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EXHIBIT 10.3
Credit Agreement
between
Environmental Safeguards, Inc.,
as Borrower
and
Casuarina, Ltd.,
as Lender
Dated as of December 19, 1996
$3,000,000 Term Loan
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TABLE OF CONTENTS
ARTICLE I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.03. Business Day Adjustment . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
Use of Proceeds
Section 2.01. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
The Loan
Section 3.01. Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.02. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.03. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.04. Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.05. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.06. Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV
Representations and Warranties
Section 4.01. Representations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V
Conditions Precedent
ARTICLE VI
Covenants
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Section 6.01. Notices of Material Events . . . . . . . . . . . . . . . . . . . . . 6
Section 6.02. Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . 6
Section 6.03. Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.04. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.05. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.06. Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VII
Events of Defaults
Section 7.01. Acceleration After Default . . . . . . . . . . . . . . . . . . . . . 7
Section 7.02. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 7.03. Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 7.04. Notice of Events . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII
Miscellaneous
Section 8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8.02. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 8.03. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.04. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.05. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 8.06. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.07. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.08 Counterparts, Integration . . . . . . . . . . . . . . . . . . . . . 11
Section 8.09 Remedies and Waivers . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.11 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of December 19, 1996 (the "Agreement"),
between ENVIRONMENTAL SAFEGUARDS, INC. ("Borrower"), and CASUARINA, LTD. (the
"Lender").
ARTICLE I
Definitions and Interpretation
SECTION 1.01. Definitions. Wherever used in this Agreement, unless
the context otherwise requires, the following terms have the meanings
indicated:
"Authority" means any government or governmental,
administrative, fiscal, judicial, or government-owned body,
department, commission, committee, authority, tribunal, agency or
entity.
"Authorization" means includes any consent, registration,
filing, agreement, notarization, certificate, license, approval,
permit, authority or exemption from, by or with any Authority, whether
given or withheld by express action or deemed given or withheld by
failure to act within any specified time period and all corporate,
creditors, and joint venturers approvals or consents.
"Business Day" means a day when banks are open for business in
Tulsa, Oklahoma.
"Change of Control" means the occurrence of any of the
following events: (i) any Person or two or more Persons acting as a
group shall acquire beneficial ownership of 35% or more of the
outstanding voting securities of Borrower, measured by voting power,
(ii) one-third or more of the directors of Borrower shall consist of
Persons not nominated by Borrower's Board of Directors (not including
as Board nominees any directors which the Board is obligated to
nominate pursuant to shareholders agreements, voting trust
arrangements or similar arrangements), or (iii) Borrower shall sell,
convey or transfer all or substantially all of its assets (either in
one transaction or in a series of related transactions) to any Person.
"Closing Date" means December 19, 1996.
"Dollars" and the sign "$" means the lawful currency of the
United States of America.
"Event of Default" means any one of the events specified in
Section 7.02.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision
thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising
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executive, legislative, judicial, taxing, regulatory or administrative
powers or functions of or pertaining to government.
"Loan" means the loan specified in Section 3.01 or, as the
context requires, its principal amount from time to time outstanding.
"Loan Interest Rate" means the rate of interest payable on the
Loan determined in accordance with Section 3.03.
"Material Adverse Effect" means a material adverse effect on
(a) the ability of Borrower to perform any of its obligations under
the Agreement or (b) the rights of or benefits available to the Lender
under the Agreement.
"Maturity Date" means the earlier of (i) December 31, 2000, or
(ii) the date on which a Change in Control occurs.
"Net Cash Flow" for any calendar month means the product of
(i) (a) actual cash receipts less (b) the actual cash operating
expenses (which would be classified as cost of goods sold according to
generally accepted accounting principles) of OnSite Technology L.L.C.
in such calendar month, and (ii) NFE's Sharing Ratio (expressed as a
percent), but only to the extent that such net receipts are
distributed by OnSite Technology L.L.C. to its members, provided that
if NFE votes to prevent such distribution of net receipts which are
available for distributing, then such net receipts shall be deemed to
have been distributed to its members.
"NFE" means National Fuel & Energy, Inc., a wholly owned
subsidiary of the Company.
"Obligations" means all indebtedness, obligations and
liabilities of Borrower to the Lender, existing on the Closing Date or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured
or unsecured, arising by contract, operation of law or otherwise,
arising or incurred under this Agreement or the transactions
contemplated thereby.
"Officer's Certificate" means a certificate signed by the
President or the Vice President of Finance of Borrower, specifying the
amount of the Net Cash Flow realized by Borrower in any calendar
month.
"Onsite Technology L.L.C." means that Oklahoma limited
liability company formed pursuant to an Operating Agreement between
National Fuel & Energy, Inc. and Xxxxxx Drilling Investment Company,
Inc. dated as of August 1, 1995, as amended.
"Person" means any individual, corporation, company, voluntary
association, limited liability company, partnership, joint venture,
trust, unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
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"Sharing Ratio" shall mean the Sharing Ratio of NFE as may be
in effect from time to time pursuant to the Operating Agreement of
OnSite Technology L.L.C., dated as of August 1, 1995, as amended.
"Warrant Agreement" means an agreement in the form of Exhibit
A hereto.
Section 1.02. Interpretation. In this Agreement, unless the context
otherwise requires:
(a) headings and underlinings are for convenience only and do not
affect the interpretation of this Agreement;
(b) words importing the singular include the plural and vice
versa;
(c) an expression importing a natural person includes any company,
partnership, trust, joint venture, association, corporation or other body
corporate and any governmental authority or agency;
(d) a reference to a Section, party, Exhibit, Annex or Schedule is
a reference to that Section of, or that party, Exhibit, Annex or Schedule to,
this Agreement;
(e) a reference to a document includes an amendment or supplement
to, or replacement or novation of, that document but disregarding any
amendment, supplement, replacement or novation made in breach of this
Agreement; and
(f) a reference to a party to any document includes that party's
successors and permitted assigns.
Section 1.03. Business Day Adjustment. Where the day on or by which a
payment is due to be made is not a Business Day, that payment shall be done on
or by the next succeeding business Day.
ARTICLE II
Use of Proceeds
Section 2.01. Use of Proceeds. The proceeds of the Loan shall be used
to finance Borrower's and NFE's required capital contributions to OnSite
Technology, L.L.C., and for Borrower's general working capital purposes.
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ARTICLE III
The Loan
Section 3.01. Amount. On the terms and subject to the conditions of
this Agreement, the Lender agrees to lend to Borrower and Borrower agrees to
borrow from the Lender the Loan, in the amount of Three Million Dollars
($3,000,000) on the Closing Date.
Section 3.02. Borrowing Procedure.
(a) Procedure for Term Loan Borrowing. Borrower shall give the
Lender irrevocable notice (which notice must be received by the Lender prior to
10:00 A.M., Tulsa, Oklahoma time, two Business Days prior to the Closing Date)
requesting that the Lender make the Loan on the Closing Date. Not later than
12:00 Noon, Tulsa, Oklahoma time, on the Closing Date, the Lender shall
transfer the amount of the Loan to the account of the Borrower specified in
such notice in immediately available funds.
Section 3.03. Interest. Subject to Sections 3.04 and 8.11, Borrower
agrees to pay interest in arrears in respect of the outstanding principal
amount of the Loan from the Closing Date until the Maturity Date at a rate of
six and three tenths percent (6.3%) per annum (the "Loan Interest Rate").
Interest shall be computed on the last Business Day of each calendar month, and
if unpaid pursuant to the provisions of Section 3.06 hereof, added to the
outstanding principal amount of the Loan.
Section 3.04. Additional Interest. Without limiting the remedies
available to the Lender under this Agreement or otherwise (and subject to the
provisions of Section 8.11), if Borrower fails to make any payment of principal
or interest (including interest payable under this Section) on or before its
due date as specified in this Agreement (whether at stated maturity or upon
prematuring by acceleration or otherwise) or, if not so specified, as notified
by the Lender to Borrower, Borrower shall pay, by way of liquidated damages, in
respect of the amount of such payment due and unpaid, interest at the rate of
twelve per cent (12%) per annum from the date any such payment became due until
the date of actual payment (as well after as before judgment). Such interest
shall be payable on demand.
Section 3.05. Repayment. On or before the last Business Day of each
calendar month, commencing two months after the Closing Date, Borrower hereby
unconditionally promises to pay the Lender 40% of the Net Cash Flow realized by
NFE in the immediately preceding calendar month, as specified in an Officer's
Certificate delivered by Borrower to Lender in respect of such calendar month.
Such payments shall be applied, first, to pay any accrued but unpaid interest,
second, to pay any other amounts due to Lender under this Agreement, and third,
to reduce the outstanding principal amount of the Loan. In any case, Borrower
hereby unconditionally promises to pay the Lender any remaining outstanding
amount of the Loan on the Maturity Date, including any accrued and unpaid
interest thereon.
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Section 3.06. Prepayment.
(a) Borrower may at any time and from time to time prepay the
Loan, in whole or in part, without premium or penalty, upon irrevocable notice
delivered to the Lender at least one Business Day prior thereto, which notice
shall specify the date and amount of prepayment. If any such notice is given,
the amount specified in such notice, together with accrued interest thereon,
shall be due and payable on the date specified therein.
(b) Amounts paid or prepaid on account of the Loan may not be
reborrowed.
