-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UCv+xwZVILGYnm0tiKzB1eLENUAynEsAefPXd4xHh2THgpeNbsBY5hMo3w5s8WAd WEy4vF5/MGgHiXy9LRjSjQ== 0000950129-97-002269.txt : 19970603 0000950129-97-002269.hdr.sgml : 19970603 ACCESSION NUMBER: 0000950129-97-002269 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 11 FILED AS OF DATE: 19970602 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEEPTECH INTERNATIONAL INC CENTRAL INDEX KEY: 0000890647 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 760289338 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-24691 FILM NUMBER: 97618145 BUSINESS ADDRESS: STREET 1: 7500 TEXAS COMMERCE TOWER STREET 2: 600 TRAVIS ST CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7132247400 S-3/A 1 DEEPTECH INTERNATIONAL INC. - AMEND. #1 333-24691 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 2, 1997. REGISTRATION NO. 333-24691 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------- PRE-EFFECTIVE AMENDMENT NO.1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 -------------------------- DEEPTECH INTERNATIONAL INC. (Exact name of Registrant as specified in its charter) DELAWARE 76-0289338 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) -------------------------- DEEPTECH INTERNATIONAL INC. TEXAS COMMERCE TOWER, SUITE 7500 600 TRAVIS HOUSTON, TEXAS 77002 (713) 224-7400 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) -------------------------- With Copies to: DONALD V. WEIR DEEPTECH INTERNATIONAL INC. TEXAS COMMERCE TOWER, SUITE 7500 600 TRAVIS HOUSTON, TEXAS 77002 (713) 224-7400 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------------- RICK L. BURDICK, P.C. AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. 1900 PENNZOIL PLACE-SOUTH TOWER 711 LOUISIANA STREET HOUSTON, TEXAS 77002 (713) 220-5800 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box: [ ] -------------------------- CALCULATION OF REGISTRATION FEE
====================================================================================================================== AMOUNT OF TITLE OF EACH CLASS AMOUNT TO BE PROPOSED PROPOSED REGISTRATION OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE (2) AGGREGATE OFFERING PRICE FEE - ---------------------------------------------------------------------------------------------------------------------- Common Stock, par value $.01 per share (1) 9,506,363 $ 6.50(2) $ 59,841,359(2) $18,725 - ---------------------------------------------------------------------------------------------------------------------- Common Stock Purchase Warrants 4,060,695 $5.5605(3) $ 22,579,495(3) (4) ======================================================================================================================
2 (1) Includes 3,845,091 shares of Common Stock which are currently outstanding and 5,361,272 which are issuable upon exercise of outstanding warrants and options, including the Warrants. Pursuant to Rule 416, additional securities are being registered as may be required for issuance pursuant to the anti-dilution provisions of the Warrants. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c), on the basis of the average high and low prices of the Common Stock on the Nasdaq National Market on March 31, 1997. (3) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(g). The offering price for the Warrants is based upon the average price per share of Common Stock at which the Warrants can be exercised. (4) Pursuant to Rule 457(g), no separate fee is being paid with respect to the Warrants since the shares of Common Stock being offered pursuant thereto are also being registered. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 3 Information contained herein is subject to completion or amendment. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State. [DeepTech Logo] PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE ____, 1997 9,506,363 SHARES OF COMMON STOCK 4,060,695 COMMON STOCK PURCHASE WARRANTS DEEPTECH INTERNATIONAL INC. --------------------- This Prospectus relates to 9,506,363 shares (the "Shares") of common stock, par value $.01 per share ("Common Stock"), of DeepTech International Inc., a Delaware corporation ("DeepTech") and warrants to purchase 4,060,695 shares of Common Stock (the "Warrants," and collectively with the Shares, the "Securities"). The Warrants were issued by DeepTech under various agreements and arrangements and are immediately exercisable. The Warrants entitle the holders to purchase shares of Common Stock at a specified exercise price ranging from $4.00 to $10.00 per share until the expiration of the Warrants pursuant to their respective terms ranging from July 15, 1998 to July 15, 2000. See "Description of Warrants." There are 3,845,091 of the Shares currently outstanding and 5,661,272 are issuable upon exercise of outstanding warrants and options, including the Warrants. The Securities may be offered from time to time (the "Offering") by persons (the "Selling Stockholders") who have acquired such Securities in certain private placements, other transactions not involving a public offering or who otherwise do not have an available exemption from registration. The Securities are being registered under the Securities Act of 1933, as amended (the "Securities Act"), on behalf of the Selling Stockholders in order to permit the public sale or other public distribution of the Securities. The Securities may be sold or distributed from time to time by or for the account of the Selling Stockholders, or by their pledgees on behalf of the Selling Stockholders, in transactions (which may involve crosses and block transactions) on the Nasdaq National Market ("Nasdaq") or any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association on which the Securities are then listed, in the over-the-counter market, in one or more privately negotiated transactions (including sales pursuant to pledges), through the writing of options on the Shares, in a combination of such methods of distribution, or by any other legally available means. This Prospectus also may be used, with the Company's consent, by donees of the Selling Stockholders, or by other persons acquiring Securities who wish to offer and sell such Securities under circumstances requiring or making desirable its use. Such methods of sale may be conducted by the Selling Stockholders at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices otherwise negotiated. The Selling Stockholders may effect such transactions directly, or indirectly through broker-dealers or agents acting on their behalf and, in connection with such sales, such broker-dealers or agents may receive compensation in the form of commissions or discounts from the Selling Stockholders and/or the purchasers of the Securities for whom they may act as agent or to whom they sell Securities as principal or both (which commissions or discounts might be in excess of customary commissions). To the extent required, the names of the agents or broker-dealers, and applicable commissions or discounts and any other required information with respect to any particular offer of Securities by the Selling Stockholders, will be set forth in a Prospectus Supplement. See "Plan of Distribution." DeepTech will not receive any of the proceeds from the sale of the Securities offered hereby although it may receive up to an aggregate of $31,096,217 in connection with the exercise of outstanding warrants and options, including the Warrants, to purchase Shares included as a part of the Offering. DeepTech will bear all expenses incident to the registration of the Securities under federal and state securities laws and the sale of the Securities hereunder other than expenses incident to the delivery of the Securities to be sold by the Selling Stockholders, including any transfer taxes payable on any Securities, and any commissions and discounts payable to underwriters, agents or dealers. The Common Stock is quoted on Nasdaq under the symbol "DEEP." On May 21, 1997, the last reported sale price for the Common Stock as reported by Nasdaq was $6.4375 per share. DeepTech had 19,321,228 shares of Common Stock issued and outstanding as of May 21, 1997. At May 21, 1997, DeepTech had outstanding warrants and options to acquire 8,920,367 shares of Common Stock. The Warrants are not listed on an exchange or quoted on Nasdaq, and it is not anticipated that application will be made to list the Warrants. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER THE CAPTION "RISK FACTORS" LOCATED ON PAGE 3 OF THIS PROSPECTUS. --------------------- 4 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- AVAILABLE INFORMATION DeepTech is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the "Exchange Act"), and, in accordance therewith, files reports, proxy and information statements and other information with the Securities and Exchange Commission (the "SEC"). The reports, proxy and information statements and other information concerning DeepTech can be inspected and copied at the public reference facilities maintained by the SEC at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices located at Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and at Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such material can also be obtained from the SEC at prescribed rates through the Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Such documents also may be obtained through the website maintained by the SEC at http://www.sec.gov. Such reports, proxy statements and other information may also be inspected at the offices of Nasdaq at 1735 K Street, N.W., Washington, D.C. 20006. DeepTech has filed with the SEC a Registration Statement on Form S-3 under the Securities Act with respect to the Securities (such registration statement, including all amendments and supplements thereto, is hereinafter referred to as the "Registration Statement"). This Prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement, certain parts of which have been omitted in accordance with the rules and regulations of the SEC. Statements contained in this Prospectus as to the contents of any contract, agreement or other document are not necessarily complete and in each instance reference is made to the copy of such contract, agreement or other document filed as an exhibit to the Registration Statement or incorporated herein by reference, and each such statement is deemed qualified in its entirety by such reference. The Registration Statement and exhibits thereto may be inspected without charge at the public reference facilities maintained by the SEC, regional offices of the SEC and offices of the SEC and Nasdaq referred to above, and copies thereof may be obtained from the SEC at prescribed rates. 5 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents, filed by DeepTech with the SEC pursuant to the Exchange Act, are incorporated herein by reference and made a part of this Prospectus: (i) DeepTech's Annual Report on Form 10-K for the fiscal year ended June 30, 1996; (ii) DeepTech's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996; (iii) DeepTech's Quarterly Report on Form 10-Q for the quarter ended December 31, 1996; and (iv) DeepTech's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. All reports and other documents filed by DeepTech with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Offering shall be deemed incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in this Prospectus or in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. DeepTech undertakes to provide without charge to each person to whom a copy of this Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference herein, other than the exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that this Prospectus incorporates. Written or oral requests for such copies should be directed to DeepTech International Inc., Texas Commerce Tower, Suite 7500, 600 Travis, Houston, Texas 77002, Attention: Corporate Secretary, telephone number (713) 224-7400. 2 6 RISK FACTORS IN ADDITION TO THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, PROSPECTIVE PURCHASERS OF THE SECURITIES SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS IN EVALUATING AN INVESTMENT IN DEEPTECH. Unless the context otherwise requires, references in this Prospectus to "DeepTech" shall mean DeepTech International Inc., a Delaware corporation, and references to the "Company" or its operations shall mean DeepTech and its operating subsidiaries (the "Subsidiaries"), Leviathan Gas Pipeline Company (indirectly 85%-owned) ("Leviathan"), Tatham Offshore, Inc. (37%-owned) ("Tatham Offshore"), RIGCO North America, L.L.C. (indirectly 100%-owned), Deepwater Production Systems, Inc. (100%-owned) ("Deepwater Systems"), Deepflex Production Services, Inc. (100%-owned) ("Deepflex"), Offshore Gas Marketing, Inc. (80%-owned) ("Offshore Marketing") and Offshore Gas Processors, Inc. (85%-owned) ("Offshore Processors"), and their respective operations. Leviathan is the general partner of Leviathan Gas Pipeline Partners, L.P., a publicly-traded master limited partnership. References to the "Partnership" contained herein shall mean Leviathan Gas Pipeline Partners, L.P. and its subsidiaries. Certain of the following risk factors relate particularly to Leviathan, the Partnership and Tatham Offshore. The risk factors relating to the Partnership and Leviathan may adversely affect the value of DeepTech's interest in Leviathan and the ability of the Partnership to pay management fees to DeepTech or to make distributions to Leviathan. The risk factors relating to Tatham Offshore may adversely affect the value of DeepTech's interest in Tatham Offshore and the ability of Tatham Offshore to pay management fees to DeepTech or make advances or distribute earnings or meet its obligations under the Tatham Offshore Subordinated Notes and any other intercompany indebtedness owing to DeepTech. The inability of Leviathan and/or Tatham Offshore to make such payments to DeepTech would have a material adverse effect upon DeepTech's ability to pay its operating expenses and service its debt obligations. SUBSTANTIAL LEVERAGE OF THE COMPANY DeepTech is highly leveraged. At March 31, 1997, the Company had stockholders' equity of $23.2 million and total consolidated long-term indebtedness of approximately $155.5 million, of which $65 million was attributable to RIGCO. In April 1997, the RIGCO credit facility was amended and an additional $12.0 million was borrowed to fund additional upgrades to one of the Company's semisubmersible rigs. DeepTech incurred substantial indebtedness as a result of the issuance of $82 million aggregate principal amount of 12% Senior Secured Notes due in the year 2000 (the "Senior Notes") in March 1994 (the "Debt Offering"). The indenture relating to the Senior Notes (the "Senior Note Indenture") contains covenants that, among other things, require DeepTech to meet certain collateral coverage tests and restrict the ability of DeepTech to incur additional indebtedness, create or incur liens, make capital expenditures, effect certain assets sales and engage in certain mergers or similar transactions. Further, substantially all material assets of DeepTech have been pledged to secure the Senior Notes. Any inability of DeepTech to service its obligations in respect of the Senior Notes or other indebtedness could have a significant adverse affect on the market value and marketability of the Securities. DeepTech expects that the Company will remain highly leveraged for the foreseeable future, with important consequences to stockholders of DeepTech, including the following: (i) the ability of the Company to obtain additional financing for working capital, acquisitions, advances or contributions to the subsidiaries for capital expenditures or other corporate purposes, should it need to do so, may be impaired; (ii) all or a substantial portion of the Company's cash flow from operations will be required to be dedicated to the payment of the Company's interest expense and principal payment obligations; (iii) the Company is more highly leveraged than many of its competitors, which may place it at a competitive disadvantage; and (iv) the Company's degree of leverage may make it more vulnerable to a downturn in its business or the economy generally. If the Company is unable to generate sufficient cash flow from operations and obtain additional sources of financing, the Company may be required to refinance all or a portion of its debt, sell certain of its assets or both. There can be no assurance that any such refinancing or asset sales would suffice to meet interest and principal payments as they become due. The failure to make such payments as they come due would have a material adverse effect on DeepTech. 3 7 DEEPTECH'S HOLDING COMPANY STRUCTURE; DEPENDENCE ON THE SUBSIDIARIES DeepTech is a holding company whose material assets consist primarily of the stock of the Subsidiaries. As a result, DeepTech is dependent upon management fees paid to it pursuant to management agreements with each of the Subsidiaries, quarterly dividends funded by distributions from the Partnership and interest on and the repayment of debt by the Subsidiaries to pay its operating expenses, service its debt obligations, including the Senior Notes, and satisfy any mandatory repurchase obligations relating to the Senior Notes. Loan agreements to which certain Subsidiaries are, or may in the future become, parties may restrict the ability of such Subsidiaries to make payments to DeepTech. The Company anticipates that additional Subsidiaries may enter into credit arrangements that may prohibit or otherwise restrict their ability to pay dividends and make advances to DeepTech. In addition, distributions in respect of the Partnership's Common Units, which are owned indirectly by DeepTech, may only be made after all minimum distributions payable in respect of the Partnership's Preference Units have been paid in full. The failure of (i) a Subsidiary to pay management fees or repay principal or interest on its intercompany debt or (ii) the Partnership to make distributions could have a material adverse effect on DeepTech's financial condition and results of operations. RELIANCE ON KEY PERSONNEL; CONCENTRATION OF OWNERSHIP The Company is dependent upon the services of its executive officers and key employees, including Thomas P. Tatham, Chairman of the Board and Chief Executive Officer of DeepTech. The Company does not have an employment agreement with Mr. Tatham or its other key employees. The Company also does not maintain Key-man insurance for any of its key employees. The loss of the services of the Company's executive officers and key employee, in general, and of Mr. Tatham, in particular, could have a material adverse effect on the Company. Taking into account the effect of exercising options, Mr. Tatham currently beneficially owns 45.3% of the Common Stock of DeepTech and the other executive officers and directors of DeepTech beneficially own approximately an additional 14.8% of the Common Stock. Accordingly, Mr. Tatham and such other executive officers and directors, if they voted together, would have the ability to elect all of DeepTech's directors and control the outcome of all matters submitted to a vote of DeepTech's stockholders. In addition, so long as Mr. Tatham owns more than one-third of DeepTech's outstanding Common Stock, Mr. Tatham acting alone would be able to prevent certain actions that require the affirmative vote of at least two-thirds of DeepTech's outstanding Common Stock. REPURCHASE OF SENIOR NOTES UPON A CHANGE OF CONTROL, INCREASED LEVERAGE BY THE PARTNERSHIP, TATHAM CONVERSION EVENT OR A DECLINE IN THE VALUE OF COLLATERAL The Senior Note Indenture provides that upon the occurrence of a Change of Control, Partnership Leverage Event or Tatham Conversion Event (each as defined in the Senior Note Indenture), DeepTech shall be required to offer to holders of the Senior Notes to repurchase any and all of the Senior Notes at a purchase price equal to 101%, 100% and 101%, respectively, of the aggregate principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, the Senior Note Indenture provides that if DeepTech's Asset Coverage Ratio (as defined in the Senior Note Indenture) falls below specified levels, DeepTech is required to offer to repurchase, at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, an amount of Senior Notes sufficient to increase the Asset Coverage Ratio to not less than specified levels. There can be no assurance that DeepTech will have sufficient resources to purchase the Senior Notes if it is required to do so under the terms of the Senior Note Indenture. This provision may also adversely affect the ability of DeepTech to obtain additional financing in the future. No assurance can be given that the terms of any future indebtedness will not contain cross default provisions based on a Change of Control or other defaults under the Senior Note Indenture. POSSIBLE DEPRESSING EFFECT OF FUTURE SALES OF DEEPTECH COMMON STOCK No predictions can be made as to the effect, if any, that future sales of the Shares, the availability of Common Stock for sale or the perception that such sales could occur, will have on the market price of the Common Stock. In addition, DeepTech has issued and may issue in the future Common Stock and/or options or warrants to purchase Common Stock pursuant to exemptions from registration available under the Securities Act 4 8 in connection with its business activities. Such securities are subject to restrictions on resale in accordance with the Securities Act and the regulations promulgated thereunder. However, if such shares are registered for sale to the public or sales are permitted pursuant to Rule 144 or another available exemption from registration under the Securities Act, such securities may be sold into the public market. The issuance and subsequent resale of a substantial number of shares of Common Stock, or a perception that such sales could occur, could have a material adverse effect on the market price of the Common Stock. PERFORMANCE OF THE PARTNERSHIP DEPENDS ON THROUGHPUT LEVELS The future performance of the Partnership will depend, in part, on the throughput levels achieved by the Partnership's natural gas pipelines (the "Gas Pipelines"), and the Poseidon Oil Pipeline (collectively with the Gas Pipelines, the "Pipelines") and any future pipelines constructed by the Partnership. Throughput levels on each Pipeline will be affected by a number of factors, including the production rates and reserve lives of wells connected to each Pipeline. The proved reserves that are available for transportation on the Pipelines are depleting assets and, as such, will be produced over a finite period. Each of the Pipelines must access additional reserves to offset the natural decline of production from existing wells connected to the Pipelines. The long term prospects of the Partnership are, therefore, dependent upon the development of additional reserves in areas accessible to the Pipelines and the interconnection and transportation by the Pipelines of production from, such additional reserves. The reserve prospects in the Flextrend (water depths of 600 to 1,500 feet) and Deepwater (water depths over 1,500 feet) areas of the Gulf of Mexico will require significant capital expenditures by others for exploration and development drilling and the installation of production facilities and pipeline extensions to interconnect with a Pipeline. Development of additional reserves in these areas could be adversely affected by relatively low prices for oil and gas, capital budget limitations or the lack of available capital. Accordingly, no assurance can be given that such reserves exist or, if they do exist, as to the timing of their discovery or development or their availability to or interconnection with the Pipelines. Furthermore, even if such additional reserves exist and are ultimately produced, no assurance can be given that all the production therefrom will be interconnected with or transported by the Pipelines since the Partnership will compete for such transportation with other pipelines on the basis of numerous factors, including geographic proximity to such production, cost of connection, available capacity, transportation rates and access to onshore markets. REGULATION BY THE FERC OF THE REGULATED PIPELINES AND CHANGING REGULATORY ENVIRONMENT Certain of the pipelines operated by the Partnership (the "Regulated Pipelines") are classified as a "natural gas company" by the Natural Gas Act of 1938, as amended. Consequently the Federal Energy Regulatory Commission (the "FERC") has jurisdiction over the Regulated Pipelines with respect to transportation of gas, rates and charges, construction of new facilities, extension or abandonment of services and facilities, accounts and records, depreciation and amortization policies and certain other matters. In addition, the Regulated Pipelines, where required, hold certificates of public convenience and necessity issued by the FERC covering their facilities, activities and services. The Regulated Pipelines may not charge or collect more than the maximum rates on file with the FERC. In the event of an adverse outcome with respect to any rate case of a Regulated Pipeline, the Partnership's cash flow could be materially adversely affected. Given the extent of regulation of the Regulated Pipelines by the FERC, the extensive changes in FERC policy in recent years, the evolving nature of regulation and the possibility for additional changes, no assurance can be given regarding the likely regulations and restrictions under which the Pipelines will be operating in the future or the effect such regulations and restrictions will have on the Pipeline's financial position, results of operations and cash flows. Further, although only the Regulated Pipelines are currently subject to rate regulation by the FERC, all of the Pipelines are subject to regulation by various federal authorities. There can be no assurance that laws and regulations currently enacted or to be enacted in the future will not adversely affect the Pipelines. HIGH DEPENDENCE ON DEVELOPMENTAL AND EXPLORATORY DRILLING ACTIVITIES The success of Tatham Offshore is largely dependent upon the success of its developmental and exploratory drilling activities. The Partnership is also engaged in developmental drilling activities. Drilling 5 9 involves numerous risks, including the risk that no commercially productive gas or oil reservoirs will be encountered. The cost of drilling, completing and operating wells is often uncertain, and drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents, weather conditions and shortages or delays in the delivery of the requisite equipment. In addition, to the extent Tatham Offshore or the Partnership acquire additional properties, 3-D seismic and other advanced technology may require greater pre-drilling expenditures than traditional drilling strategies. There can be no assurance as to the success of Tatham Offshore or Partnership drilling activities. SUBSTANTIAL FUTURE CAPITAL REQUIREMENTS OF TATHAM OFFSHORE To implement the