<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
-----
EVERGREEN RESOURCES, INC.
-------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, NO PAR VALUE
---------------------------------------------------
(Title of Class of Securities)
299900 30 8
-----------------------------------------
(CUSIP Number)
Gerald DeNotto, EIF Acquisition L.L.C., 1075 North Noel Avenue
Wheeling, IL 60090, Telephone (864) 520-3212
-------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 14, 1996
---------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the filing person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1746 (12-91)
<PAGE>
SCHEDULE 13D
- ------------------------- ----------------------
CUSIP NO. 299900 30 8 PAGE 2 OF 54 PAGES
- ------------------------- ----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gerald R. Forsythe
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,389,638
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,389,638
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,389,638
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.95%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ---------------------
CUSIP NO. 299900 30 8 PAGE 3 OF 54 PAGES
- ------------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Energy Investors Fund, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
364,500
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
364,500
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
364,500
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.13%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ----------------------
CUSIP NO. 299900 30 8 PAGE 4 OF 54 PAGES
- ------------------------- ----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Energy Investors Fund II, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,025,138
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,025,138
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,025,138
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
13.98%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ---------------------
CUSIP NO. 299900 30 8 PAGE 5 OF 54 PAGES
- ------------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Energy Investors Partners, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
364,500
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
364,500
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
364,500
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
5.13%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ----------------------
CUSIP NO. 299900 30 8 PAGE 6 OF 54 PAGES
- ------------------------- ----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Energy Investors Partners II, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,025,138
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,025,138
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,025,138
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
13.98%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ----------------------
CUSIP NO. 299900 30 8 PAGE 7 OF 54 PAGES
- ------------------------- ----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EIF Investors, Inc.
06-1224170
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,389,638
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,389,638
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,389,638
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.95%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ---------------------
CUSIP NO. 299900 30 8 PAGE 8 OF 54 PAGES
- ------------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EIF Acquisition L.L.C.
36-4085847
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,389,638
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,389,638
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,389,638
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.95%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
OO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ------------------------- ---------------------
CUSIP NO. 299900 30 8 PAGE 9 OF 54 PAGES
- ------------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Indeck Capital, Inc.
36-3960183
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WK, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
5 TO ITEMS 2(d) or 2(e) [_]
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Delaware
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
1,389,638
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
1,389,638
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,389,638
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
12 SHARES* [_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
18.95%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer.
--------------------
The class of equity securities to which this statement (this "Statement")
relates is the common shares without par value (the "Common Stock") of Evergreen
Resources, Inc., a Colorado corporation ("Evergreen"). The principal executive
offices of Evergreen are located at 1000 Writers Square, 1512 Larimer Street,
Suite 1000, Denver, Colorado 80202.
Item 2. Identity and Background.
------------------------
This Statement is filed by Gerald R. Forsythe ("Forsythe"), a United States
citizen, on behalf of himself and the following entities:
Energy Investors Fund, L.P., a Delaware limited partnership ("Fund I");
Energy Investors Partners, L.P., a Delaware limited partnership ("Partners
I");
Energy Investors Fund II, L.P., a Delaware limited partnership ("Fund II"
and, together with Fund I, the "Funds");
Energy Investors Partners II, L.P., a Delaware limited partnership
("Partners II");
EIF Investors, Inc., a Delaware corporation ("Investors");
EIF Acquisition L.L.C., a Delaware limited liability company
("Acquisition"); and
Indeck Capital, Inc., a Delaware corporation ("Capital")
(collectively, the "Reporting Persons"). The Reporting Persons are making this
joint filing because they may be deemed to constitute a "group" within the
meaning of Rule 13d-5 under the Securities Exchange Act of 1934, as amended,
although neither the fact of this filing nor anything contained herein shall be
deemed to be an admission by the Reporting Persons that such a group exists.
Fund I is the direct beneficial owner of 364,500 shares of Common Stock.
Fund II is the direct beneficial owner of 794,369 shares of the Common Stock and
1,500,000 shares of the 8% Convertible Preferred Stock of Evergreen (the
"Preferred Stock"), which are convertible into 230,769 shares of Common Stock.
Fund I is controlled by its general partner, Partners I, which in turn is
50% controlled by each of John Hancock Energy Resources Management, Inc., a
Delaware corporation ("Hancock") and Investors. Partners I has an additional
general partner with no direct ownership interest; this additional general
partner is owned by Hancock and Investors.
Fund II is controlled by its general partner, Partners II, which in turn is
50% controlled by each of Hancock and Investors. Partners II has an additional
general partner with no direct ownership interest; this additional general
partner is owned by Hancock and Investors.
Page 10 of 54
<PAGE>
Investors is 100% owned by Acquisition, which is 99% owned by Capital and
1% owned by North American Funding, L.L.C., a Delaware limited liability
company. Capital is 80% owned by Forsythe. Hancock is filing separately with
respect to its beneficial ownership of Evergreen securities.
Forsythe and Investors, Acquisition and Capital (collectively, the
"Forsythe Companies") are engaged in the energy services businesses. Forsythe
serves in various capacities (such as director, officer or manager) for the
Forsythe Companies and other affiliated companies. The address of Forsythe and
the Forsythe Companies is 1075 North Noel Avenue, Wheeling, Illinois, 60090.
Fund I, Partners I, Fund II and Partners II (collectively, the "Fund
Companies") are engaged in the business of investing in independent power
projects and other non-regulated, non-utility power production and related
facilities. The address of the Fund Companies is 200 Berkeley Street, 20th
Floor, Boston, Massachusetts, 02116.
The name, citizenship, business address, position and present principal
occupation of Forsythe and of each of the executive officers and directors of
Investors, Acquisition and Capital are as set forth in Schedule I to this
----------
Statement.
During the last five years, neither Forsythe nor, to the best knowledge of
Forsythe, any of the Forsythe Companies or the Fund Companies, or any of the
persons named in Schedule I hereto, has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, United States federal or state securities laws
or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
--------------------------------------------------
The aggregate purchase price for the shares of Common Stock owned by Fund I
is $2,441,063. Of that amount, $547,810 was furnished from the working capital
of Fund I. The remainder, $1,899,253, represents the deemed value of certain
partnership interests formerly held by Fund I and transferred to Evergreen in
exchange for Common Stock.
The aggregate purchase price for the shares of Common Stock (including the
Common Stock issuable upon conversion of the Preferred Stock) owned by Fund II
is $6,788,944. Of that amount, $2,132,192 was furnished from the working
capital of Fund II. The remainder, $4,656,752, represents the deemed value of
certain partnership interests formerly held by Fund II and transferred to
Evergreen in exchange for Common Stock.
Item 4. Purpose of Transaction.
-----------------------
The Common Stock and Preferred Stock were acquired by the Funds for
investment in the ordinary course of business. If Fund II converts the
Preferred Stock into Common Stock, such
Page 11 of 54
<PAGE>
Common Stock issued upon conversion will be held for investment by Fund II. In
addition, Fund II holds certain warrants to purchase shares of Common Stock,
but the right to exercise the warrants has not vested as of the date of this
Statement, and the determination of when the warrants will become exercisable
is dependent upon the occurrence of certain events not in the control of Fund
II. The Reporting Persons do not believe that it is possible for the warrants
to become exercisable within 60 days of the date of this Statement. Upon the
vesting of the warrants, if Fund II exercises the warrants to purchase
additional Common Stock, such shares will be held for investment.
The Funds and Evergreen are parties to a Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of August 14, 1996, relating to the
circumstances under which Evergreen will agree to register certain Common Stock
held by the Funds. The Funds may demand a registration of such Common Stock
held by the Funds, or any portion of it, as early as January 1, 1997.
In addition, pursuant to that certain Stock Purchase Agreement, dated as of
August 1, 1994, by and among the Funds and Evergreen, the Funds were granted
certain piggyback registration rights with respect to the aggregate 140,000
shares of Common Stock issued to the Funds pursuant to such agreement.
Item 5. Interest in Securities of the Issuer.
-------------------------------------
(a) As of the date of this Statement, Forsythe, through Capital,
Acquisition, Investors, Partners I (as to Fund I) and Partners II (as to Fund
II), is the indirect beneficial owner of 1,389,638 shares of Common Stock, or
18.95% of such class of securities. The Common Stock is owned directly by Fund
I and Fund II.
Fund I is the direct beneficial owner of 364,500 shares of Common Stock,
which represent 5.13% of the outstanding Common Stock.
Fund II is the direct beneficial owner of 1,025,138 shares of Common Stock,
which represent 13.98% of the outstanding Common Stock.
The number of outstanding shares of Common Stock and the aggregate
beneficial ownership percentages of Forsythe and each of the Funds is calculated
based on public information disseminated by Evergreen.
(b) Each of Fund I and Fund II has the power to vote with respect to the
Common Stock, but no power to direct the disposition of the Common Stock without
authorization of Partners I (as to Fund I) or Partners II (as to Fund II), each
of which is controlled, indirectly, by Hancock's ultimate controlling entity and
Forsythe. Accordingly, (i) Forsythe and the Forsythe Companies have shared
voting and dispositive power with respect to 1,389,638 shares (18.95%) of the
Common Stock, (ii) Fund I and Partners I have shared voting and dispositive
power with respect to 364,500 shares (5.13%) of the Common Stock, and (iii) Fund
II and Partners II have shared voting and dispositive power with respect to
1,025,138 shares (13.97%) of the Common Stock.
Page 12 of 54
<PAGE>
(c) Pursuant to an Agreement for Acquisition of Limited Partnership
Interests, dated as of August 14, 1996, by and among Fund I, Fund II and
Evergreen (the "Acquisition Agreement"), Fund I purchased 285,774 shares of
Common Stock from Evergreen in exchange for certain limited partnership
interests in a partnership engaged in the business of coal-bed methane gas
exploration, drilling and transportation for ultimate commercial sale. The
price per share of Common Stock was $6.625. Pursuant to the Acquisition
Agreement, Fund I purchased an additional 8,726 shares of Common Stock in
exchange for a cash payment of $57,810. The price per share of Common Stock was
$6.625. All other shares of Common Stock owned by Fund I were acquired for cash
in August 1994.
Pursuant to the Acquisition Agreement, Fund II purchased 702,906 shares of
Common Stock from Evergreen in exchange for certain limited partnership
interests in the same partnership described in the above paragraph. The deemed
price per share of Common Stock was $6.625. Also pursuant to the Acquisition
Agreement, Fund II purchased an additional 21,463 shares of Common Stock in
exchange for a cash payment of $142,190. The price per share of the Common
Stock was $6.625. All other shares of Common Stock owned by Fund II were
acquired for cash in August 1994, and the Preferred Stock was acquired for cash
in two equal installments, in December 1994 and July 1995.
Other than the transactions described above, none of Forsythe, or, to the
best knowledge of Forsythe, the Forsythe Companies or the Fund Companies, have
effected any transactions in the Common Stock within the past 60 days.
(d) No other person is known by Forsythe, the Forsythe Companies or the
Fund Companies to have the right to receive or the power to direct the receipt
of dividends from, or the proceeds from the sale of, the Common Stock held by
the Funds, except for Hancock, with respect to which a separate filing is being
made.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
----------------------------
Evergreen, Fund I and Fund II entered into the Registration Rights
Agreement in connection with the acquisition of Common Stock by the Funds on
August 14, 1996. Under the Registration Rights Agreement, either of the Funds
may demand registration of its shares of Common Stock acquired pursuant to the
Acquisition Agreement as early as January 1, 1997, but in any case not later
than April 1, 1997. Under the August 1, 1994 Stock Purchase Agreement, the
Funds have certain piggyback registration rights with respect to an aggregate
140,000 shares of Common Stock.