ARTICLE IV
Representations and Warranties
Section 4.01. Representations. Borrower represents and warrants to
the Lender that, on the Closing Date:
(a) it is duly organized and validly existing under the laws
of the jurisdiction of its organization, has all requisite power to carry on its
business as presently conducted and to enter into, and perform its obligations
under this Agreement, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required;
(b) the Agreement has been, duly authorized and executed by
Borrower and constitutes a valid and legally binding obligation of Borrower,
and is enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law;
(c) the Agreement (a) does not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the organizational documents of Borrower or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
credit agreement or other instrument binding upon Borrower or its assets, or
give rise to a right thereunder to require any payment to be made by Borrower,
and (d) will not result in the creation or imposition of any lien on any asset
of Borrower; and
(d) Borrower is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
agreements and other instruments binding on it or its property, except where
the failure to do so will not reasonably be expected to result in a Material
Adverse Effect. No Default has occurred and is continuing.
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ARTICLE V
Conditions Precedent
The obligations of the Lender to make the Loan hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 8.09):
(a) The Lender shall have received this Agreement, executed
and delivered by a duly authorized officer of Borrower;
(b) The Lender shall have received a Warrant Agreement in the
form of Exhibit A, duly executed and delivered on the closing date by a duly
authorized officer of Borrower;
(c) The Lender shall have received the executed note (the
"Note"), substantially in the form of Exhibit B.
ARTICLE VI
Covenants
Until the principal of and interest on the Loan and all other amounts
payable hereunder shall have been paid in full, Borrower covenants and agrees
with Lender that:
Section 6.01. Notices of Material Events. Borrower will furnish to the
Lender prompt written notice of the following:
(a) the occurrence of any Event of Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against or
affecting Borrower that, if adversely determined, could reasonably be expected
to result in a Material Adverse Effect; and
(c) any other development that results in, or could
reasonably be expected to result in, a Material Adverse Effect.
Section 6.02. Existence; Conduct of Business. Borrower will do or
cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and the rights, licenses, permits, privileges
and franchises material to the conduct of its business.
Section 6.03. Payment of Obligations. Borrower will pay its
obligations, before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (b) Borrower has set aside on its books adequate
reserves with respect thereto in accordance with GAAP and (c) the failure to
make payment pending such contest could not reasonably be expected to result in
a Material Adverse Effect.
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Section 6.04. Compliance with Laws. Borrower will comply with all
laws, rules, regulations and orders of any Governmental Authority applicable to
it or its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
Section 6.05. Use of Proceeds. The proceeds of the Loan will be used
only for the purposes contemplated in Section 2.01. No part of the proceeds of
the Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Federal Reserve Board,
including Regulations G, T, U and X.
Section 6.06. Negative Pledge. Borrower agrees that during the term of
this Agreement, and as long as any obligation that is subject to this Agreement
and the Note is outstanding, Borrower will not and will not permit NFE, to
enter into or suffer to exist any agreement permitting or creating a security
interest, lien or other encumbrance over any of its ownership interest in
OnSite Technology, L.L.C.
ARTICLE VII
Events of Defaults
Section 7.01. Acceleration after Default. If any Event of Default
occurs and is continuing (whether it is voluntary or involuntary, or results
from operation of law or otherwise), the Lender may, by notice to Borrower,
declare the Note, all interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the Note, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest, notice of intent to accelerate or further
notice of any kind, all of which are hereby expressly waived by Borrower.
Section 7.02. Events of Default. It is an Event of Default if:
(a) Borrower shall fail to pay any principal of the Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise and such failure
shall continue unremedied for a period of five days;
(b) Borrower shall fail to pay any interest on the Loan
or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of five
days;
(c) any representation or warranty made or deemed made by
or on behalf of Borrower in or in connection with the Loan or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with the Agreement shall prove to have been incorrect in any
material respect when made or deemed made,
(d) the Borrower shall fail to observe or perform any
covenant, condition or agreement contained in Section 6.01(a), 6.02 or 6.06,
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(e) Borrower shall fail to observe or perform any
covenant, condition or agreement contained in the Agreement (other than those
specified in clause (a), (b), (c) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from the
Lender.
(f) Borrower shall commence any case, proceeding or other
action (A) under any law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or
(B) seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets, or
Borrower shall make a general assignment for the benefit of its creditors; or
(ii) there shall be commenced against Borrower any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against Borrower any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or similar
process against all or any substantial part of its assets which results in the
entry of an order for any such relief which shall not have been vacated,
discharged, or stayed or bonded pending appeal within 60 days from the entry
thereof, or (iv) Borrower shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in clause (i), (ii), or (iii) above; or (v) Borrower shall generally not
or shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) Borrower fails to pay any of its debt (other than the
Loan) with an aggregate principal amount in excess of the equivalent of Fifty
Thousand Dollars ($50,000) or to perform any of its material obligations under
any agreement pursuant to which there is outstanding any debt of Borrower with
an aggregate principal amount in excess of the equivalent of Fifty Thousand
Dollars ($50,000) and such failure continues for more than any applicable
period of grace; or
(h) The Warrant Agreement or any provision thereof shall
cease to be in full force or effect as to Borrower, or Borrower of any Person
acting by or on behalf of Borrower shall deny or disaffirm Borrower's
obligations under the Warrant Agreement, or Borrower shall default in the due
performance or observance of any term, covenant or agreement on its part to be
performed or observed pursuant to the Warrant Agreement;
Section 7.03. Bankruptcy. If Borrower is liquidated or declared
bankrupt, the Loan, all interest accrued on it and any other amounts payable
under this Agreement will become immediately due and payable without any
presentment, demand, protest or notice of any kind, all of which Borrower
waives.
Section 7.04. Notice of Events. If any Event of Default happens,
Borrower shall immediately notify the Lender by facsimile specifying the nature
of such Event of Default and any steps Borrower is taking to remedy it.
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ARTICLE VIII
Miscellaneous
Section 8.01. Notices. Any notice, request or other communication to
be given or made under this Agreement shall be in writing. Subject to Section
7.04, the notice, request or other communication may be delivered by hand or
facsimile, to the party's address specified below or at such other address as
such party notifies to the other party from time to time and will be effective
upon receipt.
For Borrower:
Environmental Safeguards, Inc.
0000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx Xxxxxxx
Telephone: (000) 000-0000
Telefax: (000) 000-0000
For the Lender:
c/o Parker Drilling Company
0 Xxxx Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Section 8.02. Expenses. Borrower shall pay to the Lender:
(a) the fees and expenses of the Lender's counsel
incurred in connection with:
(i) the preparation of the Loan by the Lender
provided for under this Agreement which shall
not exceed $5,000;
(ii) the preparation and/or review, execution and,
where appropriate, registration of the
Agreement and any other documents related to
them;
(iii) the giving of any legal opinions required by
the Lender under this Agreement;
(iv) the occurrence of any Event of Default; and
(b) the costs and expenses incurred by the Lender in
relation to the enforcement or protection or attempted enforcement or
protection of its fights under this Agreement or the
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Warrant Agreement, or the exercise of its rights or powers consequent upon or
arising out of the occurrence of any Event of Default including reasonable
legal and other professional consultants' fees on a full indemnity basis.
Section 8.03. Termination of Agreement. This Agreement shall continue
in force until all monies payable under it have been fully paid in accordance
with its provisions.
Section 8.04. Governing Law.
(a) This Agreement is governed by, and shall be construed
in accordance with and governed by the law of the State of Oklahoma.
(b) The Borrower hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
courts of the State of Oklahoma sitting in Tulsa County and of the United
States District Court of the district thereof, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Oklahoma State Court or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Lender may otherwise have to bring
any action or proceeding relating to this Agreement against Borrower or its
properties in the courts of any jurisdiction.
(c) Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement which
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
Section 8.05. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION.
Section 8.06. Successors and assigns. This Agreement binds and
benefits the respective successors and assigns of its parties. However Borrower
may not assign or delegate any of its rights or obligations under this
Agreement.
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Section 8.07. Amendment. Any amendment of any provision of this
Agreement shall be in writing and signed by the parties.
Section 8.08. Counterparts, Integration. This Agreement may be
executed in several counterparts, each of which is an original, but all of
which together constitute one and the same Agreement. This Agreement, together
with the Note and Warrant Agreement, constitute the entire contract among the
parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, and as written, relating to the subject
matter hereof
Section 8.09. Remedies and Waivers. No failure or delay by the Lender
in exercising any power, remedy, discretion, authority or other rights under
this Agreement shall waive or impair that or any other right of the Lender. No
single or partial exercise of such a right shall preclude its additional or
future exercise. No such waiver shall waive any other right under this
Agreement. All waivers or consents given under this Agreement shall be in
writing.
Section 8.10. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof, and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 8.11. Interest. It is the intention of the parties hereto that
the Lender shall conform strictly to usury laws applicable to it, if any.
