Exhibit 10.9
PLACEMENT AGENCY AGREEMENT
This Placement Agency Agreement (this "Agreement") is made and entered into
as of May 27, 2005 (the "Effective Date"), by and between Blue Dolphin Energy
Company, a Delaware corporation (the "Company"), and Starlight Investments, LLC,
a Texas corporation ("Starlight").
WHEREAS, the Company desires to retain Starlight as its non-exclusive
placement agent, and Starlight is willing to act in its specific capacity, in
each case subject to the terms and conditions of this Agreement.
WHEREAS, the Company currently has in place investment banking agreements
with other firms including Amerifund Capital Group, LLC, this agreement is
exclusive to the $5 (five) million proposed "PIPE" transaction as contemplated
herein, and PIPE related agency fees as defined in Section 6.(a) below will only
be paid to Starlight under this agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Company and Starlight (each a "Party" and collectively,
the "Parties") hereby agree as follows:
1. RETENTION OF STARLIGHT; SCOPE OF SERVICES
(a) Subject to the terms and conditions set forth herein, the Company
hereby retains Starlight to act as the non-exclusive placement agent
to the Company during the Contract Period (as defined in Section 2
below), and Starlight hereby agrees to be so retained.
(b) As the non-exclusive placement agent to the Company, Starlight will
have the non-exclusive right during the Contract Period to identify
for the Company prospective purchasers (collectively, the "Purchasers"
and each individually, a "Purchaser") in a placement (the "Placement")
of equity securities to be issued by the Company, the type and dollar
amount being as mutually agreed to by the Parties (the "Securities").
(c) Terms of the Placement shall be as set forth in subscription
documents, including any stock purchase or subscription agreement,
escrow agreement, registration rights agreement, warrant agreement
and/or other documents to be executed and delivered in connection with
the Placement (collectively, the "Subscription Documents"). The
Placement is intended to be exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to Regulation D ("Regulation D") of the rules and regulations
of the Securities and Exchange Commission (the "SEC") promulgated
under the Securities Act.
(d) Starlight will act on a best efforts basis and will have no obligation
to purchase any of the Securities offered in the Placement. During the
Contract Period, Starlight shall have the non-exclusive right to
arrange for all sales of Securities in the Placement, including
without limitation the non-exclusive right to identify
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potential buyers for the Securities. All sales of Securities in the
Placement shall be subject to the approval of the Company, which
approval may be withheld in the Company's sole discretion.
2. CONTRACT PERIOD AND TERMINATION
(a) Starlight shall act as the Company's non-exclusive placement agent
under this Agreement for a period commencing on the Effective Date,
and continuing until the earlier of the Closing of the proposed "PIPE"
transaction or the Company's decision not to pursue the transaction,
or until terminated by either Party upon 30 days notice to the other
Party (the "Contract Period").
(b) Upon termination, neither party will have any further obligation under
this Agreement, except as provided in Sections 5, 6, 7, 8, 9 and 10
hereof.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The representations and warranties of the Company made to the Purchasers as
set forth in the Subscription Documents are hereby incorporated by
reference as of the date of consummation of the sale of the Securities (the
"Closing") and all such representations and warranties are hereby deemed
made by the Company directly to Starlight as though set forth in full
herein.
4. COVENANTS OF THE COMPANY
The Company covenants and agrees as follows:
(a) Neither the Company nor any affiliate of the Company (as defined in
Rule 501(b) of Regulation D) will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) of the Company which will be integrated
with the sale of the Securities in a manner which would require the
registration under the Securities Act of the Securities.
(b) Any and all filings and documents required to be filed in connection
with or as a result of the Placement pursuant to federal and state
securities laws are the responsibility of the Company and will be
filed by the Company.
(c) Any press release to be issued by the Company announcing or referring
to the Placement shall be subject to the prior review of Starlight,
and each such press release shall, at the request of Starlight,
identify Starlight as the placement agent. Starlight shall be
permitted to publish a tombstone or similar advertisement upon
completion of the Placement identifying itself as the Company's
placement agent with respect thereto. This Agreement shall not be
filed publicly by the Company without the prior written consent of
Starlight, unless required by applicable law or regulation.