Fund II may convert the Preferred Stock at a conversion price of $6.50, in
exchange for 230,769 shares of Common Stock. A percentage of the Preferred
Stock is subject to mandatory redemption annually beginning on December 31, 1999
and continuing through December 31, 2004, when all of the Preferred Stock
acquired pursuant to the Acquisition Agreement must be converted by Fund II or
redeemed by Evergreen.
Page 13 of 54
<PAGE>
Fund II also holds certain Class B Warrants of Evergreen to purchase shares
of Common Stock. The warrants will vest upon the occurrence of certain
objectively determinable events relating to the redemption of the Preferred
Stock. Evergreen has no obligation to vest the warrants until such events have
occurred. The warrants will terminate if Fund II converts all of the Preferred
Stock. Neither Fund II nor Partners II or the Forsythe Companies has made any
determination as to whether Fund II will exercise such warrants if and when the
warrants vest.
Item 7. Material to Be Filed as Exhibits.
---------------------------------
Schedule I, listing the name, citizenship, business address, position and
present principal occupation of Forsythe and the executive officers and
directors of Investors, Acquisition and Capital.
Joint Filing Agreement, dated as of August 22, 1996, among Forsythe, the
Forsythe Companies and the Fund Companies.
Power of Attorney relating to Gerald F. DeNotto.
Registration Rights Agreement, dated as of August 14, 1996, by and among
Evergreen, Fund I and Fund II.
Form of Class B Warrant.
Page 14 of 54
<PAGE>
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information contained in this Statement is true,
complete and correct.
Date: August 26, 1996 /s/ Gerald F. DeNotto
--------------------------------------------
Gerald F. DeNotto, Authorized Representative
for Gerald R. Forsythe
Page 15 of 54
<PAGE>
SCHEDULES AND EXHIBITS
----------------------
Page Number
-----------
Schedule I: Schedule I, listing the name, citizenship, business
address, position and present principal occupation of
Forsythe and the executive officers and directors of
Investors, Acquisition and Capital
Exhibit 1: Joint Filing Agreement, dated as of August 22, 1996,
among Forsythe, the Forsythe Companies and the Fund
Companies
Exhibit 2: Power of Attorney relating to Gerald F. DeNotto
Exhibit 3: Registration Rights Agreement, dated as of August 14,
1996, by and among Evergreen, Fund I and Fund II.
Exhibit 4: Form of Class B Warrant
Page 16 of 54
<PAGE>
SCHEDULE I
----------
EIF Investors, Inc.
- -------------------
<TABLE>
<CAPTION>
Executive Officers Principal Occupation
- ------------------ --------------------
<S> <C>
Gerald R. Forsythe, Chairman & CEO Chairman of Indeck Energy Services, Inc.
John W. Salyer, President & COO President of Indeck Capital, Inc.
William L. Felts, Senior Vice President and Senior Vice President of Indeck Capital, Inc.
Assistant Secretary
Michael J. Dubois, Vice President Vice President of Indeck Capital, Inc.
William K. Wasnak, Vice President Vice President of Indeck Capital, Inc.
Lawrence A. Lagowski, Treasurer Chief Financial Officer and Senior Vice President, Indeck Energy Services, Inc.
Gerald F. DeNotto, Secretary Vice President and General Counsel, Indeck Energy Services, Inc.
</TABLE>
Citizenship of Executive Officers: United States (all officers)
Directors: Gerald R. Forsythe, Chairman
John W. Salyer
Citizenship of Directors: United States (all directors)
Business address for all Executive Officers and Directors: 1075 No. Noel
Avenue, Wheeling, Illinois, 60090.
Controlling Shareholder: EIF Acquisition L.L.C.
EIF Acquisition L.L.C.
- ----------------------
Members: Indeck Capital, Inc., a Delaware corporation
North American Funding L.L.C., a Delaware limited liability company
Business address for all Members: 1075 No. Noel Avenue, Wheeling, Illinois,
60090.
Controlling Member: Indeck Capital, Inc.
Page 17 of 64
<PAGE>
Indeck Capital, Inc.
- --------------------
<TABLE>
<CAPTION>
Executive Officers Principal Occupation
- ------------------ --------------------
<S> <C>
Gerald R. Forsythe, Chairman & CEO Chairman of Indeck Energy Services, Inc.
John W. Salyer, President & COO President of Indeck Capital, Inc.
William L. Felts, Senior Vice President Senior Vice President of Indeck Capital, Inc.
and Assistant Secretary
Michael J. Dubois, Vice President Vice President of Indeck Capital, Inc.
William K. Wasnak, Vice President Vice President of Indeck Capital, Inc.
Lawrence A. Lagowski, Treasurer Chief Financial Officer and Senior Vice President, Indeck Energy Services, Inc.
Gerald F. DeNotto, Secretary Vice President and General Counsel, Indeck Energy Services, Inc.
</TABLE>
Citizenship of Executive Officers: United States (all officers)
Directors: Gerald R. Forsythe, Chairman
John W. Salyer
Citizenship of Directors: United States (all directors)
Business address for all Executive Officers and Directors: 1075 No. Noel
Avenue, Wheeling, Illinois, 60090.
Controlling Shareholder: Gerald R. Forsythe
Page 18 of 54
<PAGE>
EXHIBIT 1
AGREEMENT PURSUANT TO RULE 13d-1(f)(1)
The undersigned, in accordance with Rule 13d-1(f)(1) promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities
Exchange Act of 1934, hereby agree and consent that the Schedule 13D to which
this Agreement is an exhibit and any amendments thereto signed by each of the
undersigned, shall be filed with the Commission on behalf of each of the
undersigned.
Dated: August 22, 1996
GERALD R. FORSYTHE
/s/ Gerald F. DeNotto
------------------------------------------
Attorney-in-Fact
ENERGY INVESTORS FUND, L.P., a Delaware
limited partnership
By: Energy Investors Management, Inc., its
Authorized Agent
/s/ Elizabeth F. Fugate
------------------------------------------
Elizabeth F. Fugate, Managing Director
ENERGY INVESTORS PARTNERS, L.P., a Delaware
limited partnership
By: Energy Investors Management, Inc., its
General Partner
/s/ Elizabeth F. Fugate
------------------------------------------
Elizabeth F. Fugate, Managing Director
EXECUTIONS CONTINUED
Page 19 of 54
<PAGE>
ENERGY INVESTORS FUND II, L.P., a Delaware
limited partnership
By: Energy Investors Management Company,
its Authorized Agent
/s/ Elizabeth F. Fugate
------------------------------------------
Elizabeth F. Fugate, Managing Director
ENERGY INVESTORS PARTNERS II, L.P., a
Delaware limited partnership
By: Energy Investors Management Company,
its General Partner
/s/ Elizabeth F. Fugate
------------------------------------------
Elizabeth F. Fugate, Managing Director
EIF INVESTORS, INC., a Delaware corporation
/s/ Gerald F. DeNotto
------------------------------------------
Gerald F. DeNotto
Secretary
EIF ACQUISITION L.L.C., a Delaware limited
liability company
By: Indeck Capital, Inc., a Member
/s/ Gerald F. DeNotto
------------------------------------------
Gerald F. DeNotto
Secretary
INDECK CAPITAL, INC., a Delaware corporation
/s/ Gerald F. DeNotto
------------------------------------------
Gerald F. DeNotto
Secretary
Page 20 of 54
<PAGE>
EXHIBIT 2
POWER OF ATTORNEY
-----------------
Know all by these presents, that the undersigned hereby constitutes and
appoints Gerald F. DeNotto, signing singly, the undersigned's true and lawful
attorney-in-fact to:
(1) execute for and on behalf of the undersigned Forms 3, 4, and 5
and Schedule 13D or Schedule 13G, as applicable (including any
amendments thereto) in accordance with the Securities Exchange
Act of 1934 and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the
undersigned that may be necessary or desirable to complete and
execute any such Forms or such Schedules and timely file such
forms or schedules with the U.S. Securities and Exchange
Commission and any stock exchange or similar authority; and
(3) take any other action of any type whatsoever in connection with
the foregoing which, in the opinion of such attorney-in-fact, may
be of benefit to, in the best interest of, or legally required
by, the undersigned, it being understood that the documents
executed by such attorney-in-fact on behalf of the undersigned
pursuant to this Power of Attorney shall be in such form and
shall contain such terms and conditions as such attorney-in-fact
may approve in such attorney-in-fact's discretion.
The undersigned hereby grants to such attorney-in-fact full power and
authority to do and perform any and every act and thing whatsoever requisite,
necessary, or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or
could do if personally present, with full power of substitution or revocation,
hereby ratifying and confirming all that such attorney-in-fact, or such
attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be
done by virtue of this power of attorney and the rights and powers herein
granted. The undersigned acknowledges that the foregoing attorney-in-fact, in
serving in such capacity at the request of the undersigned, are not assuming,
nor is the Company assuming, any of the undersigned's responsibilities to comply
with Section 13 or Section 16 of the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until the
undersigned is no longer required to file Forms 3, 4, and 5 or Schedule 13D (or
Schedule 13G, if applicable) with respect to the undersigned's holdings of and
transactions in securities by the Company, unless earlier revoked by the
undersigned in a signed writing delivered to the foregoing attorney-in-fact.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be
executed as of this 22nd day of August, 1996.
/s/ Gerald R. Forsythe
----------------------
Gerald R. Forsythe
Page 21 of 54
<PAGE>
EXHIBIT 3
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of
this 14th day of August, 1996 by and between Evergreen Resources, Inc. ("ERI")
and Energy Investors Fund I, L.P. and Energy Investors Fund II, L.P. (each a
"Fund," collectively, the "Funds").
WHEREAS the Funds, on the date hereof, have received 1,018,868 of ERI's no
par value common stock, all as contemplated in that certain Agreement for
Acquisition of Limited Partnership Interests dated the date hereof and entered
into between the parties hereto (the "Acquisition Agreement");
WHEREAS ERI desires to grant to the Funds the registration rights set forth
herein;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, except as otherwise
------------
specifically provided herein, the following capitalized terms (in their singular
and plural forms as applicable) shall have the meanings set forth below:
"Commission" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Lock-up Period" means the 90 day period following the effectiveness of the
Pending Offering.
"Majority in Interest" means the Funds, their successors and assigns
holding a majority of the then outstanding Registrable Securities, determined on
the basis of the aggregate number of shares of Registrable Securities held by
the Funds.
"Pending Offering" means the secondary offering of securities currently
contemplated by ERI. The Pending Offering shall be deemed terminated if the
initial filing of the registration statement to be filed with the Commission has
not been made by December 31, 1996.
The terms "register," "registered," and "registration" refer to a
registration effected by preparing the filing of a registration statement in
compliance with the Securities Act, and the declaration or order by the
Commission of the effectiveness of such registration statement.
"Registrable Securities" means the shares of ERI Common Stock issued
pursuant to the Acquisition Agreement.
Page 22 of 54
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Underwritten Public Offering" means a public offering of Common Stock for
cash which is offered and sold in a registered transaction pursuant to an
agreement between ERI and one or more underwriters.
Section 2. Registration Rights. (a) Selling Shareholder Registration. After
-------------------- ---------------------------------
the expiration of the Lock-Up Period and upon the request of a Majority in
Interest, ERI shall use its best efforts to file a Registration Statement on
Form S-3 (or, if Form S-3 is not available, on Form S-1 or Form S-2) which
registers all or at least 30% of the Registrable Securities outstanding and then
held by the Funds. The Funds shall be entitled to demand registration under this
Section 2(a) on three occasions. Upon receipt of notice of such demand (and, as
applicable, a determination that the proposed offering may reasonably meet such
minimum criteria), ERI agrees to:
(i) promptly give written notice of the proposed registration
to the non-requesting Fund, if any; and
(ii) use its best efforts to effect, as soon as practicable,
such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualifications under
the applicable blue sky or other state securities laws and appropriate
compliance with exemptive regulations issued under the Securities Act and any
other governmental requirements or regulations) as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion of
such requesting Fund's or Funds' Registrable Securities as is specified in the
request by such Fund to ERI, together with all or such portion of the
Registrable Securities of the non-requesting Fund, if any, joining in such
request as is specified in further requests received by ERI within thirty (30)
days after such written notice is given.
(b) [Reserved]
(c) Piggyback Registration. If ERI shall register any shares of
-----------------------
Common Stock, other than in connection with the Pending Offering, pursuant to
Section 2(a), or pursuant to a registration statement on Form S-4 or S-8 (or
similar form), it shall promptly give to each Fund written notice thereof
(which shall include, to the extent available, a list of the jurisdictions in
which ERI intends to attempt to qualify the offer and sale of such securities
under the applicable blue sky or other state securities laws) and shall use
its reasonable efforts to include in such registration (and any related
qualification under blue sky laws or other compliance), and in any Underwritten
Public Offering associated therewith, all the Registrable Securities specified
in any written request or requests by either Fund (or both) received by ERI
within thirty (30) days after such written notice is given, except as and to
the extent that, in the opinion of the managing underwriter or underwriters
(if such method of disposition shall be an Underwritten Public Offering), such
inclusion would result in more than fifty percent (50%) of the Common Stock
proposed to be sold
Page 23 of 54
<PAGE>
by ERI being excluded from the offering or would materially adversely affect
the marketing of such Common Stock proposed to be sold (as reasonably
determined by ERI or its investment advisors).
(d) Registration Expenses. All expenses of any registrations permitted
----------------------
pursuant to this Agreement and of all other offerings by ERI (including, but not
limited to, the expenses of any interim audit required by any underwriters in
the event of an offering requested pursuant to Section 2(a) or 2(c) hereof, any
qualifications under the blue sky or other state securities laws, compliance
with governmental requirements of preparing and filing any post-effective
amendments required for the lawful distribution of any securities to the public
in connection with registration, of supplying prospectuses, offering circular or
other documents but excluding fees of any special counsel retained by the Funds
and underwriting fees and discounts and selling commissions applicable to the
sale of the Registrable Securities) will be paid by ERI.
(e) Registration Procedures. In the case of such registration,
------------------------
qualification or compliance effected by ERI pursuant to this Agreement in which
any Fund's Registrable Securities are included pursuant to this Agreement, ERI
will, at its expense:
(i) prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of the Registrable Securities,
not to exceed nine (9) months;
(ii) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
as may be reasonably necessary to effect the sale of such Registrable
Securities, not to exceed nine (9) months;
(iii) furnish to the Funds participating in such registration and to
the underwriters of Registrable Securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such Registrable Securities;
(iv) use its diligent good faith efforts to register or qualify the
Registrable Securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating Funds
may reasonably request in writing within twenty (20) days following the original
filing of such registration statement; provided, however, that in the case of an
Underwritten Public Offering, the managing underwriter or underwriters shall
advise ERI with respect to blue sky qualification and related matters;
(v) notify counsel for the Funds participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(vi) notify counsel for such Funds promptly of any request by the
Commission for the amending or supplementing of such registration statement or
prospectus or for additional information;
Page 24 of 54
<PAGE>
(vii) prepare and file with the Commission, promptly upon the
request of any Funds, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such Funds (and
concurred in by counsel for ERI), is required under the Securities Act or the
rules and regulations thereunder in connection with the distribution of the
Common Stock other than an amendment or supplement required solely as a result
of a change by such Fund in the method of distribution of the Registrable
Securities; and
(viii) prepare and promptly file with the Commission and promptly
notify counsel for such Funds of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
Registrable Securities is required to be delivered under the Securities Act, any
event other than a change in the method of distribution of the Registrable
Securities selected by the Funds shall have occurred as the result of which any
such prospectus or any other prospectus as then in effect would include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading.
(f) Related Registration Matters. If the Funds secure an underwriter,
-----------------------------
ERI will enter into an underwriting agreement in connection with any
registration subject to the provisions of Section 2(a) in which any Registrable
Securities are included, which agreement shall be reasonably acceptable to ERI
and contain such terms, provisions and agreements which are customary and
appropriate for such registration. In connection with any Underwritten Public
Offering in which any Registrable Securities are included, to the extent not
provided in the underwriting agreement related to such offering, ERI shall use
its reasonable efforts to:
(i) list the shares of Common Stock included in such offering on
any national securities exchange on which the Common Stock has previously been
approved for listing;
(ii) engage a bank or other company to act as transfer agent and
registrar for the Common Stock, unless ERI has already engaged a transfer agent
and registrar;
(iii) cause customary opinions of counsel, comfort letters of
accountants and other appropriate documents to be delivered by representatives
of ERI; and
(iv) as soon as practicable after the effective date of the
registration statement, and, in any event, within sixteen (16) months
thereafter, make "generally available to its securities holders" (within the
meaning of Rule 158 under the Securities Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Securities Act and covering
a period of at least twelve (12) consecutive months beginning after the
effective date of the registration statement.
(g) Information by Funds. Each Fund requesting to be included in any
---------------------
registration shall furnish to ERI such information regarding such Fund and the
distribution proposed by such Fund as ERI may reasonably require in connection
with any registration, qualification or compliance referred to in Section 2.
Page 25 of 54
<PAGE>
(h) Assignment. The rights to cause ERI to register Registrable
-----------
Securities under this Section 2 relate solely to the Funds and may not be
assigned, except that either or both Funds may assign its interests hereunder to
its partners in connection with a distribution to its partners of the
Registrable Securities (it being acknowledged the further assignment of the
registration rights referenced herein by such partners is prohibited).
(i) Notice Requirements. Any notice from a holder of Registrable
--------------------
Securities requesting registration of some or all of such Registrable Securities
pursuant to Sections 2(a) and 2(c) shall (A) specify the number of shares of
Registrable Securities intended to be included in such registration; (B)
describe the nature and method of the proposed offering and sale; (D) include an
undertaking to provide all information and materials concerning such holder and
the method of distribution and to take any other actions reasonably requested by
ERI to enable ERI to comply with the Securities Act, any state securities law
and/or the applicable requirements of the Commission or any state securities
commissioner or similar agency or official.
Section 3. Implementation. (a) Effect of Sale. Any Fund that sells all of
--------------- --------------
its Registrable Securities pursuant to the terms of this Agreement (or
otherwise) shall cease to have any further rights under this Agreement.
(b) Priority. Nothing herein shall preclude ERI from granting
---------
registration rights on parity with the registration rights set forth in Section
2(c) hereof. The parties acknowledge the existence of the registration rights
agreement between ERI and the former Powerbridge Inc. shareholders (dated the
date hereof) and that such agreement is on parity with this Agreement. In the
event that a "cutback" is required by the underwriters as contemplated in
Section 2(c) hereof, such cutback will be pro rata based on the respective
parties' ownership of Registrable Securities (under their respective
agreements).
(c) Amendment and Waiver. The provisions of this Agreement may be
---------------------
amended from time to time by an instrument in writing signed by ERI and a
Majority in Interest. Any receipt of benefit of the Funds hereunder may be
waived by a Majority in Interest.
(d) Adjustments. In the event ERI shall declare a stock split, stock
------------
dividend or other distribution of capital stock in respect of, or issue capital
stock in replacement of or exchange for, any Registrable Securities, such
Registrable Securities shall be subject to this Agreement and the provisions of
this Agreement providing for calculations based on the number of shares of
Registrable Securities shall be adjusted accordingly to account for the shares
issued in respect of the Registrable Securities.
(e) Indemnification. In the event any Registrable Securities are
----------------
included in a registration statement pursuant to Section 2 hereof:
(i) To the extent permitted by law, ERI will indemnify and hold
harmless each Fund, the partners, officers, agents, employees and managers of
each Fund, any person, if any, who controls such Fund or underwriter within the
meaning of the Securities Act or the Exchange Act against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Securities Act or the Exchange Act or other federal or state law, insofar as
such losses,
Page 26 of 54
<PAGE>
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations
(collectively, a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by ERI of the Securities Act, the Exchange Act, any state securities
law or any rule or regulation promulgated under the Securities Act, the Exchange
Act or any state securities law; and ERI will reimburse each such Fund, partner,
officer, agent, employee or manager, underwriter or controlling person for any
legal or other expenses reasonably incurred, as incurred, by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
section shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of ERI, which consent shall not be unreasonably withheld, nor shall ERI be
liable in any such case for any such loss, claim, damage, liability or action to
the extent that it arises out of or is based upon a Violation that occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Fund, underwriter or
controlling person.
(ii) To the extent permitted by law, each selling Fund will
indemnify and hold harmless ERI, each of its officers, directors, agents or
employees, each person, if any, who controls ERI within the meaning of the
Securities Act, any underwriter and any other Fund selling securities in such
registration statement or any of its partners, agents, employees, managers or
officers or any person who controls such Fund, against any losses, claims,
damages or liabilities (joint or several) (to which ERI or any such director,
agent, employee, officer, controlling person, or underwriter, or other such Fund
or manager, officer, partner, agent, employee or controlling person of such
other Fund may become subject, under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following Violations: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by such Fund of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law (in the cases of (A) and (B) only
to the extent that such Violation occurs in reliance upon with written
information furnished by such Fund expressly for use in connection with such
registration, and in the case of (C), only to the extent that such Violation
arises from the action or inaction of such Selling Fund); and each such Fund
will reimburse any legal or other expenses reasonably incurred, as incurred, by
ERI or any such agent, employee, director, officer, controlling person,
underwriter or other Fund or manager, officer, partner, agent, employee or
controlling person of such other Fund, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this section shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Fund, which consent
shall not be unreasonably withheld; and
Page 27 of 54
<PAGE>
provided, further, that each selling Fund shall be liable under this section for
only that amount of losses, claims, damages and liabilities as does not exceed
the proceeds to such selling Fund as a result of such registration.
(iii) Promptly after receipt by an indemnified party under this
section of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this section, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
that the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if, in the opinion of counsel for the indemnifying
party, representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable period of time of the commencement of any
such action shall relieve such indemnifying party of any liability to the
indemnified party under this section to the extent materially prejudicial to its
ability to defend such action, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it may have to
any indemnified party otherwise than under this section.
(e) Reports under the Exchange Act. With a view to making available to
-------------------------------
the Funds the benefits of Commission Rule 144 promulgated under the Securities
Act and any other rule or regulation of the SEC that may at any time permit a
Fund to sell securities of ERI to the public without registration or pursuant to
a registration on Form S-3, ERI agrees as follows:
(i) to make and keep public information available, as those terms
are understood and defined in Commission Rule 144, at all times while the Funds
hold any securities of ERI;
(ii) to take such action as is necessary to enable the Funds to
utilize Form S-3 for the sale of their Registrable Securities;
(iii) to file with the SEC in a timely manner all reports and other
documents required of ERI under the Securities Act and the Exchange Act; and
(iv) to furnish to any Fund, so long as the Fund owns any
Registrable Securities, forthwith upon request (i) a written statement by ERI
that it has complied with the reporting requirements of Commission Rule 144 (at
all times while the Funds hold any securities of ERI), the Securities Act and
the Exchange Act, or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of ERI and such other reports and
documents so filed by ERI, and (iii) such other information as may be reasonably
requested in availing any Fund of any rule or regulation of the SEC that permits
the selling of any such securities without registration or pursuant to such
form.
Page 28 of 54
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Evergreen Resources, Inc.
By: /s/ Mark S. Sexton
----------------------------------
Mark S. Sexton, President
Energy Investors Fund, L.P., Energy Investors Fund II, L.P., a
a Delaware limited partnership Delaware limited partnership
By: Energy Investors Management, Inc., By: Energy Investors Management Company
its Authorized Agent its Authorized Agent
By: /s/ Mark A. Tarini By: /s/ Mark A. Tarini
------------------------------- --------------------------------
Mark A. Tarini, Managing Director Mark A. Tarini, Managing Director
Page 29 of 54
<PAGE>
EXHIBIT 4
CLASS B WARRANT
To Purchase _____ Shares of Common Stock,
no par value, of
EVERGREEN RESOURCES, INC.
Dated as of August 23, 1996
Page 30 of 54
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION THEREUNDER OR
AN EXEMPTION THEREFROM.
CLASS B WARRANT
To Purchase Shares of Common Stock, no par value, of
-------
EVERGREEN RESOURCES, INC.
No. BRW- ,
---- --------- -- ----
THIS IS TO CERTIFY that, for value received, ,
-----------------------------
or registered assigns, is entitled upon the due exercise hereof at any time
during the Exercise Period to purchase the lesser of (i) (x) multiplied
--------
by (y) a fraction the numerator of which is $1.00 (which amount shall be subject
to equitable adjustment in the event of any stock dividend, stock split,
combination, reorganization, recapitalization, reclassification or other similar
event involving a change in the 8% Preferred Stock after the Original Issue Date
and on or prior to the Warrant Trigger Date), and the denominator of which is
$1.00, and (ii) the Adjusted Initial Number of shares of Common Stock of
Evergreen Resources, Inc., a Colorado corporation (the "Company"), at an
Exercise Price of $8.34 per share (such Exercise Price and the number of shares
of Common Stock purchasable hereunder being subject to adjustment as provided
herein), and to exercise the other rights, powers and privileges hereinafter
provided, all on the terms and subject to the conditions hereinafter set forth.
This Warrant is one of the Company's Class B Warrants to Purchase Shares of
Common Stock (herein, together with any warrants issued in exchange therefor or
replacement thereof, all as amended or supplemented from time to time, called
the "Warrants") issued originally for an aggregate of 899,280.58 shares of
Common Stock pursuant to the separate, but identical, Securities Purchase
Agreements, dated the Original Issue Date by and between the Company and the
institutional investors named therein (such agreements collectively, as amended,
modified and supplemented from time to time, the "Securities Purchase
Agreement"). Reference is hereby made to the Securities Purchase Agreement for
a description of, among other things, certain rights of the holders of the
Warrants and Warrant Shares. Holders of Warrants and/or Warrant Shares are
entitled to the applicable benefits of the Securities Purchase Agreement and may
enforce the applicable agreements contained therein, all in accordance with and
subject to the terms thereof, notwithstanding any redemption or acquisition of
any of the other securities issued pursuant to the Securities Purchase
Agreement.
Page 31 of 54
<PAGE>
This Warrant shall expire in the event that no shares of 8% Preferred Stock
which constitute a portion of the Applicable Redemption Multiple are redeemed by
the Company from the holder of this Warrant on the Warrant Trigger Date pursuant
to section 4.2 of the Resolution.
1. Definitions.
------------
1.1. Definitions of Terms.
---------------------
"Adjusted Initial Number" shall mean a number of shares of Common Stock,
-----------------------
calculated as of the Warrant Trigger Date, equal to (i) the product of (x)
- -
$1.00 (which amount shall be subject to equitable adjustment in the event of
any stock dividend, stock split, combination, reorganization, recapitalization,
reclassification or other similar event involving a change in the 8% Preferred
Stock after the Original Issue Date and on or prior to the Warrant Trigger
Date) multiplied by (y) the number of shares of 8% Preferred Stock, if any,
-
redeemed by the Company from the holder of this Warrant on the Warrant Trigger
Date pursuant to section 4.2 of the Resolution, but only to the extent such
shares constitute a portion of the Applicable Redemption Multiple, divided by
(ii) the Exercise Price in effect on the Warrant Trigger Date. The holder of
--
this Warrant shall insert the Adjusted Initial Number on Schedule I to this
Warrant on or after the Warrant Trigger Date, and such Adjusted Initial Number,
as so inserted, shall be deemed the Adjusted Initial Number for all purposes
of this Warrant.
"Affiliate" shall have the meaning specified in the Resolution.
---------
"Applicable Redemption Multiple" shall mean the [first] [second] [third]
------------------------------
[fourth] [fifth] multiple of 1,500,000 shares of 8% Preferred Stock, or portion
thereof, specified to be redeemed at the option of the Company pursuant to
section 4.2 of the Resolution in a notice delivered pursuant to section 4.3 of
the Resolution. [At the Initial Closing, each Purchaser shall be issued five
------------------------------------------------------------
Class B Warrants, one for each multiple of 1,500,000 shares which may be
- ------------------------------------------------------------------------
redeemed.]
- ----------
"Assignment" shall mean the form of Assignment appearing at the end of
----------
this Warrant.
"Common Stock" shall mean the shares of Common Stock, no par value, of
------------
the Company as constituted on the Original Issue Date and any shares into which
such Common Stock shall have been changed or any shares resulting from any
reclassification of such Common Stock.
"Company" shall mean Evergreen Resources, Inc., a Colorado corporation,
-------
and any successor corporation.
"Convertible Securities" shall mean evidences of indebtedness, shares
----------------------
(including, without limitation, shares of Preferred Stock) of stock or other
securities which are convertible into or exchangeable or exercisable for,
with or without payment of additional consideration, shares of Common Stock,
either immediately or upon the arrival of a specified date or the happening of
a specified event.
Page 32 of 54
<PAGE>
"Current Market Price" of any security as of any date herein specified
--------------------
shall mean the average of the daily closing prices for the 30 consecutive
trading days commencing 45 trading days before the day in question (or in the
event that a security has been traded for less than 45 days, each of the trading
days on which such security has been traded). The closing price for each day
shall be (a) if such security is listed or admitted for trading on any national
-
securities exchange, the last sale price of such security, regular way, or the
average of the closing bid and asked prices thereof if no such sale occurred, in
each case as officially reported on the principal securities exchange on which
such security is listed, or (b) if not reported as described in clause (a), the
-
average of the closing bid and asked prices of such security in the over-the-
counter market as shown by the National Association of Securities Dealers, Inc.
Automated Quotation System, or any similar system of automated dissemination of
quotations of securities prices then in common use, if so quoted, as reported by
any member firm of the New York Stock Exchange selected by the Company, or (c)
-
if not quoted as described in clause (b), the average of the closing bid and
asked prices for such security as reported by the National Quotation Bureau
Incorporated or any similar successor organization, as reported by any member
firm of the New York Stock Exchange selected by the Company. If such security is
quoted on a national securities or central market system in lieu of a market or
quotation system described above, the closing price shall be determined in the
manner set forth in clause (a) of the preceding sentence if actual transactions
are reported and in the manner set forth in clause (b) of the preceding sentence
if bid and asked prices are reported but actual transactions are not.
"Daily Market Price" of the Common Stock as of any date herein specified
------------------
shall mean the closing price of the Common Stock on such date. The closing price
for any date shall be (a) if the Common Stock is listed or admitted for trading
-
on any national securities exchange, the last sale price of the Common Stock,
regular way, or the closing bid price thereof if no such sale occurred, in each
case as officially reported on the principal securities exchange on which the
Common Stock is listed, or (b) if not reported as described in clause (a), the
-
closing bid price of the Common Stock in the over-the-counter market as shown by
the National Association of Securities Dealers, Inc. Automated Quotation System,
or any similar system of automated dissemination of quotations of securities
prices then in common use, if so quoted, as reported by any member firm of the
New York Stock Exchange selected by the Company, or (c) if not quoted as
described in clause (b), the closing bid price for the Common Stock as reported
by the National Quotation Bureau Incorporated or any similar successor
organization, as reported by any member firm of the New York Stock Exchange
selected by the Company. If the Common Stock is quoted on a national securities
or central market system in lieu of a market or quotation system described
above, the closing price shall be determined in the manner set forth in clause
(a) of the preceding sentence if actual transactions are reported and in the
manner set forth in clause (b) of the preceding sentence if bid price are
reported but actual transactions are not.
"8% Preferred Stock" shall mean the 8% Preferred Stock, $1.00 par value,
------------------
of the Company established pursuant to the Resolution.
"Exercise Price" shall mean the price per share of Common Stock set forth
--------------
in the preamble to this Warrant, as such price may be adjusted pursuant to
section 4.
Page 33 of 54
<PAGE>
"Exercise Period" shall mean the period commencing on the Warrant Trigger
---------------
Date and terminating at 5:00 p.m. Boston time on the tenth anniversary of the
Warrant Trigger Date.
"Fair Value" shall mean the fair value of the appropriate security,
----------
property, assets, business or entity as determined by an independent appraiser
of recognized national standing (selected by the Company and reasonably
satisfactory to the Required Holders of the Warrants), in each case in
accordance with generally accepted financial practice. Such determination shall
be set forth in writing, and the Company shall, immediately following such
determination, deliver a copy thereof to each holder or holders of Warrants then
outstanding. The determination so made shall be conclusive and binding on the
Company and on such holder or holders. The Company shall pay all of the expenses
incurred in connection with any such determination, including, without
limitation, the expenses of the independent appraiser engaged to make such
determination. If the Company shall not have selected such appraiser within 20
days after the occurrence of the event giving rise to the need therefor, then
the Required Holders of the Warrants at the time outstanding may select such
appraiser. Notwithstanding the foregoing, in the case of any security, if
clauses (a), (b) or (c) of the definition of Current Market Price are applicable
to such security, then the Fair Value of such security shall be the Current
Market Price of such security.
"Notice of Exercise" shall mean the form of Notice of Exercise appearing
------------------
at the end of this Warrant.
"Officers' Certificate" shall mean a certificate signed on behalf of the
---------------------
Company by its President or one of its Vice Presidents and its Treasurer or one
of its Assistant Treasurers.
"Operative Documents" shall mean the Securities Purchase Agreement, the
-------------------
securities issued pursuant thereto, the Warrants, the Warrant Shares, the
Resolution and each of the other agreements, documents and instruments executed
in connection therewith, each as it may from time to time be amended, modified
or supplemented.
"Original Issue Date" shall mean December 8, 1994.
-------------------
"Other Securities" shall mean with reference to the exercise privilege of
----------------
the holders of the Warrants, any shares (other than shares of Common Stock) and
any other securities of the Company (including, without limitation, shares of
Preferred Stock) or of any other Person which the holders of the Warrants at any
time shall be entitled to receive, or shall have received, upon the exercise or
partial exercise of the Warrants, in lieu of or in addition to shares of Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of shares of Common Stock (or Other Securities)
pursuant to the terms of the Warrants or otherwise.
"Person" shall mean an individual, a corporation, an association, a
------
joint-stock company, a business trust or other similar organization, a
partnership, a joint venture, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision thereof.
"Preferred Stock" shall mean the Preferred Stock, $1.00 par value, of the
---------------
Company, including the 8% Preferred Stock.
Page 34 of 54
<PAGE>
"Required Holders" shall mean, as of any date, the holder or holders of
----------------
66-2/3% or more in interest of the Warrants then outstanding (excluding all such
Warrants at the time owned by the Company or any Affiliate of the Company).
"Resolution" shall mean the Resolution of the Board of Directors of the
----------
Company establishing the 8% Convertible Preferred Stock, $1.00 par value, of the
Company and set forth in Articles of Amendment to State Series Shares filed with
the Secretary of State of the State of Colorado.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any successor federal statute, and the rules and regulations promulgated
thereunder, all as amended, modified or supplemented from time to time.
"Securities Purchase Agreement" shall have the meaning specified in the
-----------------------------
preamble to this Warrant.
"Stock Purchase Rights" shall mean any warrants, options or other rights
---------------------
to subscribe for, purchase or otherwise acquire any shares of Common Stock or
any Convertible Securities, either immediately or upon the arrival of a
specified date or the happening of a specified event.
"Subsidiary" of any Person at any date shall mean (a) any other Person
----------
50% or more (by number of votes) of the Voting Stock of which is owned by such
first-mentioned Person and/or by one or more other Subsidiaries of such first-
mentioned Person; (b) any other Person of which such first-mentioned Person or
any of its other Subsidiaries is a general partner; and (c) any other Person
with respect to which such first-mentioned Person and/or any one or more other
Subsidiaries of such first-mentioned Person (i) is entitled to 50% or more of
such Person's profits or losses or 50% or more of such Person's assets on
liquidation or (ii) holds an equity interest in such Person of 50% or more. As
used herein, unless the context clearly requires otherwise, the term
"Subsidiary" refers to a Subsidiary of the Company.
"Voting Stock", when used with reference to any Person, shall mean shares
------------
(however designated) of such Person having ordinary voting power for the
election of a majority of the members of the board of directors (or other
governing body) of such Person, other than shares having such power only by
reason of the happening of a contingency.
"Warrant Shares" shall mean the shares of Common Stock (and/or Other
--------------
Securities) issued or issuable, as the case may be, from time to time upon
exercise of the Warrants, including, without limitation, any shares of Common
Stock (and/or Other Securities) issued or issuable with respect thereto by way
of stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation, other reorganization or otherwise.
"Warrants" shall have the meaning specified in the preamble to this
--------
Warrant.
"Warrant Trigger Date" shall mean the date on which the Applicable
--------------------
Redemption Multiple, or any portion thereof, is redeemed pursuant to section 4.2
of the Resolution. The holder of this Warrant shall insert the actual date of
the Warrant Trigger Date on Schedule I to this Warrant on or after the
occurrence of the Warrant Trigger Date, and such date, as so inserted, shall be
deemed
Page 35 of 54
<PAGE>
the Warrant Trigger Date for all purposes of this Warrant, and any Warrant
issued in exchange or replacement hereof.
1.2. Other Definitions. The terms defined in this section 1.2, whenever
-----------------
used in this Warrant, shall, unless the context otherwise requires, have the
following respective meanings:
"this Warrant" (and similar references to any of the other Operative
------------
Documents) shall mean, and the words "herein" (and "therein"), "hereof" (and
------ ------- ------
"thereof"), "hereunder" (and "thereunder") and words of similar import shall,
------ --------- ----------
unless the context clearly requires otherwise, refer to, such instruments as
they may from time to time be amended, modified or supplemented.
"corporation" shall include an association, joint stock company, business
-----------
trust or other similar organization.
"shares" of any Person shall include any and all shares of capital stock of
------
such Person of any class or other shares, interests, participations or other
equivalents (however designated) in the capital of such Person.
2. Exercise of Warrant
-------------------
2.1. Right to Exercise; Notice. On the terms and subject to the
-------------------------
conditions of this section 2, the holder hereof shall have the right, at its
option, to exercise this Warrant in whole or in part at any time or from time to
time during the Exercise Period, all as more fully specified below, provided
--------
that a partial exercise of this Warrant for less than the entire remaining
amount of Warrant Shares issuable under this Warrant shall be made only for a
whole number of shares.
2.2. Manner of Exercise; Issuance of Shares of Common Stock. To exercise
------------------------------------------------------
this Warrant, the holder hereof shall deliver to the Company (a) a Notice of
-
Exercise duly executed by the holder hereof (or its attorney) specifying the
number of Warrant Shares to be purchased, (b) an amount equal to the aggregate
-
Exercise Price then in effect for all Warrant Shares as to which this Warrant is
then being exercised and (c) this Warrant. At the option of the holder hereof,
-
payment of the Exercise Price shall be made (w) by wire transfer of funds to an
-
account in a bank located in the United States designated by the Company for
such purpose, (x) by check payable to the order of the Company, (y) by
- -
application of any Warrant Shares as provided below, or (z) by any combination
-
of such methods.
Upon the exercise of this Warrant in whole or in part, the holder hereof
may, at its option, submit to the Company written instructions from such holder
to apply any specified portion of the Warrant Shares issuable upon such exercise
in payment of the Exercise Price required upon such exercise, in which case the
Company will accept such specified portion of the Warrant Shares (at a value per
share equal to the Current Market Price of such share, if applicable, or the
then Fair Value of such share less, in each case, the Exercise Price then in
----
effect), in lieu of a like amount of such cash payment.
Upon receipt of the items referred to in section 2.3, the Company shall,
as promptly as practicable, and in any event within five days thereafter, cause
to be issued and delivered to the
Page 36 of 54
<PAGE>
holder hereof (or its nominee) or the transferee designated in the Notice of
Exercise, a certificate or certificates representing the number of Warrant
Shares specified in the Notice of Exercise (but not exceeding the maximum number
of shares then issuable upon exercise of this Warrant) minus the number of
-----
Warrant Shares, if any, applied in payment of the Exercise Price. Such
certificates shall be registered in the name of the holder hereof (or its
nominee) or in the name of such transferee, as the case may be.
If this Warrant is exercised in part, the Company shall, at the time of
delivery of such certificate or certificates, issue and deliver to the holder
hereof or the transferee so designated in the Notice of Exercise, a new Warrant
evidencing the right of the holder hereof or such transferee to purchase at the
Exercise Price then in effect the aggregate number of Warrant Shares for which
this Warrant shall not have been exercised and this Warrant shall be canceled.
2.3. Effectiveness of Exercise. Unless otherwise requested by the holder
-------------------------
hereof, this Warrant shall be deemed to have been exercised and such certificate
or certificates representing Warrant Shares shall be deemed to have been issued,
and the holder or transferee so designated in the Notice of Exercise shall be
deemed to have become the holder of record of such Warrant Shares for all
purposes, as of the close of business on the date on which the Notice of
Exercise, the Exercise Price and this Warrant shall have been received by the
Company.
2.4. Fractional Shares. The Company shall not issue fractional Warrant
-----------------
Shares or scrip representing fractional Warrant Shares upon any exercise of this
Warrant. As to any fractional Warrant Shares which the holder hereof would
otherwise be entitled to purchase from the Company upon such exercise, the
Company shall issue one share which the holder hereof shall be entitled to
purchase from the Company at a price equal to the Exercise Price calculated as
of the date of the Notice of Exercise. Payment of such amount shall be made in
any manner permitted under section 2.2 at the time of delivery of any
certificate or certificates deliverable upon such exercise.
2.5. Continued Validity. A holder of Warrant Shares issued upon the
------------------
exercise of this Warrant, in whole or in part, shall continue to be entitled to
all rights to which a holder of this Warrant is entitled pursuant to the
provisions of this Warrant except such rights as by their terms apply solely to
the holder of a Warrant, notwithstanding that this Warrant is canceled following
such exercise. The Company will, at the time of any exercise of this Warrant,
upon the request of the holder of the Warrant Shares issued upon the exercise
hereof, acknowledge in writing, in form reasonably satisfactory to such holder,
its continuing obligation to afford to such holder all rights to which such
holder shall continue to be entitled after such exercise in accordance with the
provisions of this Warrant, including, without limitation, those set forth in
sections 7.1, 7.2, 7.4 and 7.5 of this Warrant; provided that if such holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder all such rights.
3. Registration, Transfer, Exchange and Replacement of Securities; Legends.
------------------------------------------------------------------------
3.1. Registration, Transfer, Exchange and Replacement of Securities.
---------------------------------------------------------------
Reference is hereby made to sections 13 and 14 of the Securities Purchase
Agreement for certain provisions
Page 37 of 54
<PAGE>
relating to the registration, transfer, exchange and replacement of the Warrants
and Warrant Shares. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR
IN THE SECURITIES PURCHASE AGREEMENT, THIS WARRANT MAY NOT BE TRANSFERRED, IN
WHOLE OR IN PART, PRIOR TO THE WARRANT TRIGGER DATE EXCEPT TOGETHER WITH A
PROPORTIONATE PERCENTAGE OF THE SHARES OF 8% PREFERRED STOCK OWNED BY THE HOLDER
HEREOF WHICH WERE INITIALLY ISSUED PURSUANT TO THE SECURITIES PURCHASE
AGREEMENT. Warrants issued after the Warrant Trigger Date in exchange or
replacement of another Warrant shall specify in the preamble the aggregate
number of Warrant Shares then issuable upon exercise of such new Warrant and the
Exercise Price then in effect, and shall not contain the definition of Adjusted
Initial Number, the last paragraph of the preamble to this Warrant, clause (a)
of section 4.1 or the reference to Adjusted Initial Number in Schedule I.
3.2. Legends. Neither this Warrant nor any Warrant Shares may be
-------
transferred or assigned unless registered under the Securities Act or unless an
exemption from such registration is available. Until the date on which a
registration statement covering the Warrants becomes effective under the
Securities Act, each Warrant shall bear a legend in substantially the following
form:
"THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE TRANSFERRED IN THE ABSENCE OF REGISTRATION
THEREUNDER OR AN EXEMPTION THEREFROM."
Until the date on which a registration statement covering the Warrant
Shares becomes effective under the Securities Act, each certificate evidencing
Warrant Shares shall bear a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN THE
ABSENCE OF REGISTRATION THEREUNDER OR AN EXEMPTION THEREFROM."
4. Anti-Dilution Provisions.
------------------------
4.1. Adjustment of Number of Shares Purchasable.
------------------------------------------
(a) On the Warrant Trigger Date, the number of shares of Common Stock
which the holder hereof shall thereafter be entitled to purchase, at the
Exercise Price then in effect, shall equal the number of shares of Common Stock
(calculated to the nearest 1/100th of a share) obtained by multiplying (i) $8.34
by (ii) the Adjusted Initial Number and dividing the product thereof by the
Exercise Price in effect on the Warrant Trigger Date, provided that the number
--------
of shares which such holder shall thereafter be entitled to purchase shall be
subject to further adjustment, as provided in section 4.1(b), upon any
subsequent adjustment to the Exercise Price pursuant to section 4.2, and
provided, further, that the Exercise Price at which this Warrant shall be
- -------- -------
exercisable shall be subject to further adjustment pursuant to section 4.2.