Accordingly, if the transactions with the Lender contemplated hereby would be
usurious under applicable law, if any, then, in that event, notwithstanding
anything to the contrary in the Note, this Agreement or any other agreement
entered into in connection with this Agreement or the Note, it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, taken, reserved, charged or
received by the Lender, under the Note (including, without limitation, the
Warrant Agreement), this Agreement or under any other agreement entered into in
connection with this Agreement or the Note (including, without limitation, the
Warrant Agreement) shall under no circumstances exceed the maximum amount
allowed by such applicable law and any excess shall be canceled automatically
and, if theretofore paid, shall at the option of the Lender, be applied on the
principal amount of the obligations owed to the Lender, by Borrower or refunded
by the Lender, to Borrower, and (ii) in the event that the maturity of any Note
or other obligation payable to the Lender, is accelerated or in the event of
any permitted prepayment, then such consideration that constitutes interest
under law applicable to the Lender, may never include more than the maximum
amount allowed by such applicable law and excess interest, if any, to the
Lender, provided for in this Agreement or otherwise shall be canceled
automatically as of the date of such acceleration or prepayment and, if
theretofore paid, shall, at the option of the Lender, be credited by Lender on
the principal amount of the obligations owed to the Lender by Borrower or
refunded by the Lender, to Borrower.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed in their respective names as of the date first above written.
ENVIRONMENTAL SAFEGUARDS, INC.
BORROWER: By: /s/ XXXXX XXXXXXX
-----------------------------
Name: Xx. Xxxxx Xxxxxxx
Title: President
LENDER: CASUARINA, LTD.
By: /s/ I.E. XXXXXXX, JR.
----------------------------
Name: I.E. Xxxxxxx, Jr.
Title: President
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EXHIBIT A
[FORM OF WARRANT AGREEMENT]
A-1
17
WARRANT AGREEMENT
BETWEEN
ENVIRONMENTAL SAFEGUARDS, INC.
and
XXXXXX DRILLING COMPANY
Dated as of December ___, 1996
18
WARRANT AGREEMENT dated as of December ___, 1996, between
Environmental Safeguards, Inc., a Nevada corporation (the "Company"), and
Xxxxxx Drilling Company ("Xxxxxx" and, together with any transferee of Warrants
or Warrant Shares, the "Warrant Holders(s)").
WHEREAS, Casuarina, Ltd.("Casuarina", a Bermuda corporation and wholly
owned subsidiary of Xxxxxx) and the Company have entered into a certain Credit
Agreement and Note (the "Credit Agreement") dated December ___, 1996, pursuant
to which Casuarina has agreed to loan $3,000,000 to the Company (the "Loan");
and
WHEREAS, the Company proposes to issue to Xxxxxx as partial
consideration for Casuarina's agreement to act as Lender pursuant to the Credit
Agreement, common stock purchase warrants (the "Original Warrants", the "June
1997 Warrants" and the "December 1997 Warrants" (as defined below), and
collectively, the "Warrants"), of the Company's Common Stock, par value $.001
per share (the "Common Stock"), each Warrant entitling the holder thereof to
purchase one share of Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein and in the Agreement set forth and for other good and
valuable consideration, the parties hereto agree as follows:
1. ISSUANCE OF WARRANTS: FORM OF WARRANT. The Company will issue
and deliver 250,000 Warrants (the "Original Warrants") to Xxxxxx, or to an
affiliate thereof designated by Xxxxxx, on the Closing Date referred to in the
Credit Agreement. The form of warrant certificate for the Original Warrants is
attached hereto as Exhibit A. If the Loan is not repaid in full, inclusive of
any and all interest and other amounts due under the Credit Agreement, by June
30, 1997, then the Company shall issue and deliver an additional 50,000
Warrants (the "June 1997 Warrants") to Xxxxxx, or to an affiliate designated by
Xxxxxx, on June 30, 1997. The form of warrant certificate for the June 1997
Warrants is attached hereto as Exhibit B. Furthermore, if the Loan is not
repaid in full, inclusive of any and all interest and other amounts due under
the Credit Agreement, by December 31, 1997, then the Company shall issue and
deliver an additional 50,000 Warrants (the "December 1997 Warrants") to Xxxxxx,
or to an affiliate designated by Xxxxxx, on December 31, 1997. The form of
warrant certificate for the December 1997 Warrants is attached hereto as
Exhibit C.
The Warrants shall be executed on behalf of the Company by the manual
or facsimile signature of the Chairman of the Board or the President of the
Company, under its corporate seal, affixed or in facsimile, attested by the
manual or facsimile signature of the Secretary of the Company. A Warrant
bearing the manual or facsimile signature of individuals who were at any time
the proper officers of the Company shall bind the Company notwithstanding that
such individuals or any of them shall have ceased to hold such offices prior to
the delivery of such Warrant or did not hold such offices on the date of this
Warrant Agreement.
Warrants shall be dated as of the date of execution thereof by the
Company either upon initial issuance or upon division, exchange, substitution
or transfer.
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The demand and the piggy-back registration rights set forth in Section
16 hereof may be exercised at any time during the term of the Warrants.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants as follows:
(a) EXISTENCE. The Company is a corporation, duly
organized and validly existing under the laws of the State of Nevada,
and is authorized to do business and is in good standing as a foreign
corporation in every jurisdiction in which it owns or leases real
property or in which the nature of its business requires it to be so
qualified, except where the failure to so qualify, individually or in
the aggregate, could not reasonably be expected to have a material
adverse effect.
(b) POWER AND AUTHORITY. The Company has all requisite
corporate power and authority, and has taken all corporate action
necessary, to execute, deliver and perform this Warrant Agreement, to
grant, issue and deliver this Warrant and to authorize and reserve for
issuance and, upon payment from time to time of the Exercise Price, to
issue and deliver the shares of Common Stock or other securities
issuable upon exercise of the Warrant. This Warrant Agreement has been
duly executed and delivered by the Company.
(c) RESERVATION, ISSUANCE AND DELIVERY OF COMMON STOCK.
There have been reserved for issuance, and the Company shall at all
times keep reserved, out of the authorized and unissued shares of
Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Warrant, and
such shares, when issued upon receipt of payment therefor in
accordance with the terms of the Warrant and of this Warrant
Agreement, will be legally and validly issued, fully paid and
nonassessable and will be free of any preemptive rights of
shareholders or any restrictions not otherwise set forth in this
Warrant Agreement.
(d) EXECUTION AND DELIVERY. Neither the execution or
delivery of this Warrant Agreement nor the consummation of the
transactions herein contemplated does or will result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, Credit
Agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the property
or assets of the Company is subject, nor will such action result in
any violation of any provision of the Certificate of Incorporation or
Bylaws of the Company or any statute or any order, rule or regulation
or any court or governmental agency or body having jurisdiction over
the Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with any
such court or governmental agency or body is required for the issuance
and sale of the Warrant or the consummation by the Company of the
transactions contemplated by this Warrant Agreement.
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(e) VALID AND BINDING OBLIGATIONS. This Warrant Agreement and all
related documents, when duly executed and delivered, will be legal, valid and
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to any applicable bankruptcy, insolvency or other
laws of general application affecting creditors' rights and judicial decisions
interpreting any of the foregoing.
(f) LIABILITIES, LITIGATION AND RESTRICTIONS. Except for the
litigation and liabilities disclosed in connection with the Credit Agreement,
the Company has no liabilities, direct or contingent, which may reasonably be
expected to result in a material adverse effect. Except as disclosed to Xxxxxx
in writing, no litigation or other action of any nature affecting the Company
is pending before any governmental authority or, to the knowledge of the
Company, threatened against or affecting the Company, which might reasonably be
expected to result in a material adverse effect. To the knowledge of the
Company, no unusual or unduly burdensome restriction, restraint or hazard
exists by contract, law, governmental regulation or otherwise relative to the
business or material properties of the Company, other than such as relate
generally to persons engaged in the business activities similar to those
conducted by the Company.
(g) AUTHORIZATION AND CONSENTS. No authorization, consent,
approval, exemption, franchise, permit or license of, or filing with, any
governmental authority or other person is required to authorize, or is
otherwise required in connection with, the valid execution and delivery by the
Company of this Warrant Agreement and all related documents and the performance
by the Company of its obligations hereunder, except for requisite actions under
federal and state securities laws related to the registration of the Warrant
Shares as contemplated by this Warrant Agreement.
(h) COMPLIANCE WITH LAWS, RULES, REGULATIONS AND ORDERS. To the
knowledge of the Company, neither the business nor any of the activities of the
Company, as presently conducted, violates any requirement of law the result of
which violation could reasonably be expected to result in a material adverse
effect on the Company. The Company possesses all licenses, approvals,
registrations, permits and other authorizations necessary to enable it to carry
on its business in all material respects as now conducted; all such licenses,
approvals, registrations, permits and other authorizations are in full force and
effect; and the Company has no reason to believe that it will be unable to
obtain the renewal of any such licenses, approvals, registrations, permits and
other authorizations; however, this representation does not extend to such
necessary licenses, approvals, registrations, permits and authorizations of On-
Site Technology, L.L.C.
(i) NO MATERIAL MISSTATEMENTS. No information, statement,
certificate, document, exhibit or report prepared by or at the direction or
with the supervision of the Company and furnished to Xxxxxx in connection with
the negotiation and preparation of this Warrant Agreement or of the Credit
Agreement and all related documents contains any material misstatements of fact
or omits to state a material fact necessary to make the statements contained
therein not misleading as of the date made or deemed made.
