THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE LAWS OF ANY STATE. THEY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
975,000 Warrants
CHAPARRAL RESOURCES, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for value
received Allen & Company Incorporated or registered assigns (the "Holder") is
the owner of the number of warrants specified above, each of which entitles the
Holder thereof to purchase, at any time on or before the Expiration Date
(hereinafter defined), one fully paid and non-assessable share of Common Stock,
$.10 par value ("Common Stock"), of Chaparral Resources, Inc., a Colorado
corporation (the "Company"), for the Purchase Price (defined in Paragraph 1
below) in lawful money of the United States of America (subject to adjustment as
hereinafter provided).
1. Warrant; Purchase Price
This Warrant shall entitle the Holder initially to purchase 975,000 shares
of Common Stock of the Company, and the purchase price payable upon exercise of
the Warrant (the "Purchase Price") shall be $3.50 per share of Common Stock. The
Purchase Price and number of shares of Commo n Stock issuable upon exercise of
this Warrant are subject to adjustment as provided in Article 6 hereof. The
shares of Common Stock issuable upon exercise of the Warrant (and/or other
shares of common stock so issuable by reason of any adjustments pursuant to
Article 6) are sometimes referred to herein as the "Warrant Shares".
2. Exercise; Expiration Date
2.1 The Warrant is exercisable, at the option of the Holder, in whole or in
part at any time and from time to time after the Exercisability Date and on or
before the Expiration Date, upon surrender of this Warrant Certificate to the
Company together with a duly completed Notice of Exercise, in the form attached
hereto as Exhibit A, and payment of the Purchase Price. In the case of exercise
of less than the entire Warrant represented by this Warrant Certificate, the
Company shall cancel the Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate for the balance of such
Warrant.
2.2 The term "Exercisability Date" shall mean (i) with respect to 195,000
Warrants, the date of this Warrant Certificate, and (ii) with respect to 780,000
Warrants, the date that is 31 days after the date of this Warrant Certificate,
provided, however, that if within 30 days of the date of this Warrant
Certificate the Company has prepaid all of the outstanding principal and
interest under the loan made pursuant to that certain Subordinated Loan
Agreement dated June 4, 1998 among the Company, the initial Holder of this
Warrant and the other lenders party thereto, the Exercisability Date with
respect to such 780,000 Warrants shall not occur, and such Warrants shall not
become exercisable thereafter. The term "Expiration Date" shall mean 5:00 p.m.
New York time on November 25, 2002, or if such day shall in the State of New
York be a holiday or a day on which banks are authorized to close, then 5:00
p.m. New York time the next following day which in the State of New York is not
a holiday or a day on which banks are authorized to close.
3. Registration and Transfer on Company Books
3.1 The Company shall maintain books for the registration and transfer of
the Warrant and the registration and transfer of the Warrant Shares.
3.2 Prior to due presentment for registration of transfer of this Warrant
Certificate, or the Warrant Shares, the Company may deem and treat the
registered Holder as the absolute owner thereof.
4. Reservation of Shares
The Company covenants that it will at all times reserve and keep available
out of its authorized capital stock, solely for the purpose of issue upon
exercise of the Warrant, such number of shares of capital stock as shall then be
issuable upon the exercise of all outstanding Warra nt. The Company covenants
that all shares of capital stock which shall be issuable upon exercise of the
Warrant shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each national securities
exchange, if any, on which the other shares of such outstanding capital stock of
the Company are then listed.
5. Loss or Mutilation
Upon receipt by the Company of reasonable evidence of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company, or, in the case of mutilation, upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new Warrant Certificate representing an equal number of Warrant
Shares.
2
6. Adjustment of Purchase Price and Number of Shares Deliverable
6.1 The number of Warrant Shares purchasable upon the exercise of the
Warrant and the Purchase Price with respect to the Warrant Shares shall be
subject to adjustment as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its Common Stock payable in shares of its capital stock,
(ii) subdivide its outstanding shares of Common Stock through stock split
or otherwise, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by reclassification
of its of Common Stock (including any reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation)
other securities of the Company, the number and/or nature of Warrant Shares
purchasable upon exercise of the Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Company which he would
have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this paragraph (a) shall become
effective retroactively as of the record date of such event.
