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EXHIBIT 2.3
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WARRANT
Southern Mineral Corporation
a Nevada Corporation
(the "Company")
To Purchase up to 120,000
Shares of the Company's common stock
issued to
Morgan Keegan & Company, Inc.
("Warrantholder")
December 23, 1996
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT.
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TABLE OF CONTENTS
Page
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ARTICLE I. EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Manner of Exercise. . . . . . . . . . . . . . . . . . . 1
Section 1.2. When Exercise Effective. . . . . . . . . . . . . . . . 1
Section 1.3. Delivery of Stock Certificates, etc. . . . . . . . . . 2
(a) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(b) Partial Exercise . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE . . . . . . . . 2
Section 2.1. General; Warrant Price. . . . . . . . . . . . . . . . . 2
Section 2.2. Issuance of Additional Shares of Common Stock. . . . . 2
Section 2.3. Extraordinary Dividends and Distributions. . . . . . . 3
Section 2.4. Treatment of Options and Convertible Securities. . . . 3
Section 2.5. Treatment of Stock Dividends, Stock Splits, etc. . . . 4
Section 2.6. Computation of Consideration. . . . . . . . . . . . . . 5
(a) Shares Actually Issued . . . . . . . . . . . . . . . . . . . . . 5
(b) Shares Deemed Issued . . . . . . . . . . . . . . . . . . . . . . 5
(c) Stock Dividends, Etc. . . . . . . . . . . . . . . . . . . . . . 5
(d) Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.7. Adjustments for Combinations, etc. . . . . . . . . . . 6
Section 2.8. Dilution in Case of Other Securities. . . . . . . . . . 6
ARTICLE III. CONSOLIDATION, MERGER, ETC. . . . . . . . . . . . . . . . . . . 7
Section 3.1. Consolidation, Merger, Sale of Assets,
Reorganization, etc. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.2. Assumption of Obligations. . . . . . . . . . . . . . . 7
ARTICLE IV. OTHER PROVISIONS CONCERNING DILUTION . . . . . . . . . . . . . . 7
Section 4.1. No Dilution or Impairment. . . . . . . . . . . . . . . 7
Section 4.2. Registration of Common Stock. . . . . . . . . . . . . . 8
Section 4.3. Availability of Information. . . . . . . . . . . . . . 8
Section 4.4. Reservation of Stock, etc. . . . . . . . . . . . . . . 8
ARTICLE V. RESTRICTIONS ON TRANSFER . . . . . . . . . . . . . . . . . . . . 8
Section 5.1. Restrictive Legends. . . . . . . . . . . . . . . . . . 9
Section 5.2. Notice of Proposed Transfer; Opinions of Counsel. . . . 9
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Section 5.3. Termination of Restrictions. . . . . . . . . . . . . . 9
ARTICLE VI. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS . . . . . . . . 10
Section 6.1. Ownership of Warrants. . . . . . . . . . . . . . . . . 10
Section 6.2. Office, Transfer and Exchange of Warrants. . . . . . . 10
(a) Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) New Warrant . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.3. Replacement of Warrants. . . . . . . . . . . . . . . . 10
ARTICLE VII. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.1. Remedies. . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.2. No Rights or Liabilities as Stockholder. . . . . . . . 13
Section 8.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.4. Registration Rights . . . . . . . . . . . . . . . . . . 13
Section 8.5. Miscellaneous. . . . . . . . . . . . . . . . . . . . . 14
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SOUTHERN MINERAL CORPORATION
Warrant
No. W-1 December 23, 1996
Southern Mineral Corporation, a Nevada corporation (the "Company"),
for value received, hereby certifies that Morgan Keegan & Company, Inc., or
registered assigns, is entitled to purchase from the Company up to 120,000 duly
authorized, validly issued, fully paid and non-assessable shares of its common
stock, $0.01 par value (the "Common Stock") at any time or from time to time
prior to 5:00 p.m., Houston, Texas time, on the Expiration Date, all subject to
terms, conditions and adjustments set forth in this Warrant.
This Warrant (the "Warrant") (such term to include any warrants issued
in substitution therefor) evidences rights to purchase an aggregate of up to
120,000 shares of Common Stock subject to adjustment as provided herein.
Certain capitalized terms used in this Warrant are defined in Article VII;
unless otherwise specified, references to an "Exhibit" mean one of the exhibits
attached to this Warrant, references to an "Article" mean one of the articles
in this Warrant and references to a "Section" mean one of the sections of this
Warrant.
ARTICLE I. EXERCISE OF WARRANT
SECTION 1.1. MANNER OF EXERCISE. This Warrant may be exercised by
the holder hereof, in whole or in part, during normal business hours on any
Business Day, by surrender of this Warrant to the Company at its office
maintained pursuant to subsection (a) of Section 6.2, accompanied by a
subscription in substantially the form attached to this Warrant (or a
reasonable facsimile thereof) duly executed by such holder and accompanied by
payment, in cash or by certified or official bank check payable to the order of
the Company in the amount obtained by multiplying (a) the number of shares of
Common Stock (without giving effect to any adjustment thereof) designated in
such subscription by (b) the Initial Price, and such holder shall thereupon be
entitled to receive the number of duly authorized, validly issued, fully paid
and non-assessable shares of Common Stock (or Other Securities) determined as
provided in Articles II through IV.
SECTION 1.2. WHEN EXERCISE EFFECTIVE. Each exercise of this
Warrant shall be deemed to have been effected immediately prior to the close of
business on the Business Day on which this Warrant shall have been surrendered
to the Company as provided in Section 1.1, and at such time the Person or
Persons in whose name or names any
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certificate or certificates for shares of Common Stock (or Other Securities)
shall be issuable upon such exercise as provided in Section 1.3 shall be deemed
to have become the holder or holders of record thereof.
SECTION 1.3. DELIVERY OF STOCK CERTIFICATES, ETC. As soon as
practicable after each exercise of this Warrant, in whole or in part, and in
any event within five Business Days thereafter, the Company, at its expense
(including the payment by it of any applicable issue taxes), will cause to be
issued in the name of and delivered to the holder hereof, subject to Article V,
as such holder (upon payment by such holder of any applicable transfer taxes)
may direct, the following:
(A) CERTIFICATES. A certificate or certificates for the
number of duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock (or Other Securities) to which
such holder shall be entitled upon such exercise plus, in lieu of any
fractional share to which such holder would otherwise be entitled,
cash in an amount equal to the same fraction of the Market Price per
share on the Business Day next preceding the date of such exercise.
(B) PARTIAL EXERCISE.. In case such exercise is in part
only, a new Warrant or Warrants of like tenor dated the date hereof,
calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock equal (without giving effect to any
adjustment thereof) to the number of such shares called for on the
face of this Warrant minus the number of such shares designated by the
holder upon such exercise as provided in Section 1.1.
ARTICLE II. ADJUSTMENT OF COMMON STOCK ISSUABLE UPON EXERCISE
SECTION 2.1. GENERAL; WARRANT PRICE. The number of shares of
Common Stock which the holder of this Warrant shall be entitled to receive upon
each exercise hereof shall be determined by multiplying the number of shares of
Common Stock which would be issuable upon such exercise, as designated by the
holder hereof pursuant to Section 1.1, by a fraction (the "Dilution Factor")
(a) the numerator of which is the Initial Price and (b) the denominator of
which is the Warrant Price in effect at the effective time of such exercise (as
provided in Section 1.2). The "Warrant Price" shall initially be the Initial
Price, shall be adjusted and readjusted from time to time as provided in this
Article II and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Article II.