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3. CONDITIONS TO PURCHASE. Xxxxxx'x obligations hereunder shall
be subject to satisfaction of the following conditions on the Closing Date
referred to in the Credit Agreement:
(a) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Warrant
Agreement and the Warrants and all other legal matters relating to
this Warrant Agreement, the Warrants and the transactions contemplated
hereby shall be satisfactory in all respects to Xxxxxx X. Xxxxxx,
counsel for Xxxxxx, in his reasonable judgment, and the Company shall
have furnished to such counsel all documents and information that he
may reasonably request to enable him to pass judgment upon such
matters.
(b) There shall have been duly tendered to Xxxxxx or upon
the order of Xxxxxx a certificate or certificates representing the
Warrants.
(c) Xxxxxxx, Xxxxx & Xxxxxxxxx, counsel for the Company,
shall have furnished to Xxxxxx their written opinion, dated the
Closing Date, in form and substance satisfactory to Xxxxxx, covering
the matters set forth in subparagraphs 2(a) through 2(g). Opinions by
counsel for the Company covering the matters set forth in
subparagraphs 2(f) and 2(g) shall be made to the best of such
counsel's knowledge after reasonable inquiry.
(d) As required by paragraph 18, Xxxxxx and counsel for
Xxxxxx shall have received reimbursement for all reasonable fees and
expenses for which invoices have been presented.
4. REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company (the "Warrant Register") as they are
issued. The Warrants shall be registered initially in such names and such
denominations as Xxxxxx has specified to the Company.
5. EXCHANGE OF WARRANT CERTIFICATES. Subject to any restriction
upon transfer set forth in this Warrant Agreement, each Warrant certificate may
be exchanged at the option of the Warrant Holder thereof for another
certificate or certificates of different denominations entitling the Warrant
Holder thereof to purchase upon surrender to the Company or its duly authorized
agent a like aggregate number of Warrant Shares as the certificate or
certificates surrendered then entitle such Warrant Holder to purchase. Any
Warrant Holder desiring to exchange a Warrant certificate or certificates shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, the certificate or certificates to be so exchanged.
Thereupon, the Company shall execute and deliver to the person entitled thereto
a new Warrant certificate or certificates, as the case may be, as so requested.
Any Warrant issued upon exchange, transfer or partial exercise of the Warrants
shall be the valid obligation of the Company, evidencing the same generic
rights and entitled to the same generic benefits under this Warrant Agreement
as the Warrants surrendered for such exchange, transfer or exercise.
6. TRANSFER OF WARRANTS. Subject to the provisions of Section 14
hereof, the Warrants shall be transferrable only on the Warrant Register upon
delivery to the Company of the
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Warrant certificate or certificates duly endorsed by the Warrant Holder or by
his duly authorized attorney-in-fact or legal representative, or accompanied by
proper evidence of succession, assignment or authority to transfer. In all
cases of transfer by an attorney-in-fact, the original power of attorney, duly
approved, or an official copy thereof, duly certified, shall be deposited with
the Company. In case of transfer by executors, administrators, guardians or
other legal representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited with the Company in its
discretion. Upon any registration of transfer, the Company shall deliver a new
Warrant or Warrants to the person entitled thereto.
7. TERM OF WARRANTS; EXERCISE OF WARRANTS.
(a) The Warrants granted hereunder become exercisable
upon the date of their issuance by the Company. Dates of issuance for
the Warrants are specified in Section 1 hereof. Once issued, each
Warrant entitles the Warrant Holder thereof to purchase one share of
Common Stock at any time prior to 5:00 P.M., Tulsa time, on December
31, 1998 (the "Expiration Date") at a purchase price of $2.50 per
share, subject to adjustment in accordance with Section 12 hereof (the
"Exercise Price").
(b) The Exercise Price and the number of shares issuable
upon exercise of Warrants are subject to adjustment upon the
occurrence of certain events, pursuant to the provisions of Section 12
of this Warrant Agreement. Subject to the provisions of this Warrant
Agreement, each Warrant Holder shall have the right, which may be
exercised as expressed in such Warrants, to purchase from the Company
(and the Company shall issue and sell to such Warrant Holder) the
number of fully paid and nonassessable shares of Common Stock
specified in such Warrants, upon surrender to the Company, or its duly
authorized agent, of such Warrants, with the purchase form on the
reverse thereof duly filled in and signed, and upon payment to the
Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 12 of this Warrant Agreement or upon a net
exercise pursuant to this subsection of this Warrant Agreement, for
the number of shares in respect of which such Warrants are then
exercised. The Warrant Holder may (i) pay the Exercise Price in cash,
by certified or official bank check payable to the order of the
Company, or by the surrender to the Company securities of the Company
having a Market Price equal to the Exercise Price or by the surrender
to the Company indebtedness owed by the Company pursuant to the Credit
Agreement (in which case the Company will accept such specified unpaid
principal amount in full payment, as if such payment had been made in
cash or (ii) make an exercise of Warrants for "Net Warrant Shares."
The number of Net Warrant Shares will be determined as described by
the following formula: Net Warrant Shares = [WS x (MP-EP)]/MP. "WS" is
the number of Warrant Shares issuable upon exercise of the Warrants or
portion of Warrants in question. "MP" is the Market Price of the
Common Stock on the last trading day preceding the date of the request
to exercise the Warrants. "Market Price" shall mean the then current
market price per share of Common Stock, as determined in paragraph
12.1(e). "EP" shall mean the Exercise Price.
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Upon such surrender of Warrants, and payment of the Exercise Price,
with cash or securities, or upon a net exercise as aforesaid, the Company at
its expense shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of the Warrant Holder and in such name or names as
the Warrant Holder may designate, a certificate or certificates for the number
of full shares of Common Stock so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 12 of this Warrant Agreement, in
respect of any fraction of a share of such stock otherwise issuable upon such
surrender. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such shares as of the date of the surrender of such
Warrants and payment of the Exercise Price or receipt of shares by net exercise
as aforesaid. The rights of purchase represented by the Warrants shall be
exercisable, at the election of the Warrant Holders thereof, either in full or
from time to time in part and, in the event that any Warrant is exercised in
respect of less than all of the shares purchasable on such exercise at any time
prior to the Expiration Date, a new certificate evidencing the remaining
Warrant or Warrants will be issued.
8. COMPLIANCE WITH GOVERNMENT REGULATIONS. The Company covenants
that if any share of Common Stock required to be reserved for purposes of
exercise or conversion of Warrants require, under any Federal or state law or
applicable governing rule or regulation of any national securities exchange,
registration with or approval of any governmental authority, or listing on any
such national securities exchange, before such shares may be issued upon
exercise, the Company will use its best efforts to cause such shares to be duly
registered, approved or listed on the relevant national securities exchange, as
the case may be.
9. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of Warrant Shares upon the
exercise of Warrants and any securities issued pursuant to Section 12 hereof;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any Warrants or certificates for Warrant Shares and any securities
issued pursuant to Section 12 hereof in a name other than that of the Warrant
Holder of such Warrants.
10. MUTILATED OR MISSING WARRANTS. Upon receipt by the Company of
an affidavit signed by an officer of Xxxxxx evidencing the mutilation, loss,
theft or destruction of any of the Warrants, the Company shall issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and in substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and representing an equivalent right or
interest.
11. RESERVATION OF WARRANT SHARES; PURCHASE AND CANCELLATION OF
WARRANTS. The Company shall at all times reserve, out of the authorized and
unissued shares of Common Stock, a number of shares sufficient to provide for
the exercise of the rights of purchase represented by the Warrants, and the
transfer agent for the Common Stock ("Transfer Agent") and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times until the Expiration Date to reserve such
number of authorized and unissued shares as shall be requisite for such
purpose. The Company will keep a copy of this Warrant Agreement on file
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with the Transfer Agent and with every subsequent transfer agent for any shares
of the Company's capital stock issuable upon the exercise of the rights of
purchase represented by the Warrants. The Company will supply the Transfer
Agent and any such subsequent transfer agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be issuable as provided by Section 13 of this
Warrant Agreement. The Company will furnish to the Transfer Agent and any such
subsequent transfer agent a copy of all notices of adjustments, and
certificates related thereto, transmitted to each Warrant Holder pursuant to
Section 12.3 hereof. All warrants surrendered in the exercise of the rights
thereby evidenced shall be cancelled, and such cancelled Warrants shall
constitute sufficient evidence of the number of shares of stock which have been
issued upon the exercise of such Warrants (subject to adjustment as herein
provided). No shares of stock shall be subject to reservation in respect of the
Warrants subsequent to the Expiration Date except to the extent necessary to
comply with the terms of this Warrant Agreement.
12. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The
number and kind of securities purchasable upon the exercise of each Warrant and
the Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as hereafter defined.
12.1. MECHANICAL ADJUSTMENTS. The number of Warrant Shares
purchasable upon the exercise of each Warrant and the Warrant Price
shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend
in shares of Common Stock or make a distribution in shares of
Common Stock, (ii) subdivide its outstanding shares of Common
Stock into a larger number of shares of Common Stock, (iii)
combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other
securities of the Company (including any such reclassification
in connection with a consolidation or merger in which the
company is the surviving corporation), the number of Warrant
Shares purchasable upon exercise of each Warrant immediately
prior thereto shall be adjusted so that the Warrant 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 regardless of whether the
Warrants are exercisable at the time of the happening of such
event or at the time of any record date with respect thereto.
An adjustment made pursuant to this paragraph (a) shall become
effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights,
options or warrants to holders of its outstanding Common Stock
(other than rights, options or warrants issued to an officer,
director or employee of the Company as compensation,
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regardless of whether such officer, director or employee is a
holder of the Company's Common Stock immediately prior to such
issue), without any charge to such holders, entitling them to
subscribe for or purchase shares of Common Stock at a price
per share which is lower, at the record date mentioned below,
than the then current market price per share of Common Stock
(as determined in accordance with paragraph (e) below), then
in each such case the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of each Warrant by a
fraction, of which the numerator shall be the number of shares
of Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of additional
shares of Common Stock offered for subscription or purchase,
and of which the denominator shall be the number of shares of
Common Stock outstanding on the date of issuance of such
rights, options or warrants plus the number of shares which
the aggregate offering price of the total number of shares of
common stock so offered would purchase at the then current
market price per share of Common Stock. Such adjustment shall
be made whenever such rights, options or warrants are issued,
and shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
rights, options or warrants.
(c) In case the Company shall distribute to
holders of its shares of Common Stock evidences of its
indebtedness or assets (including cash dividends or other cash
distributions) or rights, options or warrants, or convertible
or exchangeable securities containing the right to subscribe
for or purchase shares of Common Stock (excluding those
referred to in paragraph (b) above), then in each case the
number of Warrant Shares thereafter purchasable upon the
exercise of each Warrant shall be determined by multiplying
the number of Warrant Shares theretofore purchasable upon the
exercise of each Warrant by a fraction, of which the numerator
shall be the then current market price per share of Common
Stock (as determined in accordance with paragraph (e) below)
on the date of such distribution, and of which the denominator
shall be the then current market price per share of Common
Stock, less the then fair value (as determined in good faith
by the Board of Directors of the Company, whose determination
shall be conclusive, absent manifest error) of the portion of
the assets or evidences of indebtedness so distributed or of
such subscription rights, options or warrants, or of such
convertible or exchangeable securities applicable to one share
of Common Stock. Such adjustment shall be made whenever any
such distribution is made, and shall become effective on the
date of distribution retroactive to the record date for the
determination of stockholders entitled to receive such
distribution.
In the event of distribution, by the Company to
holders of its shares of Common Stock, of stock of a
subsidiary or securities convertible into or exercisable for
such stock, then in lieu of an adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant,
the Warrant Holder, upon
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the exercise thereof at any time after such distribution,
shall be entitled to receive from the Company, such subsidiary
or both, as the Company shall determine, the stock or other
securities to which such Warrant Holder would have been
entitled if such Warrant Holder had exercised such Warrant
immediately prior thereto regardless of whether the Warrants
are exercisable at such time, all subject to further
adjustment as provided in this subsection 12.1; provided,
however, that no adjustment in respect of dividends or
interest on such stock or other securities shall be made
during the term of a Warrant or upon the exercise of a
Warrant.
(d) In case the Company shall sell and issue
shares of Common Stock (other than (i) the shares of Common
Stock being offered for sale pursuant to the filing on Form
SB-2 made by the Company with the Securities and Exchange
Commission dated October 29, 1996; and (ii) the shares of
Common Stock offered by the Company in a private placement
memorandum dated September 18, 1996, provided that no more
than 2,000,000 shares of Common Stock are offered or sold in
such private placement) or rights, options, warrants or
convertible securities containing the right to subscribe for
or purchase shares of Common Stock (excluding shares, rights,
options, warrants or convertible securities issued in any of
the transactions described in paragraphs (a), (b) or (c)
above) at a price per share of Common Stock (determined, in
the case of such rights, options, warrants or convertible
securities, by dividing (w) the total of the amount received
or receivable by the Company (determined as provided below) in
consideration of the sale and issuance of such rights,
options, warrants or convertible securities, by (x) the total
number of shares of Common Stock covered by such rights,
options, warrants or convertible securities) lower than 75% of
the then current market price per share of Common Stock (as
determined in accordance with paragraph (e) below) in effect
immediately prior to such sale and issuance, then the number
of Warrant Shares thereafter purchasable upon the exercise of
the Warrants shall be determined by multiplying the number of
Warrant Shares theretofore purchasable upon exercise by a
fraction, of which the numerator shall be the number of shares
of Common Stock outstanding on the date of issuance of such
shares, rights, options, warrants or convertible securities
plus the number of additional shares of Common Stock sold or
subject to issuance pursuant to such rights, options, warrants
or convertible securities, and of which the denominator shall
be the number of shares of Common Stock outstanding on the
date of issuance of such shares, rights, options, warrants or
convertible securities plus the number of shares of Common
Stock which the aggregate consideration received or receivable
(determined as provided below) for such sale or issuance would
purchase at 75% of the then current market price. Such
adjustment shall be made successively whenever such an
issuance is made. For the purposes of such adjustments, the
consideration received or receivable by the Company for
rights, options, warrants or convertible securities shall be
deemed to be the consideration received by the Company for
such rights, options, warrants or convertible securities, plus
the consideration or premiums stated in such rights, options,
warrants or convertible
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securities to be paid for the shares of Common Stock covered
thereby. In case the Company shall sell and issue shares of
Common Stock, or rights, options, warrants or convertible
securities containing the right to subscribe for or purchase
shares of Common Stock, for a consideration consisting, in
whole or in part, of property other than cash or its
equivalent, then in determining the "price per share of Common
Stock" and the "consideration received or receivable by the
Company" for purposes of the first sentence of this paragraph
(d), the Board of Directors shall determine, in its
discretion, the fair value of said property, and such
determination, if made in good faith, shall be binding upon
all Holders.
(e) For the purpose of any computation under
paragraphs (b), (c) and (d) of this Section, the current
market price per share of Common Stock at any date shall be
the average of the daily closing prices of the Company's
Common Stock, as reported on the National Association of
Securities Dealers OTC Bulletin Board, for 30 consecutive
trading days commencing 45 trading days before the date of
such computation. The closing price for each day shall be the
last such reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each
case on the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading
or, if not listed or admitted to trading, the average of the
closing bid and asked prices of the Common Stock in the
over-the-counter market as reported by NASDAQ or any
comparable system. In the absence of one or more such
quotations, the Board of Directors of the Company shall
determine the current market price, in good faith, on the
basis of such quotations as it considers appropriate.
(f) In any case in which this Section 12.1 shall
require that any adjustment in the number of Warrant Shares be
made effective as of immediately after a record date for a
specified event, the Company may elect to defer until the
occurrence of the event the issuing to the holder of any
Warrant exercised after that record date the shares of Common
Stock and other securities of the Company, if any, issuable
upon the exercise of any Warrant over and above the shares of
Common Stock and other securities of the Company, if any,
issuable upon the exercise of any Warrant prior to such
adjustment; provided, however, that the Company shall deliver
to such Warrant Holder a due xxxx or other appropriate
instrument evidencing the holder's right to receive such
additional shares or securities upon the occurrence of the
event requiring such adjustment.
(g) No adjustment in the number of Warrant Shares
purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent
(1%) in the number of Warrant Shares purchasable upon the
exercise of each Warrant; provided, however, that any
adjustments which by reason of this paragraph (g) are not
required to be made shall be carried forward
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and taken into account in any subsequent adjustment. All
calculations shall be made to the nearest one-thousandth of a
share.
(h) Whenever the number of Warrant Shares
purchasable upon the exercise of each Warrant is adjusted, as
herein provided, the Warrant Price payable upon the exercise
of each Warrant shall be adjusted by multiplying such Warrant
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 such Warrant immediately
prior to such adjustment, and of which the denominator shall
be the number of Warrant Shares purchasable immediately
thereafter.
(i) No adjustment in the number of Warrant Shares
purchasable upon the exercise of each Warrant need be made
under paragraphs (b), (c) and (d) if the Company issues or
distributes to each Warrant Holder the rights, options,
warrants, or convertible or exchangeable securities, or
evidences of indebtedness or assets referred to in those
paragraphs which each Warrant Holder would have been entitled
to receive had the Warrants been exercised prior to the
happening of such event or the record date with respect
thereto, regardless of whether the Warrants are exercisable at
the time of the happening of such event or at the time of any
record date with respect thereto. No adjustment need be made
for a change in the par value of the Warrant Shares.
(j) For the purpose of this Section 12.1, the
terms "shares of Common Stock" shall mean (i) the class of
stock designated as the Common Stock of the Company at the
date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such
shares consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value. In
the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Warrant Holders shall
become entitled to purchase any securities of the Company
other than shares of Common Stock, thereafter the number of
such other securities so purchasable upon exercise of each
Warrant and the Exercise Price of such securities shall be
subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions
with respect to the Warrant Shares contained in paragraphs (a)
through (i), inclusive, above, and the provisions of Section 7
and Section 12.2 through 12.5, inclusive, with respect to the
Warrant Shares, shall apply on like terms to any such other
securities.
(k) Upon the expiration of any rights, options,
warrants or conversion or exchange privileges, if any thereof
shall not have been exercised, the Warrant Price and the
number of shares of Common Stock purchasable upon the exercise
of each warrant shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been
originally adjusted (or had the original adjustment not been
required, as the case may be) as if (A) the only shares of
Common Stock
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so issued were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such rights, options,
warrants or conversion or exchange rights and (B) such shares
of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange
rights whether or not exercised; provided, however, that no
such readjustment shall have the effect of increasing the
Warrant Price or decreasing the number of Warrant Shares by an
amount in excess of the amount of the adjustment initially
made with respect to the issuance, sale or grant of such
rights, options, warrants or conversion or exchange rights.
