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EXHIBIT 1.8
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THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS
AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN RELIANCE ON AN OPINION,
REASONABLY SATISFACTORY TO QUEEN SAND RESOURCES, INC. IN FORM AND SUBSTANCE, OF
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT SUCH SALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON AN EXEMPTION FROM THE ACT AND ANY
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
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QUEEN SAND RESOURCES, INC.
Common Stock Purchase Warrant
Representing Right To Purchase Shares of
Common Stock
of
Queen Sand Resources, Inc.
FOR VALUE RECEIVED, QUEEN SAND RESOURCES, INC., a Delaware corporation
(the "Company"), hereby certifies that Joint Energy Development Investments
Limited Partnership, a Delaware limited partnership, is entitled, subject to
the provisions of this Warrant, to purchase from the Company, at any time or
from time to time during the Exercise Period (as hereinafter defined), the
Warrant Shares (as hereinafter defined) at a price per share equal to the
Exercise Price (as defined below). This Warrant (together with such other
warrants as may be issued in exchange, transfer or replacement of this Warrant,
the "Warrants") is issued to the Holder (as hereinafter defined) pursuant to
the Securities Purchase Agreement (as defined below) and entitles the Holder to
purchase the Warrant Shares and to exercise the other rights, powers and
privileges hereinafter provided.
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Section 1. Definitions. The following terms, as used herein, have
the following respective meanings:
"Class A Warrants" has the meaning ascribed to such term in the Earn Up
Agreement.
"Class B Warrants" has the meaning ascribed to such terms in the Earn Up
Agreement.
"Common Stock" means the Company's common stock, $0.0015 par value.
"Company" is defined in the introductory paragraph of this Warrant.
"Date of Issuance" means May 6, 1997.
"Earn Up Agreement" means the Earn Up Agreement dated as of May 6, 1997
between the Company and Forseti Investments Ltd.
"Election Date" has the meaning specified therefor in the Earn Up
Agreement.
"Exercise Period" means the period of time between 12:01 a.m. (New York
City Time) on October 1, 1998 and 5:00 p.m. (New York City time) on December
31, 1998.
"Exercise Price" means an amount, per share, equal to $2.50. The
Exercise Price shall be subject to adjustment, as set forth in Section 4.
"Holder" means Joint Energy Development Investments Limited Partnership
and its permitted assignees.
"Person" means any individual, corporation, limited or general
partnership, joint venture, association, joint-stock company, trust, limited
liability company, unincorporated organization or government or any agency or
political subdivision thereof.
"Required Holders" means the Holders of more than 50% of all Warrant
Shares then outstanding (assuming the full exercise of all Warrants).
"Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of March 27, 1997, between the Company the Holder, as such agreement
shall be modified, amended and supplemented and in effect from time to time.
"Value" means $3.50 per share of Common Stock.
"Warrants" is defined in the introductory paragraph of this Warrant.
"Warrant Shares" means the number of shares of Common Stock (or amount
of other property) equal to the number of shares of Common Stock (or amount of
other property), as adjusted from time pursuant to the terms hereof, which
would have been received upon the exercise on the
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Election Date of all Class A Warrants and Class B Warrants, if any, that are
deliverable to the Company by Forseti Investments Ltd. pursuant to Section
2.0(b) of the Earn Up Agreement.
Section 2. Exercise of Warrant; Cancellations of Warrant. This
Warrant may be exercised in whole or in part, at any time or from time to time,
during the Exercise Period, by presentation and surrender hereof to the Company
at its principal office at the address set forth in Section 10 (or at such
other reasonable address as the Company may after the date hereof notify the
Holder in writing, coming into effect not before 14 days after receipt of such
notice by the Holder), with the Purchase Form annexed hereto as Exhibit A duly
executed and accompanied by either (at the option of the Holder) proper payment
in cash or certified or bank check equal to the Exercise Price for the Warrant
Shares for which this Warrant is being exercised; provided, that if this
Warrant is exercised in part, the Warrant must be exercised. Upon exercise of
this Warrant as aforesaid, the Company shall as promptly as practicable, and in
any event within 20 days thereafter, execute and deliver to the Holder a
certificate or certificates for the total number of Warrant Shares for which
this Warrant is being exercised, in such names and denominations as requested
in writing by the Holder. The Company shall pay any and all documentary stamp
or similar issue taxes payable in respect of the issue of the Warrant Shares.