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5. FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY
(a) In connection with Starlight's activities hereunder on the Company's
behalf, the Company shall furnish Starlight with all reasonable
information concerning the Company and its operations that Starlight
deems necessary or appropriate (the "Company Information") and shall
provide Starlight with reasonable access to the Company's books,
records, officers, directors, employees, accountants and counsel. The
Company acknowledges and agrees that, in rendering its services
hereunder, Starlight will be using and relying upon the Company
Information without independent verification thereof or independent
appraisal of any of the Company's assets and may, in its sole
discretion, use additional information contained in public reports or
other information furnished by the Company or third parties.
(b) Starlight agrees that the Company Information will be used solely for
the purpose of performing its services hereunder. Subject to the
limitations set forth in subsection (c) below, Starlight will keep the
Company Information provided hereunder confidential and will not
disclose such Company Information or any portion thereof, except (i)
to a third party contacted by Starlight on behalf of, and with the
prior approval of, the Company pursuant hereto who has agreed to be
bound by a confidentiality agreement satisfactory in form and
substance to the Company, or (ii) to any other person for which the
Company's consent to disclose such Company Information has been
obtained.
(c) Starlight's confidentiality obligations under this Agreement shall not
apply to any portion of the Company Information which (i) at the time
of disclosure to Starlight or thereafter is generally available to and
known by the public (other than as a result of a disclosure directly
or indirectly by Starlight in violation of this Agreement); (ii) was
available to Starlight on a non-confidential basis from a source other
than the Company, provided that such source is not and was not bound
by a confidentiality agreement with the Company; (iii) has been
independently acquired or developed by Starlight without violating any
of its obligations under this Agreement; or (iv) the disclosure of
which is legally compelled (whether by deposition, interrogatory,
request for documents, subpoena, civil or administrative investigative
demand or other similar process). In the event that Starlight becomes
legally compelled to disclose any of the Company Information,
Starlight shall provide the Company with prompt prior written notice
of such requirement so that the Company may seek a protective order or
other appropriate remedy and/or waive compliance with the terms of
this Agreement.
(d) The obligations of the Parties under this Section 5 shall survive the
termination of this Agreement for 12 months.
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6. FEES AND EXPENSES
(a) As compensation for services rendered by Starlight in connection with
the Placement, the Company agrees to pay Starlight a fee of seven
percent (7%) of the gross proceeds from the sale of Securities sold in
the Placement (the "Agency Fee"). The Agency Fee shall be paid
immediately upon the closing of each sale of Securities by the
Company. Due diligence, marketing, and other offering related third
party (including Amerifund Capital Group, LLC offering related
expenses) expenses not covered in section 6.(b) below will be credited
against the Agency Fee.
(b) The Company shall also promptly reimburse Starlight for all reasonable
out-of-pocket expenses incurred by Starlight and its directors,
officers and employees in connection with the performance of
Starlight's services under this Agreement. For these purposes,
"out-of-pocket expenses" shall include, but not be limited to,
attorney's fees and costs, long distance telephone, facsimile,
courier, mail, supplies, travel and similar expenses. Except for bills
for long distance telephone, facsimile, express mail, courier, mail
and supplies, Starlight will not incur any expenses without the prior
consent of the Company; and the Parties shall attempt to have the
Company direct billed as often as possible for such expenses.
(c) Upon closing of the Placement, the Company agrees to issue to
Starlight and/or its assigns, a Securities Purchase Warrant (the
"Representative's Warrant") entitling the holder(s) thereof to
purchase an amount of Securities equal to six percent (6%) of the
total number of Securities sold in the Placement for a period of three
(3) years at an exercise price per share equal to the price at which
the Securities are sold to Purchasers. The Representative's Warrant
shall otherwise be substantially in the form of EXHIBIT A attached
hereto.
