Attached files
EXHIBIT 10.10
CORPORATE ADVISOR I DIRECTOR/CONSULTING ENGAGEMENT AGREEMENT
AGREEMENT made as of this 15th day of April, 2011 by and between South
Uintah Gas Properties, Inc. (the "Company"), address: 7609 Ralston Road, Arvada,
Colorado 80002, and Gary Herick/Arrowhead Consulting, LLC (the "Consultant"),
address: ___________________________.
WHEREAS, the Company desires professional guidance and advice regarding
public company and energy and desires Consultant to act as a Board Member,
Secretary and Finance Director; and
WHEREAS, Consultant has expertise in the area of public companies and
energy companies and extensive financing background; and is willing to act as an
advisor, consultant, Secretary, Finance Director and Board Member to the Company
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
herein contained, the parties hereto agree as follows:
1. DUTIES, SCOPE OF AGREEMENT, AND RELATIONSHIP OF THE PARTIES
(a) The Company hereby agrees to retain Consultant as Board Member,
Secretary, Finance Director, and Consultant agrees to act as Board Member and
Finance Director for the Company during the term of this Agreement. All parties
understand that Consultant has other business interests, but will devote his
primary business time, attention and energies to the business of the Company
under this Agreement. In addition, the company understands that consultant's
efforts on behalf of his other interests are the sole and separate property of
Consultant.
(b) The services rendered by consultant to the company pursuant to this
Agreement shall be as an independent contractor, and this Agreement does not
make Consultant the employee, agent, or legal representative of the Company for
any purpose whatsoever, including without limitation, participation in any
benefits or privileges given or extended by the Company to its employees. No
right or authority is granted to Consultant to assume or to create any
obligation or responsibility, express or implied, on behalf of or in the name of
the company, except as may be set forth herein. The company shall not withhold
for Consultant any federal or state taxes from the amounts to be paid to
consultant hereunder, and Consultant agrees that he will pay all taxes due on
such amounts.
(i) Consultant will be responsible for managing the various funding
activities of the Company and will have such authorities as would normally
accrue to the Corporate Secretary and Finance Director.
(c) Consultant agrees to make available to Company its services as a Board
Member on an as needed basis on reasonable request.
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2. COMPENSATION
(a) The Company will pay the Consultant $10,000 per month beginning June 1,
2011 and 1,000,000 warrants as a retainer to perform Secretary and Finance
Director services as described in Attachment A.
(b) Other forms of compensation for additional services may occur depending
on the nature of a specific engagement and only upon the mutual agreement of
both parties.
3. EXPENSES
The Company shall pay the Consultant a monthly vehicle allowance of $500
and reimburse Consultant for all pre-approved reasonable and necessary expenses
incurred by it in carrying out its duties under this Agreement. Consultant shall
submit related receipts and documentation with his request for reimbursement.
4. RENEWAL; TERMINATION
(a) This Agreement shall continue in effect for 1 year until terminated by
the parties. Either the Company or the Consultant may terminate this Agreement
by giving the other party thirty (30) days written notice. However, termination
of Consultant by the Company shall not relieve the Company of its financial
obligations to Consultant as defined herein. Death or the Consultant's inability
to continue performing his duties under the Contract will relieve the Company of
its financial obligations to Consultant as defined herein.
(b) Subject to the continuing obligations of Consultant under Section 5
below, either party may terminate this Agreement at any time if the other party
shall fail to fulfill any material obligation under this Agreement and shall not
have cured the breach within 10 days after having received notice thereof.
(c) Termination or expiration of this Agreement shall not extinguish any
rights of compensation that shall accrue prior to the termination.