SECTION 2.2. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In
case the Company at any time or from time to time after the date hereof shall
issue or sell Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to section 2.4 or 2.5) without
consideration or for a
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consideration per share less than the Current Market Price, then, and in each
such case, such Warrant Price shall be reduced, concurrently with such issue or
sale, to the price calculated by multiplying the Warrant Price then in
existence by a fraction, the numerator of which shall be (i) the number of
shares of Common Stock outstanding immediately prior to such issue or sale plus
(ii) the number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such Additional Shares of
Common Stock so issued or sold would purchase at the Current Market Price, and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such issue or sale, provided that, for the
purposes of this Section 2.2, (i) immediately after any Additional Shares of
Common Stock are deemed to have been issued pursuant to Section 2.4 or 2.5,
such Additional Shares of Common Stock shall be deemed to be outstanding, and
(ii) treasury shares shall not be deemed to be outstanding. Notwithstanding
the foregoing, no adjustment to the Warrant Price shall be made in connection
with the sale of Common Stock in an underwritten public offering or in a
private placement in which the purchase price for the Common Stock issued is in
excess of 70% of the Current Market Price.
SECTION 2.3. EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. Without
the prior written consent of the holder of this Warrant, the Company shall not
make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or Other Securities or property or
Options by way of dividend or spin-off, reclassification, recapitalization or
similar corporate rearrangement) on the Common Stock, other than (a) a dividend
payable in Additional Shares of Common Stock or (b) a dividend payable in cash
or other property and declared out of the earned surplus of the Company as at
the date thereof as increased by any credits (other than credits resulting from
a revaluation of property) and decreased by any debits made thereto.
SECTION 2.4. TREATMENT OF OPTIONS AND CONVERTIBLE SECURITIES.
(a) In case the Company at any time or from time to time after the
date hereof shall issue, sell, grant or assume, or shall fix a record date for
the determination of holders of any class of securities entitled to receive,
any Options or Convertible Securities, then, and in each such case, the maximum
number of Additional Shares of Common Stock (as set forth in the instrument
relating thereto, without regard to any provisions contained therein for a
subsequent adjustment of such number) issuable upon the exercise of such
Options or, in the case of Convertible Securities and Options therefor, the
conversion or exchange of such Convertible Securities, shall be deemed to be
the number of Additional Shares of Common Stock issued as of the time of such
issue, sale, grant or assumption or, in case such a record date shall have been
fixed, as of the close of business on such record date (or, if the Common Stock
trades on an ex-dividend basis, on the date prior to the commencement of
ex-dividend trading); provided that such Additional Shares of Common Stock
shall not be deemed to have been issued unless the consideration per share
(determined pursuant to Section 2.6) of such shares would be less than the
Current Market Value in effect on the date of and
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immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, if the Common Stock trades on
an ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be; and provided, further, that in any such case in
which Additional Shares of Common Stock are deemed to be issued no further
adjustment of the Warrant Price shall be made upon the subsequent issue or sale
of Convertible Securities or Additional Shares of Common Stock upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.
(b) Upon the expiration (or purchase by the Company and
cancellation or retirement) of any such Options which shall not have been
exercised or the expiration of any rights of conversion or exchange under any
such Convertible Securities which (or purchase by the Company and cancellation
or retirement of any such Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised, the Warrant Price computed
upon the original issue, sale, grant or assumption thereof (or upon the
occurrence of the record date, or date prior to the commencement of ex-dividend
trading, as the case may be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration (or such cancellation or
retirement, as the case may be), be recomputed as if:
(i) in the case of Options for Common Stock or
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by the Company for the issue,
sale, grant or assumption of all such Options, whether or not
exercised, plus the consideration actually received by the
Company upon such exercise, or for the issue or sale of all
such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by the Company upon such conversion or exchange, and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was the consideration actually received by the Company
for the issue, sale, grant or assumption of all such Options,
whether or not exercised, plus the consideration deemed to
have been received by the Company (pursuant to Section 2.6)
upon the issue or sale of such Convertible Securities with
respect to which such Options were actually exercised.
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SECTION 2.5. TREATMENT OF STOCK DIVIDENDS, STOCK SPLITS, ETC. In
case the Company at any time or from time to time after the date hereof shall
declare or pay any dividend on the Common Stock payable in Common Stock, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock), then, and in each such case,
Additional Shares of Common Stock shall be deemed to have been issued (a) in
the case of any such dividend, immediately after the close of business on the
record date for the determination of holders of any class of securities
entitled to receive such dividend, or (b) in the case of any such subdivision,
at the close of business on the day immediately prior to the day upon which
such corporate action becomes effective.
SECTION 2.6. COMPUTATION OF CONSIDERATION. For the purpose of
Article II, the following shall be used to determine the consideration received
or deemed received by the Company:
(A) SHARES ACTUALLY ISSUED. The consideration for the
issue or sale of any Additional Shares of Common Stock shall,
irrespective of the accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed
at the net amount of cash received by the Company, without
deducting any expenses paid or incurred by the Company or any
commissions or compensations paid or concessions or discounts
allowed to underwriters, dealers or others performing similar
services in connection with such issue or sale,
(ii) insofar as it consists of property (including
securities) other than cash, be computed at the fair value
thereof at the time of such issue or sale, as determined in
good faith by the Board of Directors of the Company, and
(iii) in case Additional Shares of Common Stock are
issued or sold together with other stock or securities or
other assets of the Company for a consideration which covers
both, be the portion of such consideration so received,
computed as provided in clauses (i) and (ii) above, applicable
to such Additional Shares of Common Stock, all as determined
in good faith by the Board of Directors of the Company.
(B) SHARES DEEMED ISSUED. Additional Shares of Common
Stock deemed to have been issued pursuant to Section 2.4, relating to
Options and Convertible Securities, shall be deemed to have been
issued for a consideration per share determined by dividing,
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(i) the value of the total amount, if any,
received and receivable by the Company as consideration for
the issue, sale, grant or assumption of the Options or
Convertible Securities in question, plus the value of the
minimum aggregate amount of additional consideration (as set
forth in the instruments relating thereto, without regard to
any provision contained therein for a subsequent adjustment of
such consideration to protect against dilution) payable to the
Company upon the exercise in full of such Options or the
conversion or exchange of such Convertible Securities or, in
the case of Options for Convertible Securities, the exercise
of such Options for Convertible Securities and the conversion
or exchange of such Convertible Securities, in each case
computing such consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of Additional Shares of
Common Stock (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such number to protect against
dilution) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(C) STOCK DIVIDENDS, ETC.. Additional Shares of Common
Stock issued or deemed to have been issued pursuant to Section 2.5,
relating to stock dividends, stock splits, etc., shall be deemed to
have been issued for no consideration.
(D) SERVICES. Additional Shares of Common Stock issued
or sold or deemed issued or sold in exchange for services or the
promise of future services shall be deemed to have been issued for
such consideration as is determined by the Board of Directors in good
faith.
SECTION 2.7. ADJUSTMENTS FOR COMBINATIONS, ETC. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Warrant Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
SECTION 2.8. DILUTION IN CASE OF OTHER SECURITIES. In case any
Other Securities shall be issued or sold or shall become subject to issue or
sale upon the conversion or exchange of any stock (or Other Securities) of the
Company (or any issuer of Other Securities or any other Person referred to in
Article III) or to subscription, purchase or other acquisition pursuant to any
Options issued or granted by the Company (or any such other issuer or Person)
for a consideration such as to dilute, on a basis consistent with the standards
established in the other provisions of this Article II, the purchase rights
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granted by this Warrant, then, and in each such case, the computations,
adjustments and readjustments provided for in this Article III with respect to
the Warrant Price shall be made as nearly as possible in the manner so provided
and applied to determine the amount of Other Securities from time to time
receivable upon the exercise of the Warrants, so as to protect the holders of
the Warrants against the effect of such dilution.
ARTICLE III. CONSOLIDATION, MERGER, ETC.