Page 38 of 54
<PAGE>
(b) Upon any adjustment of the Exercise Price as provided in section 4.2
occurring on or after the Warrant Trigger Date, the number of shares of Common
Stock which the holder hereof shall thereafter be entitled to purchase, at the
Exercise Price resulting from such adjustment, shall be adjusted to equal the
number of shares of Common Stock (calculated to the nearest 1/100th of a share)
obtained by multiplying (i) the Exercise Price in effect immediately prior to
such adjustment to the Exercise Price by (ii) the number of shares of Common
Stock purchasable hereunder immediately prior to such adjustment, and dividing
the product thereof by the Exercise Price resulting from such adjustment,
provided that the number of shares which such holder shall thereafter be
- --------
entitled to purchase shall be subject to further adjustment upon any subsequent
adjustment to the Exercise Price pursuant to section 4.2 and provided, further,
-------- -------
that the Exercise Price at which this Warrant shall be exercisable shall be
subject to further adjustment pursuant to section 4.2.
4.2. Adjustment of Exercise Price. Except as otherwise provided in
----------------------------
section 4.2(n) below, the Exercise Price shall be subject to adjustment from
time to time as set forth in this section 4.2.
(a) Stock Dividends, Subdivisions and Combinations. If and whenever the
----------------------------------------------
Company subsequent to the date hereof:
(i) declares a dividend upon, or makes any distribution in
respect of, any of its capital stock, payable in shares of Common Stock,
Convertible Securities or Stock Purchase Rights, or
(ii) subdivides its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(iii) combines its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then the Exercise Price shall be adjusted to that price determined by
multiplying the Exercise Price in effect immediately prior to such event by a
fraction (A) the numerator of which shall be the total number of outstanding
-
shares of Common Stock immediately prior to such event, and (B) the denominator
-
of which shall be the total number of outstanding shares of Common Stock
immediately after such event, treating as outstanding all shares of Common Stock
issuable upon conversions or exchanges of such Convertible Securities and
exercises of such Stock Purchase Rights.
(b) Issuance of Additional Shares of Common Stock. If and whenever the
---------------------------------------------
Company subsequent to the date hereof shall issue or sell any shares of Common
Stock (except as otherwise provided in the last paragraph of this section
4.2(b)), for a consideration per share less than the greater of (x) the Fair
-
Value per of Common Stock and (y) the Exercise Price then in effect (determined,
-
in each case, as of the date specified in the next succeeding paragraph), the
Exercise Price upon each such issuance or sale shall be adjusted as of the date
specified in the next succeeding paragraph to the lower of the prices calculated
pursuant to the following clauses (i) and (ii) of this section 4.2(b) and shall
be determined by:
Page 39 of 54
<PAGE>
(i) multiplying the Exercise Price in effect as of the date
-----------
specified in the next succeeding paragraph by a fraction the numerator of
which is (A) the sum of (1) the number of shares of Common Stock
- -
outstanding immediately prior to such issue or sale multiplied by the Fair
Value per share of Common Stock immediately prior to such issue or sale
plus (2) the aggregate consideration, if any, received by the Company upon
-
such issue or sale, divided by (B) the total number of shares of Common
-
Stock outstanding immediately after such issue or sale, and the denominator
of which is the Fair Value per share of Common Stock immediately prior to
such issue or sale; and
(ii) dividing (A) the sum of (1) the number of shares of Common
-------- - -
Stock outstanding immediately prior to such issue or sale multiplied by the
Exercise Price in effect immediately prior to such issue or sale plus (2)
-
the aggregate consideration, if any, received by the Company upon such
issue or sale, by (B) the total number of shares of Common Stock
-
outstanding immediately after such issue or sale.
For purposes of this section 4.2(b), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value and the Exercise
Price then in effect shall be determined shall be the earlier of (i) the date on
-
which the Company shall enter into a firm contract for the issuance of such
shares of Common Stock and (ii) immediately prior to the date of actual issuance
--
of such shares of Common Stock.
No adjustment of the Exercise Price shall be made under this section 4.2(b)
upon the issuance of any shares of Common Stock which are (i) distributed to
-
holders of shares of Common Stock pursuant to a stock dividend or subdivision
for which an adjustment shall previously have been made under section 4.2(a) or
(ii) issued pursuant to the exercise of any Stock Purchase Rights or pursuant to
--
the conversion or exchange of any Convertible Securities to the extent that an
adjustment shall previously have been made upon the issuance of such Stock
Purchase Rights or Convertible Securities pursuant to sections 4.2(a), (c) or
(d).
(c) Issuance of Stock Purchase Rights. If and whenever the Company
---------------------------------
subsequent to the date hereof shall issue or sell any Stock Purchase Rights
(except as otherwise provided in the last paragraph of this section 4.2(c)) and
the consideration per share for which shares of Common Stock may at any time
thereafter be issuable upon exercise thereof (or, in the case of Stock Purchase
Rights exercisable for the purchase of Convertible Securities, upon the
subsequent conversion or exchange of such Convertible Securities) shall be less
than the greater of (x) the Fair Value per share of Common Stock and (y) the
- -
Exercise Price then in effect (determined, in each case, as of the date
specified in the next succeeding paragraph), the Exercise Price upon each such
issuance or sale shall be adjusted as provided in section 4.2(b) as of the date
specified in the next succeeding paragraph on the basis that the maximum number
of shares of Common Stock ever issuable upon exercise of such Stock Purchase
Rights (or upon conversion or exchange of such Convertible Securities following
such exercise) shall be deemed to have been issued as of the date of the
determination of the Fair Value and the Exercise Price then in effect specified
in the next succeeding paragraph.
For the purposes of this section 4.2(c), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value and the Exercise
Price then in effect shall be
Page 40 of 54
<PAGE>
determined shall be the earlier of (i) the date on which the Company shall enter
-
into a firm contract for the issuance of such Stock Purchase Rights and (ii)
--
immediately prior to the date of actual issuance of such Stock Purchase Rights.
No adjustment of the Exercise Price shall be made under this section 4.2(c)
upon the issuance of any Stock Purchase Rights to the extent that an adjustment
shall previously have been made upon the issuance of such Stock Purchase Rights
pursuant to section 4.2(a).
(d) Issuance of Convertible Securities. If and whenever the Company
----------------------------------
subsequent to the date hereof shall issue or sell any Convertible Securities
(except as otherwise provided in the last paragraph of this section 4.2(d)) and
the consideration per share for which shares of Common Stock may at any time
thereafter be issuable pursuant to the terms of such Convertible Securities
shall be less than the greater of (x) the Fair Value per share of Common Stock
-
and (y) the Exercise Price then in effect (determined, in each case, as of the
-
date specified in the next succeeding paragraph), the Exercise Price upon each
such issuance or sale shall be adjusted as provided in section 4.2(b) as of the
date specified in the next succeeding paragraph on the basis that the maximum
number of shares of Common Stock ever necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
as of the date of the determination of the Fair Value and Exercise Price then in
effect specified in the next succeeding paragraph.
For the purposes of this section 4.2(d), the date as of which the Exercise
Price shall be adjusted and the date as of which the Fair Value and the Exercise
Price then in effect shall be determined shall be the earlier of (i) the date on
-
which the Company shall enter into a firm contract for the issuance of such
Convertible Securities and (ii) immediately prior to the date of actual issuance
--
of such Convertible Securities.
No adjustment of the Exercise Price shall be made under this section 4.2(d)
upon the issuance of any Convertible Securities which are (i) distributed to
-
holders of shares of Common Stock pursuant to a stock dividend to the extent
that an adjustment shall previously have been made pursuant to section 4.2(a) or
(ii) issued pursuant to the exercise of any Stock Purchase Rights to the extent
--
that an adjustment shall previously have been made upon the issuance of such
Stock Purchase Rights pursuant to section 4.2(a) or (c).
(e) Minimum Adjustment. If any adjustment of the Exercise Price pursuant
------------------
to this section 4.2 shall result in an adjustment of less than $.0001, no such
adjustment shall be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward, shall amount
to $.0001; provided that upon any adjustment of the Exercise Price resulting
--------
from (i) the declaration of a dividend upon, or the making of any distribution
-
in respect of, any stock of the Company payable in shares of Common Stock, Stock
Purchase Rights or Convertible Securities or (ii) the reclassification by
--
subdivision, combination or otherwise, of the shares of Common Stock into a
greater or smaller number of shares, the foregoing figure of $.0001 per share
(or such figure as last adjusted) shall be proportionately adjusted, and
provided, further, that upon the exercise of this Warrant, the Company shall
- -------- -------
make all necessary adjustments (to the nearest .0001 of a cent) not
Page 41 of 54
<PAGE>
theretofore made to the Exercise Price up to and including the date upon which
this Warrant is exercised.
(f) Readjustment of Exercise Price. Upon each change in (i) the
------------------------------ -
consideration, if any, payable for any Stock Purchase Rights or Convertible
Securities referred to in section 4.2(a), (c) or (d), (ii) the consideration, if
--
any, payable upon exercise of such Stock Purchase Rights or upon the conversion
or exchange of such Convertible Securities or (iii) the number of shares of
---
Common Stock issuable upon the exercise of such Stock Purchase Rights or the
rate at which such Convertible Securities are convertible into or exchangeable
for shares of Common Stock, the Exercise Price in effect at the time of such
event shall forthwith be readjusted to the Exercise Price which would have been
in effect at such time had such Stock Purchase Rights or Convertible Securities
provided for such changed consideration, number of shares of Common Stock so
issuable or conversion rate, as the case may be, at the time initially granted,
issued or sold. On the expiration of any Stock Purchase Rights not exercised or
of any right to convert or exchange under any Convertible Securities not
exercised, the Exercise Price then in effect shall forthwith be increased to the
Exercise Price which would have been in effect at the time of such expiration
had such Stock Purchase Rights or Convertible Securities never been issued. No
readjustment of the Exercise Price pursuant to this section 4.2(f) shall (i)
-
increase the Exercise Price by an amount in excess of the adjustment originally
made to the Exercise Price in respect of the issue, sale or grant of the
applicable Stock Purchase Rights or Convertible Securities or (ii) require any
--
adjustment to the amount paid or number of Warrant Shares received by any Person
upon any exercise of this Warrant prior to the date upon which such readjustment
to the Exercise Price shall occur.
(g) Reorganization, Reclassification or Recapitalization of the Company.
-------------------------------------------------------------------
If and whenever subsequent to the date hereof the Company shall effect (i) any
-
reorganization or reclassification or recapitalization of the capital stock of
the Company (other than in the cases referred to in section 4.2(a)), (ii) any
--
consolidation or merger of the Company with or into another Person, (iii) the
---
sale, transfer or other disposition of the property, assets or business of the
Company as an entirety or substantially as an entirety or (iv) any other
--
transaction (or any other event shall occur) as a result of which holders of
Common Stock become entitled to receive any shares of stock or other securities
and/or property (including, without limitation, cash) with respect to or in
exchange for the shares of Common Stock, there shall thereafter be deliverable
upon the exercise of this Warrant or any portion thereof (in lieu of or in
addition to the Warrant Shares theretofore deliverable, as appropriate) the
highest number of shares of stock or other securities and/or the greatest amount
of property (including, without limitation, cash) to which the holder of the
number of Warrant Shares which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof at the time would have been
entitled upon such reorganization or reclassification or recapitalization of
capital stock, consolidation, merger, sale, transfer, disposition or other
transaction or upon the occurrence of such other event, and at the same
aggregate Exercise Price.