(b) In the event of any capital reorganization or any reclassification
of the capital stock of the Company or in case of the consolidation or
merger of the Company with another corporation (other than a consolidation
or merger in which the outstanding shares of the Company's Common Stock are
not converted into or exchanged for other rights or interests), or in the
case of any sale, transfer or other disposition to another corporation of
all or substantially all the properties and assets of the Company, the
Holder of the Warrant shall thereafter be entitled to purchase (and it
shall be a condition to the consummation of any such reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition that appropriate provisions shall be made so that such Holder
shall thereafter be entitled to purchase) the kind and amount of shares of
stock and other securities and property (including cash) which the Holder
would have been entitled to receive had such Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition; and in any such case appropriate adjustments shall be made in
the application of the provisions of this Article 6 with respect to rights
and interest thereafter of the Holder of the Warrant to the end that the
provisions of this Article 6 shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of the Warrant. The provisions of this
Section 6.1(b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
3
(c) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrant is adjusted, as provided in this Section 6.1, the
Purchase Price with respect to the Warrant Shares shall be adjusted by
multiplying such Purchase Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.
6.2 Whenever the number of Warrant Shares purchasable upon the exercise of
the Warrant or the Purchase Price of such Warrant Shares is adjusted, as herein
provided, the Company shall mail to the Holder, at the address of the Holder
shown on the books of the Company, a notice of such adjustment or adjustments,
prepared and signed by the Chief Financial Officer or Secretary of the Company,
which sets forth the number of Warrant Shares purchasable upon the exercise of
the Warrant and the Purchase Price of such Warrant Shares after such adjustment,
a brief statement of the facts requiring such adjustment and the computation by
which such adjustment was made.
6.3 In the event that at any time prior to the expiration of the Warrant
and prior to its exercise:
(a) the Company shall declare any distribution (other than a cash
dividend or a dividend payable in securities of the Company with respect to
the Common Stock); or
(b) the Company shall offer for subscription to the holders of the
Common Stock any additional shares of stock of any class or any other
securities convertible into Common Stock or any rights to subscribe
thereto; or
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the
Common Stock, regardless of the effect of any such event on the outstanding
number of shares of Common Stock; or
(d) the Company shall declare a dividend, other than a dividend
payable in shares of the Company's own Common Stock; or
(e) there shall be any capital change in the Company as set forth in
Section 6.1(b); or
(f) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company (other than in connection with a
consolidation, merger, or sale of all or substantially all of its property,
assets and business as an entity);
(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to the Holder, not less than 20 days prior to
the record date, if any, in connection with such Notification Event (provided,
however, that if there is no record date, or if 20 days prior notice is
4
impracticable, as soon as practicable) written notice specifying the nature of
such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts indicating the effect of such action (to the
extent such effect may be known at the date of such notice) on the Purchase
Price and the kind and amount of the shares of stock or other securities or
property deliverable upon exercise of the Warrant.
7. Conversion Rights
7.1 In lieu of exercise of any portion of the Warrant as provided in
Section 2.1 hereof, the Warrant represented by this Warrant Certificate (or any
portion thereof) may, at the election of the Holder, be converted into the
nearest whole number of shares of Common Stock equ al to: (1) the product of (a)
the number of Warrant Shares to be so converted and (b) the excess, if any, of
(i) the Market Price per share with respect to the date of conversion over (ii)
the purchase price per Warrant Share in effect on the business day next
preceding the date of conversion, divided by (2) the Market Price per share with
respect to the date of conversion.
7.2 The conversion rights provided under this Section 7 may be exercised in
whole or in part and at any time and from time to time while any portion of the
Warrant remains outstanding. In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates representing the number
of shares of Common Stock to which the Holder shall be entitled as a result of
the conversion, and (ii) if the Warrant Certificate is being converted in part
only, a new certificate of like tenor and date for the balance of the
unconverted portion of the Warrant Certificate.