(d) Addendum B to that certain Agreement dated August 5, 2004 between
Amerifund Capital Group, LLC and the Company, attached herein by
reference as EXHIBIT C, provides for the provision of consultancy and
other services by Amerifund Capital Group, LLC or its subsidiaries,
collectively ("AMCAP"), to the Company in connection with the
Placement, in return for fees payable to AMCAP. Starlight hereby
agrees that any such fees paid or payable to AMCAP by the Company
shall be credited against the fees due Starlight hereunder.
(e) The obligations of the Parties under this Section 6 shall survive the
termination of this Agreement for any reason for 12 (twelve) months.
7. INDEMNIFICATION
(a) The Company agrees to indemnify and hold Starlight harmless from and
against any and all losses, claims, damages or liabilities (or
actions, including securityholder actions, in respect thereof) related
to or arising out of Starlight's engagement hereunder or its role in
connection herewith, and will reimburse Starlight for all reasonable
expenses (including reasonable costs, expenses, awards and counsel
fees and/or judgments) as they are incurred by Starlight in
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connection with investigating, preparing for or defending any such
action or claim, whether or not in connection with pending or
threatened litigation in which Starlight is a party. The Company will
not, however, be responsible for any claims, liabilities, losses,
damages or expenses which are finally judicially determined to have
resulted primarily from the bad faith, gross negligence or willful
misconduct of Starlight. The Company also agrees that Starlight shall
not have any liability to the Company for or in connection with such
engagement, except for any such liability for losses, claims, damages,
liabilities or expenses incurred by the Company that result primarily
from the bad faith, gross negligence or willful misconduct of
Starlight. In the event that the foregoing indemnity is unavailable
(except by reason of the bad faith, gross negligence, or willful
misconduct of Starlight), then the Company shall contribute to amounts
paid or payable by Starlight in respect of its losses, claims, damages
and liabilities in such proportion as appropriately reflects the
relative benefits received by, and fault of, the Company and Starlight
in connection with the matters as to which such losses, claims,
damages or liabilities relate, and other equitable considerations. The
foregoing shall be in addition to any rights that Starlight may have
at common law or otherwise and shall extend upon the same terms to and
inure to the benefit of any director, officer, employee, agent or
controlling person of Starlight. The Company hereby consents to
personal jurisdiction, service and venue in any court in which any
claim which is subject to this agreement is brought against Starlight
or any other person entitled to indemnification or contribution under
this subsection (a).
(b) Starlight agrees to indemnify and hold the Company harmless from and
against any and all losses, claims, damages or liabilities (or
actions, including securityholder actions, in respect thereof) which
are finally judicially determined to have resulted primarily from the
bad faith, gross negligence or willful misconduct of Starlight, and
will reimburse the Company for all reasonable expenses (including
reasonable costs, expenses, awards and counsel fees and/or judgments)
as they are incurred by the Company in connection with investigating,
preparing for or defending any such action or claim, whether or not in
connection with pending or threatened litigation in which the Company
is a party. In the event that the foregoing indemnity is unavailable,
then Starlight shall contribute to amounts paid or payable by the
Company in respect of its losses, claims, damages and liabilities in
such proportion as appropriately reflects the relative benefits
received by, and fault of, the Company and Starlight in connection
with the matters as to which such losses, claims, damages or
liabilities relate, and other equitable considerations. The foregoing
shall be in addition to any rights that the Company may have at common
law or otherwise and shall extend upon the same terms to and inure to
the benefit of any director, officer, employee, agent or controlling
person of the Company. Starlight hereby consents to personal
jurisdiction, service and venue in any court in which any claim, which
is subject to this agreement, is brought against the Company or any
other person entitled to indemnification or contribution under this
subsection (b).
(c) The obligations of the Parties under this Section 7 shall survive the
termination of this Agreement for a period of 12 (twelve) months.