If this Warrant is exercised in part only, the Company shall, upon surrender of
this Warrant, execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares issuable
hereunder.
Section 3. Exchange, Transfer, Assignment or Loss of Warrant.
(a) This Warrant is exchangeable, without expense, at the
option of the Holder, upon presentation and surrender hereof to
the Company for other Warrants of different denominations,
entitling the Holder to purchase in the aggregate the same number
of Warrant Shares. The Holder of this Warrant shall be entitled,
without obtaining the consent of the Company, to transfer or
assign its interest in (and rights under) this Warrant in whole
or in part to any Person or Persons. Upon surrender of this
Warrant to the Company, with the Assignment Form annexed hereto
as Exhibit B duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and
deliver a new Warrant or Warrants in the name of the assignee or
assignees named in such Assignment Form and, if the Holder's
entire interest is not being assigned, in the name of the Holder,
and this Warrant shall promptly be canceled. This Warrant may be
divided or combined with other Warrants that carry the same
rights upon presentation hereof at the office of the Company,
together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed
by the Holder hereof. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation
of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification (including, if
required in the reasonable judgment of the Company, a statement
of net worth of such Holder that is at a level reasonably
satisfactory to the Company), and upon surrender and cancellation
of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.
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(b) At any time after the Election Date the Holder shall be
entitled, upon presentation and surrender of this Warrant to the
Company, to receive a new Warrant that is identical in all
respects to this Warrant except that (i) the definition of
"Warrant Shares" in Section 1 of such new Warrant shall indicate
that such term means a specified number of shares of Common Stock
(as adjusted from time to time pursuant to the terms hereof),
which number shall be the number of shares of Common Stock
receivable upon the exercise of this Warrant as of the date of
issuance of such new Warrant and (ii) such new Warrant shall not
contain this paragraph (b).
Section 4. Antidilution Provisions.
(a) Adjustment of Number of Warrant Shares and Exercise Price.
The number of Warrant Shares purchasable pursuant hereto
and the Exercise Price, each shall be subject to
adjustment from time to time on and after the Election
Date as provided in this Section 4(a). In case the
Company shall at any time after the Election Date (i) pay
a dividend of shares of Common Stock or make a
distribution of shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock into a larger number of
shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue any shares of its capital stock
or other assets in a reclassification or reorganization of
the Common Stock (including any such reclassification in
connection with a consolidation or merger in which the
Company is the continuing entity), then (x) the securities
purchasable pursuant hereto shall be adjusted to the
number of Warrant Shares and amount of any other
securities, cash or other property of the Company which
the Holder would have owned or have been entitled to
receive after the happening of any of the events described
above, had this Warrant been exercised immediately prior
to the happening of such event or any record date with
respect thereto, and (y) the Exercise Price shall be
adjusted to equal the Exercise Price immediately prior to
the adjustment multiplied by a fraction, (A) the numerator
of which is the number of Warrant Shares for which this
Warrant is exercisable immediately prior to the
adjustment, and (B) the denominator of which is the number
of shares for which this Warrant is exercisable
immediately after such adjustment. The adjustments made
pursuant to this Section 4(a) shall become effective
immediately after the effective date of the event creating
such right of adjustment, retroactive to the record date,
if any, for such event. Any Warrant Shares purchasable as
a result of such adjustment shall not be issued prior to
the effective date of such event.
For the purpose of this Section 4(a) and (b), the term
"shares of Common Stock" means (i) the classes of stock
designated as the Common Stock of the Company as of the date
hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par
value, or from no par value to par value. In
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the event that at any time, as a result of an adjustment made
pursuant to this Section 4(a), the Holder shall become entitled
to receive any securities of the Company other than shares of
Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Section 4.