7.3 "Market Price", as used with reference to any share of stock on any
specified date, shall mean:
(i) if such stock is listed and registered on any national securities
exchange or traded on The Nasdaq Stock Market ("Nasdaq"), (A) the last
reported sale price on such exchange or Nasdaq of such stock on the
business day immediately preceding the specified date, or (B) if there
shall have been no such reported sale price of such stock on the business
day immediately preceding the specified date, the average of the last
reported sale price on such exchange or on Nasdaq on (x) the day next
preceding the specified date for which there was a reported sale price and
(y) the day next succeeding the specified date for which there was a
reported sale price; or
5
(ii) if such stock is not at the time listed on any such exchange or traded
on Nasdaq but is traded on the over-the-counter market as reported by the
National Quotation Bureau or other comparable service, (A) the average of
the closing bid and asked prices for such stock on the business day
immediately preceding the specified date, or (B) if there shall have been
no such reported bid and asked prices for such stock on the business day
immediately preceding the specified date, the average of the last bid and
asked prices on (x) the day next preceding the specified date for which
such information is available and (y) the day next succeeding the specified
date for which such information is available; or
(iii) if clauses (i) and (ii) above are not applicable, the fair value per
share of such stock as determined in good faith and on a reasonable basis
by the Board of Directors of the Company and, if requested, set forth in a
certificate delivered to the holder of this Warrant upon the conversion
hereof.
8. Voluntary Adjustment by the Company
The Company may, at its option, at any time during the term of the Warrant,
reduce the then current Purchase Price to any amount deemed appropriate by the
Board of Directors of the Company and/or extend the date of the expiration of
the Warrant.
9. Registration Rights
The Company has agreed with the Holder that the Company will register for
resale the Warrant Shares at the time the Company next files a registration
statement with the United States Securities and Exchange Commission to register
any of its securities.
Notwithstanding the foregoing, the Holder agrees that any certificate
representing Warrant Shares will have a restrictive legend thereon stating that
the Warrant Shares cannot be transferred except in compliance with the
Securities Act of 1933, as amended, and any applicable state securities laws.
10. Governing Law
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York.
6
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed by its officers thereunto duly authorized and its corporate seal
to be affixed hereon, as of this 4th day of June, 1998.
CHAPARRAL RESOURCES, INC.
By:
--------------------------------
Name:
Title:
[SEAL]
Attest:
- -------------------------------
Name:
Title:
7
EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to Section
2 of the Warrant Certificate accompanying this Notice of Exercise, _______
Warrants of the total number of Warrants owned by the undersigned pursuant to
the accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.
-----------------------------------
Name of Holder
-----------------------------------
Signature
Address:
-----------------------------------
-----------------------------------
-----------------------------------
8
EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrants
of the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate into shares of the Common Stock of the Company
(the "Shares").
The number of Shares to be received by the undersigned shall be calculated in
accordance with the provisions of Section 7.1 of the accompanying Warrant
Certificate.
-----------------------------------
Name of Holder
-----------------------------------
Signature
Address:
-----------------------------------
-----------------------------------
-----------------------------------
9
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR THE LAWS OF ANY STATE. THEY MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
25,000 Warrants
CHAPARRAL RESOURCES, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for value
received John McMillian or registered assigns (the "Holder") is the owner of the
number of warrants specified above, each of which entitles the Holder thereof to
purchase, at any time on or before the Expiration Date (hereinafter defined),
one fully paid and non-assessable share of Common Stock, $.10 par value ("Common
Stock"), of Chaparral Resources, Inc., a Colorado corporation (the "Company"),
for the Purchase Price (defined in Paragraph 1 below) in lawful money of the
United States of America (subject to adjustment as hereinafter provided).