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8. NON-CIRCUMVENTION
The Company and Starlight acknowledge that Amerifund Capital Securities, a
subsidiary of Amerifund Capital Group, LLC (hereinafter referred to
collectively as AMCAP) and an affiliate of Starlight has previously
disclosed and will further identify and disclose investors to that certain
Agreement between the Company and AMCAP dated August 5, 2004. Such
investors have been registered in writing with, and the Company has agreed
to, such list of approved and subsequently to be approved investors for
solicitation by AMCAP. Starlight hereby agrees that, for a period of one
year from the end of the Contract Period or other termination of this
Agreement, Starlight will not enter into any agreement, transaction or
arrangement with any of the institutions (including their agents,
principals and affiliates and the accounts and funds which they manage or
advise) which AMCAP has introduced, directly or as a result of a referral
from such institution, to the Company as prospective purchasers of the
Securities in the Placement (collectively, the "AMCAP Contacts"),
regardless of whether a transaction is consummated with such prospective
purchasers, unless Starlight notifies AMCAP and the Company in writing of
the agreement, transaction or arrangement, and pays AMCAP either a fee
equal to the Agency Fee or a mutually agreeable fee for securities of the
Company sold to AMCAP Contacts.
9. GOVERNING LAW
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS
PROVISIONS THEREOF.
10. ARBITRATION
Starlight and the Company will attempt to settle any claim or controversy
arising out of this Agreement through consultation and negotiation in good
faith and a spirit of mutual cooperation. Any dispute which the parties
cannot resolve may then be submitted by either party to binding arbitration
in Houston, Texas under the rules of the American Arbitration Association
for resolution. Nothing in this paragraph will prevent either party from
resorting to judicial proceedings if (a) good faith efforts to resolve the
dispute under these procedures have been unsuccessful or (b) interim relief
from a court is necessary to prevent serious and irreparable injury.
11. NO WAIVER
The failure or neglect of any party hereto to insist, in any one or more
instances, upon the strict performance of any of the terms or conditions of
this Agreement, or waiver by any party of strict performance of any of the
terms or conditions of this Agreement, shall not be construed as a waiver
or relinquishment in the future of such term or condition, but the same
shall continue in full force and effect.
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12. SUCCESSORS AND ASSIGNS
The benefits of this Agreement shall inure to the benefit of the Parties,
their respective successors, assigns and representatives, and the
obligations and liabilities assumed in this Agreement by the Parties shall
be binding upon their respective successors and assigns. This Agreement may
not be assigned by either Party without the express written consent of the
other Party, which consent shall not be unreasonably withheld.
13. NOTICES
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be delivered personally
or sent by certified mail, return receipt requested, recognized overnight
delivery service, or facsimile as follows:
If to the Company:
Blue Dolphin Energy Company
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxxx (President)
If to Starlight:
Starlight Investments, LLC.
c/o Amerifund Capital Group, LLC
00000 Xx Xxxx'x Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx (Branch Manager)
Either Party may change its address or facsimile number set forth above by
giving the other Party notice of such change in accordance with the
provisions of this Section 13. A notice shall be deemed given (a) if by
personal delivery, on the date of such delivery, (b) if by certified mail,
on the date shown on the applicable return receipt, (c) if by overnight
delivery service, on the day after the date delivered to the service, or
(d) if by facsimile, on the date of transmission.
14. NATURE OF RELATIONSHIP
The Parties intend that Starlight's relationship to the Company and the
relationship of each director, officer, employee or agent of Starlight to
the Company shall be that of an independent contractor and not as an
employee of the Company or an affiliate thereof. Nothing contained in this
Agreement shall constitute or be construed to be or create a partnership or
joint venture between Starlight and the Company or their respective
successors or assigns. Neither Starlight nor any director, officer,
employee or agent of Starlight shall be considered to be an employee of the
Company by virtue of the services provided hereunder.
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15. MISCELLANEOUS
Starlight's obligations under this Agreement are subject to the following
general conditions:
(a) All relevant terms, conditions, and circumstances relating to the
Placement will be reasonably satisfactory to the Company, Starlight
and their respective counsel.
(b) Starlight reserves the right to solicit the assistance of outside
dealers ("Dealers") to assist in the offer and sale of the Placement;
provided, however, that any such Dealers agree in writing to be bound
by the terms of the Placement. It is understood that Starlight, in its
sole discretion, shall be entitled to pay over to any such Dealers any
portion of the compensation received by Starlight hereunder. The
Company shall have no financial liability for any fees or expenses of
any such Dealers.