12.2. VOLUNTARY ADJUSTMENT BY THE COMPANY. The Company may, at its
option, at any time during the term of the Warrants, reduce the then current
Exercise Price to any amount determined appropriate by the Board of Directors
of the Company.
12.3. NOTICE OF ADJUSTMENT. When the number of Warrant Shares
purchasable upon the exercise of each Warrant or the Exercise Price of such
Warrant Shares is adjusted, as herein provided, the Company shall promptly mail
by first class, postage prepaid, to each Warrant Holder notice of such
adjustment or adjustments and a certificate of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of
Warrant Shares purchasable upon the exercise of each Warrant and the Exercise
Price of such Warrant Shares after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made. Such certificate, absent
manifest error, shall be conclusive evidence of the correctness of such
adjustment.
12.4. PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the Company
into another person or in case of any sale, transfer or lease to another person
of all of or substantially all the assets of the Company, the Company or such
successor or purchaser, as the case may be, shall execute with each Warrant
Holder an agreement that each Warrant Holder shall have the right thereafter
upon payment of the Exercise Price in effect immediately prior to such action
to purchase upon exercise of each Warrant the kind and amount of shares and
other securities and property which the Warrant Holder would have owned or have
been entitled to receive after the happening of such consolidation, merger,
sale, transfer or lease had such Warrant been exercised immediately prior to
such action regardless of whether the Warrants are exercisable at the time of
such action. Such agreement shall provide for adjustments, which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 12. The provisions of this Section 12.4 shall similarly apply to
successive consolidations, mergers, sales, transfers or leases.
12.5. STATEMENT ON WARRANTS. Even though Warrants heretofore or
hereafter issued may continue to express the same price and number and kind of
shares as are stated in the Warrants initially issuable pursuant to this
Warrant Agreement, the parties understand and agree that such
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Warrants will represent rights consistent with any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants.
13. FRACTIONAL INTERESTS. The Company shall not be required to
issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be presented for exercise in full at the same time by the same
Warrant Holder, the number of full Warrant Shares which shall be issuable upon
the exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a Warrant Share would, except for the provisions of this Section
13, be issuable on the exercise of any Warrant (or specified portion, thereof),
the Company shall pay an amount in cash equal to the closing price for one
share of the Common Stock on the trading day immediately preceding the date the
Warrant is presented for exercise, multiplied by such fraction.
14. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Xxxxxx
represents and warrants to the Company that it will not dispose of the Warrant
or Warrant Shares except pursuant to (i) an effective registration statement,
or (ii) an applicable exemption from registration under the Securities Act of
1933 (the "Act"). In connection with any sale by Xxxxxx pursuant to clause (ii)
of the preceding sentence, it shall furnish to the Company an opinion of
counsel reasonably satisfactory to the Company to the effect that such
exemption from registration is available in connection with such sale.
15. CERTIFICATE TO BEAR LEGENDS. The Warrants shall be subject to
a stop-transfer order and the certificate or certificates therefor shall bear
the following legend by which each Warrant Holder shall be bound:
"THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES
OF COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN APPLICABLE
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933.
ANY SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE
MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH EXEMPTION
FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE."
The Warrant Shares or other securities issued upon exercise of the
Warrants shall, unless issued pursuant to an effective registration statement,
be subject to a stop-transfer order and the certificate or certificates
evidencing any such Warrant Shares or securities shall bear the following
legend by which the Warrant Holder thereof shall be bound:
"THE SHARES OR OTHER SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i)
AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
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APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933. ANY SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING
SENTENCE MUST BE ACCOMPANIED BY AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE."
16. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. The Company covenants and
agrees with Xxxxxx and any subsequent holders of the Warrants and/or
Warrant Shares that within sixty (60) days after receipt of a written
request from holders of 60% in interest of the Warrants and/or Warrant
Shares issued pursuant to this Agreement (the "Initiating Holders"),
the Company shall file a registration statement (and use its best
efforts to cause such registration statement to become effective under
the Act) with respect to the offering and sale or other disposition of
any number of Warrants and/or Warrant Shares (including any securities
received by the Warrant Holders pursuant to Section 12 hereof) (all
such securities, the "Registrable Securities"). The Company shall
continuously maintain the effectiveness of such registration statement
for the lesser of (i) 180 days after the effective date of the
registration statement or (ii) the consummation of the distribution by
the holders of the Registrable Securities covered by such registration
statement (the "Termination Date"); provided, however, that if at the
Termination Date, the Offered Securities are covered by a registration
statement which also covers other securities and which is required to
remain in effect beyond the Termination Date, the Company shall
maintain in effect such registration statement as it relates to the
Registrable Securities for so long as such registration statement (or
any subsequent registration statement) remains or is required to
remain in effect for any of such other securities. The Company shall
not be required to comply with more than two requests for registration
pursuant to this Section 16(a). The Company shall not be required to
comply with a request for registration pursuant to this Section 16(a)
made after December 31, 2000, provided, however, that if a request is
properly and timely made on or prior to December 31, 2000 pursuant to
this Section 16(a), the Company shall be required to comply with such
request even though the registration statement does not or cannot
become effective until after December 31, 2000 or the effectiveness of
such registration statement is otherwise required under this Section
16(a) to be maintained beyond December 31, 2000. All expenses of such
registration shall be borne by the Company, except that underwriting
commissions and expenses attributable to the Registrable Securities
will be borne by such Warrant Holders requesting that such securities
be offered.
If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section
16(a). The right of any other holder to registration pursuant to this Section
16(a) shall be conditioned upon such holder's participation in such
underwriting and the inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually
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agreed by a majority in interest of the Initiating Holders and such holder with
respect to such participation and inclusion) to the extent provided herein. A
holder may elect to include in such underwriting all or a part of the
Registrable Securities he holds. If other holders of registration rights
request inclusion in any registration statement pursuant to this Section 16(a),
such holders may be included in the underwriting conditioned on their
acceptance of the further applicable provisions of this Section 16(a). The
Company shall (together with other holders proposed to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with a representative of the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders. If the representative advises the Initiating Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, then securities held by holders other than the Initiating Holders
shall be excluded from such registration to the extent so required by such
limitation.
(b) PIGGY-BACK REGISTRATION RIGHTS. The Company covenants
and agrees with Xxxxxx and any subsequent holders of the Warrants
and/or Warrant Shares that, in the event the Company proposes to file
a registration statement under the Act prior to December 31, 2000 with
respect to the firm commitment offering of Common Stock (other than in
connection with an exchange offer or a registration statement on Form
S-4 or S-8 or other similar registration statements not available to
register securities so requested to be included), the Company shall in
each case give written notice of such proposed filing to (i) the
holders of the Warrant Shares and (ii) if on or before the Expiration
Date, the Warrant Holders, in each case at least 30 days before the
earlier of the anticipated or the actual effective date of the
registration statement and at least ten days before the initial filing
of such registration statement and such notice shall offer to such
Warrant Holders the opportunity to include in such registration
statement such number of Warrants and/or Warrant Shares (and any
securities received by the Warrant Holders pursuant to Section 12
hereof) (the "Piggy-back Securities", and together with the securities
referred to in Section 16(a) above, the "Registrable Securities") as
they may request. Warrant Holders desiring inclusion of Piggy-back
Securities in such registration statement shall so inform the Company
by written notice, given within 10 days of the giving of such notice
by the Company in accordance with the provisions of Section 18 hereof.
The Company shall permit, or shall cause the managing underwriter of a
proposed offering to permit, the holders of Piggy-back Securities
requested to be included in the registration to include such
securities in the proposed offering on the same terms and conditions
as applicable to securities of the Company. Notwithstanding the
foregoing, if any such managing underwriter shall advise the Company
in writing that, in its opinion, the distribution of securities by
holders thereof, including all or a portion of the Piggy-back
Securities, requested to be included in the registration concurrently
with the securities being registered by the Company would materially
adversely affect the distribution of such securities by the Company
for its own account, then the holders of such Warrants and/or Warrant
Shares shall delay their offering and sale of Piggy-back Securities
(or the portions thereof so designated by such managing underwriter)
for such period, not to exceed 90 days, as the managing underwriter
shall request, provided that if any other securities are included in
such registration statement for the account of any person other than
the Company and the
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holders of Warrants and/or Warrant Shares, then such securities, including the
Warrants and/or Warrant Shares, so included shall be apportioned among holders
who wish to be included therein pro rata according to amounts so requested to
be included by each such person. No such delay shall in any event impair any
right granted hereunder to make subsequent requests for inclusion pursuant to
the terms of this Section 16(b). The Company shall continuously maintain in
effect any registration statement with respect to which the Piggy-back
Securities have been requested to be included (and so included) for a period of
not less than (i) 180 days after the effectiveness of such registration
statement or (ii) the consummation of the distribution by the Warrant Holders
of the Piggy-back Securities ("Piggy-back Termination Date"); provided,
however, that if at the Piggy-back Termination Date the Piggy-back Securities
are covered by a registration statement which is, or is required to remain, in
effect beyond the Piggy-back Termination Date, the Company shall maintain in
effect the registration statement as it relates to the Piggy-back Securities
for so long as such registration statement remains or is required to remain in
effect for any of such other securities. All expenses of such registration
shall be borne by the Company, except that underwriting commissions and
expenses attributable to the Piggy-back Securities and fees and distributions
of counsel (if any) to the Warrant Holders requesting that the Piggy- back
Securities be offered will be borne by such Warrant Holders.