development of its oil and gas properties, Tatham Offshore intends to seek additional capital through a combination of other funding sources that may include traditional reserve base borrowings, joint venture partnerships, vendor financings, production pay financings and offerings of debt and equity securities. Cash flows from operations, to the extent available, will also be used to fund some expenditures. Tatham Offshore's ability to access additional capital will depend on the success of prior exploratory and development drilling and the status of various capital markets at the time such capital is sought. Accordingly, there can be no assurance that sufficient capital will be available to Tatham Offshore from any source or that, if available, it will be on terms acceptable to Tatham Offshore. Should sufficient financing not be available because costs are higher than estimated or otherwise, the development and exploration of Tatham Offshore's properties would be delayed and, accordingly, the implementation of Tatham Offshore's business strategy would be adversely affected. VOLATILITY OF OIL AND GAS PRICES Tatham Offshore and the Partnership's future financial condition and results of operations are particularly dependent upon the prices received for their oil and gas production and the costs of acquiring, developing and producing reserves. Oil and gas prices have historically been volatile and are likely to continue to be volatile in the future. Prices for oil and gas are subject to fluctuations in response to relatively minor changes in supply, market uncertainty and a variety of additional factors which are beyond the control of Tatham Offshore and the Partnership. These factors include political stability in the Middle East and elsewhere, the foreign supply of oil and gas, the price of foreign imports, the level of consumer product demand, government regulations and taxes, the price and availability of alternative fuels and the overall economic environment. A decrease in oil and gas prices could adversely affect the financial condition and results of operations of Tatham Offshore and the Partnership. OPERATING RISKS; DEEPER WATER RISKS The oil and gas operations of the Company, particularly the Partnership and Tatham Offshore, are subject to all of the risks and hazards typically associated with the exploration for, and/or the development and production of, oil and gas in the Gulf and any other areas in which the Partnership or Tatham Offshore may, in the future, conduct such activities. Risks in drilling operations include blowouts, oil spills, fires and offshore risks such as capsizing, collision, hurricanes and other adverse weather and sea conditions. Such risks can result in personal injury and loss of life and substantial damage to or destruction of oil and gas wells, platforms, production facilities or other property, suspension of operations and liabilities to third parties, any and all of which could adversely affect the Partnership or Tatham Offshore. Most of the Company's oil and gas properties are located in water depths of greater than 600 feet. Drilling operations in such water depths are by their nature more difficult than drilling operations conducted in shallower water depths because they require the application of more advanced drilling technologies, possibly resulting in significantly higher drilling costs. It is anticipated that some of the Company's wells will be completed utilizing subsea completion techniques which involve the installation of subsea wellheads and equipment with tie-back lines to adjacent production facilities. The installation of these facilities requires the use of advanced technologies, including the use of remote installation mechanics. Such operations involve a higher risk of 6 10 encountering mechanical difficulties and equipment failures which, if encountered, could result in significant cost overruns. The Company's operations also could result in liability for oil spills, discharge of hazardous materials and other environmental damages. In accordance with customary industry practices, the Company maintains insurance against some, but not all, of such risks and some, but not all, of such losses. There can be no assurance, however, that such insurance will continue to be available to or carried by the Company or, if available and carried, will be adequate to cover the Company's liability in all circumstances. The occurrence of an event not fully covered by insurance could have a material adverse effect on the financial position and results of operations of the Company. In addition, the Company may be liable for environmental damages caused by previous owners of property purchased by the Company, which liabilities would not be covered by insurance. RISKS OF OFFSHORE CONTRACT DRILLING SERVICES The Company's experience in the contract drilling business is limited. RIGCO currently has two semisubmersible drilling rigs, the FPS Laffit Pincay and the FPS Bill Shoemaker. The FPS Laffit Pincay has only been performing contract drilling services in the Gulf of Mexico since February 1996. The FPS Bill Shoemaker is currently undergoing an extensive upgrade, repair and refurbishment program to enable it to perform contract drilling services. The ability of RIGCO to fund its future debt service obligations under the RIGCO credit facility is dependent upon the successful refurbishment of the FPS Bill Shoemaker and the leasing of both the FPS Laffit Pincay and the FPS Bill Shoemaker at appropriate rates. The Company's contract drilling business is substantially dependent upon the condition of the oil and gas industry, the level of exploration and production expenditures as well as the supply of drilling rigs capable of competing with the Company's semisubmersible drilling rigs. The demand for contract drilling services is directly influenced by oil and gas prices, expectations about future oil and gas prices, the cost of exploration and production activities, the sale and expiration dates of leases and government regulations. Historically in periods of depressed natural gas prices, the demand for drilling and related services has declined leading to low day rates and low utilization of available equipment. In addition, even in an environment of stronger natural gas prices and increased drilling activity, movement of existing rigs, refurbishment of older rigs or new construction could increase the supply of rigs available and therefore adversely affect day rates and utilization levels. The Company cannot predict the timing or extent of the future level of demand of the Company's drilling services or whether recent increases in day rates and utilization rates will be sustained. The Company anticipates that the capital requirements necessary to complete the upgrades on the FPS Bill Shoemaker will be funded with proceeds from the RIGCO credit facility or from cash on hand, that the refurbishment program will be completed as currently scheduled and that the FPS Bill Shoemaker will successfully begin performing contract drilling services. However, there can be no assurance that the refurbishment of the FPS Bill Shoemaker will be completed as scheduled or that the costs to complete the refurbishment will not exceed the funds available for that purpose, or that the FPS Bill Shoemaker will be successfully leased for contract drilling service. Should sufficient financing not be available because costs are higher than estimated or otherwise, the refurbishment of the FPS Bill Shoemaker would be delayed and the ability of RIGCO to service its debt requirements under the RIGCO credit facility would be adversely affected. REGULATIONS The production and development operations of the Partnership and the exploration, development and production operations of the Company are subject to regulation at the federal and state levels. Such regulation includes requiring permits for the drilling of wells and maintaining bonding and insurance requirements in order to drill or operate wells, and regulating the location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled and the plugging and abandoning of wells. Exploration, production and development operations are also subject to various conservation laws and regulations. These include the regulation of the size of drilling and spacing units or proration units, the density of wells that may be drilled, the levels of production and the unitization or pooling of gas and oil properties. No assurance can be given regarding the likely regulations and restrictions under which the Company's development and production activities may be conducted in the future or the effect such regulations and restrictions will have on the Company's financial position, results of operations and cash flows. The operations of certain of the Subsidiaries, particularly those of Tatham Offshore and the Partnership, are subject to extensive federal, state and local regulatory requirements relating to environmental affairs, health and safety, waste management and chemical products. Governmental authorities have the power to enforce compliance with these regulations and permits and violators are subject to civil and criminal penalties, including civil fines, injunctions or both. Third parties may also have the right to pursue legal actions to enforce compliance. Future developments such as stricter laws, regulations or enforcement policies thereunder could significantly increase the cost of compliance with environmental laws and regulations. Moreover, as with other companies engaged in similar or related businesses, some risks, environmental costs and liabilities are inherent in the operations of certain of the Subsidiaries due to their handling of hydrocarbon products, and there can be no assurance that material environmental costs and liabilities will not be incurred by such Subsidiaries. The Company believes it is currently in compliance with all applicable regulations. UNCERTAINTY OF ESTIMATES OF RESERVES AND FUTURE NET RESERVES There are numerous uncertainties inherent in estimating oil and natural gas reserves and their estimated values, including many factors beyond the control of the producer. The reserve data incorporated by reference into this Prospectus represent only estimates, which have been prepared by independent petroleum engineers. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. Estimates of economically recoverable oil and gas reserves and of future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effects of regulations by government agencies and assumptions concerning future oil and gas prices, future operating costs, geologic success, severance and excise taxes, development costs and workover and remedial costs, all of which may in fact vary considerably from actual results. For these reasons, estimates of the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, classifications of such reserves based on risk of recovery and estimates of the future net cash flows expected therefrom prepared by different engineers or by the same engineers at different times may vary substantially and such reserve estimates may be subject to downward or upward adjustment based upon such factors, particularly with respect to new discoveries 7 11 and to estimates of proved undeveloped reserves, which comprise a substantial portion of the Company's reserves. Actual production, revenues and expenditures with respect to the Company's reserves will likely vary from estimates, and such variances may be material. The present values of estimated future net cash flows incorporated by reference into this Prospectus should not be construed as the current market value of the estimated oil and natural gas reserves attributable to the Company's properties. In accordance with applicable requirements of the SEC, the estimated discounted future net cash flows from proved reserves are generally based on prices and costs as of the date of the estimate, whereas actual future prices and costs may be materially higher or lower. Actual future net cash flows also will be affected by factors such as the amount and timing of actual production, supply and demand for oil and natural gas, curtailments or increases in consumption by gas purchasers and changes in governmental regulations or taxation. The timing of actual future net cash flows from proved reserves, and their actual present value, will be affected by the timing of both the production and the incurrence of expenses in connection with the development and production of oil and gas properties. In addition, the calculation of present value of the future net revenues using a 10% discount as required by the SEC, is not necessarily the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company's reserves or the oil and gas industry in general. LEGAL PROCEEDINGS The Company is and may in the future become a party to various legal and environmental proceedings which have arisen or may arise in the ordinary course of its business. No assurance can be given with respect to the outcome of these legal proceedings and the effect such outcomes may have on the Company. CONFLICTS OF INTEREST DeepTech is a diversified energy company engaged, through its operating subsidiaries, in offshore contract drilling services and the acquisition, development, production, processing, transportation and marketing of, and the exploration for, oil and gas. DeepTech is currently a party to certain material contracts with the Subsidiaries and/or their affiliates and such entities have also entered into material contracts among themselves. DeepTech anticipates that DeepTech, the Subsidiaries and the respective affiliates of DeepTech and the Subsidiaries will enter into additional material contracts and agreements. In addition, certain officers and directors of DeepTech are also officers and/or directors of the Subsidiaries and their affiliates and such officers and directors have entered into material contracts and agreements with such entities. Although the Senior Note Indenture permits DeepTech to enter into transactions with its affiliates only if each such transaction, or series of related transactions, on whole, is on terms no less favorable to DeepTech than those that could be obtained in a comparable arm's-length transaction with a non- affiliate, such transactions involving amounts of less than $2.5 million only require the authorization of officers of DeepTech even if such officers have an interest in such transactions. In addition, DeepTech manages each of the Subsidiaries pursuant to management agreements. DeepTech is not prohibited under the management agreements from engaging, directly or indirectly, in other business activities in which the respective Subsidiaries will have no economic interest. Certain conflicts may arise as a result of existing and future transactions between DeepTech and its affiliates. These conflicts may be resolved in favor of such affiliates and such resolution may have a material adverse effect on DeepTech. COMPETITION The energy industry is highly competitive. The Company competes in the areas of property acquisitions and the development, production, gathering, transportation, and marketing of, and exploration for oil and gas with major interstate pipeline companies, major oil companies, other independent oil and gas concerns and individual producers and operators. Many of these competitors have substantially greater financial and other resources than the Company. For a number of years, depressed oil and gas prices and an oversupply of drilling rigs have adversely affected the offshore drilling market. In addition, RIGCO has significant competition from many other offshore drilling contractors in all of the areas in which it operates. Activity levels in areas in which RIGCO 8 12 operates, including the U.S. Gulf of Mexico, increased in 1995 and 1996 due, in part, to increased oil and natural gas prices and increased levels of exploration and production activities. RIGCO has experienced a corresponding increase in day rates. RIGCO cannot predict the extent to which current market conditions will continue. THE COMPANY DeepTech is a diversified energy company engaged, through its operating subsidiaries, in offshore contract drilling services and the acquisition, development, production, processing, transportation and marketing of, and the exploration for, oil and gas. DeepTech was formed in October 1989 and, since that time, has significantly expanded its operations, primarily through acquisitions. DeepTech's Common Stock trades on Nasdaq under the trading symbol "DEEP." The Company believes that its holding company structure facilitates operations by enabling each Subsidiary to focus its attention on a specific aspect of the oil and gas industry while isolating it from the regulatory obligations and potential liabilities of the other Subsidiaries. In addition, such structure enables the Company to attract and retain key personnel by issuing to such personnel direct minority equity interests in the Subsidiary for which they work. The principal executive office of DeepTech is located at Texas Commerce Tower, Suite 7500, 600 Travis, Houston, Texas 77002, and its telephone number is (713) 224-7400. USE OF PROCEEDS DeepTech will not receive any of the proceeds from the sale of the Securities offered hereby, although it may receive up to an aggregate of $31,096,217 in connection with the exercise of outstanding warrants and options, including the Warrants, to purchase Shares included as a part of the Offering. DeepTech will bear all expenses incident to the registration of the Securities under federal and state securities laws and the sale of the Securities hereunder other than expenses incident to the delivery of the Securities to be sold by Selling Stockholders, including any transfer taxes payable on any Securities, and any commissions and discounts payable to underwriters, agents or dealers. See "Plan of Distribution." DESCRIPTION OF WARRANTS DeepTech has issued warrants to purchase Common Stock to noteholders, employees, directors and financial institutions under various agreements and arrangements. In December 1996, DeepTech extended an offer to certain of its warrantholders whereby the exercise period for certain vested warrants could be extended for one, two, or three years in consideration for the immediate exercise of 25%, 37.5% or 50%, respectively, of the warrants so designated by each warrantholder. As a result of this offer, on December 31, 1996, DeepTech issued 1,080,701 shares of Common Stock pursuant to the exercise of warrants at prices ranging from $4.00 to $4.50 per share of Common Stock and extended the exercise period on 1,894,446 warrants. In January 1997, in conjunction with certain refinancings, DeepTech agreed to provide Mr. Thomas P. Tatham, Chairman and Chief Executive Officer of DeepTech, and members of his immediate family the right to accept the offer to exercise 25%, 37.5% or 50% of their warrants in exchange for an extension of one, two or three years, respectively, in the expiration date of the remaining warrants, until June 1, 1997. On May 21, 1997, Mr. Tatham exercised 722,917 warrants and DeepTech issued 722,917 shares of Common Stock to Mr. Tatham and extended the exercise period on 2,168,749 warrants. The Warrants registered pursuant to the Registration Statement are 4,060,695 of the 4,063,195 warrants for which the exercise period was extended pursuant to the arrangements discussed above. The Warrants are each issued pursuant to agreements between DeepTech and the Warrantholders. The following summary of the terms of the Warrants is not intended to be complete. The terms of the respective warrant agreements, the forms of which have been filed as exhibits to the Registration Statement, are incorporated by reference herein, and this description is qualified in its entirety by reference thereto. Certain Warrantholders acquired their Warrants from the original warrantholders or their transferees in transactions exempt from registration under the Securities Act. Each Warrant entitles the holder thereof to purchase the stated number of shares of Common Stock, subject to adjustment in certain circumstances. The Warrants are exercisable at any time prior to their stated expiration. DeepTech has authorized and reserved for issuance that number of shares of Common Stock sufficient to provide for the exercise of the Warrants. When delivered, each share of Common Stock will be fully paid and non-assessable. No fractional shares will be issued upon exercise of the Warrants, but the Company will pay the cash value of any fractional shares otherwise issuable. Warrants may be exercised by notice to DeepTech accompanied by payment of the aggregate exercise price for the shares of Common Stock being acquired. 9 13 The exercise price and the number of shares of Common Stock purchasable upon the exercise of the Warrants are subject to adjustment in certain events, including (i) the issuance of a stock dividend to holders of shares of Common Stock, (ii) decrease in the number of shares of Common Stock by combination of the outstanding shares of Common Stock, (iii) the distribution by DeepTech of stock, other securities or assets with respect to or in exchange for Common Stock in connection with certain capital reorganizations, reclassifications, consolidations or mergers, (iv) the issuance of rights, options or warrants to holders of shares of Common Stock entitling such holders to purchase shares of Common Stock for a consideration per share less than the then current Warrant exercise price, (v) any distribution by DeepTech of shares of capital stock other than Common Stock, evidences of indebtedness or assets (excluding cash dividends paid from retained earnings) or rights or warrants to subscribe for or purchase any of its securities, and (vi) any sale or issuance by DeepTech of shares of Common Stock, or rights, options or warrants or convertible or exchangeable securities containing the right to subscribe for or purchase shares of such Common Stock, at a price per share of Common Stock less than the then current Warrant exercise price. No adjustment will be made for (a) the issuance of shares of Common Stock upon the exercise of the Warrants, (b) the issuance of shares of Common Stock by DeepTech upon receipt of the then current market price for the Common Stock if there is a public market or in an arm's-length transaction with third persons not affiliated with DeepTech for consideration equal to the fair market value of such shares, or (c) shares of Common Stock issuable upon the exercise of stock options granted to employees of DeepTech pursuant to a qualified stock option plan approved by DeepTech's Board of Directors. Holders of Warrants are not entitled, by virtue of being such holders, to receive dividends or to consent or to receive notice as shareholders in respect to any meeting of shareholders for the election of directors of DeepTech or any other matter, or to vote at any such meeting, or any right whatsoever as shareholders of DeepTech. Certain Warrantholders (indicated by footnote on the table below) have a put option pursuant to the terms of their Warrants. The put option grants the Warrantholder the right to require the Company to purchase the Warrant, or if the Warrant has been exercised, all of the shares of Common Stock then held by the Warrantholder pursuant to exercise of such Warrant, upon the occurrence of a Put Event (as defined in the Warrant). A Put Event is deemed to occur if (i) DeepTech is acquired by merger, consolidation or other business combination by any person or group of persons (other than Thomas P. Tatham) or (ii) the acquisition, directly or indirectly, by any person or group of persons (other than Thomas P. Tatham) of 50% or more of the capital stock of DeepTech or 50% or more of the assets of DeepTech, in either case, by way of negotiated purchase or otherwise. The purchase price upon exercise of a put option is calculated by a formula using the highest price per share paid to shareholders of the Company in such Put Event, or the cash value of any non-cash consideration paid to the Shareholders, as determined by mutual agreement of the Warrantholder and the Company or in the alternative, by determination of an investment banking firm selected by the Warrantholder and the Company. The Warrants also contain certain demand and piggyback registration rights; indemnification agreements related to such registrations; certain affirmative covenants of DeepTech and notice requirements of certain corporate actions. The table below includes certain information concerning the Warrants.
WARRANT HOLDER NUMBER EXERCISE PRICE EXPIRATION DATE -------------- ------ -------------- --------------- Citicorp USA, Inc. 618,750 $4.50 7/15/98 Citicorp USA, Inc. 328,125(1) $4.00 12/15/98 John E. Drury 26,666 $4.50 7/15/98 Alfred F. King III 2,500(1) $4.00 12/15/99 David N. King 2,500(1) $4.00 12/15/99 Lehman Brothers Holdings, Inc. 666,667 $4.50 7/15/2000 Jansen Noyes, Jr. 937(1) $4.00 12/15/99 Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W 1,250(1) $4.00 12/15/99 Nancy Noyes King FBO Alfred King III Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W 1,250(1) $4.00 12/15/99 Nancy Noyes King FBO David N. King
10 14
WARRANT HOLDER NUMBER EXERCISE PRICE EXPIRATION DATE -------------- ------ -------------- --------------- Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W 1,250(1) $ 4.00 12/15/99 Nancy Noyes King FBO Susan K. Stickney Christine M. Sanders 3,750(1) $ 4.00 12/15/98 Don A. Sanders 77,500 $ 4.50 7/15/98 Don A. Sanders 45,000(1) $ 4.00 12/15/98 Katherine U. Sanders 40,000 $ 4.50 7/15/98 Katherine U. Sanders 45,000(1) $ 4.00 12/15/98 Albert Stickney III 1,318(1) $ 4.00 12/15/99 Susan K. Stickney 4,372(1) $ 4.00 12/15/99 Thomas P. Tatham 825,000 $10.00 11/7/98 Thomas P. Tatham 1,343,749 $ 4.50 7/15/98 Roger B. Vincent, Sr. 25,111(1) $ 4.00 12/15/98
(1) These Warrants each contain certain put options discussed above. 11 15 SELLING STOCKHOLDERS The following tables set forth the name of each Selling Stockholder, the number of Securities owned by each Selling Stockholder immediately prior to the Offering, the number of Securities registered hereby that each Selling Stockholder may offer in the Offering, the number of Securities to be owned by each Selling Stockholder upon completion of the Offering as contemplated hereby and the percentage of total Securities to be owned by each Selling Stockholder upon completion of the Offering as contemplated hereby. However, because the Selling Stockholders may offer all or a portion of the Securities at any time and from time to time after the date hereof, the exact number of Securities that each Selling Stockholder may retain upon completion of the Offering cannot be determined at this time. To the knowledge of DeepTech, none of the Selling Stockholders has had any material relationship with the Company except as set forth in the footnotes to the following table and as more fully described elsewhere in this Prospectus (including the information incorporated by reference in this Prospectus).