1. Warrant; Purchase Price
This Warrant shall entitle the Holder initially to purchase 25,000 shares
of Common Stock of the Company, and the purchase price payable upon exercise of
the Warrant (the "Purchase Price") shall be $3.50 per share of Common Stock. The
Purchase Price and number of shares of Common Stock issuable upon exercise of
this Warrant are subject to adjustment as provided in Article 6 hereof. The
shares of Common Stock issuable upon exercise of the Warrant (and/or other
shares of common stock so issuable by reason of any adjustments pursuant to
Article 6) are sometimes referred to herein as the "Warrant Shares".
2. Exercise; Expiration Date
2.1 The Warrant is exercisable, at the option of the Holder, in whole or in
part at any time and from time to time after the Exercisability Date and on or
before the Expiration Date, upon surrender of this Warrant Certificate to the
Company together with a duly completed Notice of Exercise, in the form attached
hereto as Exhibit A, and payment of the Purchase Price. In the case of exercise
of less than the entire Warrant represented by this Warrant Certificate, the
Company shall cancel the Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate for the balance of such
Warrant.
2.2 The term "Exercisability Date" shall mean (i) with respect to 5,000
Warrants, the date of this Warrant Certificate, and (ii) with respect to 20,000
Warrants, the date that is 31 days after the date of this Warrant Certificate,
provided, however, that if within 30 days of the date of this Warrant
Certificate the Company has prepaid all of the outstanding principal and
interest under the loan made pursuant to that certain Subordinated Loan
Agreement dated June 4, 1998 among the Company, the initial Holder of this
Warrant and the other lenders party thereto, the Exercisability Date with
respect to such 20,000 Warrants shall not occur, and such Warrants shall not
become exercisable thereafter. The term "Expiration Date" shall mean 5:00 p.m.
New York time on November 25, 2002, or if such day shall in the State of New
York be a holiday or a day on which banks are authorized to close, then 5:00
p.m. New York time the next following day which in the State of New York is not
a holiday or a day on which banks are authorized to close.
3. Registration and Transfer on Company Books
3.1 The Company shall maintain books for the registration and transfer of
the Warrant and the registration and transfer of the Warrant Shares.
3.2 Prior to due presentment for registration of transfer of this Warrant
Certificate, or the Warrant Shares, the Company may deem and treat the
registered Holder as the absolute owner thereof.
4. Reservation of Shares
The Company covenants that it will at all times reserve and keep available
out of its authorized capital stock, solely for the purpose of issue upon
exercise of the Warrant, such number of shares of capital stock as shall then be
issuable upon the exercise of all outstanding Warra nt. The Company covenants
that all shares of capital stock which shall be issuable upon exercise of the
Warrant shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, and
that upon issuance such shares shall be listed on each national securities
exchange, if any, on which the other shares of such outstanding capital stock of
the Company are then listed.
5. Loss or Mutilation
Upon receipt by the Company of reasonable evidence of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and, in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to
the Company, or, in the case of mutilation, upon surrender and cancellation of
the mutilated Warrant Certificate, the Company shall execute and deliver in lieu
thereof a new Warrant Certificate representing an equal number of Warrant
Shares.
2
6. Adjustment of Purchase Price and Number of Shares Deliverable
6.1 The number of Warrant Shares purchasable upon the exercise of the
Warrant and the Purchase Price with respect to the Warrant Shares shall be
subject to adjustment as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on its Common Stock payable in shares of its capital stock,
(ii) subdivide its outstanding shares of Common Stock through stock split
or otherwise, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock, or (iv) issue by reclassification
of its of Common Stock (including any reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation)
other securities of the Company, the number and/or nature of Warrant Shares
purchasable upon exercise of the Warrant immediately prior thereto shall be
adjusted so that the Holder shall be entitled to receive the kind and
number of Warrant Shares or other securities of the Company which he would
have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect
thereto. Any adjustment made pursuant to this paragraph (a) shall become
effective retroactively as of the record date of such event.