5. CONFIDENTIAL INFORMATION
a. "Confidential Information," as used in this Section 5, means information
that is not generally known and that is proprietary to the Company or that the
Company is obligated to treat as proprietary. This information includes, without
limitation:
i. Trade secret information about the Company and its products;
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ii. Information concerning the Company's business as the Company has
conducted it since the Company's incorporation or as it may
conduct it in the future; and
iii. Information concerning any of the Company's past, current, or
possible future products, including (without limitation)
information about the Company's research, development,
engineering, purchasing, manufacturing, accounting, marketing,
selling, or leasing efforts.
b. Any information that Consultant reasonably considers Confidential
Information, or that the Company treats as Confidential Information, will be
presumed to be Confidential Information (whether Consultant or others originated
it and regardless of how it obtained it).
c. Except as required in its duties to the Company, Consultant will never,
either during or after the term of this Agreement, use or disclose confidential
Information to any person not authorized by the Company to receive it for a
period of two (2) years after termination of this Agreement. However,
information in the possession of Consultant as of the Effective Date of this
Agreement, information that is public or becomes public, or information that is
required to be disclosed by a bona fide legal authority is exempt from this
Agreement.
d. If this Agreement is terminated, Consultant will promptly turn over to
the Company all records and any compositions, articles, devices, apparatus and
other items that disclose, describe, or embody Confidential Information,
including all copies, reproductions, and specimens of the Confidential
Information in its possession, regardless of who prepared them. The rights of
the Company set forth in this Section 5 are in addition to any rights of the
Company with respect to protection of trade secrets or confidential information
arising out of the common or statutory laws of the State of Colorado or any
other state or any country wherein Consultant may from time to time perform
services pursuant to this Agreement. This Section 5 shall survive the
termination or expiration of this Agreement.
e. Consultant agrees to enter into a 16(b) Plan for any sales of shares of
company, subject to the Plans approval by the company in writing.
6. FALSE OR MISLEADING INFORMATION
The Company warrants that it will provide Consultant with accurate
financial, corporate, and other data required by Consultant and necessary for
full disclosure of all facts relevant to any efforts required of Consultant
under this Agreement. Such information shall be furnished promptly upon request.
If the Company fails to provide such information, or if any information provided
by the Company to Consultant shall be false or misleading, or if the Company
omits or fails to provide or withholds relevant material information to
Consultant or to any professionals engaged pursuant to paragraph 5(d) above,
then, in such event, any and all fees paid hereunder will be retained by
Consultant as liquidated damages and this Agreement shall be null and void and
Consultant shall have no further obligation hereunder. Further, by execution of
this Agreement, the Company hereby indemnifies Consultant from any and all costs
for expenses or
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damages incurred, and holds Consultant harmless from any and all claims and/or
actions that may arise out of providing false or misleading information or by
omitting relevant information in connection with the efforts required of
Consultant under this Agreement.
7. CONSULTANT'S BEST EFFORTS AND NO WARRANTY OF INFORMATION
Consultant shall use its best efforts to use reliable information and
scientific techniques associated with the oil and gas business. However,
Consultant makes no warranty as to the completeness or interpretation of such
information, nor does Consultant warrant the information with regard to errors
or omissions contained therein. Any reserve estimates, price calculations,
price forecasts, exploration potential predictions or similar information
provided by Consultant are, or may well be, estimates only and should not be
considered predictions of actual results.
8. MISCELLANEOUS
a. SUCCESSORS AND ASSIGNS. This Agreement is binding on and ensures to the
benefit of the Company. Company cannot assign this Agreement without
Consultant's written agreement.
b. MODIFICATION. This Agreement may be modified or amended only by a
writing signed by both the Company and Consultant.
c. GOVERNING LAW. The laws of Colorado will govern the validity,
construction, and performance of this Agreement. Any legal proceeding related to
this Agreement will be brought in an appropriate Colorado court, and both the
Company and Consultant hereby consent to the exclusive jurisdiction of that
court for this purpose.
d. CONSTRUCTION. Wherever possible, each prov1s1on of this Agreement will
be interpreted so that it is valid under the applicable law. If any provision of
this Agreement is to any extent invalid under the applicable law, that provision
will still be effective, to the extent it remains valid. The remainder of this
Agreement also will continue to be valid, and the entire Agreement will continue
to be valid in other jurisdictions.
e. WAIVERS. No failure or delay by either the Company or Consultant in
exercising any right or remedy under this Agreement will waive any provision of
the Agreement, nor will any single or partial exercise by either the Company or
Consultant of any right or remedy under this Agreement preclude either of them
from otherwise or further exercising these rights or remedies, or any other
rights or remedies granted by any law or any related document.
f. CAPTIONS. The headings in this Agreement are for convenience only and do
not affect this Agreement's interpretation.
g. ENTIRE AGREEMENT. This Agreement supersedes all previous and
contemporaneous oral negotiations, commitments, writings, and understandings
between the parties concerning the matters in this Agreement.