16. CAPTIONS
The Section titles herein are for reference purposes only and do not
control or affect the meaning or interpretation of any term or provision
hereof.
17. AMENDMENTS
No alteration, amendment, change or addition hereto shall be binding or
effective unless the same is set forth in writing and signed by a duly
authorized representative of each Party.
18. PARTIAL INVALIDITY
If it is finally determined that any term or provision hereof is invalid or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, and (b) the invalid or unenforceable term or provision shall be
replaced by a term or provision that is valid and enforceable and that
comes as close as possible to expressing the intention of the invalid or
unenforceable term or provision.
19. ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding of the
Parties and supersedes any and all prior agreements, arrangements and
understandings relating to the matters provided for herein.
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20. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which
shall be an original, but all of which together shall be considered one and
the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above by duly authorized representatives of the Company and Starlight.
BLUE DOLPHIN ENERGY COMPANY
By: Xxxx Xxxx
Title: Chairman & CEO
STARLIGHT INVESTMENTS, LLC.
By:
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EXHIBIT A
FORM OF REPRESENTATIVE'S WARRANT
[See attached]
SAMPLE
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL (WHICH OPINION
IS REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES), SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
Date: ______________ Warrant to Purchase
***______***
Shares
BLUE DOLPHIN ENERGY COMPANY
(Incorporated under the laws of the State of Delaware)
REPRESENTATIVE'S WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK
Warrant Price: $_____ [the same price that the Securities were sold in
the Placement] per share, subject to adjustment as provided below.
THIS IS TO CERTIFY that, for value received, Starlight Investments, LLC.
("Starlight") and its assigns (collectively, the "Holder"), is entitled to
purchase, subject to the terms and conditions hereinafter set forth, up to
***______*** shares of the common stock, par value $0.01 per share ("Common
Stock"), of Blue Dolphin Energy Company, a Delaware corporation (the "Company"),
and to receive certificate(s) for the Common Stock so purchased.
1. EXERCISE PERIOD AND VESTING. The exercise period is the period beginning
on the date of this Warrant (the "Issuance Date") and ending at 5:00 p.m.,
Houston, Texas time, on ______________ [Three years from the Issuance Date] (the
"Exercise Period"). This Warrant is vested in full as of the Issuance Date and
is immediately exercisable by Holder. This Warrant will terminate automatically
and immediately upon the expiration of the Exercise Period. Subject to
adjustment as provided below, the Warrant Price shall be adjusted as follows:
(i) for the period of time beginning on the issuance date and until the later of
the date such warrant shares underlying the warrant are registered or one (1)
year [110% of the Warrant Price], (ii) after the expiration of the later of one
year after the date hereof or until the warrant shares underlying the warrant
are registered until two (2) years [120%of the Warrant Price], and (iii) after
the expiration two (2) years after the date hereof [130% of the Warrant Price].
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2. EXERCISE OF WARRANT; CASHLESS EXERCISE. This Warrant may be exercised,
in whole or in part, at any time and from time to time during the Exercise
Period. Such exercise shall be accomplished by tender to the Company of the
purchase price set forth above as the warrant price (the "Warrant Price"),
either (a) in cash, by wire transfer or by certified check or bank cashier's
check, payable to the order of the Company, or (b) by surrendering such number
of shares of Common Stock received upon exercise of this Warrant with a current
market price equal to the Warrant Price (a "Cashless Exercise") together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached hereto as Exhibit A (the
"Subscription"). Upon receipt of the foregoing, the Company will deliver to the
Holder, as promptly as possible, a certificate or certificates representing the
shares of Common Stock so purchased, registered in the name of the Holder or its
transferee (as permitted under Section 3 below). With respect to any exercise of
this Warrant, the Holder will for all purposes be deemed to have become the
holder of record of the number of shares of Common Stock purchased hereunder on
the date this Warrant, a properly executed Subscription and payment of the
Warrant Price is received by the Company (the "Exercise Date"), irrespective of
the date of delivery of the certificate evidencing such shares, except that, if
the date of such receipt is a date on which the stock transfer books of the
Company are closed, such person will be deemed to have become the holder of such
shares at the close of business on the next succeeding date on which the stock
transfer books are open. Fractional shares of Common Stock will not be issued
upon the exercise of this Warrant. In lieu of any fractional shares that would
have been issued but for the immediately preceding sentence, the Holder will be
entitled to receive cash equal to the current market price of such fraction of a
share of Common Stock on the trading day immediately preceding the Exercise
Date. In the event this Warrant is exercised in part, the Company shall issue a
new Warrant to the Holder covering the aggregate number of shares of Common
Stock as to which this Warrant remains exercisable for.