(b) In the event of any capital reorganization or any reclassification
of the capital stock of the Company or in case of the consolidation or
merger of the Company with another corporation (other than a consolidation
or merger in which the outstanding shares of the Company's Common Stock are
not converted into or exchanged for other rights or interests), or in the
case of any sale, transfer or other disposition to another corporation of
all or substantially all the properties and assets of the Company, the
Holder of the Warrant shall thereafter be entitled to purchase (and it
shall be a condition to the consummation of any such reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition that appropriate provisions shall be made so that such Holder
shall thereafter be entitled to purchase) the kind and amount of shares of
stock and other securities and property (including cash) which the Holder
would have been entitled to receive had such Warrant been exercised
immediately prior to the effective date of such reorganization,
reclassification, consolidation, merger, sale, transfer or other
disposition; and in any such case appropriate adjustments shall be made in
the application of the provisions of this Article 6 with respect to rights
and interest thereafter of the Holder of the Warrant to the end that the
provisions of this Article 6 shall thereafter be applicable, as near as
reasonably may be, in relation to any shares or other property thereafter
purchasable upon the exercise of the Warrant. The provisions of this
Section 6.1(b) shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers or other
dispositions.
3
(c) Whenever the number of Warrant Shares purchasable upon the
exercise of the Warrant is adjusted, as provided in this Section 6.1, the
Purchase Price with respect to the Warrant Shares shall be adjusted by
multiplying such Purchase Price immediately prior to such adjustment by a
fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant
Shares so purchasable immediately thereafter.
6.2 Whenever the number of Warrant Shares purchasable upon the exercise of
the Warrant or the Purchase Price of such Warrant Shares is adjusted, as herein
provided, the Company shall mail to the Holder, at the address of the Holder
shown on the books of the Company, a notice of such adjustment or adjustments,
prepared and signed by the Chief Financial Officer or Secretary of the Company,
which sets forth the number of Warrant Shares purchasable upon the exercise of
the Warrant and the Purchase Price of such Warrant Shares after such adjustment,
a brief statement of the facts requiring such adjustment and the computation by
which such adjustment was made.
6.3 In the event that at any time prior to the expiration of the Warrant
and prior to its exercise:
(a) the Company shall declare any distribution (other than a cash
dividend or a dividend payable in securities of the Company with respect to
the Common Stock); or
(b) the Company shall offer for subscription to the holders of the
Common Stock any additional shares of stock of any class or any other
securities convertible into Common Stock or any rights to subscribe
thereto; or
(c) the Company shall declare any stock split, stock dividend,
subdivision, combination, or similar distribution with respect to the
Common Stock, regardless of the effect of any such event on the outstanding
number of shares of Common Stock; or
(d) the Company shall declare a dividend, other than a dividend
payable in shares of the Company's own Common Stock; or
(e) there shall be any capital change in the Company as set forth in
Section 6.1(b); or
(f) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company (other than in connection with a
consolidation, merger, or sale of all or substantially all of its property,
assets and business as an entity);
(each such event hereinafter being referred to as a "Notification Event"), the
Company shall cause to be mailed to the Holder, not less than 20 days prior to
the record date, if any, in connection with such Notification Event (provided,
however, that if there is no record date, or if 20 days prior notice is
4
impracticable, as soon as practicable) written notice specifying the nature of
such event and the effective date of, or the date on which the books of the
Company shall close or a record shall be taken with respect to, such event. Such
notice shall also set forth facts indicating the effect of such action (to the
extent such effect may be known at the date of such notice) on the Purchase
Price and the kind and amount of the shares of stock or other securities or
property deliverable upon exercise of the Warrant.
7. Conversion Rights
7.1 In lieu of exercise of any portion of the Warrant as provided in
Section 2.1 hereof, the Warrant represented by this Warrant Certificate (or any
portion thereof) may, at the election of the Holder, be converted into the
nearest whole number of shares of Common Stock equ al to: (1) the product of (a)
the number of Warrant Shares to be so converted and (b) the excess, if any, of
(i) the Market Price per share with respect to the date of conversion over (ii)
the purchase price per Warrant Share in effect on the business day next
preceding the date of conversion, divided by (2) the Market Price per share with
respect to the date of conversion.