NUMBER OF SHARES TO BE OFFERED OWNERSHIP FOR THE AFTER THE OFFERING OWNERSHIP OF SELLING --------------------------- SHARES PRIOR STOCKHOLDER'S NUMBER PERCENT SELLING STOCKHOLDER TO THE OFFERING ACCOUNT OF SHARES OF CLASS ------------------- --------------- ------------- --------- -------- Thomas P. Tatham 9,925,469(1)(2) 3,641,666 6,283,803 28.7% Alpha Marine Services, Inc. 100,000(3) 100,000 0 * Pete Barbara 4,000 4,000 0 * Citicorp USA, Inc. 946,875(4) 946,875 0 * Citicorp North America, Inc. 315,625 315,625 0 * DLJ Capital Corporation 1,391,675(5) 1,019,823 0 * DWW & Associates, Inc. 4,000 4,000 0 * John E. Drury 35,556(6) 35,556 0 * Bradbury Dyer, III 1,223 1,223 0 * The Equitable Life Assurance Society 0 * of the United States 325,744(7) 55,641 F-W Oil Interests, Inc. 162,000 162,000 0 * Alfred F. King III 4,000(8) 4,000 0 * David N. King 4,000(8) 4,000 0 * Scott M. Kleberg 2,459 2,459 0 * Tom Landry, Jr. 9,766 9,766 0 * Michael Lam 23,508(9) 10,000 13,508 * Thurman Lauret 4,000 4,000 0 * Lehman Brothers Holdings, Inc. 1,333,334(10)(11) 1,333,334 0 * LFC Energy Equipment, Ltd. 5,469 5,469 0 * Metropolitan Life Insurance Company 0 * Separate Account EN 200,000(12) 200,000 M. H. Whittier Corp. 71,094 71,094 0 * Mike Mullen 8,240 8,240 0 * Jansen Noyes, Jr. 1,500(13) 1,500 0 * Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Alfred King III 2,000(14) 2,000 0 * Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO David N. King 2,000(15) 2,000 0 * Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Susan K. Stickney 2,000(16) 2,000 0 * Roy T. Oliver 7,364 7,364 0 * Marshall B. Payne, Nominee 3,682 3,682 0 * SAA Investments, Inc. 4,000 4,000 0 * Christine M. Sanders 5,000(17) 5,000 0 * Don A. Sanders 843,167(18) 176,667 666,500 3.6% Katherine U. Sanders 100,000(19) 100,000 0 * Grant E. Sims 745,000(20) 445,000 300,000 1.6% Albert Stickney III 2,109(21) 2,109 0 * Susan K. Stickney 7,000(22) 7,000 0 * E.D. Terry 4,000 4,000 0 * Glenn H. Tatham 347,730(23) 50,000 297,730 1.6% Roger B. Vincent, Sr. 33,482(24)(25) 33,482 0 * L.E. Walker 8,000 8,000 0 * Steven A. Webster 13,293(26) 13,293 0 *
12 16
NUMBER OF SHARES TO BE OFFERED OWNERSHIP FOR THE AFTER THE OFFERING OWNERSHIP OF SELLING --------------------------- SHARES PRIOR STOCKHOLDER'S NUMBER PERCENT SELLING STOCKHOLDER TO THE OFFERING ACCOUNT OF SHARES OF CLASS ------------------- --------------- ------------- --------- -------- H. G. Wellington & Co. Inc. Retirement Account FBO Charles E. Murphy, Jr. 6,741(27) 6,741 0 * Westgate International, L.P. 672,973(28) 672,973 0 * Wharton Associates 5,859 5,859 0 * Whitman & Ransom Retirement Plan FBO William R. Ziegler 10,000(29) 10,000 0 * William R. Ziegler 4,922 4,922 0 * ------- --------- --------- ---- Total 719,859 9,506,363 7,548,033 33.8% ======= ========= ========= ====
*less than 1%
NUMBER OF WARRANTS TO BE OWNERSHIP OFFERED FOR THE AFTER THE OFFERING OWNERSHIP OF SELLING ------------------------- WARRANTS PRIOR STOCKHOLDER'S NUMBER PERCENT SELLING STOCKHOLDER TO THE OFFERING ACCOUNT OF WARRANTS OF CLASS ------------------- --------------- --------------- ----------- -------- Thomas P. Tatham(1) 2,168,749 2,168,749 0 * Citicorp USA, Inc. 946,875 946,875 0 * John E. Drury 26,666 26,666 0 * Alfred F. King III 2,500 2,500 0 * David N. King 2,500 2,500 0 * Lehman Brothers Holdings, Inc. 666,667(10) 666,667 0 * Jansen Noyes, Jr. 937 937 Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Alfred King III 1,250 1,250 0 * Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO David N. King 1,250 1,250 0 * Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Susan K. Stickney 1,250 1,250 0 * Christine M. Sanders 3,750 3,750 0 * Don A. Sanders 162,500 162,500 0 Katherine U. Sanders 45,000 45,000 0 * Albert Stickney III 1,318 1,318 0 * Susan K. Stickney 4,372 4,372 0 * Roger B. Vincent, Sr. 25,111(25) 25,111 0 * --------- --------- --- --- Total 4,060,695 4,060,695 0 0% ========= ========= === ===
*less than 1% (1) Thomas P. Tatham is the Chairman and Chief Executive Officer of DeepTech, and Chairman of Tatham Offshore and Leviathan Gas Pipeline Company. (2) Includes 2,568,749 shares issuable upon the exercise of outstanding warrants. (3) Laney Chouest, a director of DeepTech, owns 30% of Alpha Marine Services, Inc. (4) Consists of 946,875 shares issuable upon the exercise of outstanding warrants. (5) Includes 1,019,823 shares issuable upon the exercise of outstanding warrants. (6) Includes 26,666 shares issuable upon the exercise of outstanding warrants. (7) Includes 55,641 shares issuable upon the exercise of outstanding warrants. (8) Includes 2,500 shares issuable upon the exercise of outstanding warrants. (9) Michael Lam is a director of DeepTech. (10) Includes 666,667 shares issuable upon the exercise of outstanding warrants. 13 17 (11) A subsidiary of Lehman Brothers Holdings, Inc. (the "Lehman Lender") has extended a loan to a wholly-owned indirect subsidiary of the Company, RIGCO, pursuant to a syndicated Credit Agreement dated as of September 30, 1996 among RIGCO, as borrower, the other financial institutions (including the Lehman Lender) from time to time parties thereto (the "RIGCO Lenders") as amended (the "RIGCO Credit Agreement"). As additional consideration for making the loan to RIGCO, another subsidiary of Lehman Brothers Holdings, Inc. received warrants to purchase common stock of RIGCO. (12) Consists of 200,000 shares issuable upon the exercise of outstanding warrants. (13) Includes 937 shares issuable upon the exercise of outstanding warrants. (14) Includes 1,250 shares issuable upon the exercise of outstanding warrants. (15) Includes 1,250 shares issuable upon the exercise of outstanding warrants. (16) Includes 1,250 shares issuable upon the exercise of outstanding warrants. (17) Includes 3,750 shares issuable upon the exercise of outstanding warrants. (18) Includes 122,500 shares issuable upon the exercise of outstanding warrants. (19) Includes 85,000 shares issuable upon the exercise of outstanding warrants. (20) Includes 300,000 shares issuable upon the exercise of outstanding stock options. (21) Includes 1,318 shares issuable upon the exercise of outstanding warrants. (22) Includes 4,372 shares issuable upon the exercise of outstanding warrants. (23) Glenn H. Tatham is the son of Thomas P. Tatham. (24) Includes 25,111 shares issuable upon the exercise of outstanding warrants. (25) Roger B. Vincent, Sr. is a Director of Tatham Offshore, and is a director of an affiliate of Springwell Corporation, which served as a financial advisor to the Company from April 1991 through November 1993. The Shares and Warrants consist of securities held by record by Delaware Charter and Guarantee Trust Company TTEE FBO Roger B. Vincent, Sr. IRA R/O. (26) Includes 8,371 shares issuable upon the exercise of outstanding warrants. (27) Consists of 6,741 shares issuable upon the exercise of outstanding warrants. (28) Westgate International, L.P. is also the beneficial owner of 850,000 shares of Series A Preferred Stock of Tatham Offshore and 25,000 shares of Tatham Offshore Common Stock. A director of Tatham Offshore is employed by a company which provides services to Westgate International, L.P. (29) Consists of 10,000 shares issuable upon the exercise of outstanding warrants. 14 18 PLAN OF DISTRIBUTION The Securities may be sold or distributed from time to time by or for the account of the Selling Stockholders, or their pledgees on behalf of the Selling Stockholders, in transactions (which may involve crosses and block transactions) on Nasdaq or any national securities exchange or U.S. inter-dealer quotation system of a registered national securities association on which the Securities are then listed, in the over-the-counter market, in one or more privately negotiated transactions (including pledges and gifts), through the writing of options on the Securities, in a combination of such methods of distribution or by any other legally available means. Such methods of sale may be conducted by the Selling Stockholders at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at prices otherwise negotiated. The Selling Stockholders may effect such transactions directly, or indirectly through broker-dealers or agents acting on their behalf and, in connection with such sales, such broker-dealers or agents may receive compensation in the form of commissions or discounts from the Selling Stockholders and/or the purchasers of the Securities for whom they may act as agent or to whom they sell Securities as principal or both (which commissions or discounts might be in excess of customary commissions). To the extent required, the names of the agents or broker- dealers, and applicable commissions or discounts and any other required information with respect to any particular offer of Securities by the Selling Stockholders, will be set forth in a Prospectus Supplement. The Selling Stockholders and any such underwriters, brokers, dealers or agents that participate in such distribution may be deemed to be "underwriters" within the meaning of the Securities Act, and any discounts, commissions or concessions received by any such underwriters, brokers, dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act. Neither DeepTech nor the Selling Stockholders can presently estimate the amount of such compensation. DeepTech knows of no existing arrangements between any Selling Stockholder and any other Selling Stockholder, underwriter, broker, dealer or other agent relating to the sale or distribution of the Securities. Under applicable rules and regulations under the Exchange Act, any person engaged in a distribution of any of the Securities may not simultaneously engage in market activities with respect to the Common Stock for a period of nine business days prior to the commencement of such distribution. In addition and without limiting the foregoing, the Selling Stockholders will be subject to applicable provisions of the Exchange Act; including without limitation Rules 10b-5, 10b-6 and 10b-7, which provisions may limit the timing of purchases and sales of any of the Securities by the Selling Stockholders. All of the foregoing may affect the marketability of the Common Stock. DeepTech will not receive any of the proceeds from the sale of the Securities offered hereby, but will bear all expenses incident to the registration of the Securities under federal and state securities laws and the sale of the Securities hereunder other than expenses incident to the delivery of the Securities to be sold by the Selling Stockholders, including any transfer taxes payable on any Securities, and any commissions and discounts payable to underwriters, agents or dealers. In order to comply with certain states' securities laws, if applicable, the Securities will be sold in such jurisdictions only through registered or licensed brokers or dealers. In addition, in certain states the Common Stock may not be sold unless the Common Stock has been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. LEGAL MATTERS The validity of the Securities offered hereby will be passed upon for the Company by Akin, Gump, Strauss, Hauer & Feld, L.L.P. Akin, Gump, Strauss, Hauer & Feld, L.L.P. owns 235,357 shares of common stock of the Company. EXPERTS The audited consolidated financial statements of DeepTech and its Subsidiaries incorporated by reference in this Prospectus have been audited by Price Waterhouse LLP, independent accountants, as indicated in their report with respect thereto and are included in reliance upon the authority of said firm as experts in auditing and accounting. The reports of Ryder Scott Company Petroleum Engineers, independent petroleum engineers, and Netherland, Sewell & Associates, Inc., independent petroleum engineers, and the respective information with 15 19 respect to estimated reserves contained therein incorporated by reference in this Prospectus and the Registration Statement have been so included in reliance upon the authority of said firms as experts with respect to the matters contained therein. UNCERTAINTY OF FORWARD LOOKING STATEMENTS Certain statements and information in this Prospectus (including documents incorporated herein by reference, see "Incorporation of Certain Documents by Reference") constitute forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements are typically punctuated by words or phrases such as "anticipate," "estimate," "projects," "management believes," "DeepTech believes" and words or phrases of similar import. Such statements are subject to certain risks, uncertainties or assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Among the key factors that may have a direct bearing on DeepTech's results and financial condition are: (i) competitive practices in the oil and gas industry in which DeepTech competes, (ii) fluctuations in oil and gas prices, (iii) environmental liabilities to which the Company may become subject in the future which are not covered by an indemnity or insurance, (iv) the impact of current and future laws and governmental regulations (particularly environmental regulations) affecting the oil and gas industry in general and the Company's operations in particular and (v) the ability of DeepTech and its subsidiaries to secure additional capital to fund its operations. 16 20 No dealer, salesperson or other person has been authorized to give any information or to make any representations other than those contained in or incorporated by reference in this Prospectus in connection with the offer made by this Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the Selling Stockholders. Neither the delivery of this Prospectus nor any sale made hereunder shall under any circumstances create an implication that there has been no change in the affairs of the Company since the date hereof. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any security other than the shares of Common Stock and Common Stock Purchase Warrants offered hereby, nor does it constitute an offer to sell or a solicitation of an offer to buy any shares of Common Stock or Common Stock Purchase Warrants by anyone in any jurisdiction in which such offer or solicitation is not authorized, or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. ------------------------ TABLE OF CONTENTS
PAGE ---- Available Information . . . . . . . . . . . . Incorporation of Certain Documents by Reference . . . . . . . . . . . . . . . Risk Factors . . . . . . . . . . . . . . . . The Company . . . . . . . . . . . . . . . . . Recent Developments . . . . . . . . . . . . . Use of Proceeds . . . . . . . . . . . . . . . Description of Warrants . . . . . . . . . . . Selling Stockholders . . . . . . . . . . . . Plan of Distribution . . . . . . . . . . . . Legal Matters . . . . . . . . . . . . . . . . Experts . . . . . . . . . . . . . . . . . . . Uncertainty of Forward Looking Statements . . . . . . . . . . . .
9,506,363 SHARES OF COMMON STOCK 4,060,695 COMMON STOCK PURCHASE WARRANTS DEEPTECH INTERNATIONAL INC. PROSPECTUS JUNE [___], 1997 21 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the issuance and distribution of the securities being registered hereby. Securities and Exchange Commission Filing Fee . . . . . . $ 18,725 Printing Costs . . . . . . . . . . . . . . . . . . . . . . $ 25,000 Legal Fees and Expenses . . . . . . . . . . . . . . . . . $ 95,000 -------- Total . . . . . . . . . . . . . . . . . . . . . . . . $138,725
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Certificate of Incorporation of DeepTech entitles the Board of Directors to provide for indemnification of directors and officers to the fullest extent provided by law, except for liability (i) for any breach of the directors' duty of loyalty to DeepTech or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends, or for unlawful stock purchases or redemptions, or (iv) for any transaction from which the director derived an improper personal benefit. Article VII of the Bylaws of DeepTech provide that to the fullest extent and in the manner provided by the laws of the State of Delaware and specifically as is permitted under Section 145 of the General Corporation Law of the State of Delaware, DeepTech shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, other than an action by or in the right of DeepTech, by reason of the fact that such person is or was a director, officer, employee or agent of DeepTech, or is or was serving at the request of DeepTech as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit, or proceeding if he acted in good faith and in a manner he reasonably believed to be in and not opposed to the best interests of DeepTech, and with respect to any criminal action or proceeding, he had no reasonable cause to believe his conduct was unlawful. Determination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in a good faith and in a manner which he reasonably believed to be in and not opposed to the best interests of DeepTech, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was lawful. The Bylaws provide that DeepTech shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of DeepTech to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of DeepTech, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to DeepTech unless the court orders otherwise. II-1 22 ITEM 16. EXHIBITS The following exhibits are filed as part of this Registration Statement:
Exhibit Number Exhibit Description - ------- ------------------- 4.1 Form of Stock Certificate of Common Stock of DeepTech (filed as Exhibit 4.1 to DeepTech's Registration Statement on Form S-1, File No. 33-76999, and incorporated herein by reference). 4.2** Common Stock Purchase Warrant dated December 31, 1996 issued by DeepTech to each of the Holders listed on Schedule I thereto. 4.3** Common Stock Purchase Warrant dated January 21, 1997 between DeepTech and Citicorp USA Inc. 4.4** DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and Donald A. Sanders. 4.5** DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and John Drury. 4.6** Amendment No. 1 to Warrant Agreement dated December 31, 1996 between DeepTech and each Lender listed on Schedule I thereto. 4.7** Warrant Agreement dated February 16, 1996 between DeepTech and each of the Lenders listed on Schedule I thereto. 4.8** Amendment No. 1 to Warrant Agreement dated December 31, 1996 between DeepTech and Lehman Commercial Paper Inc. 4.9** Amendment No. 1 to Warrant Agreement dated December 31, 1996 among DeepTech, Citicorp USA, Inc., Donald A. Sanders and Thomas P. Tatham. 4.10** Warrant Certificate issued by DeepTech on the date and to the holders listed on Schedule I thereto. 4.11* DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and each holder listed on Schedule I thereto. 4.12* Warrant Agreement dated as of January 23, 1997 between DeepTech and Thomas P. Tatham. 4.13* Amendment No. 1 dated May 29, 1997 to Warrant Agreement between DeepTech and Thomas P. Tatham dated as of February 16, 1996. 4.14* Amendment No. 1 dated as of May 28, 1997 to Warrant Agreement between DeepTech and Thomas P. Tatham dated as of January 23, 1997. 4.15* Warrant Certificate No. 00-01A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.16* Warrant Certificate No. 00-07A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.17* Warrant Certificate No. 001A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.18* Warrant Certificate No. 00-03A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.19* Warrant Certificate No. 00-06A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 5.1* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. 23.1** Consent of Price Waterhouse LLP 23.2** Consent of Ryder Scott Company Petroleum Engineers, Independent Petroleum Engineers 23.3** Consent of Netherland, Sewell & Associates, Inc. Independent Petroleum Engineers. 23.4 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in its opinion filed as Exhibit 5.1). 24.1** Powers of Attorney
- ------------ * Filed herewith. ** Previously filed. ITEM 17. UNDERTAKINGS. (a) The undersigned Registrant hereby undertakes as follows: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Exchange Act that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar, as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-2 23 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Pre-Effective Amendment No. 1 to Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, Texas on June 2, 1997. DEEPTECH INTERNATIONAL INC. (Registrant) By: /s/ THOMAS P. TATHAM ------------------------------------ Thomas P. Tatham Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ THOMAS P. TATHAM Chairman and Chief Executive Officer June 2, 1997 - --------------------------------------- (Principal Executive Officer) Thomas P. Tatham /s/ DONALD V. WEIR* Chief Financial Officer and Director June 2, 1997 - --------------------------------------- (Principal Financial Officer) Donald V. Weir /s/ JANET E. SIKES* Secretary, Treasurer and Director June 2, 1997 - --------------------------------------- (Principal Accounting Officer) Janet E. Sikes /s/ CONRAD P. ALBERT* Director June 2, 1997 - --------------------------------------- Conrad P. Albert Director - --------------------------------------- Laney Chouest Director - --------------------------------------- Charles M. Darling, IV Director - --------------------------------------- Ralph Eads /s/ ROBERT E. FOX* Director June 2, 1997 - --------------------------------------- Robert E. Fox
II-3 24
SIGNATURE TITLE DATE --------- ----- ---- /s/ STEVEN L. GIRARD* Director June 2, 1997 - --------------------------------------- Steven L. Gerard /s/ MICHAEL H. LAM* Director June 2, 1997 - --------------------------------------- Michael H. Lam /s/ BEN T. HARRIS* Director June 2, 1997 - --------------------------------------- Ben T. Morris Director - --------------------------------------- Nancy K. Quinn /s/ GRANT E. SIMS* Director, Senior Vice President June 2, 1997 - --------------------------------------- Grant E. Sims
*By: /s/ THOMAS P. TATHAM ----------------------------------- Thomas P. Tatham (Attorney-in-Fact) II-4 25 EXHIBIT INDEX
Exhibit Number Exhibit Description - ------- ------------------- 4.1 Form of Stock Certificate of Common Stock of DeepTech (filed as Exhibit 4.1 to DeepTech's Registration Statement on Form S-1, File No. 33-76999, and incorporated herein by reference). 4.2** Common Stock Purchase Warrant dated December 31, 1996 issued by DeepTech to each of the Holders listed on Schedule I thereto. 4.3** Common Stock Purchase Warrant dated January 21, 1997 between DeepTech and Citicorp USA Inc. 4.4** DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and Donald A. Sanders. 4.5** DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and John Drury. 4.6** Amendment No. 1 to Warrant Agreement dated December 31, 1996 between DeepTech and each Lender listed on Schedule I thereto. 4.7** Warrant Agreement dated February 16, 1996 between DeepTech and each of the Lenders listed on Schedule I thereto. 4.8** Amendment No. 1 to Warrant Agreement dated December 31, 1996 between DeepTech and Lehman Commercial Paper Inc. 4.9** Amendment No. 1 to Warrant Agreement dated December 31, 1996 among DeepTech, Citicorp USA, Inc., Donald A. Sanders and Thomas P. Tatham. 4.10** Warrant Certificate issued by DeepTech on the date and to the holders listed on Schedule I thereto. 4.11* DeepTech Warrant Agreement dated February 16, 1996 between DeepTech and each party listed on Schedule I thereto. 4.12* Warrant Agreement dated as of January 23, 1997 between DeepTech and Thomas P. Tatham. 4.13* Amendment No. 1 dated May 29, 1997 to Warrant Agreement between DeepTech and Thomas P. Tatham dated as of February 16, 1996. 4.14* Amendment No. 1 dated as of May 28, 1997 to Warrant Agreement between DeepTech and Thomas P. Tatham dated as of January 23, 1997. 4.15* Warrant Certificate No. 00-01A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.16* Warrant Certificate No. 00-07A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.17* Warrant Certificate No. 001A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.18* Warrant Certificate No. 00-03A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 4.19* Warrant Certificate No. 00-06A issued by DeepTech on May 29, 1997 to Thomas P. Tatham. 5.1* Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P. 23.1** Consent of Price Waterhouse LLP 23.2** Consent of Ryder Scott Company Petroleum Engineers, Independent Petroleum Engineers 23.3** Consent of Netherland, Sewell & Associates, Inc. Independent Petroleum Engineers. 23.4 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in its opinion filed as Exhibit 5.1). 24.1** Powers of Attorney.