SECTION 3.1. CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. From and after the date hereof, the Company shall not (a)
consolidate with or merge into any other Person if the Company is not the
continuing or surviving corporation of such consolidation or merger, or (b)
permit any other Person to consolidate with or merge into the Company even
though the Company shall be the continuing or surviving Person if, in
connection with such consolidation or merger, the Common Stock or Other
Securities shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or (d)
effect a capital reorganization or reclassification of the Common Stock or
Other Securities (other than a capital reorganization or reclassification
resulting in the issue of Additional Shares of Common Stock for which
adjustment in the Warrant Price is provided in Section 2.2 or 2.3) unless the
Company provides the holder of this Warrant written notice of the proposed
transaction 10 days prior to any record date for notice to stockholders
entitled to vote on such transaction or, if no such vote is taken, 20 days
prior to the effective date or closing of the transaction.
SECTION 3.2. ASSUMPTION OF OBLIGATIONS. Notwithstanding anything
contained in this Warrant to the contrary, the Company will not effect any of
the transactions described in clauses (a) through (d) of Section 3.1 unless,
prior to the consummation thereof, each Person (other than the Company) which
may be required to deliver any stock, securities, cash or property upon the
exercise of this Warrant as provided herein shall assume, by written instrument
delivered to, and reasonably satisfactory to, the holder of this Warrant, (a)
the obligations of the Company under this Warrant (and if the Company shall
survive the consummation of such transaction, such assumption shall be in
addition to, and shall not release the Company from, any continuing obligations
of the Company under this Warrant) and (b) the obligation to deliver to such
holder such shares of stock, securities, cash or property as, in accordance
with the foregoing provisions of this Article III, such holder may be entitled
to receive.
ARTICLE IV. OTHER PROVISIONS CONCERNING DILUTION
SECTION 4.1. NO DILUTION OR IMPAIRMENT. The Company will not, by
amendment of its certificate of incorporation or through any consolidation,
merger, reorganization,
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transfer of assets, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not permit the par value of any shares of stock
receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of Common Stock on the exercise of the Warrant
from time to time outstanding, and (c) will not take any action which results
in any adjustment of the Warrant Price if the total number of shares of Common
Stock (or Other Securities) issuable after the action upon the exercise of the
Warrant would exceed the total number of shares of Common Stock (or Other
Securities) then authorized by the Company's certificate of incorporation and
available for the purpose of issuance upon such exercise.
SECTION 4.2. REGISTRATION OF COMMON STOCK. If any shares of
Common Stock required to be reserved for purposes of exercise of this Warrant
require registration with or approval of any governmental authority under any
federal or state law (other than the Securities Act) before such shares may be
issued upon exercise because no exemption from such registration is available,
the Company will, at its expense and as expeditiously as possible, use its best
efforts to cause such shares to be duly registered or approved, as the case may
be. At any such time as Common Stock is listed on any national securities
exchange, the Company will, at its expense, list the shares of Common Stock
issuable upon exercise of the Warrant and maintain the listing of such shares
after their issuance; and the Company will also list on such national
securities exchange, will register under the Exchange Act and will maintain
such listing of, any Other Securities that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the same
class shall be listed on such national securities exchange by the Company.
SECTION 4.3. AVAILABILITY OF INFORMATION. The Company will
cooperate with each holder of any Warrant, in supplying such information as may
be reasonably requested by such holder to complete and file any information
reporting forms presently or hereafter required by the Commission to report
such holders beneficial ownership of Common Stock or Other Securities or as a
condition to the availability of an exemption from the provisions of the
Securities Act for the sale of any Restricted Securities.
SECTION 4.4. RESERVATION OF STOCK, ETC. The Company will at all
times reserve and keep available, solely for issuance and delivery upon
exercise of the Warrants, the number of shares of Common Stock (or Other
Securities) from time to time issuable upon exercise of the Warrant. All
shares of Common Stock (or Other Securities) issuable upon exercise of the
Warrant shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and non-assessable with
no liability on the part of the holders thereof.
