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 REGIGTRATION IS AVAILABLE.
20,000 Warrants
CHAPARRAL RESOURCES, INC.
WARRANT CERTIFICATE
This warrant certificate ("Warrant Certificate") certifies that for value
received Whittier Ventures, LLC 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 20,000 shares
of Common Stock of the Company, and the purchase price payable upon exercise of
the Warrant (the "Purchase Price") shall be $0.01 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
a. 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 the date of this Warrant
Certificate. The term "Expiration Date" shall mean 5:00 p.m. Houston, Texas time
on July 22, 2003, or if such day shall in the State of Texas be a holiday or a
day on which banks are authorized to close, then 5:00 p.m. Houston, Texas time
the next following day which in the State of Texas 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 Warrant. 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.
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.
(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
impracticable, as soon as practicable) written notice specifying the nature of
such event End 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 equal 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. 1n 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 Overage 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
(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
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 Texas.
IN WITNESS THEREOF, 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 2nd day of July, 1998.
CHAPARRAL RESOURCES, INC.
By:
-----------------------------
Name:
Title:
Attest:
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Name:
Title:
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
- - --------------------------------
Signature
Address:
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- - --------------------------------
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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.
Name of Holder
Signature
Address: