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Warrant
Exhibit 4.21
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "
SECURITIES ACT "), OR ANY STATE SECURITIES LAWS. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
THESE WARRANTS ARE BEING ISSUED IN CONNECTION WITH A CREDIT
AGREEMENT DATED NOVEMBER 28, 2006 BY AND AMONG SONORAN ENERGY,
INC., NGPC ASSET HOLDINGS, LP, AS ADMINISTRATIVE AGENT, AND THE
LENDERS REFERRED TO THEREIN.
No. W-[1]
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
OF
SONORAN ENERGY, INC.
These Warrants to Purchase Shares of Common Stock (these "
Warrants ") certify that for value received, NGP Capital
Resources Company or its successors or assigns (the "
Holder "), is entitled to subscribe for and purchase from
Sonoran Energy, Inc. , a Washington corporation (the "
Company "), up to the Aggregate Total Shares (as defined
below), on a Fully Diluted Basis, at the Exercise Price (as defined
below), subject to the provisions and upon the terms and conditions
hereinafter set forth. The Exercise Price and the Aggregate
Total Shares are each subject to adjustment as hereinafter set
forth. These Warrants and all rights hereunder shall expire
at 5:00 p.m., Houston, Texas time, on the Expiration Date (as
defined below).
ARTICLE I
Definitions
As used herein, the following terms shall have the meanings set
forth below:
1.1
" Aggregate Total Shares " means, (a) on the Effective
Date, 2,870,000 shares of Common Stock or (b) any time after the
Effective Date, (i) 2,870,000 shares of Common Stock or (ii) such
greater number of shares of Common Stock following any adjustment
to such amount in accordance with the terms of Article IV
hereof.
1.2
" Articles of Incorporation " means the Articles of
Incorporation of the Company, dated as of [
], and filed with the
Secretary of State of the State of Washington on [
] as
hereafter amended, modified, restated or replaced from time to
time.
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Warrant
1.3
" Board of Directors " means at any time the board of
directors of the Company as elected pursuant to the Bylaws.
1.4
" Business Day " means any day other than a Saturday,
Sunday or a day on which banks are authorized or required to be
closed in Houston, Texas or New York, New York.
1.5
" Bylaws " means the Bylaws of the Company, dated as of
[
], as
hereafter amended, modified, restated or replaced from time to
time.
1.6
" Company " is defined in the introductory paragraph, and
shall also include any successor to such entity by merger,
consolidation or otherwise.
1.7
" Common Stock " shall mean authorized shares of Common
Stock of the Company, par value $0.165 per share, as constituted on
the Effective Date, and any stock into which such Common Stock may
thereafter be converted or changed, and also shall include any
other stock of the Company of any other class that is not preferred
as to dividends or distributions in liquidation over any other
class of any other stock of the Company.
1.8
" Company Offering " means the closing of the sale and
issuance of any of the shares of Common Stock to the general public
in a public offering pursuant to an effective registration
statement under the Securities Act.
1.9
" Convertible Securities " means evidences of
indebtedness, units, interests, preferred stock, or other
securities (including these Warrants) that are convertible into or
exercisable or exchangeable for, with or without payment of
additional consideration, shares of Common Stock, either
immediately or upon a specified date or the happening of a
specified event.
1.10
" Credit Agreement " means the Credit Agreement dated
November 28, 2006 by and among the Company, NGPC Asset Holdings,
LP, as administrative agent, and the lenders referred to
therein.
1.11
" Current Market Price " means, with respect a security
or any other item, the fair value of such security or item as
determined in writing in good faith by the Board of Directors.
Notwithstanding the foregoing, in the event these Warrants
are exercised in connection with a Company Offering, the fair
market value per share of Common Stock shall be equal to the
offering price per share of Common Stock to the public in the
Company Offering.
1.12
" Effective Date " means November 28, 2006.
1.13
" Exercise Price " means in the event that the Holder or
a Holder Designee exercises all or a portion of these Warrants (i)
$0.20 per share of Common Stock, as adjusted from time to time
pursuant to Article IV or (ii) the equivalent thereof in the
case of a Cashless Exercise.
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Warrant
1.14
" Expiration Date " means the seventh (7 th )
anniversary of the Payoff Date.
1.15
" Fully Diluted Basis " means, as applied to the
calculation of shares of Common Stock outstanding at any time, (a)
all shares of Common Stock outstanding at the time of determination
and (b) all shares of Common Stock issuable upon exercise,
conversion or exchange of all Options and Convertible Securities,
regardless of exercise price.
1.16
" Holder Designee " is defined in Section 3.2
.
1.17
" Investor Rights Agreement " means that certain Investor
Rights Agreement of even date herewith by and between the Company
and the Holder.
1.18
" Options " means any options or other rights to
subscribe for or to purchase shares of Common Stock or Convertible
Securities, including all authorized but unissued options.
1.19
" Payoff Date " means the earlier to occur of
(a) the date on which all Obligations (as defined in the
Credit Agreement) have been paid in full or (b) an Event of
Default has occurred pursuant to, and as defined in, the Credit
Agreement, and the Commitments, as defined in the Credit Agreement
(if not theretofore terminated), have been terminated.
1.20
" Person " means any individual, partnership, limited
partnership, corporation, limited liability company, trust,
association, entity or other organization.
1.21
" Subscription Notice " is defined in
Section 2.1 .
1.22
" Triggering Event " is defined in Section 5.1(a)
.
1.23
" Warrant Office " is defined in Section 3.1 .
1.24
" Warrant Common Stock " means shares of Common Stock
issued or issuable by the Holder upon the exercise of these
Warrants, as adjusted in accordance with the terms of these
Warrants.
1.25
" Warrants " is defined in the introductory section
hereof, and shall also include any warrants issued in substitution
or exchange therefor as provided herein.
ARTICLE II
Exercise of Warrants
2.1
Method of Exercise . The Warrants represented
hereby may be exercised by the Holder in whole or in part, at any
time and from time to time, beginning on the Payoff Date and ending
at 5:00 p.m., Houston, Texas time, on the Expiration Date. To
exercise these Warrants, the Holder shall deliver to the Company,
at the Warrant Office:
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Warrant
(i)
a written subscription notice substantially in the form attached
as Exhibit A hereto (the " Subscription Notice "), duly
completed and executed on behalf of the Holder, stating therein the
election of such Holder to exercise these Warrants in the manner
provided in the Subscription Notice;
(ii)
payment in full of the aggregate Exercise Price for all shares
of Warrant Common Stock to be purchased pursuant thereto
payable:
(A)
in cash or by certified check or wire transfer,
(B)
through a "cashless" or "net-issue" exercise (" Cashless
Exercise "), pursuant to which the Holder shall exchange the
Warrants (or the portion thereof to be cancelled) subject to a
Cashless Exercise for that number of shares of Warrant Common Stock
determined by multiplying the number of shares of Warrant Common
Stock issuable on exercise of the Warrants (or the portion thereof
to be cancelled) by a fraction, the numerator of which shall be the
difference between (x) the Current Market Price of the shares
of Common Stock on the date of exercise and (y) the Exercise
Price, and the denominator of which shall be the Current Market
Price of a share of Common Stock on the date of exercise; the
Subscription Notice shall set forth the calculation upon which the
Cashless Exercise is based, or
(C)
pursuant to a combination of clauses (A) and (B)
above; and
(iii)
this Warrant.
These Warrants shall be deemed to be exercised immediately prior
to the close of business on the date of receipt by the Company of
the items listed above (such date, the " Exercise Date ")
and the person entitled to receive the shares of Warrant Common
Stock issuable upon such exercise shall be treated for all purposes
as the holder of record of such shares of Warrant Common Stock as
of the close of business on such date. In the event that
these Warrants are exercised in part, within two (2) business days
after the Exercise Date, the Company at its expense shall execute
and deliver new Warrants of like tenor exercisable for the
percentage of shares of Warrant Common Stock for which these
Warrants may thereafter be exercised. Within two (2) Business
Days after the Exercise Date, the Company shall issue and deliver
to the Holder stock certificates for the number of shares of Common
Stock issuable upon exercise by the Holder pursuant to this
Section 2.1 .
2.2
Expenses and Taxes . The Company shall pay all
expenses and taxes (including, without limitation, all documentary,
stamp, transfer or other transactional taxes) other than income
taxes attributable to the preparation, issuance or delivery of
these Warrants and of the shares of Warrant Common Stock.
2.3
Reservation of Common Stock . The Company covenants
that, for so long as any Warrants remain outstanding, the Company
shall reserve, free from all preemptive rights, out of its
authorized but unissued Common Stock, and solely for the
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Warrant
purpose of effecting the exercise of these
Warrants, a sufficient number of shares of Common Stock to provide
for the exercise of these Warrants.
2.4
Valid Issuance . All shares of Warrant Common Stock
issued upon exercise of these Warrants will, upon (i) submission of
a Subscription Notice, (ii) surrender of these Warrants (or any
portion thereof), (iii) payment of the Exercise Price therefor and
(iv) the issuance of such shares of Warrant Common Stock by the
Company, be duly authorized, validly and legally issued, fully paid
and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof and, without limiting the
generality of the foregoing, the Company shall take no action or
fail to take any action which will cause a contrary result.
2.5
No Fractional Shares of Common Stock . No
fractional shares of Common Stock shall be issued upon exercise of
these Warrants, but the Company shall pay the Holder an amount
equal to the Current Market Price of such fractional share of
Common Stock in lieu of each fraction of a share of Common Stock
otherwise called for upon any exercise of a Warrant.
ARTICLE III
Transfer
3.1
Warrant Office . The Company shall maintain an
office for certain purposes specified herein (the " Warrant
Office "), which office shall initially be the office of
Transfer Agent of the Company if one exists on the Effective Date,
and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States
as to which written notice has previously been given to the Holder.
The Company shall maintain, at the Warrant Office, a register
for these Warrants in which the Company shall record the name and
address of the person in whose name these Warrants have been
issued, as well as the name and address of each permitted assignee
of the rights of the registered owner hereof.
3.2
Ownership of Warrants . The Company may deem and
treat the Person in whose name these Warrants are registered as the
Holder until provided with written notice by the registered Holder
in the form of the Assignment/Transfer Notice attached hereto as
Exhibit B (the " Assignment/Transfer Notice ") to the
contrary. These Warrants may be exercised by any assignee of
the Holder (a " Holder Designee ") for the purchase of
shares of Warrant Common Stock, and for purposes of these Warrants,
any such assignee shall also constitute the "Holder" hereunder.
3.3
Restrictions on Transfer of Warrants . Subject to
compliance with applicable federal and state securities laws, these
Warrants and all rights hereunder are transferable, in whole or in
part, without charge (except for securities transfer taxes or
income taxes), upon (i) surrender of these Warrants properly
endorsed, (ii) submission of a properly executed
Assignment/Transfer Notice and (iii) payment to the Company of
funds sufficient to pay any transfer tax.
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Warrant
3.4
Exchange of Warrant Upon a Transfer . On surrender
of this Warrant for exchange, properly endorsed on the Assignment
Form and subject to the provisions of these Warrants with respect
to compliance with the Securities Act, the Company at its expense
shall issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as the Holder
(on payment by the Holder of any applicable transfer taxes) may
direct, for the percentage of Warrant Common Stock issuable upon
exercise hereof. The Company hereby agrees to extend the
benefit of these Warrants to any assignee and any such assignee may
specifically enforce the provisions of these Warrants as if an
original party hereto.
ARTICLE IV
Antidilution Provisions and Preemptive Rights
4.1
General . The Exercise Price and the number of
shares of Warrant Common Stock shall be subject to adjustment from
time to time in accordance with this Article IV .
4.2
Dividends, Subdivisions and Combinations . If, at
any time after the date of this Agreement, the Company shall:
(i)
pay a dividend or make a distribution, in each case payable in
Common Stock;
(ii)
subdivide, split or reclassify its outstanding Common Stock into
a larger number of shares of Common Stock; or
(iii)
combine its outstanding Common Stock into a smaller number of
shares of Common Stock,
then (A) the number of shares of Warrant Common Stock shall be
adjusted so as to equal the number of shares of Warrant Common
Stock that the Holder would have held immediately after the
occurrence of such event if the Holder had exercised such Warrants
immediately prior to the occurrence of such event and (B) the
Exercise Price shall be adjusted to be equal to (x) the Exercise
Price immediately prior to the occurrence of such event
multiplied by (y) a fraction (1) the numerator of which is
the number of shares of Warrant Common Stock immediately prior to
the adjustment in clause (A) , and (2) the denominator of
which is the number of shares of Warrant Common Stock immediately
after the adjustment in clause (A) . An adjustment
made pursuant to this Section 4.2 shall become effective
immediately after the occurrence of such event retroactive to the
record date, if any, for such event.
4.3
Issuance of Additional Common Stock.