- ------------ * Filed herewith. ** Previously filed. EX-4.11 2 WARRANT AGREEMENT - CITICORP USA, INC. 1 EXHIBIT 4.11 SCHEDULE I DEEPTECH WARRANT AGREEMENTS BETWEEN DEEPTECH INTERNATIONAL, INC. AND THE PARTIES LISTED BELOW Pursuant to Item 601(a) of Regulation S-K, the individual DeepTech Warrant Agreements, dated February 16, 1996, between DeepTech International Inc. and each of the following parties have been omitted because the agreements are substantially identical in all material respects except as to the items scheduled below. Party (a) # of Warrants (b) --------- ----------------- Thomas P. Tatham 1,333,333 Citicorp USA, Inc. 1,000,000 2 TABLE OF CONTENTS
Page ---- 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ----------- 2. ISSUANCE; EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ----------------------------- 2.1. Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 -------------------- 2.2. Manner of Exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ------------------ 2.3. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ---------------- 2.4. Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ----------------- 2.5. Continued Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ------------------ 3. TRANSFERS, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ----------------------------------- 3.1. Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 -------- 3.2. Division and Combination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ------------------------ 3.3. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 -------- 3.4. Maintenance of Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 -------------------- 4. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ----------- 4.1. Stock Dividends, Subdivisions and Combinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ---------------------------------------------- 4.2. Certain Other Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 --------------------------- 4.3. Issuance of Additional Shares of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 --------------------------------------------- 4.4. Issuance of Warrants or Other Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ------------------------------------ 4.5. Issuance of Convertible Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 ---------------------------------- 4.6. Superseding Adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 ---------------------- 4.7. Other Provisions Applicable to Adjustments under this Section . . . . . . . . . . . . . . . . . . . . . . 14 ------------------------------------------------------------- 4.8. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets . . . . . . . . . . . . 16 -------------------------------------------------------------------------------- 5. NOTICES TO WARRANT HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 -------------------------- 5.1. Notice of Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 --------------------- 5.2. Notice of Certain Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ---------------------------------- 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ------------------------------ 6.2. Warrant Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 --------------- 7. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ----------------- 7.1. No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 ------------- 7.2. Reservation and Authorization of Common Stock; Registration with or Approval of any Governmental ------------------------------------------------------------------------------------------------ Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 --------- 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 --------------------------------------------------
-i- 3
Page ---- 9. RESTRICTIONS ON TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ------------------------------- 9.1. Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ------------------ 9.2. Notice of Proposed Transfers; Requests for Registration . . . . . . . . . . . . . . . . . . . . . . . . . 21 ------------------------------------------------------- 9.3. Required Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 --------------------- 9.4. Incidental Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ----------------------- 9.5. Registration Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ----------------------- 9.6. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 -------- 9.7. Indemnification and Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 -------------------------------- 9.8. Termination of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 --------------------------- 9.9. Listing on Securities Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ------------------------------ 9.10. Selection of Managing Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 ---------------------------------- 10. SUPPLYING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 --------------------- 11. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 ------------------ 12. OFFICE OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 --------------------- 13. FINANCIAL AND BUSINESS INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 ---------------------------------- 13.1. Quarterly Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 --------------------- 13.2. Annual Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 ------------------ 13.3. Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 ------- 14. APPRAISAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 --------- 15. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ------------------------------------------------- 16. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ------------- 16.1. Nonwaiver and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ---------------------- 16.2. Notice Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ---------------- 16.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 --------------- 16.4. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 -------- 16.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ---------------------- 16.6. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 --------- 16.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ------------ 16.8. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 -------- 16.9. Governing Law; Consent to Jurisdiction and Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ------------------------------------------------ 16.10. MUTUAL WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 ---------------------------
-ii- 4 DEEPTECH WARRANT AGREEMENT WARRANT AGREEMENT, dated as of February 16, 1996 (the "Agreement"), between DEEPTECH INTERNATIONAL INC., a Delaware corporation (the "Company"), and (a) _________________________ (the "Lender"). W I T N E S S E T H : WHEREAS, in order to induce the Lender to make the loan to the Company under the Note, the Company has agreed to execute and deliver this Agreement and to issue to the Lender the warrants hereinafter described; NOW, THEREFORE, in consideration of the premises herein contained the parties hereto agree as follows: 1. DEFINITIONS As used in this Agreement the following terms have the respective meanings set forth below: "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Company after the Closing Date, other than Warrant Stock. "Affiliate" shall mean as to any Person (the "Primary Person"), any Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, the Primary Person. For purposes of this definition, control of a Person shall mean the power, directly or indirectly, to (i) vote 10% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Appraised Value" shall mean, in respect of any share of Common Stock on any date herein specified, the fair market value of such share of Common Stock 5 2 (determined without giving effect to any discount for (i) a minority interest or (ii) any lack of liquidity of the Common Stock or to the fact that the Company may have no class of equity registered under the Exchange Act) as of the last day of the most recent fiscal month to end within 60 days prior to such date specified, based on the quotient obtained by dividing (x) the value of the Company, as determined by an investment banking firm selected in accordance with the terms of Section 14, by (y) the number of Fully Diluted Outstanding shares of Common Stock. "Book Value" shall mean, in respect of any share of Common Stock on any date herein specified, the consolidated book value of the Company applicable to Common Stock as of the last day of the month immediately preceding such date, divided by the number of Fully Diluted Outstanding shares of Common Stock as determined in accordance with GAAP by a firm of independent certified public accountants of recognized national standing selected by the Company and reasonably acceptable to the Required Holders. "Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York. "Closing Date" shall mean the date the Warrants are initially issued. "Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws. "Common Stock" shall mean the common stock, $.01 par value per share, of the Company, as constituted on the Closing Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets over any other class of stock of the Company and which is not subject to redemption and (ii) shares of common stock of any successor or acquiring corporation (as defined in Section 4.8) received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 4.8. "Contractual Obligation" shall mean, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking for which such Person is a party or by which it or any of its property is bound. "Convertible Securities" shall mean evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. 6 3 "Current Market Price" shall mean, in respect of any share of Common Stock on any date herein specified, (a) if there shall then be a public market for the Common Stock, the average of the daily market prices for 10 consecutive Business Days commencing 15 days before such date; the daily market price for each such Business Day being (i) the last sale price on such day on the principal stock exchange on which such Common Stock is then listed or admitted to trading, (ii) if no sale takes place on such day on any such exchange, the average of the last reported closing bid and asked prices on such day as officially quoted on any such exchange, (iii) if the Common Stock is not then listed or admitted to trading on any stock exchange, the average of the last reported closing bid and asked prices on such day in the over-the-counter market, as furnished by the National Association of Securities Dealers Automated Quotations System or the National Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business, or (v) if there is no such firm, as furnished by any member of the NASD selected mutually by the Required Holders and the Company or, if they cannot agree upon such selection, as selected by two such members of the NASD, one of which shall be selected by the Required Holders and one of which shall be selected by the Company; or (b) at any time prior to the time there is a public market for the Common Stock, the fair market value per share of Common Stock on such date as mutually determined in good faith by the Required Holders and the board of directors of the Company (determined without giving effect to any discount for a minority interest, any restrictions on transferability or any lack of liquidity of the Common Stock or to the fact that the Company has no class of equity registered under the Exchange Act), such fair market value to be determined by reference to the cash price that would be paid between a fully informed buyer and seller under no compulsion to buy or sell, provided that (i) if Current Market Price is being determined in connection with an issuance of shares of Common Stock, warrants, options or Convertible Securities solely to one or more Affiliates of the Company, then if so requested by the Required Holders, Current Market Price shall be the Appraised Value; and (ii) Current Market Price shall never be less than Book Value. "Current Warrant Price" shall mean, in respect of a share of Common Stock at any date herein specified, $4.50 (which is the closing price per share of the Common Stock on January 22, 1996 as reported on the National Association of Securities Dealers Automated Quotation Systems), as adjusted pursuant to this Agreement. "Exchange Act" shall mean 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 from time to time. "Exercise Period" shall mean the period during which the Warrants are exercisable pursuant to Section 2.2. "Expiration Date" shall mean July 15, 1997. 7 4 "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of the Warrants and other options or warrants to purchase, or securities convertible into, shares of common stock outstanding on such date which would be deemed outstanding in accordance with GAAP for purposes of determining book value or net income per share. "GAAP" shall mean generally accepted accounting principles in the United States of America as from time to time in effect. "Holder" shall mean each Person in whose name the Warrants or any Warrant Stock are registered on the books of the Company maintained for such purpose. "NASD" shall mean the National Association of Securities Dealers, Inc., or any successor corporation thereto. "Other Property" shall have the meaning set forth in Section 4.8. "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Company or any Subsidiary, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Permitted Issuances" shall mean (i) the issuance of shares of Common Stock upon exercise of the Warrants, (ii) the issuance of shares of Common Stock pursuant to the securities identified on Schedule I hereto, (iii) if there shall then be a public market for the Common Stock, the issuance of shares of Common Stock upon receipt by the Company of the Current Market Price therefor described in clause (a) of the definition of "Current Market Price", (iv) the issuance of shares relating to any benefit plan, stock option plan or any other compensation plan or arrangement offered solely to the officers, directors, employees and/or consultants of the Company and its Affiliates which plan or arrangement complies with Rule 16b-3 under the Exchange Act, and (v) at any time prior to the time there is a public market for the Common Stock, the issuance of shares of Common Stock in an arm's length transaction with third Persons not affiliated with the Company for consideration equal to the fair value of such shares as determined in good faith by the Board of Directors of the Company. Any determination by the Board of Directors of the Company pursuant to the preceding sentence may be challenged in good faith by Holders of Warrants exercisable for in excess of 51% of the aggregate number of shares of Common Stock then purchasable upon exercise of all Warrants, whether or not then exercisable, and any dispute shall be resolved by an investment banking firm of reorganized national standing selected and paid for by the Company and reasonably acceptable to such Holders or by any other method as is then agreed to by the Company and such Holders. 8 5 "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Public Company" shall have the meaning set forth in Section 13.1. "Registrable Securities" shall have the meaning set forth in Section 9.3. "Required Holders" shall mean the Holders of Warrants exercisable for in excess of 50% of the aggregate number of shares of Common Stock then purchasable upon exercise of all outstanding Warrants, whether or not then exercisable. "Requirement of Law" shall mean, as to any Person, the certificate of incorporation and by-laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitration or a court or other governmental authority, in each case applicable to or binding on such Person or any of the property thereof or to which such Person or any of its property is subject. "Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 9.1. "Securities Act" shall mean 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. "Subsidiary" shall mean any Person of which an aggregate of more than 50% of the outstanding stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other managers of such Person (irrespective of whether, at the time, stock or other ownership interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by the Company and/or one or more Subsidiaries of the Company. "Transfer Notice" shall have the meaning set forth in Section 9.2. "Warrant Certificate" shall mean a certificate evidencing one or more Warrants, substantially in the form of Exhibit A hereto, with such changes therein as may be required to reflect any adjustments made pursuant to Section 4. "Warrant Price" shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of Warrants pursuant to Section 2.2, multiplied by (ii) the Current Warrant Price as of the date of such exercise. 9 6 "Warrant Stock" shall mean the shares of Common Stock purchased by the Holders of the Warrants upon the exercise thereof. "Warrants" shall mean the warrants issued pursuant to this Agreement and shall include all warrants issued upon transfer, division or combination of, or in substitution for, any thereof. All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised. A Warrant shall entitle the holder thereof to purchase from the Company one share of Common Stock (subject to adjustment as provided in Section 4). 2. ISSUANCE; EXERCISE OF WARRANT 2.1. Issuance of Warrants. The Company hereby agrees to issue in favor of the Lender, on the Closing Date, (b) ________________ Warrants. On the Closing Date the Company shall deliver to the Lender Warrant Certificates evidencing the Warrants issued to the Lender. Each Warrant issued on the Closing Date shall entitle the Holder thereof to purchase from the Company one share of Common Stock (subject to adjustment as provided in Section 4). 2.2. Manner of Exercise. The Holder may at any time and from time to time, from and after the date that the issuance of the Warrants to the Lender has been approved by the required vote of the stockholders of the Company and until 5:00 P.M., New York City time, on the Expiration Date, exercise the Warrants evidenced by a Warrant Certificate, on any Business Day, for all or any part of the number of shares of Common Stock purchasable thereunder. In order to exercise the Warrants, in whole or in part, a Holder shall deliver to the Company at its principal office at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002, Attention: Thomas P. Tatham, or at the office or agency designated by the Company pursuant to Section 12, (i) a written notice of such Holder's election to exercise the Warrants, which notice shall specify the number of shares of Common Stock to be purchased, (ii) payment of the Warrant Price in the manner provided below, and (iii) the Warrant Certificate or Warrant Certificates evidencing the Warrants. Such notice shall be substantially in the form of the form of election to purchase appearing at the end of the Warrant Certificate as Exhibit A, duly executed by such Holder or its agent or attorney. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within three (3) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to such Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as such Holder shall request in the notice and shall be registered in the name of Holder or, subject to Section 9, such other name as shall be designated in the notice. The Warrants shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and such Holder or any other Person so designated to be named 10 7 therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the notice, together with the check or checks representing payment of the Warrant Price and the Warrant Certificate or Warrant Certificates, is received by the Company as described above and all taxes required to be paid by such Holder, if any, pursuant to Section 2.3 prior to the issuance of such shares have been paid. If the Warrants evidenced by a Warrant Certificate shall have been exercised, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to Holder a new Warrant Certificate evidencing the rights of Holder to purchase the unpurchased shares of Common Stock represented by the old Warrant Certificate, which new Warrant Certificate shall in all other respects be identical with the old Warrant Certificate. Notwithstanding any provision herein to the contrary, the Company shall not be required to register shares in the name of any Person who acquired any Warrant or any Warrant Stock otherwise than in accordance with this Agreement. Payment of the Warrant Price shall be made at the option of the Holder (i) by certified or official bank check or (ii) if such Holder shall then be a lender under the DeepTech Note, by such Holder's applying as credit, on a dollar-for-dollar basis, an amount of outstanding principal and accrued interest due under the DeepTech Note equal to the Warrant Price, such request to be evidenced by delivery of the DeepTech Note to the Company together with written instructions to the Company setting forth the amount of such credit and authorizing the Company to cancel the DeepTech Note and, in the event there is still principal outstanding under the DeepTech Note, to issue a replacement promissory note or notes to the holder of the DeepTech Note in accordance with such instructions or (iii) in immediately available funds or (iv) any combination thereof. 2.3. Payment of Taxes. All shares of Common Stock issuable upon the exercise of Warrants pursuant to the terms hereof shall be validly issued, fully paid and nonassessable and without any preemptive rights. The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery thereof, unless such tax or charge is imposed by law upon Holder, in which case such taxes or charges shall be paid by Holder. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Warrant Stock issuable upon exercise of Warrants in any name other than that of Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other charge is due. 2.4. Fractional Shares. The Company shall not be required to issue a fractional share of Common Stock upon the exercise of Warrants. As to any fraction of a share which the Holder of Warrants would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Current Market Price per share of Common Stock on the date of exercise. 11 8 2.5. Continued Validity. A Holder of shares of Warrant Stock (other than a holder who acquires such shares after the same have been publicly sold pursuant to a Registration Statement under the Securities Act) shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as Holder under Sections 6, 7, 9, 10, 11, 13 and 16 of this Agreement. The Company will, at the time of each exercise of Warrants upon the request of the Holder of the shares of Warrant Stock issued upon the exercise thereof, acknowledge in writing, in form reasonably satisfactory to such Holder, its continuing obligation to afford to such Holder all such rights; provided, however, 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. TRANSFERS, DIVISION AND COMBINATION 3.1. Transfer. Subject to compliance with Section 9, transfer of Warrants, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of the Warrant Certificate representing such Warrants at the principal office of the Company referred to in Section 2.2 or the office or agency designated by the Company pursuant to Section 12, together with a written assignment substantially in the form of Exhibit B to the Warrant Certificate duly executed by the Holder or its agent or attorney, an opinion of Holder's or transferee's counsel delivered to the Company in connection with such transfer (which opinion shall be reasonably satisfactory to the Company) that such transfer is being effected pursuant to an effective registration statement under the Securities Act or an exemption from registration thereunder and funds sufficient to pay any transfer taxes payable by such Holder upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall, subject to Section 9, execute and deliver a new Warrant Certificate or Warrant Certificates in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant Certificate or Warrant Certificates evidencing the portion of the old Warrant Certificate not so assigned, and the old Warrant Certificate shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 9, may be exercised by a new Holder for the purchase of shares of Warrant Stock without having a new Warrant Certificate or Warrant Certificates issued. If requested by the Company, a new Holder shall acknowledge in writing, in form reasonably satisfactory to the Company, such Holder's continuing obligation under Section 9. 3.2. Division and Combination. Subject to Section 9, any Warrant Certificate may be divided or combined with other Warrant Certificates upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrant Certificates are to be issued, signed by a Holder or its agent or attorney. Subject to compliance with Section 3.1 as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant Certificate or 12 9 Warrant Certificates in exchange for the Warrant Certificate or Warrant Certificates to be divided or combined in accordance with such notice. 3.3. Expenses. The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant Certificate or Warrant Certificates under this Section 3. 3.4. Maintenance of Books. The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration of transfer and exchange of the Warrants and the Warrant Stock. 4. ADJUSTMENTS The number of shares of Warrant Stock for which Warrants are exercisable, and the price at which such shares may be purchased upon exercise of Warrants, shall be subject to adjustment from time to time as set forth in this Section 4. The Company promptly shall give each Holder written notice of any event described below which requires an adjustment pursuant to this Section 4 at the time of such event. 4.1. Stock Dividends, Subdivisions and Combinations. If at any time after January 22, 1996 the Company shall: (a) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock, (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (i) the number of shares of Common Stock for which a Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which a Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Current Warrant Price shall be adjusted to equal the Current Warrant Price multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment and the denominator of which shall be the number of shares for which a Warrant is exercisable immediately after such adjustment. 13 10 4.2. Certain Other Distributions. If at any time after January 22, 1996 the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution of: (a) cash; (b) any evidences of its indebtedness (other than Convertible Securities), any shares of its stock (other than Additional Shares of Common Stock or Convertible Securities) or any other securities or property of any nature whatsoever (other than cash); or (c) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness (other than Convertible Securities), any shares of its stock (other than Additional Shares of Common Stock or Convertible Securities) or any other securities or property of any nature whatsoever; then (i) the number of shares of Common Stock for which a Warrant is exercisable shall be adjusted to equal the product obtained by multiplying the number of shares of Common Stock for which a Warrant is exercisable immediately prior to such adjustment by a fraction (A) the numerator of which shall be the Current Market Price per share of Common Stock at the date of taking such record and (B) the denominator of which shall be such Current Market Price per share of Common Stock, minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Company and supported by an opinion from an investment banking firm of recognized national standing acceptable to the Required Holders) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multiplied by the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares for which a Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4.2 and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 4.1. 4.3. Issuance of Additional Shares of Common Stock. (a) (i) If at any time after January 22, 1996 the Company shall (except as hereinafter provided) issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for consideration in an amount per Additional Share of Common Stock less than the Current Market Price, then the Current Warrant Price shall be reduced to a price determined by dividing (A) an amount equal to the sum of (X) the number of shares of 14 11 Common Stock Outstanding immediately prior to such issuance or sale multiplied by the then existing Current Warrant Price, plus (Y) the consideration, if any, received by the Company upon such issuance or sale, by (B) the total number of shares of Common Stock Outstanding immediately after such issuance or sale and (ii) upon each adjustment of the Current Warrant Price as a result of the calculations made pursuant to this Section 4, each Warrant outstanding prior to the making of the adjustment in the Current Warrant Price shall thereafter be treated as that number of Warrants, and shall evidence the right to purchase, at the adjusted Current Warrant Price, that number of shares of Common Stock outstanding, obtained by (i) multiplying the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment by the Current Warrant Price in effect immediately prior to the adjustment, and (ii) dividing the product so obtained by the Current Warrant Price obtained immediately after such adjustment of the Current Warrant Price. (b) The provisions of paragraph (a) of Section 4.3 shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Section 4.1 or 4.2. No adjustment of the number of shares of Common Stock for which a Warrant shall be exercisable shall be made under paragraph (a) of Section 4.3 upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4.4 or Section 4.5. 