of the Company's capital stock other than Common Stock, on
the sale price per share of Common Stock then underlying such share sold).
(S) 5. Notice to Warrant Holders.
-------------------------
A. Notice of Adjustment of Stock Unit or Purchase Price. Whenever
----------------------------------------------------
the number of shares of Warrant Stock comprising a Stock Unit or the Purchase
Price per Stock Unit shall be adjusted pursuant to (S) 4, the Company shall
forthwith obtain a certificate signed by the president of the Company, the
principal
-21-
financial officer of the Company and independent accountants, of recognized
national standing, then engaged by the Company and reasonably acceptable to the
holders of a majority of the Warrants, setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such adjustment was
calculated (including a statement of the fair value, as determined by the Board
of Directors of the Company, of any evidences of indebtedness, shares of stock,
other securities or property or warrants, options or other subscription or
purchase rights referred to in (S) 4.B, (S) 4.G(2) or (S) 4.H) and specifying
the number of shares of Common Stock comprising a Stock Unit and (if such
adjustment was made pursuant to (S) 4.H or (S) 4.I) describing the number and
kind of any other shares of stock comprising a Stock Unit, and any change in the
Purchase Price thereof after giving effect to such adjustment or change. The
Company shall promptly, and in any case within 30 days after the making of such
adjustment, cause a signed copy of such certificate to be delivered to each
holder of a Warrant in accordance with (S) 16. The Company shall keep at its
office or agency, maintained for the purpose pursuant to (S) 16, copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any holder of a Warrant or any
prospective purchaser of a Warrant designated by a holder thereof.
B. Notice of Certain Corporate Action. In case the Company shall
----------------------------------
propose (a) to pay any dividend payable in cash or in stock of any class to the
holders of its Nonpreferred Stock or to make any other distribution to the
holders of its Nonpreferred Stock, or (b) to offer to the holders of its
Nonpreferred Stock rights to subscribe for or to purchase any Additional Shares
of Nonpreferred Stock or shares of stock of any class or any other securities,
rights or options, or (c) to effect any reclassification of its Nonpreferred
Stock (other than a reclassification involving only the subdivision or
combination of outstanding shares of Nonpreferred Stock), or (d) to effect any
capital reorganization, or (e) to effect any consolidation, merger or sale,
change to the Company's charter, transfer or other disposition of all or
substantially all of its property, assets or business, or (f) to effect the
liquidation, dissolution or winding up of the Company, then in each such case,
the Company
-22-
shall give to each holder of a Warrant, in accordance with (S) 17, a notice,
certified by the president of the Company and the principal financial officer of
the Company, of such proposed action, which shall specify the date on which a
record is to be taken for the purposes of such stock dividend, distribution or
rights, or the date on which such reclassification, reorganization,
consolidation, merger, sale, change to the Company's charter, transfer,
disposition, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of Nonpreferred Stock, if any such
date is to be fixed, and shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action on the
Nonpreferred Stock and the number and kind of any other shares of stock which
will comprise a Stock Unit, and the purchase price or prices thereof, after
giving effect to any adjustment which will be required as a result of such
action. Such notice shall be so given in the case of any action covered by
clause (a) or (b) above at least ten days prior to the record date for
determining holders of the Nonpreferred Stock for purposes of such action, and
in the case of any other such action, at least twenty days prior to the date of
the taking of such proposed action or the date of participation therein by the
holders of Nonpreferred Stock, whichever shall be the earlier.
(S) 6. Reservation and Authorization of Nonpreferred Stock; Registration
-----------------------------------------------------------------
with or Approval of any Governmental Authority. The Company shall at all times
- ----------------------------------------------
reserve and keep available for issue upon the exercise of Warrants such number
of its authorized but unissued shares of Common Stock as will be sufficient to
permit the exercise in full of all outstanding Warrants. All shares of Common
Stock which shall be so issuable, when issued upon exercise of any Warrant or
upon such conversion, as the case may be, shall be duly and validly issued and
fully-paid and nonassessable.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price per share of Common Stock below the then par value, if
any, of the shares of Common Stock issuable upon exercise of the Warrants, the
Company shall take any corporate action which may, in the opinion of its
-23-
counsel, be necessary in order that the Company may validly and legally issue
fully-paid and nonassessable shares of Common Stock at such adjusted Current
Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock comprising a Stock Unit or in the Current
Warrant Price per share of Common Stock, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof (except
that nothing contained in this Warrant certificate shall require the Company to
register the Warrants under the Securities Act or any similar federal or state
equivalent).