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ARTICLE V. RESTRICTIONS ON TRANSFER
SECTION 5.1. RESTRICTIVE LEGENDS. Except as otherwise permitted
by this Article V, each Warrant (including each Warrant issued upon the
transfer of any Warrant) shall be stamped or otherwise imprinted with a legend
in substantially the following form:
"This Warrant and any shares acquired upon the exercise of
this Warrant have not been registered under the Securities Act of
1933, as amended, and may not be transferred, sold or otherwise
disposed of in the absence of such registration or an exemption
therefrom under such Act. This Warrant and such Shares may be
transferred only in compliance with the conditions specified in this
Warrant."
Except as otherwise permitted by this Article V, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred
in the absence of such registration or an exemption therefrom under
such Act."
SECTION 5.2. NOTICE OF PROPOSED TRANSFER; OPINIONS OF COUNSEL.
Prior to any transfer of any Restricted Securities which transfer is not
registered under an effective registration statement under the Securities Act,
the holder thereof will give written notice to the Company of such holder's
intention to effect such transfer and to comply in all other respects with this
Section 5.2. Each such notice (a) shall describe the manner and circumstances
of the proposed transfer and (b) if requested by the Company, shall include an
opinion of legal counsel addressed to the Company, in form and substance
reasonably satisfactory to the Company, to the effect that such transfer does
not violate the Securities Act of 1933 and applicable state securities laws.
SECTION 5.3. TERMINATION OF RESTRICTIONS. The restrictions
imposed by this Article V upon the transferability of Restricted Securities
shall cease and terminate as to any particular Restricted Securities when such
securities shall have been sold pursuant to an effective registration statement
under the Securities Act or otherwise become freely transferable under
applicable federal and state securities laws by the holder thereof. Whenever
such restrictions shall cease and terminate as to any Restricted Securities,
the holder thereof shall be entitled to receive from the Company, without
expense (other than applicable transfer taxes, if any), new certificates
representing the securities not bearing the applicable legends required by
Section 5.1.
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ARTICLE VI. OWNERSHIP, TRANSFER AND SUBSTITUTION OF WARRANTS
SECTION 6.1. OWNERSHIP OF WARRANTS. The Company may treat the
person in whose name any Warrant is registered on the register kept at the
office of the Company maintained pursuant to subdivision (a) of Section 6.2 as
the owner and holder thereof for all purposes, notwithstanding any notice to
the contrary, except that, if and when any Warrant is properly assigned in
blank, the Company may (but shall not be obligated to) treat the bearer thereof
as the owner of such Warrant for all purposes, notwithstanding any notice to
the contrary. Subject to Article V, a Warrant, if properly assigned, may be
exercised by a new holder without a new Warrant first having been issued.
SECTION 6.2. OFFICE, TRANSFER AND EXCHANGE OF WARRANTS.
(A) OFFICE. The Company will maintain an office in where
notices, presentations and demands in respect of this Warrant may be
made upon it. Such office currently is at 500 Dallas, Suite 2800,
Houston, Texas 77002 until such time as the Company shall notify each
holder of the Warrant of any change of location of such office.
(B) NEW WARRANT. Upon the surrender of any Warrant,
properly endorsed, for registration of transfer or for exchange at the
office of the Company maintained pursuant to subdivision (a) of this
Section 6.2, the Company at its expense will (subject to compliance
with Article V, if applicable) execute and deliver to or upon the
order of the holder thereof a new Warrant or Warrants of like tenor,
in the name of such holder or as such holder (upon payment by such
holder of any applicable transfer taxes) may direct, calling in the
aggregate on the face or faces thereof for the number of shares of
Common Stock called for on the face or faces of the Warrant or
Warrants so surrendered.