4.4. Issuance of Warrants or Other Rights. (a) If at any time after January 22, 1996 the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell, any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and if the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the Current Market Price in effect immediately prior to the time of such distribution, issue or sale, then: (i) the number of shares of Common Stock for which a Warrant is exercisable shall be adjusted to equal the product obtained by multiplying the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the taking of such record or such issuance or sale by a fraction (A) the numerator of which is the number of shares of Common Stock which would be Outstanding immediately after the issuance or sale of the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities, and (B) the denominator of which is the number of shares of Common Stock Outstanding immediately prior to the taking of such record or the issuance or sale of such warrants or other rights; and (ii) the Current Warrant Price 15 12 shall be adjusted as provided in Section 4.3(a) on the basis that (A) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (B) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest possible price per share in any range of prices per share at which such Additional Shares of Common Stock are available to such holders, and (C) the Company shall be deemed to have received all of the consideration payable therefor, if any, as of the date of the actual issuance of such warrants or other rights. No further adjustments of the Current Warrant Price or number of Warrants shall be made upon the actual issuance of such Common Stock or of such Convertible Securities upon exercise of such warrants or other rights or upon the actual issuance of such Common Stock upon such conversion or exchange of such Convertible Securities. (b) If any Additional Share of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities is issuable in exchange for consideration in an amount per such Additional Share of Common Stock equal to or more than the greater of the Current Warrant Price and the Current Market Price at the time such record is taken or such warrants or other rights are issued or sold, then the Current Warrant Price as to the number of shares of Common Stock for which a Warrant is exercisable prior to the adjustment under Section 4.4(a)(i) shall not change, and the Current Warrant Price for each of the incremental number of shares of Common Stock for which this Warrant becomes exercisable after such adjustment shall be equal to the fair value of such consideration per Additional Share of Common Stock. 4.5. Issuance of Convertible Securities. (a) If at any time the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell, any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and if the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Current Market Price in effect immediately prior to the time of such issue or sale of Convertible Securities, then: (i) the number of shares of Common Stock for which a Warrant is exercisable shall be adjusted to equal the product obtained by multiplying the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the taking of such record or such issuance or sale by a fraction (A) the numerator of which is the number of shares of Common Stock which would be Outstanding immediately after the issuance or sale of the maximum number of Additional Shares of Common Stock necessary to effect the conversion or exchange of all such Convertible Securities, and (B) the denominator of which is the number of shares of Common Stock Outstanding immediately prior to the taking of such record or the issuance or sale of such Convertible Securities; and (ii) the Current Warrant Price shall be adjusted as provided in Section 4.3(a) on the basis that (A) the maximum number of Additional Shares of Common Stock necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and 16 13 outstanding, (B) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (C) the Company shall be deemed to have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No adjustment of the Current Warrant Price shall be made under this Section 4.5 upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 4.4. No further adjustments of the Current Warrant Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase or any warrant or other right to purchase any such Convertible Securities for which adjustments of the Current Warrant Price have been or are to be made pursuant to other provisions of this Section 4, no further adjustments of the Current Warrant Price or number of Warrants shall be made by reason of such issue or sale. (b) If any Additional Share of Common Stock issuable upon conversion or exchange of all such Convertible Securities is issuable in exchange for consideration in an amount per such Additional Share of Common Stock equal to the Current Market Price at the time such record is taken or such Convertible Securities are issued or sold, then the Current Warrant Price as to the number of shares of Common Stock for which this Warrant is exercisable prior to the adjustment under Section 4.5(a)(i) shall not change, but the Current Warrant Price for each of the incremental number of shares of Common Stock for which a Warrant becomes exercisable after such adjustment shall be equal to the fair value of such consideration per Additional Share of Common Stock. 4.6. Superseding Adjustment. If, at any time after any adjustment of the number of shares of Common Stock for which a Warrant is exercisable shall have been made pursuant to Section 4.4 or Section 4.5 as the result of any issuance of warrants, options, rights or Convertible Securities, and such warrants, options or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants, options or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the effect of such warrants, rights or options or other Convertible Securities on the then outstanding Warrants, but not on any then outstanding Warrant Stock, on the basis of treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such warrants, rights or options or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor. 17 14 4.7. Other Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which a Warrant is exercisable provided for in this Section 4: (a) Computation of Consideration. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants, options or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for cash consideration, the consideration received by the Company therefor shall be the amount of the cash received by the Company therefor, or, if such Additional Shares of Common Stock or Convertible Securities are offered by the Company for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by the Company for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as mutually determined in good faith by the Required Holders and the Board of Directors of the Company. In case any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase such Additional Shares of Common Stock or Convertible Securities shall be issued in connection with any merger in which the Company issues any securities, the amount of consideration therefor shall be deemed to be the fair value, as mutually determined in good faith by the Required Holders and the Board of Directors of the Company, of such portion of the assets and business of the nonsurviving corporation as the Required Holders and such Board in good faith shall mutually determine to be attributable to such Additional Shares of Common Stock, Convertible Securities, warrants or other rights, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants, options or other rights to subscribe for or purchase the same shall be the consideration received by the Company for issuing such warrants or other rights plus the additional consideration payable to the Company upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible Securities shall be the consideration, if any, received by the Company for issuing warrants or other rights to subscribe for or purchase such Convertible Securities, plus the consideration paid or payable to the Company in respect of the subscription for or purchase of such Convertible Securities, plus the additional consideration, if any, payable to the Company upon the exercise of the right of conversion or exchange in such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Company shall be deemed to have received for such 18 15 Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (b) When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4.1) up to, but not beyond, the date of exercise of any Warrants if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% to the number of shares of Common Stock for which the Warrants initially issued pursuant to this Agreement are exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (c) Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock resulting from an issuance of additional Warrants to any Holder pursuant to this Section 4 shall be taken into account to the nearest 1/10th of a share. (d) When Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (e) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 4 by reason of taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, any Holder exercises Warrants, any Additional Shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for Holder by the Company to be issued to Holder upon and to the extent that the event actually takes place, upon payment of the then Current Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Company and escrowed property returned. 19 16 (f) Challenge to Good Faith Determination. Whenever the Board of Directors of the Company shall be required to make a determination in good faith of the fair value of any item under this Section 4, such determination may be challenged in good faith by the Required Holders, and any dispute shall be resolved by an investment banking firm of recognized national standing selected and paid for by the Company and reasonably acceptable to such Holders. 4.8. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with and into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then each Holder shall have the right thereafter to receive, upon exercise of a Warrant, solely the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation, sale, transfer or disposition by a holder of the number of shares of Common Stock for which a Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation, sale, transfer or disposition, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Agreement to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of the Common Stock for which a Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.8 "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 4.8 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations, sales, transfers or dispositions. 20 17 5. NOTICES TO WARRANT HOLDERS 5.1. Notice of Adjustments. Whenever the number of shares of Common Stock for which a Warrant is exercisable, or whenever the price at which a share of such Common Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant to Section 4, the Company shall forthwith prepare a certificate to be executed by the chief financial officer of the Company setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company determined the fair value of any evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights referred to in Section 4), specifying the number of shares of Common Stock for which a Warrant is exercisable and (if such adjustment was made pursuant to Section 4.8) describing the number and kind of any other shares of stock or Other Property for which a Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change. As of the date of this Agreement, no such certificate is required to be delivered. The Company shall promptly cause a signed copy of such certificate to be delivered to each Holder in accordance with Section 16.2. The Company shall keep at its office or agency designated pursuant to Section 12 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective purchaser of a Warrant designated by a Holder thereof. 5.2. Notice of Certain Corporate Action. Each Holder shall be entitled to the same rights to receive notice of corporate action as any holder of Common Stock. 6. REPRESENTATIONS AND WARRANTIES The Company hereby represents and warrants as follows: (a) The Company is a corporation duly organized and validly existing under the laws of the State of Delaware, has the power and authority to execute and deliver this Agreement and the Warrant Certificates, to issue the Warrants and to perform its obligations under this Agreement and the Warrant Certificates. (b) The execution, delivery and performance by the Company of this Agreement and the Warrant Certificates, the issuance of the Warrants and the issuance of the Warrant Stock upon exercise of the Warrants have been duly authorized by all necessary corporate action and do not and will not violate, or result in a breach of, or constitute a default under or require any consent under, or result in the creation of any lien or security interest upon the assets of the Company pursuant to, any Requirement of Law or any Contractual Obligation binding upon the Company. 21 18 (c) This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid, binding and enforceable obligation of the Company. When the Warrants and the Warrant Certificates have been issued as contemplated hereby, (i) the Warrants and the Warrant Certificates will constitute legal, valid, binding and enforceable obligations of the Company and (ii) the Warrant Stock, when issued upon exercise of the Warrants in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable shares of Common Stock with no personal liability attaching to the ownership thereof. (d) (i) The total number of shares of all classes of stock that the Company shall on the Closing Date have authority to issue is 110,000,000 shares, consisting solely of (i) 100,000,000 shares of Common Stock, par value $.01 per share, of which, after giving effect to the transactions contemplated herein and all other issuances of capital stock of the Company on or prior to the Closing Date, 16,614,918 shares of Common Stock will be issued and outstanding and 11,831,750 shares of Common Stock will be reserved for future issuance for the purposes described in Schedule I, and (ii) 10,000,000 shares of preferred stock par value $.01 per share, none of which were issued and outstanding on the Closing Date. The delivery hereunder by the Company to the Lender of the Warrants issued on the Closing Date will transfer and convey to the Lender good and marketable title to such Warrants and, upon exercise of such Warrants in accordance with this Agreement, good and marketable title to the Common Stock purchased upon such exercise, free and clear of all preemptive rights, liens, charges and encumbrances, except for restrictions on transfer set forth in this Agreement or arising under the Federal and state securities laws. Except as set forth in this paragraph (d), the Company does not have outstanding any stock or securities convertible into or exchangeable for any shares of its stock, nor, except as so set forth, does it have outstanding any agreements, rights or options entitling any person to subscribe for or to purchase any capital stock or securities convertible into or exchangeable for any of its shares of stock. The Company is not subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock. (e) The Company has provided to the Holder a copy of the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed since the date of the most recent Annual Report on Form 10-K. The information contained in such disclosure documents, as of the date thereof, does not contain any untrue statement of a material fact and does not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 6.2. Warrant Holders. Each Holder hereby represents and warrants as follows: (a) It is acquiring the Warrants for its own account, as principal, for the purpose of investment and not with a view to or for sale in connection with any 22 19 distribution thereof. Each Holder hereby represents that it will not offer to sell, sell or otherwise dispose of any of the Warrants or any Warrant Stock in violation of the Securities Act or any other applicable state or federal securities laws. (b) It has to its satisfaction reviewed the business and affairs of the Company and understands the risks of, and other considerations relating to, its receipt of the Warrant Stock. Such Holder has been furnished a copy of the Company's most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed since the date of the most recent Annual Report on Form 10-K, and all other public information requested by it relating to the Company and its activities and proposed activities. (c) It has sufficient knowledge and experience in business and financial matters to be capable of utilizing the information made available to it to fully and completely evaluate the merits and risks of owning the Warrant Stock. (d) it has been furnished with or given adequate access to such information about the Company and the Warrants as it has requested, (ii) it has made its own independent inquiry and investigation into, and based thereon has formed an independent judgment concerning, the Company, (iii) it is able to bear the economic risks of the investment in the Common Stock upon exercise of the Warrants, (iv) it has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Company and (v) it is an "accredited investor" within the meaning of "accredited investor" under Regulation D of the Securities Act of 1933, as amended. 7. CERTAIN COVENANTS 7.1. No Impairment. The Company shall not by any action including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of each Holder against impairment. Without limiting the generality of the foregoing, the Company will use reasonable good faith efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Agreement. Upon the request of a Holder, the Company will at any time during the period this Agreement is in effect acknowledge in writing, in form satisfactory to such Holder, the continuing validity of this Agreement and the obligations of the Company hereunder. 23 20 7.2. Reservation and Authorization of Common Stock; Registration with or Approval of any Governmental Authority. From and after the Closing Date, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrants and payment therefor in accordance with the terms of this Agreement, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights. Before taking any action which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Current Warrant Price. Before taking any action which would result in an adjustment in the number of shares of Common Stock for which a Warrant is exercisable or in the Current Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from its stockholders, any public regulatory body or bodies having jurisdiction thereof. If any shares of Common Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law (otherwise than as provided in Section 9) before such shares may be so issued, the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered. 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of Section 4 refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrants or any Warrant Stock. 9. RESTRICTIONS ON TRANSFERABILITY The Warrants and the Warrant Stock shall not be transferred before satisfaction of the conditions specified in this Section 9, which conditions are intended to ensure compliance with the provisions of the Securities Act with respect to the transfer of any Warrant or any Warrant Stock. Each Holder, by entering into this 24 21 Agreement and accepting the Warrants, agrees to be bound by the provisions of this Section 9. 9.1. Restrictive Legend. Except as otherwise provided in this Section 9, each certificate representing Warrants or Warrant Stock, shall be stamped or otherwise imprinted with a legend in substantially the following form: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or any applicable state securities laws, and may not be sold or transferred in the absence of such registration or an exemption therefrom. Such securities are subject to the restrictions and privileges specified in a Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holders of securities named therein, a copy of which is on file with the Secretary of the Company and will be furnished without charge to the holder hereof upon written request, and the holder of this certificate agrees to be bound thereby." 9.2. Notice of Proposed Transfers; Requests for Registration. Prior to any transfer of any Warrants or any shares of Restricted Common Stock, the Holder of such Warrants or Restricted Common Stock shall give five days' prior written notice to the Company of such Holder's intention to effect such transfer (a "Transfer Notice"). Holder agrees that it will not sell, transfer or otherwise dispose of Warrants or any shares of Restricted Common Stock, in whole or in part, except pursuant to an effective registration statement under the Securities Act or an exemption from registration thereunder. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon such transfer shall bear the restrictive legend set forth in Section 9.1, and each Warrant Certificate issued upon such transfer shall bear the restrictive legend set forth in Section 9.1, unless in either case such transfer is pursuant to an effective registration statement under the Securities Act or in the opinion of the transferee's or Holder's counsel delivered to the Company in connection with such transfer (which opinion shall be reasonably satisfactory to the Company) such legend is not required in order to ensure compliance with the Securities Act. The Holders of Warrants and Warrant Stock shall have the right to require registration of such Warrants or Warrant Stock pursuant to Sections 9.3 and 9.4. 9.3. Required Registration. (a) After receipt of a written request from the Holders of Warrants and/or Warrant Stock representing at least 50% of the total of (i) all shares of Warrant Stock then subject to purchase upon exercise of all Warrants and (ii) all shares of Warrant Stock then outstanding, requesting that the Company effect the registration of the Warrants, the shares of Common Stock issuable upon the exercise of such Holders' Warrants or of any of such Holders' Warrant Stock under the Securities Act (all such securities collectively referred to as the "Registrable Securities") and specifying the intended method or methods of disposition thereof, the Company shall promptly notify all Holders of Warrants and Warrant Stock in writing of the receipt of such request and each Holder, in lieu of exercising its rights under 25 22 Section 9.4, may elect (by written notice sent to the Company within ten Business Days from the date of such Holder's receipt of the aforementioned Company's notice) to have its Registrable Securities included in such registration thereof pursuant to this Section 9.3(a). Thereupon the Company shall, as expeditiously as is possible (and, in any event, within 60 days after the request for registration), effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by such Holders for sale, subject to the next sentence, all to the extent required to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid) of the Registrable Securities so registered. If the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Securities requested to be included in the registration by the Holders would materially and adversely affect the distribution of such securities, then all Holders selling Registrable Securities shall reduce the amount of Registrable Securities each intended to distribute through such offering on a pro rata basis. The Company shall not be required to effect a registration hereunder if the Board of Directors of the Company determines in the exercise of its reasonable judgment that, due to a pending or contemplated acquisition or disposition, to effect any such registration at such time would have a material adverse effect on the Company, in which case such registration may be deferred for a single period not to exceed ninety (90) days, provided the Company shall not register any of its equity securities prior to the registration deferred under this sentence except for registrations on Form S-4 and Form S-8; and in any event, the Company shall not be required to effect more than two registrations of any Registrable Securities pursuant to this Section 9.3(a). If the Company shall defer a registration as set forth above, the Required Holders shall have the right to withdraw the registration request by giving written notice to the Company within 30 days after the receipt of the notice of deferral and, in the event of such withdrawal, such registration request shall not be counted for purposes of the number of registrations to which Holder is entitled pursuant to this Section 9.3(a). (b) Lockup. (i) Subject to clause (ii) below, the Company agrees not to effect any public sale or distribution of any Registrable Securities or any similar securities, or any securities convertible into or exchangeable or exercisable for Registrable Securities or such similar securities (other than any such sale or distribution pursuant to registrations on Form S-4 and Form S-8), commencing on the date the Company receives a request from any Holder under Section 9.3(a) and continuing until 120 days after the commencement of the related underwritten offering under Section 9.3(a) (the "Lockup Period"), where the managing underwriter so requests. (ii) Notwithstanding anything to the contrary in clause (i) above, (A) nothing in this Section 9.3(b) shall prevent or impair the ability of other security holders of the Company holding securities of the Company that give them, as of the date of this Agreement, demand registration rights with respect to Registrable Securities from exercising their demand registration rights at any time during the 26 23 Lockup Period and (B) if at any time during the Lockup Period the Company proposes to file on its behalf and/or on behalf of any of its security holders a Registration Statement under the Securities Act on any form (other than a Form S-4 or S-8 or any similar successor form or any other registration statement relating to an exchange offer or offering of securities solely to the Company's existing security holders or employees), then the registration request of the Holder requesting registration pursuant to Section 9.3(a) shall be deemed to be an incidental registration in accordance with Section 9.4 and (x) such registration shall not count as one of the two registration requests available to such Holder pursuant to Section 9.3(a) and (y) if the offering resulting from such registration shall be reduced in size for any reason, such reduction shall not be made from the Registrable Securities of any Holders entitled to register securities pursuant to Section 9.3(a), but shall be made from the allocations of all other parties (including the Company) registering their securities. 9.4. Incidental Registration. If the Company at any time proposes to file on its behalf and/or on behalf of any of its security holders ("the demanding security holders") a Registration Statement under the Securities Act on any form (other than a Registration Statement on Form S-4 or S-8 or any similar or successor form or any other registration statement relating to an exchange offer or offering of securities solely to the Company's existing security holders or employees), it will give written notice to all Holders of Warrants or Warrant Stock at least twenty (20) days before the anticipated date of initial filing with the Commission of such Registration Statement, which notice shall set forth the Company's intention to effect such a registration, the class or series and number of equity securities proposed to be registered and the intended method of disposition of the securities proposed to be registered by the Company. The notice shall offer to include in such filing the aggregate number of shares of Registrable Securities, as such Holders may request. Nothing in this Section 9.4 shall preclude the Company from discontinuing the registration of its securities being effected on its behalf under this Section 9.4 at any time prior to the effective date of the registration relating thereto. Each Holder desiring to have Registrable Securities registered under this Section 9.4 shall advise the Company in writing within fifteen (15) days after the date of receipt of such offer from the Company, setting forth the amount of such Registrable Securities for which registration is requested. The Company shall thereupon include in such filing the number of shares of Registrable Securities for which registration is so requested, subject to the next sentence, and shall use its best efforts to effect registration under the Securities Act of such securities. If the managing underwriter of a proposed public offering shall advise the Company in writing that, in its opinion, the distribution of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by the Company or any demanding security holder would materially and adversely affect the distribution of such securities by the Company or such demanding security holders, then all selling security holders shall reduce the amount of securities each intended to distribute through such offering on a pro rata basis. 