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h. NOTICES. All notices and other communications required or permitted
under this Agreement shall be in writing and sent by registered first-class
mail, postage prepaid, and shall be effective five days after mailing to the
addresses stated below. These addresses may be changed at any time by like
notice.
In the case of the Company:
South Uintah Gas Properties, Inc.
7609 Ralston Road
Arvada, Colorado 80002
In the case of Consultant:
Gary Herick
i. INDEMNIFICATION. Company agrees to indemnify and hold harmless
Consultant from any and all claims, actions, liabilities, costs, expenses,
including attorney fees arising from claims made against Consultant in
connection with Company's possession or use of advice, guidance, materials,
information, data or other services provided by Consultant under this Agreement.
j. CONFLICTS OF INTEREST. Company acknowledges that Consultant is engaged
in the business of providing consulting for other companies in the oil and gas
industry within the North America and Asia. In the event Consultant is requested
by Company to provide advice and guidance on or about issues that may create a
potential conflict of interest between Consultants' s other business matters and
the Company's operations, Consultant shall not be required by Company to render
advice and guidance on such an area. Company and Consultant shall use their best
efforts to notify each other of any potential conflicts of interests. In any
event, Consultant's general knowledge that Company plans to engage, or is
actively engaging, related to the oil and gas industry shall in no way preclude
Consultant, or Consultant's business entities, from providing services or
consulting for other oil and gas companies within the same area.
lN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
"The Company" "The Consultant"
South Uintah Gas Properties, Inc. Gary Herick - Arrowhead
Consulting, LLC
/s/ George E. Harris /s/ Gary Herick
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EXHIBIT A
TERM SHEET
INITIAL WARRANTS AWARD
WARRANTS. Subject to the Vesting Requirements of the Consulting Agreement
and this Exhibit, Company will grant Consultant warrants to purchase up to
1,000,000 shares of Company common stock at $2.00 per share in the form attached
hereto as Exhibit B.
1. Subject to continuation of consultation through the vesting date, the
warrants will be vested in Consultant and exercisable with respect to 1/3
of the shares on the first anniversary of the grant date, an additional 1/3
of the shares on the second anniversary of the grant date and the final 1/3
on the third anniversary of the grant date.
2. Warrants will have a term expiring 2 years after vesting date.
3. Company agrees to register the Company's shares subject to the warrant on
Form S-8 or such other registration form as may be available, and the
company shall provide a cashless exercise procedure.
4. Consultant agrees to execute a lock-up agreement if any financing for the
Company so requires.
EXHIBIT B
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK UNDERLYING THIS WARRANT WERE
ISSUED IN A REGISTERED TRANSACTION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED,
THE "SECURITIES ACT"). THE SECURITIES EVIDENCED HEREBY MAY NOT BE TRANSFERRED
WITHOUT (1) AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH TRANSFER
MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND ALL
APPLICABLE STATE SECURITIES LAW; OR (II) SUCH REGISTRATION.
WARRANT TO PURCHASE SHARES OF COMMON STOCK
SOUTH UINTAH GAS PROPERTIES, INC.
THIS WARRANT TO PURCHASE SHARES OF COMMON STOCK ("WARRANT") CERTIFIES THAT, for
value received, ______________ (the "Holder"), is entitled to subscribe for and
purchase from SOUTH UINTAH GAS PROPERTIES, INC. (the "Company"), a corporation
organized and existing under the laws of the State of Colorado, at the Warrant
Exercise Price specified below during the exercise period specified below to and
including ________ THOUSAND (___,000) fully paid and non-assessable shares of
Common Stock of the Company (the "Common Stock").
The exercise price of this Warrant (subject to adjustment as noted below)
shall be ____ dollars ($__.00) per share (The "Warrant Exercise Price").
This Warrant is subject to the following provisions, terms, and conditions:
1. EXERCISE. This Warrant or any portion thereof shall be exercisable at any
time from and after the date hereof, by the registered Holder by payment of
the Warrant Exercise Price per share in immediately available funds to the
Company at any time prior to 5:00 p.m., Colorado time, on August __, 2013
("the Expiration Date").
Holder may assign portions of the warrants hereunder by Letter of Instruction to
the Company prior to issue.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants that:
(a) the Company has all requisite power and authority to execute, issue
and perform this Warrant and to issue the Common Stock;
(b) this Warrant has been duly authorized by all necessary corporate
action, has been duly executed and delivered, and is a legal and
binding obligation of the Company;
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(c) all shares which may be issued upon the exercise of the rights
represented by this Warrant according to the terms hereof or
represented by the Common Stock will, upon issuance, be duly
authorized and issued, fully paid, and nonassessable; and
(d) during the period within which the rights represented by this Warrant
may be exercised, the Company will at all times have authorized, and
reserved for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of
shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
3. ADJUSTMENTS.
(a) In case the Company shall
(i) declare a dividend upon the Common Stock payable in Common Stock
(other than a dividend declared to effect a subdivision of the
outstanding shares of Common Stock, as described in subparagraph
(b) below) or any obligations or any shares of stock of the
Company which are convertible into or exchangeable for Common
Stock (such obligations or shares of stock being hereinafter
referred to as "Convertible Securities"), or in any rights or
options to purchase any Common Stock or Convertible Securities,
or
(ii) declare any other dividend or make any other distribution upon
the Common Stock,
then thereafter the holder of this Warrant upon the exercise hereof
will be entitled to receive the number of shares of Common Stock to
which such holder shall be entitled upon such exercise, and, in
addition and without further payment therefor, such number of shares
of Common Stock, such that upon exercise hereof, such holder would
receive as a result of each dividend described in clause (i) above and
each dividend or distribution described in clause (ii) above which
such holder would have received by way of any such dividend or
distribution if, continuously since the record date for any such
dividend or distribution, such holder (x) had been the record holder
of the number of shares of Common Stock then received, and (y) had
retained all dividends or distributions in stock or securities
(including Common Stock or Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible Securities)
payable in respect of such Common Stock or in respect of any stock or
securities paid as dividends or distributions and originating directly
or indirectly from such Common Stock.
(b) In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the number of shares
subject to this Warrant immediately prior to such subdivision shall be
proportionately increased, and conversely, in case the outstanding
shares of Common Stock of the Company shall be combined into a smaller
number of shares, the number of shares subject to this Warrant
immediately prior to such combination shall be proportionately
reduced.
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(c) If any capital reorganization or reclassification of the capital stock
of the Company, consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, or assets
with respect to or in exchange for Common Stock, then, as a condition
of such reorganization, reclassification, consolidation, merger, or
sale, lawful and adequate provision shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive, upon
the basis and upon the terms and conditions specified in this Warrant
and in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise
of the rights represented hereby, such shares of stock, securities or
assets as may be issued or payable with respect to or in exchange for
a number of outstanding shares of such Common Stock equal to the
number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby had such
reorganization, reclassification, consolidation, merger, or sale not
taken place, and in any such case appropriate provision shall be made
with respect to the rights and interests of the holder of this Warrant
to the end that the provisions hereof (including without limitation
provisions for adjustments of the Warrant Exercise Price and of the
number of shares purchasable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any
shares of stock, securities, or assets thereafter deliverable upon the
exercise hereof.