SECTION 6.3. REPLACEMENT OF WARRANTS. Upon receipt of evidence
reasonably 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 of any Warrant held by a Person other than Purchaser or any
institutional investor, upon delivery of indemnity reasonably satisfactory to
the Company in form and amount or, in the case of any such mutilation, upon
surrender of such Warrant for cancellation at the office of the Company
maintained pursuant to subdivision (a) of Section 6.2, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
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ARTICLE VII. DEFINITIONS
As used herein, unless the context otherwise requires, the following
terms have the following respective meanings:
Additional Shares of Common Stock: All shares (including treasury
shares) of Common Stock issued or sold (or pursuant to Section 2.4 or 2.5,
deemed to be issued) by the Company after the date hereof, whether or not
subsequently reacquired or retired by the Company, other than
(a) shares issued upon the exercise of the Warrant or
pursuant to Options issued in exchange for services rendered to the
Company or any subsidiary;
(b) such additional number of shares as may become
issuable upon the exercise of any of the securities referred to in the
foregoing clause (a) by reason of adjustments required pursuant to
anti-dilution provisions applicable to such securities as in effect on
the date hereof, but only if and to the extent that such adjustments
are required as the result of the original issuance of the Warrants.
Business Day: Any day other than a Saturday or a Sunday or a day on
which commercial banking institutions in the States of Texas or New York are
authorized by law to be closed. Any reference to "days" (unless Business Days
are specified) shall mean calendar days.
Commission: The Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such
term to include (i) any stock into which such Common Stock shall have been
changed or any stock resulting from any reclassification of such Common Stock
or (ii) all other stock of any class or classes (however designated) of the
Company the holders of which have the right, without limitation as to amount,
either to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference.
Company: As defined in the introduction to this Warrant, such term to
include any corporation which shall succeed to or assume the obligations of the
Company hereunder in compliance with Article III.
Convertible Securities: Any evidences of indebtedness, shares of
stock (other than Common Stock) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares of Common Stock.
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Current Market Price: On any date specified herein, the average daily
Market Price during the period of the most recent 20 days, ending on such date,
on which the national securities exchanges were open for trading, except that
if no Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current
Market Price shall be the Market Price on such date; provided, however, that if
Common Stock is sold pursuant to a firm commitment public offering, the Current
Market Price for purposes of Section 2.2 shall be deemed to be the proceeds per
share to the Company from such offering.
Dilution Factor: As defined in Section 2.1.
Exchange Act: The Securities Exchange Act of 1934, 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.
Expiration Date: December 23, 2001.
Initial Price: $4.50 per share.
Market Price: On any date specified herein, the amount per share of
the Common Stock, equal to (a) the last sale price of such Common Stock,
regular way, on such date or, if no such sale takes place on such date, the
average of the closing bid and asked prices thereof on such date, in each case
as officially reported on the principal national securities exchange on which
such Common Stock is then listed or admitted to trading, or (b) if such Common
Stock is not then listed or admitted to trading on any national securities
exchange but is designated as a national market system security by the NASD,
the last trading price of the Common Stock on such date, or (c) if there shall
have been no trading on such date or if the Common Stock is not so designated,
the average of the closing bid and asked prices of the Common Stock on such
date as shown by the NASD automated quotation system, or (d) if such Common
Stock is not then listed or admitted to trading on any national exchange or
quoted in the over-the-counter market, the fair market value of the Common
Stock as determined by the Company's Board of Directors in good faith.
NASD: The National Association of Securities Dealers, Inc.
Options: Rights, options or warrants to subscribe for, purchase or
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities: Any stock (other than Common Stock) and other
securities of the Company or any other Person (corporate or otherwise) which
the holder of the Warrant at any time shall be entitled to receive, or shall
have received upon the exercise of the Warrant, in lieu of or in addition to
Common Stock, or which at any time shall be
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issuable or shall have been issued in exchange for or in replacement of Common
Stock or Other Securities pursuant to Article III or otherwise.
Person: Any corporation, limited liability company, association,
partnership, joint venture, trust, estate, organization, business, individual,
government or political subdivision thereof or governmental agency.
Purchase Agreement: The Purchase Agreement, dated December 23, 1996,
among the Company. and certain purchasers of Common Stock named therein.