27 24 9.5. Registration Procedures. If the Company is required by the provisions of this Section 9 to use its best efforts to effect the registration of any of its securities under the Securities Act, the Company will, as expeditiously as possible: (a) prepare and file with the Commission a Registration Statement with respect to such securities and use its best efforts to cause such Registration Statement to become and remain effective for the period described in paragraph (b) below; (b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering and the expiration of 180 days; (c) furnish to such selling security holders or underwriter such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders or underwriters may reasonably request; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States as each holder of such securities shall request (provided, however, the Company shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service or process), and do such other reasonable acts and things as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; (e) unless waived in writing by each Holder of Registrable Securities being included in such registration pursuant to Section 9.3, use its best efforts to obtain from either a nationally recognized underwriter or investment banker or an underwriter or investment banker reasonably acceptable to such Holder a firm commitment (pursuant to an underwriting agreement in customary form) to underwrite the public offering of the securities covered by such Registration Statement; (f) furnish, at the request of any Holder requiring or requesting registration of Registrable Securities pursuant to Section 9.3 or 9.4, on the date that such Registrable Securities are delivered to the underwriters for sale pursuant to such registration or, if such Registrable Securities are not being sold through underwriters, on the date that the Registration Statement with respect to such Registrable Securities becomes effective, (1) an opinion, dated such date, of the 28 25 independent counsel representing the Company for the purposes of such registration, addressed to the underwriters, or if such Registrable Securities are not being sold through underwriters, then to the Holders making such request, stating that such Registration Statement has become effective under the Securities Act and that (i) to the best knowledge of such counsel, no stop order suspending the effectiveness thereof has been issued and no proceedings for that purpose have been instituted or are pending before or contemplated by the Commission, (ii) the Registration Statement, the related prospectus, and each amendment or supplement thereto, comply as to form in all material respects with the requirements of the Securities Act and the applicable rules and regulations of the Commission thereunder (except no opinion need be expressed with respect to the inclusion and content of the financial statements and notes thereto and related schedules and other financial, statistical or expertized information), (iii) to the best knowledge of such counsel, the descriptions in the Registration Statement or the prospectus, or any amendment or supplement thereto, of all legal matters and contracts and other legal documents or instruments known to such counsel, insofar as such statements constitute a summary of legal matters, documents and proceedings, are accurate and fairly present in all material respects the information required to be shown, and (iv) to the best knowledge of such counsel, such counsel does not know of any legal or governmental proceedings, pending or contemplated, required to be described in the Registration Statement or prospectus, or any amendment or supplement thereto, which are not described as required, nor of any contracts or documents or instruments of a character required to be described in the Registration Statement or prospectus, or any amendment or supplement thereto, or to be filed as exhibits to the Registration Statement which are not described and filed or incorporated by reference as required; such counsel shall also confirm that it has no reason to believe that either the Registration Statement or the prospectus, or any amendment or supplement thereto contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which made, not misleading; and (2) a letter dated such date, from the independent certified public accountants of the Company, addressed to the underwriters, or if such Registrable Securities are not being sold through underwriters, then to the Holder making such request and, if such accountants refuse to deliver such letter to such Holder, then to the Company stating that they are independent certified public accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of the Company included in the Registration Statement or the prospectus, or any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act. Such opinion of counsel shall additionally cover such other legal matters with respect to the registration in respect of which such opinion is being given as such Holders of Registrable Securities may reasonably request. Such letter from the independent certified public accountants shall additionally cover such other financial matters (including information as to the period ending not more than five (5) Business Days prior to the date of such letter) with respect to the registration in respect of 29 26 which such letter is being given as such Holders of Registrable Securities may reasonably request; (g) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; and (h) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the Registration Statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Section 9 in respect of the securities which are to be registered at the request of any Holder of Registrable Securities that such Holder shall furnish to the Company such information regarding the securities held by such Holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the Company. 9.6. Expenses. All expenses incurred in complying with Section 9, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), printing expenses, fees and disbursements of counsel for the Company, the reasonable fees and expenses of one counsel for the selling security holders (selected by the Person holding a majority of the securities being registered), expenses of any special audits incident to or required by any such registration and expenses of complying with the securities or blue sky laws of any jurisdictions pursuant to Section 9.5(d), shall be paid by the Company, except that (a) the Company shall not be liable for any discount or commission to any underwriter in respect of the securities sold by such Holder of Registrable Securities and (b) the Company shall not be obligated to pay more than $200,000 in connection with registration made pursuant to Section 9.3. 9.7. Indemnification and Contribution. (a) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Section 9, the Company shall indemnify and hold harmless the Holder of such Registrable Securities, such Holder's directors, officers, employees, agents and attorneys and each other Person (including each underwriter) who participated in the offering of such Registrable Securities and each other Person, if any, who controls such Holder or such participating Person within the meaning of the Securities Act, against any losses, claims, damages, liabilities or expenses, joint or several (including, without limiting the foregoing, the legal expenses incurred in connection with any such action, suit or proceeding), to which such Holder or any such director, officer, employee, agent, attorney or participating Person or controlling Person may become subject under 30 27 the Securities Act or any other statute or at common law, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse such Holder or such director, officer, employee, agent, attorney or participating Person or controlling Person for any legal or any other expenses incurred by such Holder or such director, officer, employee, agent, attorney or participating Person or controlling Person in connection with investigating or defending any such loss, claim, damage, liability, expense or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or expense arises out of or is based upon any alleged untrue statement or alleged omission made in such Registration Statement, preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder specifically for use therein and in the case of any non-underwritten offering, to the extent that any such losses, claims, damages, liabilities or expenses result from the fact that a current copy of the prospectus was not sent or given to the person asserting any such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the securities concerned to such person if it is determined that it was the responsibility of such Holder to provide such person with a current copy of the prospectus and such current copy of the prospectus would have cured the defect giving rise to such losses, claims, damages, liabilities or expenses. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or such director, officer or participating Person or controlling Person, and shall survive the transfer of such securities by such Holder. (b) Each Holder of any Registrable Securities, by acceptance thereof, agrees to indemnify and hold harmless the Company, its directors, officers, employees, agents and attorneys and each other Person, if any, who controls the Company within the meaning of the Securities Act against any losses, claims, damages, liabilities or expenses, joint or several, to which the Company or any such director or officer or any such Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) arise out of or are based upon information in writing provided to the Company by such Holder of such Registrable Securities contained, on the effective date thereof, in any Registration Statement under which securities were registered under the Securities Act at the request of such Holder, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto or the fact that in the case of any non-underwritten offering, a current copy of the prospectus was not sent to the Person asserting such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the securities with respect to such Person if it is determined that it was the responsibility of such Holder to provide such Person with a current copy of the prospectus and such current copy would have cured the defect giving rise to such losses, claims, damages, liabilities or expenses; provided, 31 28 however, that such Warrant Holder's obligation under this Section 9.7(b) to indemnify and hold harmless the Company shall in no event exceed the lesser of (A) damage attributable solely to the inclusion of such written information in such Registration Statement, preliminary prospectus, final prospectus, or amendment or supplement suffered by the Person or Persons whose claims gave rise to such losses, claims, damages or liabilities and (B) the net proceeds received by such Holder from the sale of its Registerable Securities. (c) If the indemnification provided for in this Section 9 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 9 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 9.7(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this subsection (c), no Holder shall be required to contribute any amount in excess of the net proceeds received by it upon the sale of its securities pursuant to the Registration Statement to which the losses, claims, damages, liabilities and expenses referred to above relate. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The obligations of each of the Holders under this subsection (c) to contribute are several and not joint. (d) Conduct of Indemnification Proceedings. Any person or entity entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party after the receipt by the indemnified party of a written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party will claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure of any indemnified 32 29 party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 9.7 hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice, and (ii) unless in such indemnified party's reasonable judgment a conflict of interest may exist between such indemnified and indemnifying parties with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If the indemnifying party is entitled to, and does, assume the defense of such claim, the indemnified party shall have the right to employ separate counsel and to participate in the defense thereof, but the fees and expenses of such counsel shall be borne by the indemnified party. Whether or not such defense is assumed by the indemnifying party, the indemnifying party shall not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party shall be permitted to consent to the entry of any judgment or to enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel in any one jurisdiction for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. 9.8. Termination of Restrictions. Notwithstanding the foregoing provisions of Section 9, the restrictions imposed by this Section upon the transferability of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) and the legend requirement of Section 9.1 shall terminate as to any particular Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) (i) when and so long as such security shall have been effectively registered under the Securities Act and disposed of pursuant thereto, or (ii) when the holder thereof shall have delivered to the Company the written opinion of counsel to such holder, which opinion shall be reasonably satisfactory to the Company, stating that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by Section 9 shall terminate as to any Warrants or any Restricted Common Stock, as hereinabove provided, the Holder thereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant Certificate or a new certificate representing such Common Stock, as the case may be, not bearing the restrictive legend set forth in Section 9.1. 9.9. Listing on Securities Exchange. If the Company shall list any shares of Common Stock on any securities exchange, it will, at its expense, use its best efforts to list thereon, maintain and, when necessary, increase such listing of, all shares of Common Stock issued or, to the extent permissible under the applicable securities exchange rules, issuable upon the exercise of the Warrants so long as any shares of Common Stock shall be so listed during any such Exercise Period. 33 30 9.10. Selection of Managing Underwriters. The managing underwriter or underwriters for any offering of Registrable Securities to be registered pursuant to Section 9.3 shall be an underwriter or underwriters of nationally recognized standing selected by the Company. 10. SUPPLYING INFORMATION The Company shall cooperate with each Holder of a Warrant and each Holder of Restricted Common Stock in supplying such information as may be reasonably necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or Restricted Common Stock. 11. LOSS OR MUTILATION Upon receipt by the Company from any Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of a certificate representing Warrants or Warrant Stock and indemnity reasonably satisfactory to it (it being understood that the written agreement of the Lender or an Affiliate thereof shall be sufficient indemnity) and in case of mutilation upon surrender and cancellation hereof or thereof, the Company will execute and deliver in lieu hereof or thereof a new Warrant or new stock certificate as the case may be, of like tenor to such Holder; provided, in the case of mutilation, no indemnity shall be required if the certificate representing Warrants or Warrant Stock in identifiable form is surrendered to the Company for cancellation. 12. OFFICE OF THE COMPANY As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration or transfer, division or combination as provided herein. 13. FINANCIAL AND BUSINESS INFORMATION 13.1. Quarterly Information. Except during any period when the Company either (i) is subject to the reporting requirements of Section 15(d) of the Exchange Act, or (ii) has securities registered under Section 12(b) or 12(g) of the Exchange Act (such status being referred to as being a "Public Company"), the Company will deliver to each Holder, as soon as practicable after the end of each quarterly fiscal period in each fiscal year of the Company, and in any event within 45 days thereafter, a copy of the unaudited consolidated balance sheet as at the close of 34 31 such quarter, and the related unaudited consolidated statements of income, shareholders' equity and cash flow of the Company and its Subsidiaries for that portion of the fiscal year ending as of the close of such quarter. Such financial statements shall be prepared by the Company in accordance with GAAP (subject to normal year end adjustments and the inclusion of footnotes) and accompanied by the certification of the Company's chief executive officer or chief financial officer that, to the best of his knowledge, such financial statements are complete and correct in all material respects and fairly present in accordance with GAAP (subject to normal year end adjustments and the inclusions of footnotes) the consolidated financial position, the consolidated statements of income, shareholder equity and cash flow of the Company and its Subsidiaries as at the end of such quarter and for such year-to-date period, as the case may be. 13.2. Annual Information. Except during any period when the Company is a Public Company, the Company will deliver to each Holder as soon as practicable after the end of each fiscal year of the Company, and in any event within 90 days thereafter, one copy of: (i) an audited consolidated balance sheet of the Company and its Subsidiaries as at the end of such year, and (ii) audited consolidated statements of income, shareholders' equity and cash flow of the Company and its Subsidiaries for such year; setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year; all prepared in accordance with GAAP, and which audited financial statements shall be accompanied by (i) a certification of the chief executive officer or chief financial officer of the Company that, to the best of his knowledge, all such financial statements are complete and correct in all material respects and present fairly in accordance with GAAP the consolidated financial position of the Company and its Subsidiaries as at the end of such fiscal year and for the period then ended, (ii) an opinion thereon of the independent certified public accountants regularly retained by the Company, or any other firm of independent certified public accountants of recognized national standing selected by the Company, and (iii) a report of such independent certified public accountants confirming any adjustment made pursuant to Section 4 during such year. 13.3. Filings. The Company will file on or before the required date all required regular or periodic reports (pursuant to the Exchange Act) with the Commission and will deliver to each Holder promptly upon their becoming available one copy of each report, notice or proxy statement sent by the Company to its stockholders generally, and of each regular or periodic report (pursuant to the Exchange Act) and any Registration Statement, prospectus or written communication (other than transmittal letters) (pursuant to the Securities Act), filed by the Company with (i) the Commission or (ii) any securities exchange on which shares of Common Stock are listed. 35 32 14. APPRAISAL The determination of the Appraised Value per share of Common Stock shall be made by an investment banking firm of nationally recognized standing selected by the Company and acceptable to the Required Holders. If the investment banking firm selected by the Company is not acceptable to the Required Holders and the Company and the Required Holders cannot agree on a mutually acceptable investment banking firm, then the Required Holders and the Company shall each choose one such investment banking firm and the respective chosen firms shall agree on another investment banking firm which shall make the determination. The Company shall retain, at its sole cost, such investment banking firm as may be necessary for the determination of Appraised Value required by the terms of this Agreement. 15. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER No provision hereof, in the absence of affirmative action by any Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of any Holder, shall give rise to any liability of such Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. Except as may otherwise be provided by law or by separate agreement between a Holder and the Company, no Holder, as such, shall be entitled to vote or be deemed the holder of Common Stock or any other securities (other than Warrants) of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon any Holder the rights of a stockholder of the Company or the right to vote for the election of directors or upon any matters submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or otherwise, until the Warrants shall have been exercised in accordance with the terms and conditions hereof. 16. MISCELLANEOUS 16.1. Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of any Holder shall operate as a waiver of such right or otherwise prejudice such Holder's rights, powers or remedies. If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Agreement, the Company shall pay to the applicable Holders such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holders in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 16.2. Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the 36 33 provisions of this Agreement shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, telex, telecopier or overnight air courier guaranteeing next day delivery, addressed as follows: (a) If to any Holder, at its last known address appearing on the books of the Company maintained for such purpose. (b) If to the Company at: Deeptech International, Inc. 7400 Texas Commerce Tower 600 Travis Houston, Texas 77002 Attention: Thomas P. Tatham Telecopy No.: (713) 224-7574 with a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1900 Pennzoil Place - South Tower 711 Louisiana Street Houston, Texas 77002 Attention: Rick L. Burdick Telecopy No.: (713) 236-0822 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, or three (3) Business Days after the same shall have been deposited in the United States mail. 16.3. Indemnification. Except to the extent otherwise provided in Section 9.7 the Company agrees to indemnify and hold harmless each Holder, its officers, directors, employees, agents, and attorneys from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against such Holder relating to or arising out of (i) such Holder's exercise of the Warrants and/or ownership of any shares of Warrant Stock issued in consequence thereof, or (ii) any litigation to which such Holder is made a party in its capacity as a stockholder or warrantholder of the Company; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements (A) arise from or relate to any material violation by such Holder of any law or regulation applicable to it or (B) are found in a final non-appealable judgment by a court to have resulted from such Holder's gross negligence, 37 34 bad faith or willful misconduct or material violation of law. The procedures to be followed for claims of indemnification under this Section 16.3 shall be as set forth in Section 9.7(d). 16.4. Remedies. Each Holder of Warrants and Warrant Stock, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under Section 9 of this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of Section 9 of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 16.5. Successors and Assigns. Subject to the provisions of Section 3.1 and 9, this Agreement and the rights evidenced hereby shall inure to the benefit of and be binding upon the successor of the Company and the successors and assigns of any Holder. The provisions of this Agreement are intended to be for the benefit of all Holders from time to time of the Warrants and Warrant Stock, and shall be enforceable by any such Holder. 16.6. Amendment. This Agreement may be modified or amended or the provisions hereof waived with the written consent of the Company and the Required Holders, provided that no Warrant may be modified or amended to reduce the number of shares of Common Stock for which such Warrant is exercisable or to increase the price at which such shares may be purchased upon exercise of such Warrant (before giving effect to any adjustment as provided therein) without the prior written consent of the Holder thereof. 16.7. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 16.8. Headings. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement. 16.9. Governing Law; Consent to Jurisdiction and Venue. In all respects, including all matters of construction, validity and performance, this Agreement and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the State of New York applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. THE COMPANY CONSENTS TO PERSONAL JURISDICTION, WAIVES ANY OBJECTION AS TO JURISDICTION OR VENUE, AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE, IN THE COUNTY OF NEW YORK, STATE OF NEW YORK. Service of process on the Company or any Holder in any action arising out of or relating to this Agreement shall be effective if mailed to such party in accordance with the procedures and requirements set forth in Section 16.2. Nothing herein shall preclude any Holder or the Company from bringing suit or taking other legal action in any other jurisdiction. 38 35 16.10. MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS 25 THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT. 39 36 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. DEEPTECH INTERNATIONAL INC. By_______________________________ Name: Title: (a) _____________________________ By_______________________________ Name: Title: 40 EXHIBIT A To Warrant Agreement [FORM OF WARRANT CERTIFICATE] THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 16, 1996, BETWEEN DEEPTECH INTERNATIONAL INC. AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. __-__ WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that Thomas P. Tatham, or registered assigns, is the registered holder of 1,333,333 Warrants (the "Warrants") to purchase shares of common stock of Deeptech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from the Company before 5:00 p.m., New York City time, on the Expiration Date, as such term is defined in the Warrant Agreement, one fully paid and nonassessable share of common stock of the Company (a "Warrant Share") at a price (the "Exercise Price") of $4.50 per Warrant Share payable in lawful money of the United States of America (subject to adjustment as provided in Section 4 of the Warrant Agreement), or, as provided in Section 2.2 of the Warrant Agreement, by applying such amounts as credit for outstanding principal and interest due under certain debt of the Company, upon surrender of this Warrant Certificate, execution of the annexed Election to Purchase Form and payment of the Exercise Price at the office of the Company at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as the Company may specify in writing to the registered holder of the Warrants evidenced hereby. The Exercise Price is subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The Company may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. 41 2 Warrant Certificates, when surrendered at the office of the Company at the above-mentioned office address or at the Company's headquarters by the registered holder hereof in person or by a legal representative duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of the Company at the above-mentioned address, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holder of Warrants party thereto (the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 42 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: February 16, 1996 DEEPTECH INTERNATIONAL INC. By_________________________________ Title: (CORPORATE SEAL) ATTEST: __________________________ Secretary 43 EXHIBIT A TO WARRANT CERTIFICATE ELECTION TO PURCHASE FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises _____ Warrants for the purchase of ______ Shares of Common Stock of Deeptech International Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to ________________ whose address is ___________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. ______________________________ (Name of Registered Owner) ______________________________ (Signature of Registered Owner) ______________________________ (Street Address) ______________________________ (City) (State) (Zip Code) 44 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below: Name and Address of Assignee No. of Shares of Common Stock and does hereby irrevocably constitute and appoint ________________ attorney-in-fact to register such transfer on the books of Deeptech International Inc. maintained for the purpose, with full power of substitution in the premises. Dated:_________________________ Name:__________________________ Signature:_____________________ Witness:_______________________ The assignee named above hereby agrees to purchase and take the Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of February 16, 1996, between Deeptech International Inc. and the initial holder named therein and agrees to be bound thereby. Dated:___________________________ Name:____________________________ Signature:________________________ 45 SCHEDULE I TO WARRANT AGREEMENT
DATE OF NUMBER OF EXERCISE OPTION HOLDER WARRANT WARRANTS PRICE - -------------------------------------------------------------------------------------------------------- DTI Funding, Inc. & Assignees 12/14/93 137,079 $13.50 DTI Funding, Inc. & Assignees 12/14/93 33,460 $13.50 Wilrig 11/8/94 1,100,000 $10.00 Highwood Partners, L.P. 12/5/95 372,973 $5.00 Highwood Partners, L.P. - Contingent 12/5/95 100,000 $5.00 DLJ & Assignees 2/19/93 1,182,872 $4.25 DLJ & Assignees 2/19/93 178,575 $4.25 Citicorp USA, Inc. 12/15/92 437,500 $4.00 Citicorp USA, Inc. 2/16/96 1,000,000.5 $4.50 Chemical Bank 7/20/92 250,000 $4.00 Lehman Commercial Paper Inc. 2/16/96 1,333,333.5 $4.50 Sandpiper & Co. 12/15/92 200,000 $4.00 Donald A. Sanders 12/15/92 60,000 $4.00 Katherine U. Sanders 12/15/92 60,000 $4.00 Del. Chtr. Guar. & Trust FBO R.B. Vincent IRA 12/15/92 33,482 $4.00 Anatar Investments Defined Benefit Plan 12/15/92 25,112 $4.00 Maged F. Riad and John C. Oran, Trustees Under Whitman & Ranson Ret. Savings Plan FBO William R. Ziegler 12/15/92 10,000 $4.00 Steven A. Webster 12/15/92 8,371 $4.00 Susan K. Stickney 12/15/92 7,000 $4.00 William R. Ziegler 12/15/92 6,741 $4.00 Chris M. Sanders 12/15/92 5,000 $4.00 Roberto Marsella 12/15/92 4,185 $4.00 David N. King 12/15/92 4,000 $4.00 Alfred King III 12/15/92 4,000 $4.00 Albert Stickney III 12/15/92 2,109 $4.00 Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO David N. King 12/15/92 2,000 $4.00 Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Alfred King III 12/15/92 2,000 $4.00 Jansen Noyes, Jr. & Alfred King, Jr. TTEE U/W Nancy Noyes King FBO Susan K. Stickney 12/15/92 2,000 $4.00 Jansen Noyes, Jr. 12/15/92 1,500 $4.00 Mike Willis 6/11/90 87,938 $3.41 Don A. Sanders 2/16/96 106,667 $4.50 John Drury 2/16/96 35,555 $4.50 ------ TOTAL PER OPTION EXHIBIT SCHEDULE 6,793,453 OTHER OPTIONS ISSUED TO EMPLOYEES/DIRECTORS: Gary Coburn 5/12/94 5,000 $13.50 Gary Huxford 5/12/94 1,000 $13.50 Thomas P. Tatham 12/1/94 100,000 $10.15 Thomas P. Tatham 2/16/96 333,333 $4.50 Thomas P. Tatham 2/16/96 1,333,333 $4.50 Grant E. Sims 12/1/94 50,000 $10.15 Donald V. Weir 12/1/94 50,000 $10.15 Donald S. Taylor 12/1/94 50,000 $10.15 Harry J. Briscoe 12/1/94 50,000 $10.15 Robert H. Williams 12/1/94 50,000 $10.15
46 2