If the Holder elects to conduct a Cashless Exercise, the Company shall
cause to be delivered to the Holder a certificate or certificates representing
the number of shares of Common Stock computed using the following formula:
X = (Y x (A-B))/A
Where:
X = the number of shares of Common Stock to be issued to Holder;
Y = the portion of the Warrant (in number of shares of Common Stock)
being exercised by Holder (at the date of such calculation);
A = the fair market value of one share of Common Stock on the
Exercise Date (as calculated below); and
B = Warrant Price (as adjusted to the date of such calculation).
For purposes of the foregoing calculation, "fair market value of one share
of Common Stock on the Exercise Date" shall mean: (i) if the principal trading
market for such securities is a national or regional securities exchange, the
closing price on such exchange for day immediately prior to such Exercise Date;
(ii) if sales prices for shares of Common Stock are reported by the NASDAQ
National Market System or NASDAQ Small Cap Market (or a similar system then in
use), the last reported sales price for the day immediately prior to such
Exercise Date; or (iii) if
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neither (i) nor (ii) above are applicable, and if bid and ask prices for shares
of Common Stock are reported in the over-the-counter market by NASDAQ (or, if
not so reported, by the National Quotation Bureau), the average of the high bid
and low ask prices so reported for the ten (10) trading days immediately prior
to such Exercise Date. Notwithstanding the foregoing, if there is no reported
closing price, last reported sales price, or bid and ask prices, as the case may
be, for the period in question, then the current market price shall be
determined as of the latest ten (10) day period prior to such day for which such
closing price, last reported sales price, or bid and ask prices, as the case may
be, are available, unless such securities have not been traded on an exchange or
in the over-the-counter market for 30 or more days immediately prior to the day
in question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company. The Company acknowledges and agrees that this Warrant was issued on the
Issuance Date.
3. TRANSFERABILITY AND EXCHANGE
(a) This Warrant, and the Common Stock issuable upon the exercise
hereof, may not be sold, transferred, pledged or hypothecated unless the Company
shall have been provided with an opinion of counsel, or other evidence
reasonably satisfactory to it, that such transfer is not in violation of the
Securities Act, and any applicable state securities laws. Subject to the
satisfaction of the aforesaid condition, this Warrant and the underlying shares
of Common Stock shall be transferable from time to time by the Holder upon
written notice to the Company. If this Warrant is transferred, in whole or in
part, the Company shall, upon surrender of this Warrant to the Company, deliver
to each transferee a Warrant evidencing the rights of such transferee to
purchase the number of shares of Common Stock that such transferee is entitled
to purchase pursuant to such transfer. The Company may place a legend similar to
the legend at the top of this Warrant on any replacement Warrant and on each
certificate representing shares issuable upon exercise of this Warrant or any
replacement Warrants. Only a registered Holder may enforce the provisions of
this Warrant against the Company. A transferee of the original registered Holder
becomes a registered Holder only upon delivery to the Company of the original
Warrant and an original Assignment, substantially in the form set forth in
Exhibit B attached hereto.
(b) This Warrant is exchangeable upon its surrender by the Holder to
the Company for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of shares purchasable hereunder, each
of such new Warrants to represent the right to purchase such number of shares as
may be designated by the Holder at the time of such surrender.
4. ADJUSTMENTS TO WARRANT PRICE AND NUMBER OF SHARES SUBJECT TO WARRANT.
The Warrant Price and the number of shares of Common Stock purchasable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of any of the events specified in this Section 4. For the purpose of
this Section 4, "Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company, however
designated, that has the right to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount (excluding, and
subject to any prior rights of, any class or series of preferred stock).