Restricted Securities: All of the following: (a) any Warrants
bearing the applicable legend or legends referred to in Section 5.1, (b) any
shares of Common Stock (or Other Securities) which have been issued upon the
exercise of Warrants and which are evidenced by a certificate or certificates
bearing the applicable legend or legends referred to in such section and (c)
unless the context otherwise requires, any shares of Common Stock (or Other
Securities) which are at the time issuable upon the exercise of Warrants and
which, when so issued, will be evidenced by a certificate or certificates
bearing the applicable legend or legends referred to in such section.
Securities Act: The Securities Act of 1933, 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.
Warrant Price: As defined in Section 2.1 of this Warrant.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. REMEDIES. The Company stipulates that the remedies
at law of the holder of this Warrant in the event of any default or threatened
default by the Company in the performance of or compliance with any of the
terms of this Warrant are not and will not be adequate and that, to the fullest
extent permitted by law, such terms may be specifically enforced by a decree
for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
SECTION 8.2. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. The holder
of this Warrant and all subsequent holders thereof hereby agree that no
provision of this Warrant shall be construed as conferring upon the holder
hereof any rights as a stockholder of the Company or as imposing any obligation
on such holder to purchase any securities or as imposing any liabilities on
such holder as a stockholder of the Company, whether such obligation or
liabilities are asserted by the Company or by creditors of the Company.
SECTION 8.3. NOTICES. All notices and other communications under
this Warrant shall be in writing and shall be mailed by registered or certified
mail, return receipt
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requested, addressed (a) if to any holder of any Warrant, to the registered
address of such holder as set forth in the register kept at the principal
office of the Company, or (b) if the Company, to the attention of its President
at its office maintained pursuant to subdivision (a) of Section 6.2, provided
that the exercise of any Warrant shall be effective in the manner provided in
Article I.
SECTION 8.4. REGISTRATION RIGHTS. The shares of Common Stock
issuable upon exercise of this Warrant shall be entitled to the registration
rights provided in the Purchase Agreement.
SECTION 8.5. MISCELLANEOUS.
(a) This Warrant may be amended, waived, discharged or terminated
and the Company may take any action herein required to be performed by it, only
if the Company shall have obtained the written consent to such amendment,
action or omission to act, of the holder or holders of Warrants entitling such
holders to purchase 51% or more by number of shares of the total number of
shares of Common Stock issuable under all Warrants at the time outstanding.
(b) THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
(c) The section headings in this Warrant are for purposes of
convenience only and shall not constitute a part hereof.
(d) This Agreement shall be binding upon and inure to the Benefit
of and be enforceable by the parties hereto and their respective successors and
assigns, subject to compliance with applicable federal and state securities
laws.
SOUTHERN MINERAL CORPORATION
By:
---------------------------------
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FORM OF SUBSCRIPTION
To ___________________________:
The undersigned registered holder of the within Warrant hereby
irrevocably exercises such Warrant for, and purchases _________* shares of
Common Stock of Southern Mineral Corporation, and herewith makes payment of
$___________ therefor, and requests that the certificates for such shares be
issued in the name of, and delivered to _____________________, whose address is
_______________________________________.
Dated: (Signature must conform in all respects
--------------------- to name of holder as specified on the
face or Warrant)
------------------------------------------
(Street Address)
------------------------------------------
(City) (State) (Zip Code)
- ---------------------------
*Insert the number of shares called for on the face of this
Warrant (or, in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the unexercised
portion of the Warrant, to the holder surrendering the Warrant.
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FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within
Warrant hereby sells, assigns and transfers unto _________________ the right
represented by such Warrant to purchase shares of Common Stock of Southern
Mineral Corporation to which such Warrant relates, and appoints ______________
his Attorney in fact to make such transfer on the books of maintained for such
purpose, with full power of substitution in the premises.
Dated: (Signature must conform in all respects
--------------------------- to name of holder as specified on the
face or Warrant)
------------------------------------
(Street Address)
---------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- --------------------------
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