(a)
General . If, at any time after the date of this
Warrant, the Company shall issue or sell any shares of Common Stock
(or, in accordance with Section 4.3(b) , shall be deemed to
have issued or sold) any shares of Common Stock (other than any
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Warrant
issuance for which an adjustment is made
pursuant to Section 4.2 , 4.4 , or 4. 5)
without consideration or for a consideration per share of Common
Stock less than the Current Market Price on the Business Day
immediately preceding the date of such issuance or sale, or less
than the Exercise Price in effect immediately prior to such
issuance or sale, then, effective immediately upon such issuance or
sale (or deemed issuance or sale), the Exercise Price and the
number of shares of Warrant Common Stock issuable upon exercise of
these Warrants shall be adjusted as follows:
(i)
The Exercise Price shall be reduced to the amount obtained by
multiplying the Exercise Price in effect immediately prior to such
issuance or sale (or deemed issuance or sale), by a fraction, (A)
the numerator of which shall be (1) the number of shares of Common
Stock outstanding prior to such issuance or sale plus (2) the
number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of such shares of
Common Stock so issued or sold would purchase at the higher of (x)
the Current Market Price per share of Common Stock on the Business
Day immediately preceding the date of such issuance or sale and (y)
the Exercise Price in effect immediately prior to such issuance or
sale and (B) the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such issuance or
sale.
(ii)
The number of shares of Warrant Common Stock shall be increased
to the number of shares of Common Stock obtained by multiplying the
number of shares of Warrant Common Stock immediately prior to such
issuance or sale by a fraction, (A) the numerator of which shall be
the Exercise Price in effect immediately prior to the adjustment in
clause (i) of this Section 4.3(a) , and (B) the
denominator of which shall be the Exercise Price in effect
immediately after such adjustment.
Notwithstanding anything in the foregoing Section 4.3(a)
to the contrary, the parties hereby acknowledge and agree that (x)
no adjustment pursuant to this Section 4.3(a) shall be made
as a result of the issuance on the date hereof of up to 30,000,000
shares of Common Stock to Cubus APS pursuant to that certain Common
Stock Subscription Agreement (the " Agreement ") entered
into on December 1, 2006, by and among the Company and Cubus APS,
(the " Subscription Agreement "); and (y) the provisions of
this Article IV shall be applicable to the issuance of shares of
Common Stock pursuant to or in connection with (x) any Convertible
Securities, Options or other warrants issued to Cubus, (whether or
not such Convertible Securities, Options or other warrants are
issued in connection with the Subscription Agreement, including
without limitation any Convertible Securities, Options or other
warrants issued to Cubus on or prior to the date of this Agreement
and (y) any other Convertible Securities, Options or other similar
instruments issued by the Company prior to the date of this
Agreement.
(b)
Issuance of Options or Convertible Securities . The
issuance or sale of Options or Convertible Securities shall be
deemed, in accordance with this Section 4.3(b) , to be the
issuance of shares of Common Stock.
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Warrant
(i)
Issuance of Options . If the Company in any manner
issues or grants any Options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such Options
(or upon conversion or exchange of the total maximum amount of
Convertible Securities issuable upon the exercise of such Options)
shall be deemed, for purposes of Section 4.3(a) , to be
outstanding and to have been issued and sold by the Company on the
actual date of issuance. For purposes of Section
4.3(a) , the shares of Common Stock issuable upon exercise of
Options or upon conversion or exchange of Convertible Securities
issuable upon exercise of Options for Convertible Securities shall
be deemed to have been issued and sold at a price per share of
Common Stock equal to (A) the sum of (x) the total amount, if any,
received or receivable by the Company as consideration for the
issuance or granting of such Options plus (y) the minimum
aggregate amount of additional consideration payable to the Company
upon the exercise of all such Options plus (z) in the case
of such Options for Convertible Securities, the minimum aggregate
amount of additional consideration, if any, payable to the Company
upon issuance or sale of such Convertible Securities and the
conversion or exchange thereof divided by (B) the total
maximum number of shares of Common Stock issuable upon exercise of
such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
Options.
(ii)
Issuance of Convertible Securities . If the Company
in any manner issues or sells any Convertible Securities, then the
maximum number of shares of Common Stock issuable upon the
conversion or exchange of such Convertible Securities shall be
deemed, for purposes of Section 4.3(a) to be outstanding and
to have been issued and sold by the Company on the act
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