DATE OF NUMBER OF EXERCISE OPTION HOLDER WARRANT WARRANTS PRICE - -------------------------------------------------------------------------------------------------------- John H. Gray 12/1/94 50,000 $10.15 Thomas P. Tatham 9/8/95 300,000 $5.00 Grant E. Sims 12/1/92 75,000 $4.25 Grant E. Sims 12/1/92 75,000 $4.25 Grant E. Sims 12/1/92 75,000 $4.25 Harvey Fleisher 11/14/95 150,000 $4.00 Ben T. Morris 10/26/95 150,000 $4.00 Paul Thompson, III 10/26/95 150,000 $4.00 Laney Chouest/Alpha Marine Services 10/26/95 150,000 $4.00 Nancy Quinn 10/26/95 150,000 $4.00 Robert Fox 10/26/95 150,000 $4.00 Phil Clarke 10/26/95 150,000 $4.00 Mike Lam 10/26/95 150,000 $4.00 Donald V. Weir 11/14/95 125,000 $4.00 Grant Sims 11/14/95 100,000 $4.00 John Gray 11/14/95 100,000 $4.00 Keith Forman 11/14/95 50,000 $4.00 Antoine Gautreaux 11/14/95 75,000 $4.00 Eddie Moses 11/14/95 75,000 $4.00 Janet E. Sikes 11/14/95 75,000 $4.00 Kenneth E. Beeney 11/14/95 75,000 $4.00 Diana Walters 11/14/95 75,000 $4.00 James Lytal 11/14/95 50,000 $4.00 Jeff Lucas 11/14/95 50,000 $4.00 John Pike 11/14/95 50,000 $4.00 Ed Gibbon 11/14/95 50,000 $4.00 Dennis A. Kunetka 11/14/95 30,000 $4.00 Clyde Nath 10/25/95 30,000 $4.00 Lari Paradee 11/14/95 25,000 $4.00 Gary Hobbs 11/14/95 25,000 $4.00 Steve Noe 11/14/95 20,000 $4.00 Bill Moss 11/14/95 20,000 $4.00 Eddie Mitchell 11/14/95 20,000 $4.00 Wayne Lammert 11/14/95 10,000 $4.00 Ken Bass 11/14/95 10,000 $4.00 Director deferred comp - September 9/30/95 7,690 $4.00 Deferred Comp Plan - July 11/14/95 7,188 $4.00 Deferred Comp Plan - August 11/14/95 7,188 $4.00 Deferred Comp Plan - September 11/14/95 7,188 $4.00 Deferred Comp Plan - November 11/30/95 7,188 $4.00 Deferred Comp Plan - December 12/31/95 7,188 $4.00 Deferred Comp Plan - February 1/31/96 7,188 $4.00 Director deferred comp - July 7/31/95 4,690 $4.00 Director deferred comp - August 8/31/95 4,690 $4.00 Director deferred comp - November 11/30/95 7,504 $4.00 Director deferred comp - December 12/31/95 7,504 $4.00 Director deferred comp - February 1/31/96 7,504 $4.00 Director deferred comp - October 10/31/95 10,716 $3.99 Deferred Comp Plan - October 11/14/95 7,205 $3.99 ---------- TOTAL OPTIONS ISSUED TO EMPLOYEES/DIRECTORS 5,038,297 ---------- TOTAL OPTIONS OUTSTANDING AT 1/31/96 11,831,750 ==========
EX-4.12 3 WARRANT AGREEMENT - THOMAS P. TATHAM 1 Exhibit 4.12 WARRANT AGREEMENT for the Purchase of Common Stock By and Between DEEPTECH INTERNATIONAL INC. and THOMAS P. TATHAM Dated as of January 23, 1997 2 TABLE OF CONTENTS 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. ISSUANCE AND EXERCISE OF WARRANT . . . . . . . . . . . . . . . . . 7 2.1 Issuance of Warrants. . . . . . . . . . . . . . . . . . . . 7 2.2 Manner of Exercise. . . . . . . . . . . . . . . . . . . . . 7 2.3 Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 9 2.4 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . 10 2.5 Continued Validity. . . . . . . . . . . . . . . . . . . . . 10 3. TRANSFERS, DIVISION AND COMBINATION . . . . . . . . . . . . . . . . 10 3.1 Transfer. . . . . . . . . . . . . . . . . . . . . . . . . . 10 3.2 Division and Combination. . . . . . . . . . . . . . . . . . 11 3.3 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 11 3.4 Maintenance of Books. . . . . . . . . . . . . . . . . . . . 11 4. ADJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 4.1 Stock Dividends, Subdivisions and Combinations. . . . . . . 12 4.2 Certain Other Distributions . . . . . . . . . . . . . . . . 12 4.3 Issuance of Additional Shares of Stock . . . . . . . . . . . 13 4.4 Issuance of Warrants or Other Rights . . . . . . . . . . . . 14 4.5 Issuance of Convertible Securities . . . . . . . . . . . . . 14 4.6 Superseding Adjustment . . . . . . . . . . . . . . . . . . . 15 4.7 Other Provisions Applicable to Adjustments Under This Section . . . . . . . . . . . . . . . . . . . . . . . . . . 15 4.8 Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets . . . . . . . . . . . . . . . . . . . 17 5. NOTICES TO WARRANT HOLDERS . . . . . . . . . . . . . . . . . . . . 18 5.1 Notice of Adjustments . . . . . . . . . . . . . . . . . . . 18 5.2 Notice of Certain Corporate Action . . . . . . . . . . . . . 18 6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 19 7. CERTAIN COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 20 7.1 No Impairment . . . . . . . . . . . . . . . . . . . . . . . 20 7.2 Reservation and Authorization of Common Stock; Registration with, or Approval of, any Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . 20 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS . . . . . . . . . . 21 9. RESTRICTIONS ON TRANSFERABILITY . . . . . . . . . . . . . . . . . . 21 9.1 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . 21 9.2 Notice of Proposed Transfers; Requests for Registration . . 22 9.3 Required Registration . . . . . . . . . . . . . . . . . . . 23 9.4 Incidental Registration . . . . . . . . . . . . . . . . . . 23 9.5 Registration Procedures . . . . . . . . . . . . . . . . . . 24 9.6 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 25
i 3 9.7 Indemnification and Contribution . . . . . . . . . . . . . . 26 9.8 Termination of Restrictions . . . . . . . . . . . . . . . . 29 9.9 Listing on Securities Exchange . . . . . . . . . . . . . . . 29 9.10 Selection of Managing Underwriter . . . . . . . . . . . . . 30 10. SUPPLYING INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 30 11. LOSS OR MUTILATION . . . . . . . . . . . . . . . . . . . . . . . . 30 12. OFFICE OF DEEPTECH . . . . . . . . . . . . . . . . . . . . . . . . 30 13. APPRAISAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 14. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER . . . . . . . . . . .31 15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 15.1 Nonwaiver and Expenses . . . . . . . . . . . . . . . . . . . 31 15.2 Notice Generally . . . . . . . . . . . . . . . . . . . . . . 31 15.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . 32 15.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 33 15.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . 33 15.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 33 15.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . 33 15.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 33 15.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 15.10 Consent to Jurisdiction and Venue . . . . . . . . . . . . . 34
Schedule of Exhibits: Exhibit A Form of Warrant Certificate Exhibit B Shares Subject to Outstanding Warrants, Options, Conversion Rights, Etc. Exhibit C Form of DeepTech Note Exhibit D Form of FPS Note ii 4 THIS WARRANT AGREEMENT AND THE SECURITIES PROVIDED FOR HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER, ANY SUCH STATE SECURITIES LAWS OR THE PROVISIONS OF THIS WARRANT AGREEMENT WARRANT AGREEMENT THIS WARRANT AGREEMENT, dated as of January 23, 1997 (the "Agreement"), is entered into by and between DEEPTECH INTERNATIONAL INC., a Delaware corporation ("DeepTech"), and Thomas P. Tatham ("Tatham"). W I T N E S E T H : WHEREAS, FPS II, Inc. ("FPS"), a subsidiary of DeepTech, as maker, has issued that certain promissory note dated November 8, 1994 in the original principal amount of $1,650,000 payable to the order of Wilrig (as the same has been and may be amended, supplemented or otherwise modified from time to time, the "FPS Note"); and WHEREAS, DeepTech, as maker, has issued that certain promissory note dated November 8, 1994 in the original principal amount of $9,350,000 payable to the order of Wilrig AS ("Wilrig") (as the same has been and may be amended, supplemented or otherwise modified from time to time, the "DeepTech Note" which, together with the FPS Note, may hereinafter be referred to as the "Notes"); and WHEREAS, in order to induce Wilrig to act as holder under the Notes, DeepTech has agreed to execute and deliver this Agreement and to issue to Wilrig the warrants herein described; WHEREAS, on January 23, 1997, Wilrig assigned the DeepTech Note to BT Securities Corporation ("BT") and Tatham assigned certain promissory notes issued by DeepTech to Tatham (the "Tatham Notes") to BT; WHEREAS, in connection with the BT transaction described above, Wilrig assigned the 1,100,000 Warrants to BT and BT delivered them to DeepTech for assignment to Tatham pursuant to this Agreement; 5 NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties hereby stipulate and agree as follows: 1. DEFINITIONS As used in this Agreement, the following terms have the respective meanings set forth below: "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by DeepTech after the Closing Date, other than Warrant Stock. "Affiliate" shall mean as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with"), as used with respect to any Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities or by contract or otherwise; and the terms "controlled" and "controlling" have the meanings correlative to the foregoing. "Agreement" shall mean this Warrant Agreement. "Appraised Value" shall mean, in respect of any share of Common Stock on any date herein specified, the fair saleable value of such share of Common Stock (determined without giving effect to the discount for (i) a minority interest or (ii) any lack of liquidity of the Common Stock or to the fact that DeepTech may have no class of equity registered under the Exchange Act) as of the last day of the most recent fiscal month to end within 60 days prior to such date specified, based on the value of DeepTech, as determined by an investment banking firm (selected pursuant to the terms of Section 13) in accordance with such firm's customary practices (including, if appropriate, taking into account the fact that DeepTech is privately held), divided by the number of Outstanding shares of Common Stock, after giving pro forma effect to the exercise or conversion of all exercisable or Convertible Securities (including the Warrants) for Common Stock and the payment of the exercise or conversion price therefor. "Book Value" shall mean, in respect of any share of Common Stock on any date herein specified, the consolidated book value of DeepTech as of the last day of any month immediately preceding such date, divided by the number of Outstanding shares of Common Stock, after giving pro forma effect to the exercise or conversion of all exercisable or Convertible Securities (including the Warrants) for Common Stock and the payment of the exercise or conversion price 2 6 therefor, as determined in accordance with GAAP by any firm of independent certified public accountants of recognized national standing selected by DeepTech and reasonably acceptable to the Required Holders. "Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York. "Closing Date" shall mean the date hereof. "Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws. "Common Stock" shall mean the common stock, $.01 par value per share, of DeepTech, as constituted on the Closing Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of DeepTech of any other class (regardless of how denominated) issued to the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets over any other class of stock of DeepTech and which is not subject to redemption and (ii) shares of common stock of any successor or acquiring corporation (as defined in Section 4.8) received by or distributed to the holders of Common Stock of DeepTech in the circumstances contemplated by Section 4.8. "Convertible Securities" shall mean evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Current Market Price" shall mean, in respect of any share of Common Stock on any date herein specified, (a) if there shall then be a public market for the Common Stock, the average of the daily market prices for 10 consecutive Business Days commencing 25 days before such date; the daily market price for each such Business Day being (i) the last sale price on such day on the principal stock exchange on which such Common Stock is then listed or admitted to trading, (ii) if no sale takes place on such day on any such exchange, the average of the last reported closing bid and asked prices on such day as officially quoted on any such exchange, (iii) if the Common Stock is not then listed or admitted to trading on any stock exchange, the average of the last reported closing bid and asked prices on such day in the over-the-counter market, as furnished by the National Association of Securities Dealers Automatic Quotation System or the National Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged in the business of reporting such prices, as furnished by any similar firm 3 7 then engaged in such business, or (v) if there is no such firm, as furnished by any member of NASD selected by DeepTech; or (b) at any time that there is a public market for the Common Stock, the fair market value per share of Common Stock on such date as determined reasonably and in good faith by the board of directors of DeepTech (determined without giving effect to any discount for a minority interest, any restrictions on transferability or any lack of liquidity of the Common Stock or to the fact that DeepTech has no class of equity registered under the Exchange Act), such fair market value to be determined by reference to the cash price that would be paid between a fully informed buyer and seller under no compulsion to buy or sell, provided that (i) if Current Market Price is being determined in connection with an issuance of shares of Common Stock, solely to one or more Affiliates of DeepTech, then if so requested by the Required Holders, Current Market Price shall be the Appraised Value; and (ii) Current Market Price shall never be less than Book Value. "Current Warrant Price" shall mean, in respect of a share of Common Stock at any date herein specified, $10.00 per share of Common Stock. "DeepTech" shall have the meaning ascribed thereto in the heading of this Agreement. "DeepTech Note" shall have the meaning ascribed thereto in the recitals of this Agreement. "DeepTech Note Holder" shall mean the holder of the DeepTech Note from time to time under the terms of the DeepTech Note. As of the Closing Date, Wilrig is the sole DeepTech Note Holder. "Demanding Security Holder" shall have the meaning set forth in Section 9.4. "Exchange Act" shall mean 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 from time to time. "Exercise Period" shall mean the period during which the Warrants are exercisable pursuant to Section 2.2. "Expiration Date" shall mean November 7, 1997. "FPS" shall have the meaning ascribed thereto in the recitals of this Agreement. "FPS Note" shall have the meaning ascribed thereto in the recitals of this Agreement. 4 8 "FPS Note Holder" shall mean the holder of the FPS Note from time to time under the terms of the FPS Note. As of the Closing Date, Wilrig is the sole FPS Note Holder. "GAAP" shall mean generally accepted accounting principles in the United States of America as from time to time in effect. "NASD" shall mean the National Association of Securities Dealers, Inc., or any successor thereto. "Notes" shall have the meaning ascribed thereto in the recitals of this Agreement. "Note Holder" shall mean the DeepTech Note Holder and the FPS Note Holder, collectively. As of the Closing Date, Wilrig is the sole Note Holder. "Other Property" shall have the meaning set forth in Section 4.8. "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of DeepTech or any Subsidiary, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Permitted Issuances" shall mean (i) the issuance of shares of Common Stock upon exercise of the Warrants, (ii) the issuance of shares of Common Stock pursuant to the securities identified on Exhibit B hereto, (iii) the issuance of shares relating to any benefit plan, stock option plan or any other compensation plan offered solely to DeepTech's officers, directors and/or employees, (iv) the issuance of shares of Common Stock as consideration for the purchase of any property, stock, business or securities from any Person who is not an Affiliate of DeepTech immediately prior to such transaction whether such shares are issued directly by DeepTech or a Subsidiary of DeepTech in connection with any merger, consolidation or other business combination, (v) if there shall then be a public market for the Common Stock, the issuance of shares of Common Stock upon receipt by DeepTech of the Current Market Price therefor as described in clause (a) of the definition of "Current Market Price" and (vi) if there shall then be no public market for the Common Stock, the issuance of shares of Common Stock, warrants or Convertible Securities on terms that are at least as favorable to DeepTech as terms that could be obtained in an arm's length transaction with third Persons not Affiliates of DeepTech and for consideration equal to the fair value of such shares as determined in good faith by a majority of disinterested members of the board of directors of DeepTech. 5 9 "Person(s)" shall mean any individual, sole proprietorship, partnership, joint venture, trust, limited liability company, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Registrable Securities" shall mean, at any particular time and as to each Warrant Holder, (i) all shares of common stock issuable upon the exercise of such Warrant Holder's Warrants and (ii) all of such Warrant Holder's issued and outstanding Warrant Stock. "Registration Expenses" shall have the meaning set forth in Section 9.6. "Registration Statement" shall have the meaning set forth in Section 9.5. "Required Holders" shall mean the Warrant Holders, other than the Company and its Affiliates, of Warrants exercisable for an amount exceeding 50% of the aggregate number of shares of Common Stock then purchasable upon exercise of all Warrants (other than any held by DeepTech or its Affiliates), whether or not exercisable. "Requirement of Law" shall mean, as to any Person, any requirement contained in any certificate of incorporation, bylaws, or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other governmental authority, in each case applicable to or binding such Person or any of the property or to which such Person or any of its property is subject. "Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of a Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 9.1. "Securities Act" shall mean 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. "Subsidiary" shall mean any Person of which an aggregate of more than 50% of the outstanding stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other managers of such Person (irrespective of whether, at the time, stock or other ownership interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at 6 10 the time, directly or indirectly, owned legally or beneficially by DeepTech and/or one or more Subsidiaries of DeepTech. "Tatham" shall have the meaning ascribed thereto in the heading of this Agreement. "Transfer Notice" shall have the meaning set forth in Section 9.2. "Warrant Certificate" shall mean a certificate evidencing one or more Warrants, substantially in the form of Exhibit A hereto, with such changes therein as may be required to reflect any adjustments made pursuant to Section 4. "Warrant Holder" shall mean each Person in whose name the Warrants are registered on the books of DeepTech maintained for such purpose or each Person holding any Warrant Stock. "Warrant Price" shall mean, for any exercise of Warrants pursuant to Section 2.2, an amount equal to (i) the number of shares of Common Stock being purchased upon such exercise multiplied by (ii) the Current Warrant Price for each share of Common Stock as of the date of such exercise. "Warrant Stock" shall mean the shares of Common Stock purchased by the Warrant Holders upon the exercise thereof. "Warrants" shall mean the warrants issued pursuant to this Agreement and all warrants issued upon transfer, division or combination of, or in substitution for, such warrants. All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock for which they may be exercised. A Warrant shall entitle the record holder thereof to purchase from DeepTech one share of Common Stock (subject to adjustment as provided in Section 4). "Wilrig" shall have the meaning ascribed thereto in the heading of this Agreement. 2. ISSUANCE AND EXERCISE OF WARRANTS 2.1 Issuance of Warrants. DeepTech hereby agrees to issue to Tatham, on the Closing Date, 1,100,000 Warrants. On the Closing Date, DeepTech shall deliver to Warrant Certificates evidencing the Warrants issued to Tatham. 2.2 Manner of Exercise. (a) A Warrant Holder may, 7 11 (i) From and after the Closing Date until 5:00 p.m., New York, New York time on the Expiration Date, exercise 800,000 of the Warrants evidenced by a Warrant Certificate, on any Business Day, for all or part of the number of shares of Common Stock purchasable thereunder; and (ii) in the event that (A) DeepTech or any person to whom DeepTech has assigned its option, granted under the Memorandum of Agreement, dated October 6, 1994, between Wilrig, Treasure Driller AS, DeepTech and FPS, to purchase the Treasure Seeker exercises that option or (B) DeepTech or an affiliate of DeepTech purchases from Wilrig or a wholly-owned subsidiary of Wilrig a semi-submersible rig other than the Treasure Driller, in either case within one year following the Closing Date, from and after the occurrence of such event until 5:00 p.m. New York, New York time on the Expiration Date, exercise 300,000 of the Warrants evidenced by a Warrant Certificate, on any Business Day for all or part of the number of shares of Common Stock purchasable thereunder; provided, however, any partial exercise only shall be in integral multiples of 100,000 shares. In the event that the condition set forth in Section 2.2(a)(ii) is not satisfied within one year following the Closing Date, 300,000 of the 1,100,000 Warrants shall no longer be exercisable and Wilrig shall deliver to DeepTech at its principal office at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002, Attention: Thomas P. Tatham, or at the office or agency designated by DeepTech pursuant to Section 12, the Warrant Certificate or Warrant Certificates evidencing at least 300,000 Warrants. Upon receipt of such Warrant Certificates, DeepTech shall, as promptly as practicable, and in any event within three (3) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to such Warrant Holder a new Warrant Certificate evidencing (i) any unexercised Warrants represented by the old Warrant Certificate minus (ii) the 300,000 unexercisable Warrants. Such new Warrant Certificate shall in all other respects be identical to the old Warrant Certificate. (b) In order to exercise the Warrants, in whole or in part, the Warrant Holder shall deliver to DeepTech at its principal office at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002, Attention: Thomas P. Tatham, or at the office or agency designated by DeepTech pursuant to Section 12, (i) a written notice duly executed by the Warrant Holder or its agent or attorney, substantially in the form of the form of election to purchase appearing at the end of the Warrant Certificate as Exhibit A thereto, of such Warrant Holder's election to exercise the Warrants, which notice shall 8 12 specify the number of shares of Common Stock to be purchased, (ii) payment of the Warrant Price in the manner provided below, and (iii) the Warrant Certificate or Warrant Certificates evidencing the Warrants. Upon receipt thereof, DeepTech shall, as promptly as practicable, and in any event within three (3) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to such Warrant Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as such Warrant Holder shall request in the notice and shall be registered in the name of the Warrant Holder or, subject to Section 9, such other name as shall be designated in the notice. The Warrants shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and such Warrant Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the notice, together with payment of the Warrant Price and the Warrant Certificate or Warrant Certificates, are received by DeepTech as described above and all taxes required to be paid by such Warrant Holder, if any, pursuant to Section 2.3 prior to the issuance of such shares have been paid. If the Warrants evidenced by a Warrant Certificate shall have been exercised, DeepTech shall, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to Warrant Holder a new Warrant Certificate evidencing the rights of Warrant Holder to purchase the unpurchased shares of Common Stock represented by the old Warrant Certificate, which new Warrant Certificate shall in all other respects be identical to the old Warrant Certificate. Notwithstanding any provision herein to the contrary, DeepTech shall not be required to register shares in the name of any Person who acquired any Warrant or any Warrant Stock otherwise than in accordance with this Agreement. (c) Payment of the Warrant Price shall be made only in immediately available funds. 2.3 Payment of Taxes. DeepTech shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Stock, unless such tax or charge is imposed by law upon the Warrant Holder, in which case such taxes or charges shall be paid by such Warrant Holder. DeepTech shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Warrant Stock issuable upon exercise of Warrants in any name other than 9 13 that of Warrant Holder, and in such case DeepTech shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of DeepTech that no such tax or other charge is due. 2.4 Fractional Shares. DeepTech shall not be required to issue a fractional share of Common Stock upon the exercise of Warrants. As to any fraction of a share which the Warrant Holder would otherwise be entitled to purchase upon such exercise, DeepTech shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the Current Market Price per share of Common Stock on the date of exercise. If the determination of Current Market Price for purposes of this Section 2.4 would otherwise require an appraisal to be made by an investment banking firm, then Current Market Price for purposes of this Section 2.4 only shall mean Book Value per share of Common Stock on the date of exercise, unless a determination of Appraised Value shall have been made within six months prior to such date in which case such Appraised Value shall be utilized for the purposes of determining Current Market Price. 2.5 Continued Validity. A Warrant Holder of shares of Warrant Stock (other than a holder who acquires such shares after the same have been publicly sold pursuant to a Registration Statement under the Securities Act) shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as Warrant Holder under Sections 9, 10 and 15 of this Agreement. DeepTech will, at the time of each exercise of Warrants or upon the request of the Warrant Holder of the shares of Warrant Stock issued upon the exercise thereof, acknowledge in writing, in form reasonably satisfactory to such Warrant Holder, its continuing obligation to afford to such Warrant Holder all such rights; provided, however, that if such Warrant Holder shall fail to make any such request, such failure shall not affect the continuing obligation of DeepTech to afford to such Warrant Holder all such rights. 3. TRANSFERS, DIVISION AND COMBINATION 3.1 Transfer. So long as any principal or interest remains outstanding under the Notes, the Warrants may only be transferred to a new Warrant Holder who is, at the time of transfer, also a holder of the Notes. Subject to compliance with Section 9, transfer of Warrants, in whole or in part, shall be registered on the books of DeepTech to be maintained for such purpose, upon surrender of the Warrant Certificate representing such Warrants at the principal office of DeepTech referred to in Section 2.2 or the office or agency designated by DeepTech pursuant to Section 12, together with a written assignment substantially in the form of 10 14 Exhibit B to the Warrant Certificate and a written agreement, in form reasonably satisfactory to DeepTech, setting forth the new Warrant Holder's agreement to be bound by all of the terms of this Agreement each duly executed by the Warrant Holder or its agent or attorney, and funds sufficient to pay any transfer taxes payable by such Warrant Holder upon the making of such transfer. Upon such surrender and, if required, such payment, DeepTech shall, subject to Section 9, execute and deliver a new Warrant Certificate or Warrant Certificates in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant Certificate or Warrant Certificates evidencing the portion of the old Warrant Certificate not so assigned, and the old Warrant Certificate shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 9, may be exercised by a new Warrant Holder for the purchase of shares of Warrant Stock without having a new Warrant Certificate or new Warrant Certificates issued. 3.2 Division and Combination. Subject to the provisions of Section 9, any Warrant Certificate may be divided or combined with other Warrant Certificates upon presentation thereof at the aforesaid office or agency of DeepTech, together with a written notice specifying the names and denominations in which new Warrant Certificates are to be issued, signed by a Warrant Holder or its agent or attorney. Subject to compliance with Section 3.1 as to any transfer which may be involved in such division or combination, DeepTech shall execute and deliver a new Warrant Certificate or Warrant Certificates in exchange for the Warrant Certificate or Warrant Certificates to be divided or combined in accordance with such notice. 3.3 Expenses. DeepTech shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant Certificate or Warrant Certificates provided for under this Section 3. 3.4 Maintenance of Books. DeepTech agrees to maintain, at its aforesaid office or agency, books for the registration of, and the registration of transfer of, the Warrants. 4. ADJUSTMENTS The number of shares of Warrant Stock for which Warrants are exercisable, and the price at which such shares may be purchased upon exercise of Warrants, shall be subject to adjustment from time to time as set forth in this Section 4. DeepTech shall give each Warrant Holder notice of any event described below which requires 11 15 an adjustment pursuant to this Section 4 within a reasonable period of time after such event. 4.1 Stock Dividends, Subdivisions and Combinations. If at any time DeepTech shall: (a) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution of, Additional Shares of Common Stock, (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then (i) the number of shares of Common Stock for which a Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which a Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Current Warrant Price shall be adjusted to equal the Current Warrant Price multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment and the denominator of which shall be the number of shares for which a Warrant is exercisable immediately after such adjustment. 