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock or other securities, (ii) subdivide its
outstanding shares of Common
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Stock into a greater number of shares, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock other securities of the Company, then the Warrant
Price in effect at the time of the record date for such dividend or on the
effective date of such subdivision, combination or reclassification, and/or the
number and kind of securities issuable on such date, shall be proportionately
adjusted so that the Holder of any Warrant thereafter exercised shall be
entitled to receive the aggregate number and kind of shares of Common Stock (or
such other securities other than Common Stock) of the Company, at the same
aggregate Warrant Price, that, if such Warrant had been exercised immediately
prior to such date, the Holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, distribution, subdivision,
combination or reclassification. Such adjustment shall be made successively
whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
surviving corporation) of cash, evidences of indebtedness or assets, or
subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price per share of Common Stock on such record date,
less the amount of cash so to be distributed (or the fair market value (as
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so to be distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, and the denominator of which shall be
such current market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price which would then be in effect if such record date had not
been fixed.
(c) For the purpose of any computation under any subsection of this
Section 4, the "current market price" per share of Common Stock on any date
shall be the per share price of the Common Stock on the trading day immediately
prior to the event requiring an adjustment hereunder and shall be: (i) if the
principal trading market for such securities is a national or regional
securities exchange, the closing price on such exchange on such day; or (ii) if
sales prices for shares of Common Stock are reported by the NASDAQ National
Market System or Small Cap Market System (or a similar system then in use), the
last reported sales price so reported on such day; or (iii) if neither (i) nor
(ii) above are applicable, and if bid and ask prices for shares of Common Stock
are reported in the over-the-counter market by NASDAQ (or, if not so reported,
by the National Quotation Bureau), the average of the high bid and low ask
prices so reported on such day. Notwithstanding the foregoing, if there is no
reported closing price, last reported sales price, or bid and ask prices, as the
case may be, for the day in question, then the current market price shall be
determined as of the latest date prior to such day for which such closing price,
last reported sales price, or bid and ask prices, as the case may be, are
available, unless such securities have not been traded on an exchange or in the
over-the-counter market for 30 or more days immediately prior to the day in
question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company.
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(d) Notwithstanding any provision herein to the contrary, no
adjustment in the Warrant Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (b) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may be.
(e) In the event that at any time, as a result of an adjustment made
pursuant to subsection (a) above, the Holder of any Warrant thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any 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 shares of Common Stock contained in this Section
4, and the other provisions of this Warrant shall apply on like terms to any
such other shares.
(f) If the Company merges or consolidates into or with another
corporation or entity, or if another corporation or entity merges into or with
the Company (excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the Company
are sold or transferred to another corporation, entity, or person, then, as a
condition to such consolidation, merger, or sale (a "Transaction"), lawful and
adequate provision shall be made whereby the Holder shall have the right from
and after the Transaction to receive, upon exercise of this Warrant and upon the
terms and conditions specified herein and in lieu of the shares of the Common
Stock that would have been issuable if this Warrant had been exercised
immediately before the Transaction, such shares of stock, securities, or assets
as the Holder would have owned immediately after the Transaction if the Holder
had exercised this Warrant immediately before the effective date of the
Transaction.
5. REGISTRATION RIGHTS. The Company hereby grants to Holder, with respect
to the shares of Common Stock underlying this Warrant, registration rights
identical to those that are granted to Purchasers in the Placement (as such
terms are defined in that certain Placement Agency Agreement, dated as of
__________, by and between the Company and Starlight); it being specifically
agreed and understood that the shares of Common Stock underlying this Warrant
will be included in any registration statement filed by the Company which
includes shares of Common Stock, or shares of Common Stock underlying any
securities, issued to Purchasers in the Placement.
6. RESERVATION OF SHARES. The Company agrees at all times to reserve and
hold available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the purchase thereof hereunder.