(d) Excluding a potential merger with a public company candidate currently
in contemplation (the "Merger"), to which warrant holder consents by
its subscription hereto and in which, if completed, the public company
will assume and accede to all of the liabilities and obligations of
the company hereunder, and under which the public company will issue
an equal number of notes with identical terms and conditions as those
in the Company, and common shares, preferred shares of identical
classes and warrants in exchange for the notes, shares and warrants of
South Uintah Gas Properties, Inc., and excluding those events set
forth in the two paragraphs following this paragraph, if (i) all or
any portion of the warrant shall be exercised subsequent to any share
dividend, split-up, recapitalization, merger, consolidation, or
liquidation occurring after the date hereof, as a result of which
shares of any class shall be issued in respect to outstanding Common
Stock or Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes (a "Reorg
Event"), or (ii) if Common Stock or securities exercisable for or
convertible into Common Stock are issued at a price less than $2.00
(as adjusted for stock splits, stock dividends and the like)(a
"Dilutive Event") the person or persons so converting the Convertible
Promissory Note shall receive, for the aggregate price paid upon such
conversion, the aggregate number and class of shares which such person
would have received, if Common Stock (as authorized at the date
hereof) had been purchased at the date hereof for the same aggregate
price as those shares offered and sold at a price (equal to the price
in the Dilutive Event) and all such share dividends, split-ups,
recapitalizations, mergers, consolidations, combinations, or exchanges
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of shares, separations, reorganizations, or liquidations in all Reorg
Events; provided, however, that no fractional shares shall be issued
upon any such exercise, and the aggregate price paid shall be
appropriately reduced on account of any fractional share not issued.
The Company has pending subscriptions for or convertible promissory
notes in the amount of $500,000 convertible to common stock at $0.25
and appurtenant options to purchase shares for 2 years at $0.50 per
share, and such subscriptions shall not trigger any adjustment under
this section 4. The conversion rights under the Secured Convertible
Promissory Note for $500,000 @ $.20 and appartent shall not be deemed
to trigger this adjustment clause.
The sale of private placement shares of up to 5,000,000 common shares
at $1.00 shall not be deemed to trigger the anti-dilution clause
herein.
Further, the anti-dilution clause herein shall not be triggered upon
the intended merger/business combinations with a public shell or upon
the acquisition of the Lexico and Uinta/Natural Buttes assets.
(e) Excluding those events set forth in (d) above, if the Company issues
or grants any rights or options to subscribe for or to purchase shares
of Common Stock at a price per share of Common Stock less than either
(I) the Warrant Exercise Price, and (II) after 6 months from date
hereof, the then-current Market Price (as defined below) per share of
Common Stock, then the total number of shares of Common Stock issuable
upon exercise of this Warrant shall be increased by an amount
determined by multiplying (I) the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such adjustment
by (II) an amount determined by dividing (i) the number of shares of
Common Stock underlying the rights or options giving rise to such
adjustment by (ii) the total number of shares of Common Stock then
outstanding.
(f) Upon each adjustment in the number of shares the Holder is entitled to
purchase upon exercise of this Warrant, the Warrant Exercise Price
hereunder shall be appropriately adjusted such that the Holder shall
hold Warrants entitling Holder to purchase the number of shares as so
adjusted for an aggregate Warrant Exercise Price equal to the
aggregate Warrant Exercise Price in effect immediately prior to such
adjustment.
(g) In case any time:
(i) any of the adjustments required by 4(a) through (e) occur;
(ii) the Company shall make any distribution to the holders of its
capital stock;
(iii)the Company shall offer for subscription pro rata to the holders
of its capital stock any additional shares of stock of any class
or other rights; or
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(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written
notice, by first-class mail, postage prepaid, addressed to the
registered holder of this Warrant at the address of such holder as
shown on the books of the Company, of the date on which (x) the books
of the Company shall close or a record shall be taken for such
dividend, subdivision, distribution, or subscription rights, or (y)
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up, or conversion or redemption
shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of capital stock of record shall
participate in such dividend, distribution, or subscription rights, or
shall be entitled to exchange their capital stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up,
or conversion or redemption, as the case may be. Such written notice
shall be given at least ten (10) days prior to the action in question
and not less than ten (10) days prior to the record date or the date
on which the Company's transfer books are closed in respect thereto.