(b) Reorganization, Merger, etc. If any capital
reorganization, reclassification or similar transaction
involving the capital stock of the Company (other than as
specified in Section 4(a)), any consolidation, merger or
business combination of the Company with another
corporation or the sale or conveyance of all or any
substantial part of its assets to another corporation,
shall be effected in such a way that holders of the shares
of Common Stock shall be entitled to receive stock,
securities or assets (including, without limitation, cash)
with respect to or in exchange for shares of the Common
Stock, then, prior to and as a condition of such
reorganization, reclassification, similar transaction,
consolidation, merger, business combination, sale or
conveyance, lawful and adequate provision shall be made
whereby the Holder shall thereafter have the right to
purchase and receive upon the basis and upon the terms and
conditions specified in this Warrant and in lieu of the
Warrant Shares immediately theretofore purchasable and
receivable upon the exercise of this Warrant, such shares
of stock, securities or assets as may be issued or payable
with respect to or in exchange for a number of outstanding
Warrant Shares equal to the number of Warrant Shares
immediately theretofore purchasable and receivable upon
the exercise of this Warrant had such reorganization,
reclassification, similar transaction, consolidation,
merger, business combination, sale or conveyance not taken
place. The Company shall not effect any such
consolidation, merger, business combination, sale or
conveyance unless prior to or simultaneously with the
consummation thereof the survivor or successor corporation
(if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such
assets shall assume by written instrument executed and
sent to the Holder, the obligation to deliver to the
Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Holder may
be entitled to receive.
(c) Statement on Warrant Certificates. Irrespective of any
adjustments in the Exercise Price or the number or kind of
Warrant Shares, this Warrant may continue to express the
same price and number and kind of shares as are stated on
the front page hereof.
(d) Exception to Adjustment. Anything herein to the contrary
notwithstanding, the Company shall not be required to make
any adjustment of the number of Warrant Shares issuable
hereunder or to the Exercise Price in the case of the
issuance of the Warrants or the issuance of shares of the
Common Stock (or other securities) upon exercise of the
Warrants.
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(e) Treasury Shares. The number of shares of the Common Stock
outstanding at any time shall not include treasury shares
or shares owned or held by or for the account of the
Company or any of its subsidiaries, and the disposition of
any such shares shall be considered an issue or sale of
the Common Stock for the purposes of this Section 4.
(f) Adjustment Notices to Holder. Upon any increase or
decrease in the number of Warrant Shares purchasable upon
the exercise of this Warrant or the Exercise Price the
Company shall, within 30 days thereafter, deliver written
notice thereof to all Holders, which notice shall state
the increased or decreased number of Warrant Shares
purchasable upon the exercise of this Warrant and the
adjusted Exercise Price, setting forth in reasonable
detail the method of calculation and the facts upon which
such calculations are based.
Section 5. Notification by the Company. In case at any time while
this Warrant remains outstanding:
(a) the Company shall declare any dividend or make any
distribution upon its Common Stock or any other class of
its capital stock; or
(b) the Company shall offer for subscription pro rata to the
holders of its Common Stock or any other class of its
capital stock any additional shares of stock of any class
or any other securities convertible into or exchangeable
for shares of stock or any rights or options to subscribe
thereto; or
(c) the Board of Directors of the Company shall authorize any
capital reorganization, reclassification or similar
transaction involving the capital stock of the Company, or
a sale or conveyance of all or a substantial part of the
assets of the Company, or a consolidation, merger or
business combination of the Company with another Person;
or
(d) actions or proceedings shall be authorized or commenced
for a voluntary or involuntary dissolution, liquidation or
winding-up of the Company;
then, in any one or more of such cases, the Company shall give written notice
to the Holder, at the earliest time legally practicable (and not less than 20
days before any record date or other date set for definitive action) of the
date on which (i) the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights or options or (ii)
such reorganization, reclassification, sale, conveyance, consolidation, merger,
dissolution, liquidation or winding-up shall take place or be voted on by
shareholders of the Company, as the case may be. Such notice shall also
specify the date as of which the holders of the Common Stock of record shall
participate in said dividend, distribution, subscription rights or options or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, sale,
conveyance, consolidation, merger, dissolution, liquidation or winding-up, as
the case may be. If
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the action in question or the record date is subject to the effectiveness of a
registration statement under the Securities Act or to a favorable vote of
shareholders, the notice required by this Section 5 shall so state.
Section 6. No Voting Rights: Limitations of Liability. Prior to
exercise, this Warrant will not entitle the Holder to any voting rights or
other rights as a stockholder of the Company. No provision hereof, in the
absence of affirmative action by the Holder to exercise this Warrant, and no
enumeration herein of the rights or privileges of the Holder, shall give rise
to any liability of the Holder for the purchase price of the Warrant Shares
pursuant to the exercise hereof.
Section 7. Amendment and Waiver.
(a) No failure or delay of the Holder in exercising any power
or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of such right or
power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are
cumulative and not exclusive of any rights or remedies
which it would otherwise have. The provisions of this
Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Required
Holders.