7. NOTICES TO HOLDER. Upon any adjustment of the Warrant Price (or number
of shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter cause to be given
to the Holder written notice of such
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adjustment. Such notice shall include the Warrant Price (and/or the number of
shares of Common Stock purchasable upon the exercise of this Warrant) after such
adjustment, and shall set forth in reasonable detail the Company's method of
calculation and the facts upon which such calculations were based. Where
appropriate, such notice shall be given in advance and included as a part of any
notice required to be given under the other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with respect
to the holders of any class of securities of the Company for the purpose of
determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation, or winding up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.
8. NO RIGHTS AS A STOCKHOLDER. This Warrant does not entitle the Holder to
any voting rights or other rights as a stockholder of the Company, nor to any
other rights whatsoever except the rights herein set forth.
9. ADDITIONAL COVENANTS OF THE COMPANY. The Company shall not, by amendment
of its Articles of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, 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. Without limiting the generality of the
foregoing, the Company (a) will at all times reserve and keep available, solely
for issuance and delivery upon exercise of this Warrant, shares of Common Stock
issuable from time to time upon exercise of this Warrant, (b) will not increase
the par value of any shares of capital stock receivable upon exercise of this
Warrant above the amount payable therefor upon such exercise, and (c) will take
all such actions as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable stock.
10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of the Company, the Holder and their respective successors and
permitted assigns.
11. NOTICES. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) sent by prepaid overnight courier service, or (iii) sent by
telecopy or facsimile transmission, answer back requested, to the parties at the
following addresses (or at such other address as shall be specified by the
parties by like notice):
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if to the Holder:
Starlight Investments, LLC
c/o Amerifund Capital Group, LLC
00000 Xx. Xxxx'x Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx (Branch Manager)
and, if to the Company:
Blue Dolphin Energy Company
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: President
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, when
the answer back is received.
12. SEVERABILITY. Every provision of this Warrant is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Warrant.
13. GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of Texas without giving effect to the
principles of choice of laws thereof.
14. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
15. ENTIRE AGREEMENT. This Warrant (including the Exhibits attached hereto)
constitutes the entire understanding between the Company and the Holder with
respect to the subject matter hereof, and supersedes all prior negotiations,
discussions, agreements and understandings relating to such subject matter.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
BLUE DOLPHIN ENERGY COMPANY
By:
------------------------------------
Title:
---------------------------------
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Exhibit A
SUBSCRIPTION FORM
(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for _______ shares (the
"Stock") of the Common Stock of _________________ (the "Company") pursuant to
and in accordance with the terms and conditions of the attached Warrant (the
"Warrant"), and hereby makes payment of $_______ therefor by [tendering cash,
wire transferring or delivering a certified check or bank cashier's check,
payable to the order of the Company] [surrendering _______ shares of Common
Stock received upon exercise of the Warrant, which shares have a current market
price equal to such payment as required in Section 2 of the Warrant]. The
undersigned requests that a certificate for the Stock be issued in the name of
the undersigned and be delivered to the undersigned at the address stated below.
If the Stock is not all of the shares purchasable pursuant to the Warrant, the
undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
I understand that because the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same legend as set forth on
the front page of the Warrant.
I further agree that the Company may place stop orders on the certificates
evidencing the Stock with the transfer agent, if any, to the same effect as the
above legend. The legend and stop transfer notice referred to above shall be
removed only upon my furnishing to the Company of an opinion of counsel
(reasonably satisfactory to the Company) to the effect that such legend may be
removed.
Date: Signed:
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Address:
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Exhibit B
ASSIGNMENT
(To be Executed by the Holder to Effect Transfer of the Attached Warrant)
For Value Received __________________________ hereby sells, assigns and
transfers to _________________________ the Warrant attached hereto and the
rights represented thereby to purchase _________ shares of Common Stock in
accordance with the terms and conditions hereof, and does hereby irrevocably
constitute and appoint _________________________ as attorney to transfer such
Warrant on the books of the Company with full power of substitution.
Dated: Signed:
------------------------- --------------------------------
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assign: Number of Assign:
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X-0
XXXXXXX X
XXXXXXXX X To That Certain Agreement dated
August 5, 2004
(Incorporated by reference)