(h) No fractional shares of Common Stock shall be issued upon the exercise
of this Warrant, but, instead of any fraction of a share which would
otherwise be issuable, the Company shall pay a cash adjustment (which
may be effected as a reduction of the amount to be paid by the holder
hereof upon such exercise) in respect of such fraction in an amount
equal to the same fraction of the Market Price per share of Common
Stock as of the close of business on the date of the notice required
by Section 4(g). "Market Price" shall mean, if the Common Stock is
traded on a securities exchange or on the NASDAQ System, the average
of the closing prices of the Common Stock on such exchange or the
NASDAQ System on the twenty (20) trading days ending on the trading
day prior to the date of determination, or, if the Common Stock is
otherwise traded in the over-the-counter market, the average of the
closing bid prices on the twenty (20) trading days ending on the
trading day prior to the date of determination. If at any time the
Common Stock is not traded on an exchange or the NASDAQ System, or
otherwise traded in the over-the-counter market, the Market Price
shall be deemed to be the higher of
(i) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board
of Directors of the Company as of the last day of any month
ending within sixty (60) days preceding the date as of which the
determination is to be made, or
(ii) the fair value thereof determined in good faith by the Board of
Directors of the Company as of a date which is within fifteen
(15) days of the date as of which the determination is to be
made.
4. NO VOTING RIGHTS. This Warrant shall not entitle the Holder hereof to any
voting rights or other rights as a stockholder of the Company.
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5. RESTRICTIONS ON TRANSFER. This Warrant and the shares of Common Stock
issued or issuable through the exercise of this Warrant are "restricted
securities" under the Securities Act of 1933 (the "Securities Act") and the
rules and regulations promulgated thereunder and may not be sold,
transferred, pledged, or hypothecated without such transaction being
registered under the Securities Act and applicable state laws or the
availability of an exemption therefrom ; a legend to this effect shall
appear on this Warrant and, unless the issuance is a registered
transaction, on all shares of Common Stock issued upon the exercise hereof.
The holder of this Warrant, by acceptance hereof, agrees to give written
notice to the Company before transferring this Warrant or transferring any
Common Stock issuable or issued upon the exercise hereof of such holder's
intention to do so, describing briefly the manner of any proposed transfer
of this Warrant or such holder's intention as to the disposition to be made
of shares of Common Stock issuable or issued upon the exercise hereof. Such
holder shall also provide the Company with an opinion of counsel reasonably
satisfactory to the Company to the effect that the proposed transfer of
this Warrant or disposition of shares may be effected without registration
or qualification (under any federal or state law) of this Warrant or the
shares of Common Stock issuable or issued upon the exercise hereof. Upon
receipt of such written notice and opinion by the Company, such holder
shall be entitled to transfer this Warrant, or to exercise this Warrant in
accordance with its terms and dispose of the shares received upon such
exercise or to dispose of shares of Common Stock received upon the previous
exercise of this Warrant, all in accordance with the terms of the notice
delivered by such holder to the Company, provided that an appropriate
legend respecting the aforesaid restrictions on transfer and disposition
may be endorsed on this Warrant or the certificates for such shares.
Transfers to family of Holder as "restricted" shall be allowed by Company,
as a matter of course.
6. TRANSFER PROCEDURES. Subject to the provisions of Section 5, this Warrant
and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents
and agrees that the bearer of this Warrant, when endorsed, may be treated
by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented by this Warrant, or to the transfer hereof
on the books of the Company, any notice to the contrary notwithstanding;
but until such transfer on such books, the Company may treat the registered
holder hereof as the owner for all purposes.
7. REGISTRATION RIGHTS.
(a) Demand Registration Rights. During the two (2) year period commencing
the Date of Issuance, upon the written request of the Holders of those
securities representing at least a majority of the sum of the Shares issuable
upon the exercise of this Warrant, the Company agrees to prepare and file with
the Commission, no more than once, a post-effective Amendment, or a registration
statement under the Act, registering or qualifying the securities underlying
this Warrant. The Company agrees to use its best efforts to cause the above
filing to become effective.
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(b) If at any time the Company proposes to register the sale of shares of
Common Stock (whether for itself or any of its security holders) under the
Securities Act and the registration form to be used may be used for the
registration of shares underlying this Warrant (a "Piggyback Registration"), the
Company shall give prompt written notice to the Holder of its intention to
effect such a registration and, subject to Section 7(b) below, shall include in
such registration all shares of Common Stock underlying this Warrant with
respect to which the Company has received Holder's written request for inclusion
in such registration, provided that such request must be received by Company
within 20 days after the date of the Company's notice to Holder. The
Registration Expenses in all Piggyback Registrations shall be paid by the
Company.