(c) OTHER MATTERS. In connection with the registration
of Registrable Securities in accordance with Paragraph (a) or (b) above, the
Company agrees to:
(i) Use its best efforts to register or qualify the
Registrable Securities for offer or sale under state securities or
Blue Sky laws of such jurisdictions in which the holders of such
Warrants and/or Warrant Shares shall designate; provided, that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not so qualified at the time of the request
to register the Registrable Securities or to take any action which
would subject it to general service of process in any jurisdiction
where it is not so subject at the time of the request to register the
Registrable Securities, and use its best efforts to do any and all
other acts and things which may be necessary or advisable to enable
the Warrant Holders to consummate the sale, transfer or other
disposition of such securities in any jurisdiction;
(ii) Enter into indemnity and contribution agreements,
each in customary form, with each underwriter, if any, and each holder
of Registrable Securities included in such registration statement;
and, if requested, enter into an underwriting agreement containing
customary representations, warranties, covenants, allocation of
expenses, and customary closing conditions including, but not limited
to, opinions of counsel, accountants' cold comfort letters, engineers'
reports and environmental reports, with any underwriter who
participates in the offering of Registrable Securities;
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(iii) Pay all expenses in connection with the registration
of the Warrants and/or Warrant Shares under the Act and compliance
with the provisions of clause (i) above, except to the extent
otherwise provided in Sections 16(a) and 16(b); and
(iv) List the Warrant Shares on each securities exchange on
which the Common Stock is listed.
In connection with the registration of Registrable Securities in
accordance with Paragraph (b) above, the Warrant Holders agree to enter into an
underwriting agreement containing customary representations, warranties,
covenants, allocation of expenses (not otherwise inconsistent with this Warrant
Agreement), and customary closing conditions, with any underwriter who
participates in the offering of Registrable Securities.
(d) RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND
WARRANT HOLDERS, The Company agrees (i) not to effect any public sale
or distribution of any securities similar to the Registrable
Securities or any securities convertible into or exchangeable or
exercisable for such securities (or any option or other right for such
securities), except for any securities that may be issued to the
Warrant Holders pursuant Section 12 hereof, during the 15-day period
prior to, and during the 60-day period beginning on the effective date
of any registration statement under which the Registrable Securities
are registered in accordance with Section 16(a) (other than as part of
such registration).
(e) RULE 144, With a view to making available to Warrant
Holders the benefits of certain rules of the Securities and Exchange
Commission (the "Commission") that may permit the sale of Registrable
Securities to the public without registration, the Company hereby
covenants and agrees to use its best efforts to: (i) file in a timely
manner all reports and other documents required to be filed by it
under the Act and the Securities Exchange Act of 1934 and the rules
and regulations adopted by the Commission thereunder necessary to
permit sales under Rule 144 under the Act, and the Company will take
such further action to the extent required from time to time to enable
Warrant Holders to sell Registrable Securities (whether or not any
such securities have been the subject of a demand or piggy-back request
under Section 16 hereof) without registration under the Act within the
limitation of the exemptions provided by (a) Rule 144 under the Act,
as such Rule may be amended from time to time, or (b) any similar rule
or regulation hereafter adopted by the Commission and (ii) promptly
furnish each Warrant Holder a copy of all such reports and documents.
Upon the request of a Warrant Holder, the Company will deliver to such
Warrant Holder a written statement as to whether it has complied with
such requirements.
(f) OTHER REGISTRATION RIGHTS. The Company hereby agrees
that it shall not issue any additional registration rights with
respect to shares of its Common Stock, warrants to purchase its Common
Stock or securities convertible into its Common Stock, which are
inconsistent with the provisions of this Agreement.
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17. NO RIGHTS AS STOCKHOLDERS; NOTICE TO WARRANT HOLDERS. Nothing
contained in this Warrant Agreement or in any of the Warrants shall be
construed as conferring upon the Warrant Holders or their transferees the right
to vote or to receive dividends or to consent or to receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company. If, however, at any time prior to the expiration
of the Warrants and prior to their exercise, any of the following events shall
occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the holders of its shares of Common
Stock; or
(b) the Company shall offer to the holders of its shares
of Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any
right to subscribe to or purchase any thereof; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger, sale,
transfer or lease or all or substantially all of its property, assets,
and business as an entirety) shall be proposed,
then in any one or more of said events the Company shall (a) give notice in
writing of such event to the Warrant Holders as provided in Section 21 hereof
and (b) if there are more than 100 Warrant Holders, cause notice of such event
to be published once in The Wall Street Journal (national edition), such giving
of notice and publication to be completed at least 15 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution, or
subscription rights, or for the determination of stockholders entitled to vote
on such proposed dissolution, liquidation or winding up. Such notice shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to publish, mail or receive such notice or any defect therein
or in the publication or mailing thereof shall not affect the validity of any
action taken in connection with such dividend, distribution or subscription
rights, or such proposed dissolution, liquidation or winding up.
18. EXPENSES. The Company shall pay all legal and other reasonable
out-of-pocket expenses of the Warrant Holders and of their counsel, subject to
a limit of $5,000.
19. RIGHTS TO INFORMATION. The Company, in accordance with Section
16(c) above, will provide to all Warrant Holders and to all holders of Warrant
Shares, on a timely basis, copies of all documents and reports filed with the
Commission and annual and quarterly financial statements, prepared in
accordance with GAAP; and additionally will provide upon reasonable request any
other pertinent financial information.
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20. NOTICES. Any notice pursuant to this Warrant Agreement to be
given or made by the holder of any Warrant or Warrant Shares to or on the
Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed as follows:
Environmental Safeguards, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Notices or demands authorized by this Warrant Agreement to be given or made to
or on the Warrant Holder of any Warrant or Warrant Shares shall be sufficiently
given or made (except as otherwise provided in this Warrant Agreement) if sent
by registered mail, return receipt requested, postage prepaid, addressed to
such Warrant Holder at the address of such Warrant Holder as shown on the
Warrant Register or the Common Stock Register, as the case may be.
21. GOVERNING LAW. THIS WARRANT AGREEMENT, THE WARRANTS AND ALL
RELATED DOCUMENTS SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
22. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Holders may from time to time supplement or amend this Warrant Agreement in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein,
or to make any other provisions in regard to matters or questions arising
hereunder which the Company and the Warrant Holder may deem necessary or
desirable and which shall not be inconsistent with the provisions of the
Warrants and which shall not adversely affect the interests of the Warrant
Holders. Any amendment to this Warrant Agreement may be effected with the
consent of Warrant Holders of at least a majority of the total then outstanding
Warrants (for this purpose Warrant Shares shall be deemed to be Warrants in the
proportion that Warrant Shares are then issuable upon the exercise of
Warrants); provided that, any amendment which shall have the effect of
materially adversely affecting the interests of any Warrant Holder shall not be
effective with respect to such Warrant Holder if such Warrant Holder shall not
have consented thereto.
23. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties of the Company and all covenants and agreements
made herein shall survive the execution and delivery of this Warrant Agreement
and the Warrants and shall remain in force and effect until the Expiration
Date.
24. SUCCESSORS. All representations and warranties of the Company
and all covenants and agreements of this Warrant Agreement by or for the
benefit of the Company or the Warrant Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder.
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25. MERGER OR CONSOLIDATION OF THE COMPANY. So long as this
Warrant Agreement remains in effect, the Company will not merge or consolidate
with or into, or sell, transfer or lease all or substantially all of its
property to, any other corporation unless the successor or purchasing
corporation, as the case may be (if not the Company), shall expressly assume,
by supplemental agreement executed and delivered to the Warrant Holders, the
due and punctual performance and observance of each and every covenant and
condition of this Warrant Agreement to be performed and observed by the
Company.
26. BENEFITS OF THIS WARRANT AGREEMENT. Nothing in this Warrant
Agreement shall be construed to give to any person or corporation other than
the Company and the Warrant Holders, any legal or equitable right, remedy or
claim under this Warrant Agreement, but this Warrant Agreement shall be for the
sole and exclusive benefit of the Company and the holders of the Warrants and
Warrant Shares.
27. CAPTIONS. The captions of the sections and subsections of this
Warrant Agreement have been inserted for convenience and shall have no
substantive effect.
28. COUNTERPARTS. This Warrant Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed on the day, month and year first above written.
ENVIRONMENTAL SAFEGUARDS, INC.