Prior to and as a condition of the consummation of any transaction or event
described in the preceding sentence, the Company shall make equitable, written
adjustments in the application of the provisions herein set forth satisfactory
to the Required Holders of the Warrants so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any shares
of stock or other securities or other property thereafter deliverable upon
exercise of the
Page 42 of 54
<PAGE>
Warrants. Any such adjustment shall be made by and set forth in a supplemental
agreement of the Company and/or the successor entity, as applicable, for the
benefit of and in form and substance acceptable to the Required Holders of the
Warrants, which agreement shall bind the Company and/or the successor entity, as
applicable, and all holders of Warrants then outstanding and shall be
accompanied by a favorable opinion of the regular outside counsel to the Company
or the successor entity, as applicable (or such other firm as is reasonably
acceptable to the Required Holders of the Warrants), as to the enforceability of
such agreement and as to such other matters as the Required Holders of the
Warrants may reasonably request.
(h) Other Dilutive Events. If any other transaction or event (other than
---------------------
those explicitly referred to in this section 4.2), including, without
limitation, any issuance, repurchase, redemption, or other distribution in
respect of any shares of stock or securities of the Company (other than the 8%
Preferred Stock) or of any other Person, including any Person referred to in
section 4.2(g), shall occur as to which the other provisions of this section 4
are not strictly applicable but the failure to make any adjustment to the
Exercise Price or to any of the other terms of this Warrant would not fairly
protect the purchase rights and other rights represented by this Warrant in
accordance with the essential intent and principles hereof, then, and as a
condition to the consummation of any such transaction or event, and in each such
case, the Company shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors of the Company),
which shall give its opinion as to the adjustment, if any, on a basis consistent
with the essential intent and principles established in this section 4,
necessary to preserve, without dilution, the rights represented by this Warrant.
The certificate of any such firm of accountants shall be conclusive evidence of
the correctness of any computation made under this section 4. The Company shall
pay the fees and expenses of such firm of accountants in connection with any
such opinion. Upon receipt of such opinion, the Company will promptly deliver a
copy thereof to the holder of this Warrant and shall make the adjustments
described therein.
(i) Determination of Consideration. For purposes of this section 4, the
------------------------------
consideration received or receivable by the Company for the issuance, sale or
grant of shares of Common Stock, Stock Purchase Rights or Convertible
Securities, irrespective of the accounting treatment of such consideration,
shall be valued and determined as follows:
(i) Cash Payment. In the case of cash, the gross amount paid by
------------
the purchasers without deduction of any accrued interest or dividends, any
reasonable expenses paid or incurred and any reasonable underwriting
commissions or concessions paid or allowed by the Company in connection
with such issue or sale.
(ii) Non-Cash Payment. In the case of consideration other than
----------------
cash, the Fair Value thereof (in any case as of the date immediately
preceding the issuance, sale or grant in question).
(iii) Certain Allocations. If shares of Common Stock, Stock
-------------------
Purchase Rights and/or Convertible Securities are issued or sold together
with other securities or other assets of the Company for a consideration
which covers more than one of the foregoing categories of securities and
assets, the consideration received or receivable (computed as provided in
clauses (i) and (ii) of this section 4.2 (i)) shall be allocable to such
shares of
Page 43 of 54
<PAGE>
Common Stock, Stock Purchase Rights and/or Convertible Securities as
reasonably determined in good faith by the Board of Directors of the
Company (provided such allocation is set forth in a written resolution and
--------
a certified copy thereof is furnished to the holder of this Warrant
promptly (but in any event within 10 days) following its adoption).
(iv) Dividends in Securities. If the Company shall declare a
-----------------------
dividend or make any other distribution upon any stock of the Company
payable in shares of Common Stock, Convertible Securities or Stock Purchase
Rights, such shares of Common Stock, Convertible Securities or Stock
Purchase Rights, as the case may be, issuable in payment of such dividend
or distribution shall be deemed to have been issued or sold without
consideration.
(v) Stock Purchase Rights and Convertible Securities. The
------------------------------------------------
consideration for which each share of Common Stock shall be deemed to be
issued upon the issuance or sale of any Stock Purchase Rights or
Convertible Securities shall be determined by dividing (A) the total
-
consideration, if any, received by the Company as consideration for the
Stock Purchase Rights or the Convertible Securities, as the case may be,
plus the minimum aggregate amount of additional consideration, if any, ever
payable to the Company upon the exercise of such Stock Purchase Rights
and/or upon the conversion or exchange of such Convertible Securities, as
the case may be, but without deduction of any accrued interest or
dividends, any reasonable expenses paid or incurred and any reasonable
underwriting commissions or concessions paid or allowed by the Company in
connection with such issue or sale; by (B) the maximum number of shares of
-
Common Stock ever issuable upon the exercise of such Stock Purchase Rights
or upon the conversion or exchange of such Convertible Securities.
(vi) Merger, Consolidation or Sale of Assets. If any shares of
---------------------------------------
Common Stock, Convertible Securities or Stock Purchase Rights are issued in
connection with any merger or consolidation of which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed
to be the Fair Value of such portion of the assets and business of the non-
surviving corporation as shall be attributable to such shares of Common
Stock, Convertible Securities or Stock Purchase Rights, as the case may be.
In the event of (A) any merger or consolidation of which the Company is not
-
the surviving corporation or (B) the sale, transfer or other disposition of
-
the property, assets or business of the Company as an entirety or
substantially as an entirety for stock or other securities of any other
Person, the Company shall be deemed to have issued the number of shares of
Common Stock for stock or securities of the surviving corporation or such
other Person computed on the basis of the actual exchange ratio on which
the transaction was predicated and for a consideration equal to the Fair
Value on the date of such transaction of such stock or securities of the
surviving corporation or such other Person, and if any such calculation
results in adjustment of the Exercise Price, the determination of the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such merger, consolidation or sale, for the purposes of section
4.2(g), shall be made after giving effect to such adjustment of the
Exercise Price.
Page 44 of 54
<PAGE>
(j) Record Date. If the Company shall take a record of the holders of
-----------
the shares of Common Stock for the purpose of entitling them (i) to receive a
-
dividend or other distribution payable in shares of Common Stock, Convertible
Securities or Stock Purchase Rights or (ii) to subscribe for or purchase shares
--
of Common Stock, Convertible Securities or Stock Purchase Rights, then all
references in this section 4 to the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such
dividend or the making of such other distribution or the date of the granting of
such right of subscription or purchase, as the case may be, shall be deemed to
be references to such record date.
(k) Shares Outstanding. The number of shares of Common Stock deemed to
------------------
be outstanding at any given time shall not include shares of Common Stock held
by the Company or any Subsidiary of the Company.
(l) Maximum Exercise Price. At no time shall the Exercise Price exceed
----------------------
the amount set forth in the first paragraph of the Preamble of this Warrant
except as a result of an adjustment thereto pursuant to section 4.2(a)(iii) or
4.2(g).
(m) Application. All subdivisions of this section 4.2 are intended to
-----------
operate independently of one another. If a transaction or an event occurs that
requires the application of more than one subdivision, all applicable
subdivisions shall be given independent effect.
(n) No Adjustments under Certain Circumstances. Anything herein to the
------------------------------------------
contrary notwithstanding, no adjustment to the Exercise Price shall be made:
(i) in the case of any issuance of shares of Common Stock (or
Other Securities) upon the exercise, in whole or in part, of any Warrant or
upon the issuance of any Warrant;
(ii) in the case of any issuance of shares of Common Stock upon the
conversion, in whole or in part, of any shares of 8% Preferred Stock or
upon the issuance of any shares of 8% Preferred Stock;
(iii) in the case of any issuance of shares of Common Stock sold to
the public in a firm commitment underwritten public offering registered
under the Securities Act of 1933, as amended, where the price at which such
shares of Common Stock are sold to the public is not less than 95% of the
Daily Market Price of the Common Stock on the date of pricing of such
public offering;
(iv) in the case of issuances in any fiscal year of the Company to
employees of the Company of either shares of Common Stock or options or
warrants to acquire shares of Common Stock, but only to the extent that the
aggregate number of shares of Common Stock so issued to employees in such
fiscal year plus the aggregate maximum number of shares of Common Stock
ever issuable upon exercise of options or warrants so issued to employees
in such fiscal year does not exceed 1.5% of the aggregate number of
outstanding shares of Common Stock as of the end of the immediately
preceding fiscal year of the Company;
Page 45 of 54
<PAGE>
(v) in the case of any issuance of shares of Common Stock upon the
exercise of options or warrants, upon issuance of which options or warrants
no adjustment to the Conversion Price was made by virtue of subsection
(n)(iv) of this section 4.2; or
(vi) in the case of any issuance of shares of Common Stock upon the
exercise of options or warrants held on the Original Issue Date by
employees of the Company, but only to the extent that the aggregate number
of shares of Common Stock so issued upon exercise of such options or
warrants held on the Original Issue Date by such employees does not exceed
497,300 in the aggregate.
4.3. Rights Offering; Special Dividends.
-----------------------------------
(a) If during the Exercise Period the Company shall effect an offering
of securities pro rata among the holders of its Common Stock, the holder hereof
shall be entitled, at its option, to elect to participate in each and every
such offering as if this Warrant had been exercised and such holder were, at
the time of any such rights offering, then a holder of that number of Warrant
Shares to which such holder is then entitled on the exercise hereof.
(b) In the event during the Exercise Period the Company shall make or
issue, or shall fix a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution (other than a
distribution in liquidation, dissolution or winding up or other distribution
otherwise provided for herein) with respect to the Common Stock payable in (i)
securities of the Company other than shares of Common Stock, or (ii) other
----- ----
assets (excluding cash dividends or distributions), then and in each such event,
provision shall be made so that the holder of this Warrant shall receive upon
exercise hereof in addition to the number of shares of Common Stock receivable
thereupon, the number of securities or such other assets of the Company which
such holder would have received had this Warrant been exercised for such shares
of Common Stock on the date of such event.
4.4. Certificates and Notices.
-------------------------
(a) Adjustments to Exercise Price. As promptly as practicable (but in
-----------------------------
any event not later than five days) after the occurrence of any event requiring
any adjustment under this section 4 to the Exercise Price (or to the number or
kind of securities or other property deliverable upon the exercise of this
Warrant), the Company shall, at its expense, deliver to the holder of this
Warrant either (i) an Officers' Certificate or (ii) a certificate signed by a
- --
firm of independent public accountants of recognized national standing (which
may be the regular auditors of the Company), setting forth in reasonable detail
the events requiring the adjustment and the method by which such adjustment was
calculated and specifying the adjusted Exercise Price and the number of shares
of Common Stock purchasable upon exercise of this Warrant after giving effect to
such adjustment. The certificate of any such firm of accountants shall be
conclusive evidence of the correctness of any computation made under this
section 4.