(c) If a Piggyback Registration is an underwritten primary registration on
behalf of the Company or a successor, and the managing underwriters advise the
Company in writing that in their opinion the number of shares of Common Stock
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company shall exclude from such registrations the excess amount of
shares of Common Stock, and shall include in such registration (i) first, the
securities the Company proposes to sell; (ii) second, shares of Common Stock
requested to be included in such registration by the holders of all securities
of the Company having registration rights, prorata among the owners of such
securities on the basis of the number of shares of Common Stock or equivalent
shares of Common Stock owned by each such owner, and (iii) third, other
securities requested to be included in such registration, in the Company's
discretion.
(d) Whenever the Holder has requested that any shares of Common Stock
underlying this Warrant be registered pursuant to this Section 7, the Company
shall use its best efforts to effect the registration and the sale of such
shares in accordance with the intended method of disposition thereof, and
pursuant thereto the Company shall as expeditiously as possible:
(i) notify the Holder of the effectiveness of each registration statement
filed hereunder and prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period
of not less than 180 days and comply with the provisions of the
Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(ii) furnish the Holder such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the shares of Common
Stock underlying this Warrant;
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(v) use its best efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and in the
event of the issuance of any stop order suspending the effectiveness
of a registration statement, or of any order suspending or preventing
the use of any related prospectus or suspending the qualification of
any equity securities included in such registration statement for sale
in any jurisdiction, the Company shall use its best efforts promptly
to obtain the withdrawal of such order.
(e) In connection with any registration statement in which Holder is
participating, each Holder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, shall indemnify the Company, its directors and officers and
each person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by Holder.
(e) Holder may not participate in any registration under this Section 7
which is underwritten unless Holder (i) agrees to sell Holder's shares of Common
Stock on the basis provided in any underwriting arrangements approved by the
Company and (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements.
8. MISCELLANEOUS.
(a) NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, by facsimile transmission or electronic mail,
or otherwise delivered by hand or by messenger, addressed
(i) if to a holder of this Warrant, at such holder's address set
forth on the books of the Company, or at such other address as
such holder shall have furnished to the Company in writing; or
(ii) if to the Company, one copy should be sent to the Company's
current address at ______________________, or at such other
address as the Company shall have designated by notice.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered
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if delivered personally; if sent by first class, postage prepaid mail,
at the earlier of its receipt or seventy-two (72) hours after the same
has been deposited in a regularly maintained receptacle for the
deposit of the United States mail, addressed and mailed as aforesaid;
or, if sent by facsimile transmission or electronic mail as of the
date delivery is confirmed by the sender's equipment.
(b) SEVERABILITY. If any provision of this Agreement shall be held to be
illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid, or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid, or unenforceable provision were not contained herein.
(c) GOVERNING LAW. This Warrant will be governed in accordance with federal
law to the extent applicable and by the internal law, not the law of conflicts,
of the State of Colorado.
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IN WITNESS WHEREOF, South Uintah Gas Properties, Inc. has caused this
Warrant to be signed by its duly authorized officer and dated as of
_______________, 2011.
SOUTH UINTAH GAS PROPERTIES, INC.
By: ___________________________________
Chief Financial Officer
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if
such Holder Desires to Exercise this Warrant in
Whole or in Part:
To: South Uintah Gas Properties, Inc. (the "Company")
The undersigned ___________________________ (Social Security number
_____________or taxpayer identification number of Subscriber:
_________________________) hereby irrevocably elects to exercise the right of
purchase represented by this Warrant for, and to purchase thereunder,
____________ shares of the Common Stock (the "Common Stock") provided for
therein and tenders payment herewith to the order of the Company in the amount
of $______________, such payment being made as provided on the face of this
Warrant.
The undersigned requests that certificates for such shares of Common Stock be
issued as follows:
Name: __________________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Deliver to: ____________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated: ______________________
Signature
________________________________________
Note: The signature on this Subscription
Form must correspond with the name as
written upon the face of this Warrant in
every particular, without alteration or
enlargement or any change whatever.
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