7.2 The conversion rights provided under this Section 7 may be exercised in
whole or in part and at any time and from time to time while any portion of the
Warrant remains outstanding. In order to exercise the conversion privilege, the
Holder shall surrender to the Company, at its offices, this Warrant Certificate
accompanied by a duly completed Notice of Conversion in the form attached hereto
as Exhibit B. The Warrant (or so much thereof as shall have been surrendered for
conversion) shall be deemed to have been converted immediately prior to the
close of business on the day of surrender of such Warrant Certificate for
conversion in accordance with the foregoing provisions. As promptly as
practicable on or after the conversion date, the Company shall issue and shall
deliver to the Holder (i) a certificate or certificates representing the number
of shares of Common Stock to which the Holder shall be entitled as a result of
the conversion, and (ii) if the Warrant Certificate is being converted in part
only, a new certificate of like tenor and date for the balance of the
unconverted portion of the Warrant Certificate.
7.3 "Market Price", as used with reference to any share of stock on any
specified date, shall mean:
(i) if such stock is listed and registered on any national securities
exchange or traded on The Nasdaq Stock Market ("Nasdaq"), (A) the last
reported sale price on such exchange or Nasdaq of such stock on the
business day immediately preceding the specified date, or (B) if there
shall have been no such reported sale price of such stock on the business
day immediately preceding the specified date, the average of the last
reported sale price on such exchange or on Nasdaq on (x) the day next
preceding the specified date for which there was a reported sale price and
(y) the day next succeeding the specified date for which there was a
reported sale price; or
5
(ii) if such stock is not at the time listed on any such exchange or traded
on Nasdaq but is traded on the over-the-counter market as reported by the
National Quotation Bureau or other comparable service, (A) the average of
the closing bid and asked prices for such stock on the business day
immediately preceding the specified date, or (B) if there shall have been
no such reported bid and asked prices for such stock on the business day
immediately preceding the specified date, the average of the last bid and
asked prices on (x) the day next preceding the specified date for which
such information is available and (y) the day next succeeding the specified
date for which such information is available; or
(iii) if clauses (i) and (ii) above are not applicable, the fair value per
share of such stock as determined in good faith and on a reasonable basis
by the Board of Directors of the Company and, if requested, set forth in a
certificate delivered to the holder of this Warrant upon the conversion
hereof.
8. Voluntary Adjustment by the Company
The Company may, at its option, at any time during the term of the Warrant,
reduce the then current Purchase Price to any amount deemed appropriate by the
Board of Directors of the Company and/or extend the date of the expiration of
the Warrant.
9. Registration Rights
The Company has agreed with the Holder that the Company will register for
resale the Warrant Shares at the time the Company next files a registration
statement with the United States Securities and Exchange Commission to register
any of its securities.
Notwithstanding the foregoing, the Holder agrees that any certificate
representing Warrant Shares will have a restrictive legend thereon stating that
the Warrant Shares cannot be transferred except in compliance with the
Securities Act of 1933, as amended, and any applicable state securities laws.
10. Governing Law
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York.
6
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed by its officers thereunto duly authorized and its corporate seal
to be affixed hereon, as of this 4th day of June, 1998.
CHAPARRAL RESOURCES, INC.
By:
----------------------------------
Name:
Title:
[SEAL]
Attest:
- -------------------------------
Name:
Title:
7
EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to Section
2 of the Warrant Certificate accompanying this Notice of Exercise, _______
Warrants of the total number of Warrants owned by the undersigned pursuant to
the accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.
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Name of Holder
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Signature
Address:
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EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby irrevocably elects to convert, pursuant to Section 7 of
the Warrant Certificate accompanying this Notice of Conversion, _______ Warrants
of the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate into shares of the Common Stock of the Company
(the "Shares").
The number of Shares to be received by the undersigned shall be calculated in
accordance with the provisions of Section 7.1 of the accompanying Warrant
Certificate.
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Name of Holder
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Signature
Address:
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