(b) No notice or demand on the Company in any case shall
entitle the Company to any other or further notice or
demand in similar or other circumstances.
Section 8. No Fractional Warrant Shares. The Company shall not be
required to issue stock certificates representing fractions of Warrant Shares,
but shall in respect of any fraction of a Warrant Share make a payment in cash
based on the Value of the Common Stock after giving effect to the full exercise
or conversion of the Warrants.
Section 9. Reservation of Warrant Shares. The Company shall
authorize, reserve and keep available at all times, free from preemptive
rights, a sufficient number of Warrant Shares to satisfy the requirements of
this Warrant.
Section 10. Notices. Unless otherwise specified, whenever this Warrant
requires or permits any consent, approval, notice, request, or demand from one
party to another, that communication must be in writing (which may be by
telecopy) to be effective and is deemed to have been given (a) if by telecopy,
when transmitted to the appropriate telecopy number (and all communications
sent by telecopy must be confirmed promptly by telephone; but any requirement
in this parenthetical does not affect the date when the telecopy is deemed to
have been delivered), or (b) if by any other means, including by
internationally acceptable courier or hand delivery, when actually delivered.
Until changed by notice pursuant to this Warrant, the address (and telecopy
number) for the Holder and the Company are:
If to Holder: Joint Energy Development Investments Limited
Partnership
c/o Enron Corp.
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1400 Smith Street
Houston, Texas 77002
Attn: Donna Lowry - Director, 28th Floor
Facsimile: (713) 646-3602
If to Company: Queen Sand Resources, Inc.
3500 Oak Lawn, Suite 380, L.B.#31
Dallas, Texas 75219-4398
Attn: Robert P. Lindsay
Facsimile: (214) 521-9960
With copies to: Queen Sand Resources, Inc.
60 Queen Street, Suite 1400
Ottawa, Canada K1P 5Y7
Attn: Edward J. Munden
Facsimile: (613) 230-6055
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, Texas 75202
Attn: William L. Boeing, Esq.
Facsimile: (214) 651-5940
Section 11. Section and Other Headings. The headings contained in
this Warrant are for reference purposes only and will not affect in any way the
meaning or interpretation of this Warrant.
Section 12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE DELAWARE GENERAL CORPORATION LAW, TO THE
EXTENT APPLICABLE TO THE INTERNAL AFFAIRS OF THE COMPANY (INCLUDING THE GRANT
OF THIS WARRANT AND THE ISSUANCE OF THE WARRANT SHARES), AND OTHERWISE SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
Section 13. Binding Effect. The terms and provisions of this Warrant
shall inure to the benefit of the Holder and its successors and assigns and
shall be binding upon the Company and its successors and assigns, including,
without limitation, any Person succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company's
assets.
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IN WITNESS WHEREOF, the seal of the Company and the signature of its
duly authorized officer have been affixed hereto as of May 6, 1997.
[SEAL] QUEEN SAND RESOURCES, INC.
Attest: By: /s/ Edward J. Munden
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Edward J. Munden
President and Chief Executive
Officer
and
Attest: By: /s/ Robert P. Lindsay
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Robert P. Lindsay
Chief Operating Officer
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EXHIBIT A
TO
WARRANT
PURCHASE FORM
To Be Executed by the Holder
Desiring to Exercise a Warrant of
Queen Sand Resources, Inc.
The undersigned holder hereby exercises the right to purchase
___________ shares of Common Stock covered by the within Warrant, according to
the
conditions thereof, and herewith makes payment in full of the Exercise Price of
such shares, in the amount of $____________.
Name of Holder:
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Signature:
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Title:
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Address:
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Dated: , .
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EXHIBIT B
TO
WARRANT
ASSIGNMENT FORM
To Be Executed by the Holder
Desiring to Transfer a Warrant of
Queen Sand Resources, Inc.
FOR VALUE RECEIVED, the undersigned holder hereby sells, assigns and
transfers unto ____________________________ the right to purchase ____________
shares of Common Stock covered by the within Warrant, and does hereby
irrevocably constitute and appoint _________________ Attorney to transfer the
said Warrant on the books of the Company (as defined in such Warrant), with
full power of substitution.
Name of Holder:
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Signature:
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Title:
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Address:
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Dated: , .
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In the presence of
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NOTICE:
The signature to the foregoing Assignment Form must correspond to the name as
written upon the face of the within Warrant in every detail, without alteration
or enlargement or any change whatsoever.
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