(S) 7. Taking of Record; Stock and Warrant Transfer Books. In the case
--------------------------------------------------
of all dividends or other distributions by the Company to the holders of its
Nonpreferred Stock with respect to which any provision of (S) 4 refers to the
taking of a record of such holders, the Company will in each such case take such
a record and will take such record as of the close of business on a Business
Day. The Company will not at any time, except (i) upon dissolution, liquidation
or winding up, or (ii) for purposes of declaring and paying a dividend or
matters related to voting by shareholders of the Company, close its stock
transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
(S) 8. Transfer Taxes. The Company will pay any and all transfer taxes
--------------
that may be payable in respect of the issuance or delivery of shares of Common
Stock on exercise of this Warrant. The Company shall not, however, be required
to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Common Stock in a name other than that in which
this Warrant is registered, and no such issue or delivery shall be made unless
and until the person requesting such issue has paid to the Company the amount of
any such tax, or has established, to the satisfaction of the Company, that such
tax has been paid.
(S) 9. Warrant Repurchase. The holder of this Warrant shall have the
------------------
right at its option, for up to fifteen (15)
-24-
business days following the first to occur of (i) the Company's payment in full
of the Notes for cash prior to their stated maturity or (ii) the maturity of the
Notes in accordance with their terms (including maturity due to acceleration
thereunder), to cause the Company to repurchase for cash this Warrant in an
amount equal to the holder of this Warrant's pro rata share (such pro rata share
to be determined based on the total number of shares of Common Stock underlying
any exercised or unexercised Warrant issued pursuant to the Warrant Agreement)
of an amount equal to the amount necessary to cause a 12.5% IRR to be achieved
by the holder of the Company's $10mm Note (assuming that the Warrant Repurchase
Price (as defined below) is received by such holder).
If the holder hereof elects to have the Company repurchase this
Warrant in accordance with this (S) 9, the holder hereof shall provide notice to
the Company at the Company's address set forth in (S) 17 hereof within the time
period specified above. Upon receipt of such request, the Company shall provide
an accounting of the amount to be paid for the repurchase of this Warrant (the
"WARRANT REPURCHASE PRICE") to the holder hereof within five (5) Business Days
of receipt of such notice (the "ACCOUNTING NOTICE"). Within five (5) Business
Days from the mailing of such Accounting Notice, the Company shall deliver in
immediately available funds to the holder hereof the Warrant Repurchase Price.
Upon receipt of the Warrant Repurchase Price, this Warrant shall no longer be
exercisable and shall be returned to the Company for cancellation.
(S) 10. Voting Rights. This Warrant shall not entitle the holder hereof
-------------
to voting rights with respect to the underlying Warrant Stock or to any rights
as a stockholder of the Company with respect to such underlying Warrant Stock
until this Warrant has been exercised in accordance with its terms.
(S) 11. Restrictions on Transferability. The Warrants and the Warrant
-------------------------------
Stock shall be transferable only (i) in accordance with the provisions of
Section 6 of the Warrant Agreement and (ii) upon compliance with the conditions
specified in this Warrant and in compliance with the provisions of the
Securities Act and applicable state securities laws in respect of the
-25-
transfer of any Warrant or any Warrant Stock, and any holder of this Warrant
shall be bound by the provisions of (and entitled to the benefits of) (S) 3.
(S) 12. Limitation of Liability. No provision hereof, in the absence of
-----------------------
affirmative action by the holder hereof to purchase shares of Common Stock, and
no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such holder for the purchase price or as a
stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.