By:
--------------------------
Name:
Title:
(CORPORATE SEAL)
ATTEST:
----------------
Name:
Title:
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EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK OR
OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933. ANY
SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS AND COMMON STOCK UNDERLYING SUCH
WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
Certificate No. 1 250,000 Warrants
VOID AFTER 5:00 P.M. TULSA TIME
ON DECEMBER 31, 1998
ENVIRONMENTAL SAFEGUARDS, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received, Xxxxxx Drilling Company, the
registered holder hereof or registered assigns (the "Warrant Holder"), is the
owner of the number of Warrants set forth above, each of which entitles the
owner thereof to purchase at any time from December _, 1996, until 5:00 P.M.,
Tulsa time, on December 31, 1998, one fully paid and nonassessable share of the
Common Stock (subject to adjustment), par value $.001 per share (the "Common
Stock"), of Environmental Safeguards, Inc., a Nevada corporation (the
"Company"), at the purchase price of $2.50 per share, subject to adjustment as
described in the Warrant Agreement referred to below (the "Exercise Price").
The Warrant Holder may pay the Exercise Price in cash, or by certified or
official bank check or by reduction of the outstanding principal amount under
the Credit Agreement, or make a net exercise for Net Warrant Shares as
described in the Warrant Agreement.
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of an agreement dated December
___, 1996 (the "Warrant Agreement") between the Company and Xxxxxx Drilling
Company which Warrant Agreement is hereby incorporated herein by reference and
made a part hereof and to which Warrant Agreement reference is hereby made for
a full description of the rights, limitations of rights, obligations, duties
and immunities hereunder of the Company and the Warrant Holders of the Warrant
Certificates. Copies
1
39
of the Warrant Agreement are on file at the principal office of the Company.
The Warrant Holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Warrant Holder hereof as the owner for all purposes.
The Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the Warrant Holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled to such Warrant Holder
to purchase. If this Warrant Certificate shall be exercised in part, the
Warrant Holder shall be entitled to receive upon surrender hereof, another
Warrant Certificate or Warrant Certificates for the number of whole Warrants
not exercised.
No fractional shares of Common Stock will be issued upon the exercise of
any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Warrant Agreement.
Neither the Warrants nor the Warrant Certificate entitles any Warrant
Holder hereof to any of the rights of a stockholder of the Company.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, Environmental Safeguards, Inc. has caused the
signature of its President and Secretary to be signed hereon and its corporate
seal to be placed hereon.
ENVIRONMENTAL SAFEGUARDS, INC.
By:
---------------------------
ATTEST:
--------------------
2
40
EXHIBIT B
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK OR
OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933. ANY
SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS AND COMMON STOCK UNDERLYING SUCH
WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
Certificate No. 2 50,000 Warrants
VOID AFTER 5:00 P.M. TULSA TIME
ON DECEMBER 31, 1998
ENVIRONMENTAL SAFEGUARDS, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received, Xxxxxx Drilling Company, the
registered holder hereof or registered assigns (the "Warrant Holder"), is the
owner of the number of Warrants set forth above, each of which entitles the
owner thereof to purchase at any time from 5:00 P.M., Tulsa time, on June 30,
1997, until 5:00 P.M., Tulsa time, on December 31, 1998, one fully paid and
nonassessable share of the Common Stock (subject to adjustment), par value
$.001 per share (the "Common Stock"), of Environmental Safeguards, Inc., a
Nevada corporation (the "Company"), at the purchase price of $2.50 per share,
subject to adjustment as described in the Warrant Agreement referred to below
(the "Exercise Price"). The Warrant Holder may pay the Exercise Price in cash,
or by certified or official bank check or by reduction of the outstanding
principal amount under the Credit Agreement, or make a net exercise for Net
Warrant Shares as described in the Warrant Agreement.
This Warrant Certificate is subject to, and entitled to the benefits
of, all of the terms, provisions and conditions of an agreement dated December
__, 1996 (the "Warrant Agreement") between the Company and Xxxxxx Drilling
Company which Warrant Agreement is hereby incorporated herein by reference and
made a part hereof and to which Warrant Agreement reference is hereby made for
a full description of the rights, limitations of rights, obligations, duties
and
3
41
immunities hereunder of the Company and the Warrant Holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
The Warrant Holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Warrant Holder hereof as the owner for all purposes.
The Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the Warrant Holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled to such Warrant Holder
to purchase. If this Warrant Certificate shall be exercised in part, the
Warrant Holder shall be entitled to receive upon surrender hereof, another
Warrant Certificate or Warrant Certificates for the number of whole Warrants
not exercised.
No fractional shares of Common Stock will be issued upon the exercise of
any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Warrant Agreement.
Neither the Warrants nor the Warrant Certificate entitles any Warrant
Holder hereof to any of the rights of a stockholder of the Company.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, Environmental Safeguards, Inc. has caused the
signature of its President and Secretary to be signed hereon and its corporate
seal to be placed hereon.
ENVIRONMENTAL SAFEGUARDS, INC.
By:
---------------------------
ATTEST:
-------------------------
4
42
EXHIBIT C
FORM OF WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK OR
OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT, OR (ii) AN
APPLICABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933. ANY
SALE PURSUANT TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS AND COMMON STOCK UNDERLYING SUCH
WARRANTS REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
Certificate No. 3 50,000 Warrants
VOID AFTER 5:00 P.M. TULSA TIME
ON DECEMBER 31, 1998
ENVIRONMENTAL SAFEGUARDS, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received, Xxxxxx Drilling Company, the
registered holder hereof or registered assigns (the "Warrant Holder"), is the
owner of the number of Warrants set forth above, each of which entitles the
owner thereof to purchase at any time from 5:00 P.M., Tulsa time, on December
31, 1997, until 5:00 P.M., Tulsa time, on December 31, 1998, one fully paid and
nonassessable share of the Common Stock (subject to adjustment), par value
$.001 per share (the "Common Stock"), of Environmental Safeguards, Inc., a
Nevada corporation (the "Company"), at the purchase price of $2.50 per share,
subject to adjustment as described in the Warrant Agreement referred to below
(the "Exercise Price"). The Warrant Holder may pay the Exercise Price in cash,
or by certified or official bank check or by reduction of the outstanding
principal amount under the Credit Agreement, or make a net exercise for Net
Warrant Shares as described in the Warrant Agreement.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of an agreement dated December ___,
1996 (the "Warrant Agreement") between the Company and Xxxxxx Drilling Company
which Warrant Agreement is hereby incorporated herein by reference and made a
part hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
5
43
immunities hereunder of the Company and the Warrant Holders of the Warrant
Certificates. Copies of the Warrant Agreement are on file at the principal
office of the Company.
The Warrant Holder hereof may be treated by the Company and all other
persons dealing with this Warrant Certificate as the absolute owner hereof for
any purpose and as the person entitled to exercise the rights represented
hereby, or to the transfer hereof on the books of the Company, any notice to
the contrary notwithstanding, and until such transfer on such books, the
Company may treat the Warrant Holder hereof as the owner for all purposes.
The Warrant Certificate, with or without other Warrant Certificates,
upon surrender at the principal office of the Company, may be exchanged for
another Warrant Certificate or Warrant Certificates of like tenor and date
evidencing Warrants entitling the Warrant Holder to purchase a like aggregate
number of shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled to such Warrant Holder
to purchase. If this Warrant Certificate shall be exercised in part, the
Warrant Holder shall be entitled to receive upon surrender hereof, another
Warrant Certificate or Warrant Certificates for the number of whole Warrants
not exercised.
No fractional shares of Common Stock will be issued upon the exercise of
any Warrant or Warrants evidenced hereby, but in lieu thereof a cash payment
will be made, as provided in the Warrant Agreement.
Neither the Warrants nor the Warrant Certificate entitles any Warrant
Holder hereof to any of the rights of a stockholder of the Company.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF OKLAHOMA,
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, Environmental Safeguards, Inc. has caused the
signature of its President and Secretary to be signed hereon and its corporate
seal to be placed hereon.
ENVIRONMENTAL SAFEGUARDS, INC.
By:
--------------------------
ATTEST:
-------------------------
6
44
EXHIBIT B
TERM NOTE
$3,000,000 December 19, 1996
FOR VALUE RECEIVED, ENVIRONMENTAL SAFEGUARDS, INC., a Nevada
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of CASUARINA,
LTD. ("Lender") on or before the Maturity Date the principal amount of Three
Million Dollars ($3,000,000) or such lesser amount of unrepaid Term Loan under
the Credit Agreement (as defined below) as is outstanding on the Maturity Date.
The principal amount hereof shall be repaid by the Borrower in accordance with
the Credit Agreement.
The Borrower promises to pay interest on the unpaid principal amount
hereof in full, at a rate, and on such occasions, as provided in the Credit
Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Lender at 0 Xxxx Xxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000 (or
at such other location as Lender may designate) in same day funds. Each
principal payment or prepayment and the resulting principal balance hereof
shall be recorded by the Lender and, prior to any transfer hereof, endorsed on
the grid attached hereto which is a part of this Note.
This Note is the Term Note referred to in and is entitled to the
benefits of the Credit Agreement dated as of December 19, 1996 (the "Credit
Agreement"), among the Borrower and Lender, which Credit Agreement, among other
things, contains provisions for acceleration of the maturities hereof upon the
happening of certain stated events. Terms used herein which are defined in the
Credit Agreement shall have the meanings specified in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF OKLAHOMA.
ENVIRONMENTAL SAFEGUARDS, INC.
By:
-------------------------
Name: Xx. Xxxxx Xxxxxxx
Title: Chairman
B-1
45
TERM NOTE
Principal
Payment Unpaid Principal
Date or Prepayment Balance
---- ------------- ----------------
B-2