(b) Extraordinary Corporate Events. If and whenever the Company
------------------------------
subsequent to the date hereof shall propose to (i) pay any dividend to the
-
holders of shares of Common Stock or to
Page 46 of 54
<PAGE>
make any other distribution to the holders of shares of Common Stock (including,
without limitation, any cash dividend), (ii) offer to the holders of shares of
--
Common Stock rights to subscribe for or purchase any additional shares of any
class of stock or any other rights or options, (iii) effect any reclassification
---
of the shares of Common Stock (other than a reclassification involving merely
the subdivision or combination of outstanding shares of Common Stock), (iv)
--
engage in any reorganization or recapitalization or any consolidation or merger
(other than a merger in which no distribution of securities or other property is
to be made to holders of shares of Common Stock), (v) consummate any sale,
-
transfer or other disposition of its property, assets and business as an
entirety or substantially as an entirety, (vi) effect any other transaction
--
which might require an adjustment to the Exercise Price (or to the number or
kind of securities or other property deliverable upon the exercise of this
Warrant), including, without limitation, any transaction of the kind described
in section 4.2(g) or (vii) commence or effect the liquidation, dissolution or
---
winding up of the Company, then, in each such case, the Company shall deliver to
the holder of this Warrant an Officers' Certificate giving notice of such
proposed action, specifying (A) the date on which the stock transfer books of
-
the Company shall close, or a record shall be taken, for determining the holders
of shares of Common Stock entitled to receive such dividend or other
distribution or such rights or options, or the date on which such
reclassification, reorganization, recapitalization, consolidation, merger, sale,
transfer, other disposition, transaction, liquidation, dissolution or winding up
shall take place or commence, as the case may be, and (B) the date as of which
-
it is expected that holders of shares of Common Stock of record shall be
entitled to receive securities or other property deliverable upon such action,
if any such date is to be fixed. Such Officers' Certificate shall be delivered
in the case of any action covered by clause (i) or (ii) above, at least 30 days
prior to the record date for determining holders of Common Stock for purposes of
receiving such payment or offer, and, in any other case, at least 30 days prior
to the date upon which such action takes place and 20 days prior to any record
date to determine holders of shares of Common Stock entitled to receive such
securities or other property.
(c) Effect of Failure. Failure to give any certificate or notice, or any
-----------------
defect in any certificate or notice required under this section 4.4 shall not
affect the legality or validity of the adjustment of the Exercise Price or the
number of Warrant Shares purchasable upon exercise of this Warrant.
5. Registration Rights, etc. Reference is hereby made to section 9 of
-------------------------
the Securities Purchase Agreement for certain provisions relating to the
registration rights of the holders of the Registrable Shares (as defined in the
Securities Purchase Agreement).
6. Reservation of Common Stock. The Company will at all times reserve
---------------------------
and keep available, solely for issuance, sale and delivery upon the exercise
of this Warrant, such number of shares of Common Stock (and/or Other Securities)
equal to the number of shares of Common Stock (and/or Other Securities) issuable
upon the exercise of this Warrant. All such shares of Common Stock (and/or Other
Securities) shall be duly authorized and, when issued upon exercise of this
Warrant in accordance with the terms hereof, will be validly issued and fully
paid and nonassessable with no liability on the part of the holders thereof.
Page 47 of 54
<PAGE>
7. Various Covenants of the Company.
---------------------------------
7.1. No Impairment or Amendment. The Company shall not by any action
--------------------------
including, without limitation, amending its Articles of Incorporation, any
reorganization, recapitalization, transfer of capital stock or assets,
consolidation, merger, liquidation, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate to protect the rights of the holder hereof
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) will not permit the par value of any Warrant Shares
-
issuable upon exercise of this Warrant to be greater than the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
-
or appropriate in order that the Company may validly issue fully paid and
nonassessable Warrant Shares, (c) will obtain and maintain all such
-
authorizations, exemptions or consents from any public regulatory body having
jurisdiction as may be necessary to enable the Company to perform its
obligations under this Warrant, (d) will not issue any capital stock or enter
-
into any agreement the terms of which would have the effect, directly or
indirectly, of preventing the Company from honoring its obligations hereunder
and (e) will not amend or modify any term, condition or provision of its
-
Articles of Incorporation or by-laws in a manner which is, or could reasonably
be expected to be, materially adverse to the interests of any holder of Warrants
and/or Warrant Shares.
So long as any Warrants or Warrant Shares are outstanding, the Company
will acknowledge in writing, in form satisfactory to any holder of any such
security, the continued validity of the Company's obligations hereunder.
7.2. Listing on Securities Exchanges, etc. At all times following the
------------------------------------
exercise of this Warrant, the Company will maintain the listing of all Warrant
Shares on each securities exchange or market or trading system on which the
Common Stock (or Other Securities) are then or at any time thereafter listed or
traded.
7.3. Anti-Dilution Provisions. If the Company issues any Stock Purchase
------------------------
Rights or Convertible Securities or other securities containing provisions
protecting the holder or holders thereof against dilution in any manner more
favorable to such holder or holders thereof than those set forth in this
Warrant, such provisions (or any more favorable portion thereof) shall be deemed
to be incorporated herein as if fully set forth in this Warrant and, to the
extent inconsistent with any provision of this Warrant, shall be deemed to be
substituted therefor.
7.4. Indemnification. Without limiting the generality of any provision
---------------
of the Securities Purchase Agreement or any of the other Operative Documents,
the Company shall indemnify, save and hold harmless the holder of this Warrant
and the holder of any Warrant Shares from and against any and all liability,
loss, cost, damage, reasonable attorneys' and accountants' fees and expenses,
court costs and all other out-of-pocket expenses reasonably incurred by such
holder in connection with preserving and/or enforcing any of the terms hereof.
Page 48 of 54
<PAGE>
7.5. Certain Expenses. The Company shall pay all expenses in connection
----------------
with, and all taxes (other than stock transfer taxes) and other governmental
charges that may be imposed in respect of, the issue, sale and delivery of this
Warrant and any Warrant Shares.
8. Miscellaneous.
-------------
8.1. Nonwaiver. No course of dealing or any delay or failure to exercise
---------
any right, power or remedy hereunder on the part of the holder of this Warrant
or of any Warrant Shares shall operate as a waiver of or otherwise prejudice
such holder's rights, powers or remedies.
8.2. Amendment. Any term, covenant, agreement or condition of this
---------
Warrant may, with the consent of the Company, be amended, or compliance
therewith may be waived (either generally or in a particular instance and either
retroactively or prospectively), in writing by the holder hereof, provided that
no such amendment or waiver shall extend to or affect any obligation not
expressly amended or waived or impair any right consequent thereon.
8.3. Communications. All communications provided for herein shall be
--------------
delivered, mailed or sent by facsimile transmission addressed in the manner and
shall be effective as of the time specified in the Securities Purchase
Agreement.
8.4. Like Tenor. All Warrants shall at all times be identical, except
----------
as otherwise specified in section 3.1 and except as to the preamble to each
Warrant, the definition of Applicable Redemption Multiple, and Schedule I.
8.5. Remedies. The Company stipulates that the remedies at law of the
--------
holder or holders of this Warrant and/or of any Warrant Shares in the event of
any default or threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise. No remedy conferred in this Warrant on the holder of any
Warrant or Warrant Shares is intended to be exclusive of any other remedy, and
each and every such remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or under any other agreement, document or
instrument or now or hereafter existing at law or in equity or by statute or
otherwise.
8.6. Successors and Assigns. This Warrant and the rights evidenced
----------------------
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Company, the holder or holders of this Warrant and, as
applicable, of any Warrant Shares, to the extent provided herein, and shall be
enforceable by such holder or holders.
8.7. Governing Law. This Warrant, including the validity hereof and the
-------------
rights and obligations of the Company and of the holder hereof and all
amendments and supplements hereof and all waivers and consents hereunder, shall
be construed in accordance with and governed by the domestic substantive laws of
The Commonwealth of Massachusetts without giving effect to any choice of law or
conflicts of law provision or rule that would cause the application of the
domestic substantive laws of any other jurisdiction.
Page 49 of 54
<PAGE>
8.8. Headings; Entire Agreement; Partial Invalidity, etc. The table of
---------------------------------------------------
contents to and headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. This Warrant, together
with the other Operative Documents, embodies the entire agreement and
understanding between the holder hereof and the Company and supersedes all prior
agreements and understandings relating to the subject matter hereof. In case any
provision in this Warrant or any of the other Operative Documents shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
[The remainder of this page is left blank intentionally.]
Page 50 of 54
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
as an instrument under seal and to be attested by its duly authorized officers
as of the date first above written.
EVERGREEN RESOURCES, INC.
By:
------------------------------------
(Title)
Page 51 of 54
<PAGE>
FORM OF NOTICE OF EXERCISE
(To be executed only upon partial or full exercise
of the within Class B Warrant)
The undersigned registered holder of the within Class B Warrant irrevocably
exercises the within Class B Warrant for and purchases shares of
---------------
Common Stock (or Other Securities) [Specify applicable kind of securities] of
---------------------------------------
EVERGREEN RESOURCES, INC. and herewith makes payment therefor in the amount of
$ , all at the price, in the manner and on the terms and conditions
-----
specified in the within Class B Warrant, and requests that a certificate (or
certificates in denominations of shares) for such shares hereby purchased
be issued in the name of and delivered to (choose one) (a) the undersigned or
-
(b) ,whose address is and, if such
- ---------- ------------------------------
shares shall not include all the Warrant Shares issuable as provided in the
within Class B Warrant, that a new Class B Warrant of like tenor for the number
of Warrant Shares not being purchased hereunder be issued in the name of and
delivered to (choose one) (a) the undersigned or (b) , whose address is
- -
.
- ------------------------------------------
Dated: , .
---------------- -------
[ ]
By
--------------------------------------------
(Signature of Registered Holder)
NOTICE: The signature on this Notice of Exercise must correspond with the name
as written upon the face of the within Class B Warrant in every
particular, without alteration or enlargement or any change whatever.
Page 52 of 54
<PAGE>
FORM OF ASSIGNMENT
(To be executed only upon the assignment
of the within Class B Warrant)
FOR VALUE RECEIVED, the undersigned registered holder of the within Class B
Warrant hereby sells, assigns and transfers unto
------------------------------,
whose address is
--------------------------------------------------------------,
all of the rights of the undersigned under the within Class B Warrant, with
respect to shares of Common Stock (or Other Securities) [Specify
---------- --------
applicable kind of securities] of EVERGREEN RESOURCES, INC. and, if such shares
- ------------------------------
shall not include all the Warrant Shares issuable as provided in the within
Class B Warrant, that a new Class B Warrant of like tenor for the number of
Warrant Shares not being transferred hereunder be issued in the name of and
delivered to [choose one] (a) the undersigned or (b)
------------ - - -------------------------,
whose address is ,
------------------------------------------------------------
and does hereby irrevocably constitute and appoint
---------------------------
Attorney to register such transfer on the books of EVERGREEN RESOURCES, INC.
maintained for the purpose, with full power of substitution in the premises.
Dated: , .
------------------ -----
[ ]
By
-----------------------------------
(Signature of Registered Holder)
NOTICE: The signature on this Assignment must correspond with the name as
written upon the face of the within Class B Warrant in every
particular, without alteration or enlargement or any change whatever.
Page 53 of 54
<PAGE>
SCHEDULE I
[To be completed by the holder of this Warrant]
The Warrant Trigger Date is:
------------------
The Adjusted Initial Number is:
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Page 54 of 54