(S) 13. Loss, Destruction of Warrant Certificates. Upon receipt of
-----------------------------------------
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Company
(the original holder's or any other institutional holder's indemnity being
satisfactory indemnity in the event of loss, theft or destruction of any Warrant
owned by such institutional holder), or, in the case of any such mutilation,
upon surrender and cancellation of such Warrant, the Company will make and
deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new
Warrant of like tenor and representing the right to purchase the same aggregate
number of shares of Common Stock.
(S) 14. Furnish Information. The Company agrees that it shall deliver to
-------------------
the holder of record hereof promptly after their becoming available copies of
all financial statements, reports and proxy statements which the Company shall
have sent to its stockholders generally.
(S) 15. Amendments. The terms of this Warrant and all other Warrants may
----------
be amended, and the observance of any term therein may be waived, but only with
the written consent of the holders of Warrants evidencing 66-2/3% in number of
the total number of Stock Units at the time purchasable upon the exercise of all
then outstanding Warrants, provided that no such action may change the number of
shares of stock comprising a Stock Unit or the Current Warrant Price, without
the written consent of the holders of Warrants representing at least 66-2/3% in
number of the total number of Stock Units at the time purchasable upon the
exercise of all then outstanding Warrants.
-26-
(S) 16. Office of the Company. So long as any of the Warrants remains
---------------------
outstanding, the Company shall maintain an office in Denver, Colorado where the
Warrants may be presented for exercise, transfer, division or combination as in
this Warrant provided. Such office shall be at 475 17th Street, Suite 1500,
Denver, Colorado 80202 unless and until the Company shall designate and maintain
some other office for such purposes and give written notice thereof to the
holders of all outstanding Warrants.
(S) 17. Notices Generally. Any notice, demand or delivery pursuant to
-----------------
the provisions hereof shall be sufficiently given or made if given or made as
set forth in Section 7.06 of the Warrant Agreement, which is incorporated herein
by reference.
(S) 18. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. NOTWITHSTANDING SUCH CHOICE OF LAW, THE
COMPANY HEREBY IRREVOCABLY SUBMITS ITSELF AND EACH OTHER RELATED PERSON TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE STATE
OF CALIFORNIA AND THE COUNTY OF LOS ANGELES AND AGREES AND CONSENTS THAT SERVICE
OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES IN ANY LEGAL
PROCEEDING RELATING TO THE OPERATIVE DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS
ALLOWED UNDER CALIFORNIA OR FEDERAL LAW. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
(S) 19. Subject to Other Agreements. This Warrant Certificate evidences
---------------------------
a "Warrant" referred to in Section 1 of the Warrant Agreement, and this Warrant,
and all Warrant Stock issued upon the exercise hereof, is entitled to the
benefits of, and subject to all of the restrictions set forth in the Warrant
Agreement.
-27-
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed in its name by its Chief Financial Officer, such signature to be
attested to by the Company's Secretary or Assistant Secretary, and the Company's
corporate seal to be impressed hereon.
Dated: September 23, 1997
[SEAL] INLAND RESOURCES INC.,
a Washington corporation
By:
--------------------------
Bill I. Pennington
Chief Financial Officer
Attested to by:
- -------------------------
Michael J. Stevens
Secretary
-28-
SUBSCRIPTION FORM
(to be executed only upon exercise of Warrant)
The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for and purchases ___________ Stock Units of Inland Resources Inc.,
a Washington corporation, purchasable with this Warrant, herewith makes payment
therefor on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to ______________________ whose address is ________________________.
Dated:
---------------------------
-------------------------------------
(Signature of Registered Owner)
-------------------------------------
(Street Address)
--------------------------------------
(City) (State) (Zip Code)
-29-
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
Stock Units set forth below:
No. of Stock
Name and Address of Assignee Units
---------------------------- --------------
and does hereby irrevocably constitute and appoint _____________________
attorney to make sure transfer on the books of Inland Resources Inc., a
Washington corporation, maintained for the purpose, with full power of
substitution in the premises.
Dated:
-----------------------------
Signature
------------------------------
Witness
NOTICE: The signature to the assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatever.
-30-
The signature to this assignment must be guaranteed by an Eligible
Guarantor Institution as defined in Rule 17Ad-15 promulgated under the
Securities Exchange Act of 1934, as amended, or any successor thereto.
-31-