4.2 Certain Other Distributions. If at any time DeepTech shall take a record of the holders of its Common Stock for the purpose of entitling them to receive any dividend or other distribution of: (a) cash; (b) any evidences of its indebtedness (other than Convertible Securities), any shares of its stock (other than Additional Shares of Common Stock or Convertible Securities) or any other securities or property of any nature whatsoever (other than cash); or (c) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness (other than Convertible Securities), any shares of its stock (other than Additional Shares of Common Stock or Convertible Securities) or any other securities or property of any nature whatsoever; 12 16 then (i) the number of shares of Common Stock for which a Warrant is exercisable shall be adjusted to equal the product obtained by multiplying the number of shares of Common Stock for which a Warrant is exercisable immediately prior to such adjustment by a fraction (A) the numerator of which shall be the Current Market Price per share of Common Stock at the date of taking such record and (B) the denominator of which shall be such Current Market Price per share of Common Stock, minus the amount allocable to one share of Common Stock of any such cash so distributable and of the fair value (as determined reasonably and in good faith by the board of directors of DeepTech) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable, and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multiplied by the number of shares of Common Stock for which a Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares for which a Warrant is exercisable immediately after such adjustment. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by DeepTech to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 4.2 and, if the Outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the Outstanding shares of Common Stock within the meaning of Section 4.1. 4.3 Issuance of Additional Shares of Stock. (a) If at any time DeepTech shall (except as hereinafter provided) issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for consideration in an amount per Additional Share of Common Stock less than the Current Market Price, then the Current Warrant Price shall be adjusted by multiplying the Current Warrant Price by a fraction, the numerator of which shall be (A) an amount equal to the sum of (X) the number of shares of Common Stock Outstanding immediately prior to such issuance or sale multiplied by the Current Market Price immediately prior to the first to occur of (i) board action by DeepTech authorizing such action or (ii) the public announcement of an intent to take such action, plus (Y) the consideration, if any, received by DeepTech upon such issuance or sale, and the denominator of which shall be (B) the total number of shares of Common Stock Outstanding immediately after such issuance or sale multiplied by the Current Market Price immediately prior to such issuance. 13 17 (b) The provisions of Section 4.3(a) shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Sections 4.1 or 4.2. No adjustment of the number of shares of Common Stock for which a Warrant shall be exercisable shall be made under Section 4.3(a) upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 4.4 or Section 4.5. 4.4 Issuance of Warrants or Other Rights. If at any time DeepTech shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which DeepTech is the surviving corporation) issue or sell, any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and if the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the Current Market Price in effect immediately prior to the time of such distribution, issue or sale, then the Current Warrant Price shall be adjusted as provided in Section 4.3(a) on the basis that (A) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to be Outstanding immediately following such issuance, (B) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest possible price per share in any range of prices per share at which such Additional Shares of Common Stock are available to such holders, and (C) DeepTech shall be deemed to have received all of the consideration payable therefor, if any, as of the date of the actual issuance of such warrants or other rights. No further adjustments of the Current Warrant Price shall be made upon the actual issuance of such Common Stock or of such other rights or upon exercise of such warrants or other rights or upon the actual issuance of such Common Stock upon such conversion or exchange of such Convertible Securities. 4.5 Issuance of Convertible Securities. If at any time DeepTech shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which DeepTech is the surviving corporation) issue or sell, any 14 18 Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and if the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Current Market Price in effect immediately prior to the time of such issue or sale of Convertible Securities, then the Current Warrant Price shall be adjusted as provided in Section 4.3(a) on the basis that (A) the maximum number of Additional Shares of Common Stock necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to be Outstanding immediately following such issuance, (B) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (C) DeepTech shall be deemed to have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No adjustment of the Current Warrant Price shall be made under this Section 4.5 upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 4.4. No further adjustments of the Current Warrant Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to purchase any such Convertible Securities for which adjustments of the Current Warrant Price have been or are to be made pursuant to other provisions of this Section 4, no further adjustments of the Current Warrant Price shall be made by reason of such issue or sale. 4.6 Superseding Adjustment. If, at any time after any adjustment of the Current Warrant Price shall have been made pursuant to Section 4.4 or Section 4.5 as the result of any issuance of warrants, options, rights or Convertible Securities, and such warrants, options or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants, options or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, then such previous adjustment shall be rescinded and annulled and, if applicable, the Current Warrant Price shall be recalculated as if all such expired and unexercised warrants, options, rights or Convertible Securities had never been issued. 4.7 Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments of the number of shares of Common Stock for which a Warrant is exercisable provided for in this Section 4: 15 19 (a) Computation of Consideration. To the extent that any Additional Shares of Common Stock shall be issued for cash consideration, the consideration received by DeepTech therefor shall be the amount of the cash received by DeepTech therefor, or, if such Additional Shares of Common Stock are sold to underwriters or dealers for public offering without a subscription offering, the initial public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by DeepTech for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined reasonably and in good faith by a majority of the disinterested members of the board of directors of DeepTech. (b) When Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment to the number of shares for which the Warrants are exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 4.1) up to, but not beyond, the date and time of exercise of any Warrants if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% to the number of shares of Common Stock for which the Warrants initially issued pursuant to this Agreement are exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (c) Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Stock resulting from an issuance of additional Warrants to any Warrant Holder pursuant to this Section 4 shall be taken into account to the nearest 1/10th of a share subject to Section 2.4. (d) When Adjustment Not Required. If DeepTech shall take a record of the holders of its Common Stock for the purpose of entitling then to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by 16 20 reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (e) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 4 by reason of taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, any Warrant Holder exercises Warrants, any Additional Shares of Common Stock issuable upon exercise of such Warrant by reason of such adjustment shall be deemed the last shares of Common Stock for which such Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or other property shall be held in escrow for a Warrant Holder by DeepTech to be issued to such Warrant Holder upon and to the extent that the event actually takes place, upon payment of the balance, if any, of the Warrant Price for such Warrant at such date (after taking into account any overpayment of the Warrant Price made at the time of the initial Warrant exercise). Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by DeepTech and escrowed property returned. 4.8 Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case DeepTech shall reorganize its capital, reclassify its capital stock, consolidate or merge with and into another corporation (where DeepTech is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of DeepTech), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of DeepTech, then DeepTech shall, as a condition precedent to such transaction, cause effective provisions to be made so that each Warrant Holder shall have the right thereafter to receive, upon exercise of a Warrant, solely the number of shares of common stock of the successor or acquiring corporation or of DeepTech, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets, by a holder of the number of shares of Common Stock for which a Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, such provisions shall include the express assumption by the successor or acquiring corporation (if other than DeepTech) of the due and punctual observance and performance of each and every covenant and condition of this Agreement to be performed and observed by DeepTech and all the obligations and liabilities hereunder, subject to such modifications as may be 17 21 deemed appropriate (as determined by resolution of the board of directors of DeepTech) in order to provide for adjustments of shares of the Common Stock for which a Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 4. For purposes of this Section 4.8, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 4.8 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. 5. NOTICES TO WARRANT HOLDERS 5.1 Notice of Adjustments. Whenever the number of shares of Common Stock for which a Warrant is exercisable, or whenever the price at which a share of such Common Stock may be purchased upon exercise of the Warrants, shall be adjusted pursuant to Section 4, DeepTech shall forthwith prepare a certificate to be executed by the chief financial officer of DeepTech setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the board of directors of DeepTech determined the fair value of any evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights referred to in Section 4), specifying the number of shares of Common Stock for which a Warrant is exercisable and (if such adjustment was made pursuant to Section 4.8) describing the number and kind of any other shares of stock or Other Property for which a Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change. DeepTech shall promptly cause a signed copy of such certificate to be delivered to each Warrant Holder in accordance with Section 15.2. DeepTech shall keep at its office or agency designated pursuant to Section 12 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by any Warrant Holder or any prospective purchaser of a Warrant designated by a Warrant Holder thereof. 5.2 Notice of Certain Corporate Action. Each Warrant Holder shall be entitled to the same rights to receive notice of corporate action as any holder of Common Stock. 18 22 6. REPRESENTATIONS AND WARRANTIES DeepTech hereby represents and warrants as follows: (a) DeepTech is a corporation duly organized and validly existing under the laws of the State of Delaware, has the power and authority to execute and deliver this Agreement and the Warrant Certificates, to issue the Warrants and to perform its obligations under this Agreement and the Warrant Certificates. (b) The execution, delivery and performance by DeepTech of this Agreement and the Warrant Certificates, the issuance of the Warrants and the issuance of the Warrant Stock upon exercise of the Warrants have been duly authorized by all necessary corporate action and do not and will not violate, or result in a breach of, or constitute a default under or require any consent under, or result in the creation of any lien or security interest upon the assets of DeepTech pursuant to, any Requirement of Law or any contractual obligation binding upon DeepTech. (c) This Agreement has been duly executed and delivered by DeepTech and constitutes a legal, valid and enforceable obligation of DeepTech. When the Warrants and the Warrant Certificates have been issued as contemplated hereby, (i) the Warrants and the Warrant Certificates will constitute legal, valid, binding and enforceable obligations of DeepTech and (ii) the Warrant Stock, when issued upon exercise of the Warrants in accordance with the terms hereof, will be duly authorized, validly issued, fully paid and nonassessable shares of Common Stock with no personal liability attaching to the ownership thereof. (d) The total number of shares of all classes of stock that DeepTech shall on the Closing Date have authority to issue is 110,000,000 shares, consisting of (i) 100,000,000 shares of Common Stock, par value $0.01 per share, of which, after giving effect to the transactions contemplated herein and all other issuances of capital stock of DeepTech on or prior to November 8, 1994, 15,364,798 shares of Common Stock will be issued and outstanding and 1,100,000 shares of Common Stock will be reserved for future issuance pursuant to this Agreement, and (ii) 10,000,000 shares of preferred stock, $0.01 par value per share, none of which were issued and outstanding as of November 8, 1994. The delivery hereunder by DeepTech to the Warrant Holder of the Warrants issued on the Closing Date will transfer and convey to the Warrant Holder good and marketable title to such Warrants and, upon exercise of such Warrants in accordance with this Agreement, good and marketable title to the Common Stock purchased upon such exercise, free and clear of all preemptive rights, liens, charges and encumbrances, except for restrictions on transfer referred to in this Agreement or arising under the Federal and state securities laws. Except as referred to in this paragraph (d), DeepTech does 19 23 not have outstanding any stock or securities convertible into or exchangeable for any shares of its stock, nor, except as so set forth, does it have outstanding any agreements, rights or options entitling any person to subscribe for or to purchase any capital stock or securities convertible into or exchangeable for any of its shares of stock. 7. CERTAIN COVENANTS 7.1 No Impairment. DeepTech shall not by any action including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of each Warrant Holder against impairment. Without limiting the generality of the foregoing, DeepTech will use reasonable good faith efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable DeepTech to perform its obligations under this Agreement. Upon the request of a Warrant Holder, DeepTech will, at any time during the period this Agreement is in effect, acknowledge in writing, in form satisfactory to such Warrant Holder, the continuing validity of this Agreement and the obligations of DeepTech hereunder. 7.2 Reservation and Authorization of Common Stock; Registration with, or Approval of, any Governmental Authority. From and after the Closing Date, DeepTech shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding warrants. All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrants and payment therefor in accordance with the terms of this Agreement, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights. Before taking any action which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, DeepTech shall take any corporate action which may be necessary in order that DeepTech may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Current Warrant Price. 20 24 Before taking any action which would result in an adjustment in the number of shares of Common Stock for which a Warrant is exercisable or in the Current Warrant Price, DeepTech shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. If any shares of Common Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law (otherwise than as provided in Section 9) before such shares may be so issued, DeepTech will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered. 7.3 Holder of the Notes. From and after the Closing Date, each Warrant Holder agrees that, at all times that such Warrant Holder is a holder of any Warrants and that there is outstanding principal or interest under such Notes, such Warrant Holder will also be a holder of the Notes. 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS In the case of all dividends or other distributions by DeepTech to the holders of its Common Stock with respect to which any provision of Section 4 refers to the taking of a record of such holders, DeepTech will in each such case take such a record as of the close of business on a Business Day. DeepTech will not at any time, except upon dissolution, liquidation or winding up of DeepTech, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrants. 9. RESTRICTIONS ON TRANSFERABILITY The Warrants and the Warrant Stock shall not be transferred before satisfaction of the conditions specified in this Section 9, which conditions are intended to ensure compliance with the provisions of the Securities Act and applicable state securities laws with respect to the transfer of any Warrant or any Warrant Stock. Each Warrant Holder, by entering into this Agreement and accepting the Warrants, agrees to be bound by the provisions of this Section 9. 9.1 Restrictive Legend. Except as otherwise provided in this Section 9, each certificate representing Warrants or Warrant Stock, shall be stamped or otherwise imprinted with a legend in substantially the following form: 21 25 "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN A WARRANT AGREEMENT, DATED AS OF NOVEMBER 8, 1994, BETWEEN DEEPTECH AND THE INITIAL HOLDERS OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF DEEPTECH AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY." 9.2 Notice of Proposed Transfers; Requests for Registration. Prior to any transfer of any Warrants or any shares of Restricted Common Stock, the Warrant Holder of such Warrants or Restricted Common Stock shall give five days prior written notice to DeepTech of such Warrant Holder's intention to effect such transfer (a "Transfer Notice"). Each Warrant Holder agrees that it will not sell, transfer or otherwise dispose of Warrants or any shares of Restricted Common Stock, in whole or in part, except pursuant to an effective registration statement under the Securities Act or an exemption from registration thereunder. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon such transfer shall bear the restrictive legend set forth in Section 9.1, and each Warrant Certificate issued upon such transfer shall bear the restrictive legend set forth in Section 9.1, unless opinion of the transferee's or Warrant Holder's counsel delivered to DeepTech in connection with such transfer (which opinion shall be reasonably satisfactory to DeepTech) such legend is not required in order to ensure compliance with the Securities Act. The Warrant Holders of Warrants and Warrant Stock shall have the right to request registration of such Warrant Stock pursuant to Sections 9.3 and 9.4.; provided, however, all registration rights granted under this Section 9 shall terminate on the second anniversary of the Closing Date. The initial Warrant Holder acknowledges that the Warrants will be issued to it in connection with the Notes, and, except to the extent of a prepayment under the Notes, the Warrant Price may only be paid through a transfer of outstanding principal and accrued interest under the Notes. Accordingly, notwithstanding any provision hereof to the contrary, the Warrant Holder agrees that it will not transfer all or any part of the Warrants to any Person unless (i) the holder of the Warrants so transferred is entitled to pay the Warrant Price in cash with respect thereto under the terms of this Agreement or (ii) the Holder of the Warrants so transferred is also the holder of a sufficient amount of outstanding principal 22 26 and interest under each of the Notes to permit payment of the Warrant Price with respect to such Warrants in accordance with the terms of this Agreement. 9.3 Required Registration. In the event the Warrant Holders have not sold all shares of Registrable Securities pursuant to a registration statement under the Securities Act, whether pursuant to Section 9.4 or an offer by DeepTech, within (1) one year following the Closing Date, the Required Holders may deliver to DeepTech a written request that DeepTech register any or all of the Registrable Securities. DeepTech shall, as soon as practicable following receipt of such request, use its best efforts to effect the registration under the Securities Act of all Registrable Securities specified in the request of such Warrant Holder. 9.4 Incidental Registration. If DeepTech at any time proposes to file on its behalf and/or on behalf of any of its security holders (the "Demanding Security Holders") a Registration Statement under the Securities Act on any form (other than Registration Statement on Form S-8 or any similar or successor form or any other registration statement relating to an offering of securities solely to DeepTech's existing security holders or employees) to register the offer and sale of its Common Stock for cash, it will give written notice to all Warrant Holders of Warrants or Warrant Stock at least twenty (20) days before the anticipated date of initial filing with the Commission of such Registration Statement, which notice shall set forth DeepTech's intention to effect such a registration, the class or series and number of equity securities proposed to be registered and the intended method of disposition of the securities proposed to be registered by DeepTech. The notice shall offer to include in such filing all of the Warrant Holder's Registrable Securities. Each Warrant Holder desiring to have Registrable Securities registered under this Section 9.4 shall advise DeepTech in writing within fifteen (15) days after the date of receipt of such offer from DeepTech, setting forth the amount of such Registrable Securities for which registration is requested. DeepTech shall thereupon include in such filing the number of shares of Registrable Securities for which registration is so requested, subject to the next sentence, and shall use its best efforts to effect registration under the Securities Act of such securities. If the managing underwriter of a proposed public offering shall advise DeepTech in writing that, in its opinion, the distribution of the Registrable Securities requested to be included in the registration concurrently with the securities being registered by DeepTech or any Demanding Security Holder would materially and adversely affect the distribution of such securities by DeepTech or such Demanding Security Holders, then all selling security holders, (but not DeepTech) shall reduce the amount of securities each 23 27 intended to distribute through such offering on a pro rata basis to the greatest aggregate amount which, in the opinion of such managing underwriter, would not materially and adversely affect the distribution of such securities; provided, however, in the event that such registration statement is filed (i) within one year from the Closing Date and (ii) covers Common Stock issued by DeepTech in connection with an acquisition, only the amount of securities that the Warrant Holder intended to distribute through such offering which is in excess of 25% of the total number of shares of issued and outstanding Warrant Stock held by the Warrant Holder shall be subject to such pro rata reduction. Nothing in this Section 9.4 shall preclude DeepTech from discontinuing the registration of its securities being effected on its behalf under this Section 9.4 at any time prior to the effective date of the registration relating thereto. 9.5 Registration Procedures. If DeepTech is required by the provisions of this Section 9 to use its best efforts to effect the registration of any of its securities under the Securities Act, DeepTech will, as expeditiously as possible: (a) prepare and file with the Commission a registration statement with respect to such securities (a "Registration Statement") and use its best efforts to cause such Registration Statement to become and remain effective for the period described in paragraph (b) below; (b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all securities covered by such Registration Statement until the earlier of such time as all of such securities have been disposed of in a public offering and the expiration of 30 days; (c) furnish to such selling security holders such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling security holders may reasonably request; (d) use its best efforts to register or qualify the securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States as each holder of such securities shall request (provided, however, DeepTech shall not be obligated to qualify as a foreign corporation to do business under the laws of any jurisdiction in which it is not then qualified or to file any general consent to service or process), and do such other reasonable acts and things 24 28 as may be required of it to enable such holder to consummate the disposition in such jurisdiction of the securities covered by such Registration Statement; (e) enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; and (f) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, but not later than 18 months after the effective date of the Registration Statement, an earnings statement covering the period of at least 12 months beginning with the first full month after the effective date of such Registration Statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act. It shall be a condition precedent to the obligation of DeepTech to take any action pursuant to this Section 9 in respect of the securities which are to be registered at the request of any Warrant Holder of Registrable Securities that such Warrant Holder shall furnish to DeepTech such information regarding the securities held by such Warrant Holder and the intended method of disposition thereof as DeepTech shall reasonably request and as shall be required in connection with the action taken by DeepTech. 9.6 Expenses. All expenses incurred in complying with Section 9, including, without limitation, all registration and filing fees (including all expenses incident to filing with the NASD), printing expenses, fees and disbursements of counsel for DeepTech, the reasonable fees and expenses of one counsel for the selling security holders (selected by the Person holding the plurality of the securities being registered), expenses of any special audits incident to or required by any such registration and expenses of complying with the securities or blue sky laws of any jurisdictions pursuant to Section 9.5(d) (all of such expenses shall be collectively referred to herein as "Registration Expenses"), shall be paid by DeepTech; provided, however, (a) DeepTech shall not be responsible for any discount or commission or cost reimbursement to any underwriter in respect of the securities sold by such Warrant Holder of Registrable Securities, (b) in the event that (i) the registration is to be effected pursuant to Section 9.3 and (ii) DeepTech has not filed in a timely manner all reports required to be filed under the Securities Exchange Act of 1934, as amended, during the twelve calendar months and any portion of a month immediately preceding the filing of the Registration Statement, the Warrant Holder shall pay to DeepTech, upon demand, $50,000 to reimburse DeepTech for any Registration Expenses and (c) in the event that (i) the registration is to be effected pursuant to Section 9.3, (ii) the Warrant Holders have had the opportunity to 25 29 include all shares of Registrable Securities in a Registration Statement pursuant to the Securities Act within one year following the Closing Date (and have not been required to reduce the number of shares to be sold pursuant to such Registration Statement pursuant to the second paragraph of Section 9.4) and (iii) DeepTech has filed in a timely manner all reports required to be filed under the Securities Exchange Act of 1934, as amended, during the twelve calendar months and any portion of a month immediately preceding the filing of the Registration Statement, DeepTech shall not be responsible for any Registration Expenses, and the Warrant Holders registering Registrable Securities shall reimburse and indemnify DeepTech for any Registration Expenses reasonably incurred by DeepTech in connection with such registration. 9.7 Indemnification and Contribution. (a) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Section 9, DeepTech shall indemnify and hold harmless the Warrant Holder of such Registrable Securities, such Warrant Holder's directors and officers, and each other Person (including each underwriter) who participated in the offering of such Registrable Securities and each other Person, if any, who controls such Warrant Holder or such participating Person within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which such Warrant Holder or any such director or officer or participating Person or controlling Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any alleged untrue statement of any material fact contained, on the effective date thereof, in any Registration Statement under which such securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto, or (ii) any alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and shall reimburse such Warrant Holder or such director, officer or participating Person or controlling Person for any legal or any other expenses reasonably incurred by such Warrant Holder or such director, officer or participating Person or controlling Person in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that DeepTech shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any alleged untrue statement or alleged omission made in such Registration Statement, preliminary prospectus, prospectus or amendment or supplement in reliance upon and in conformity with written information furnished to DeepTech by such Warrant Holder specifically for use therein and, in the case of any non-underwritten offering, to the extent that any such losses, claims, damages, liabilities or expenses arise out of or are based upon the fact that a current copy of the 26 30 prospectus was not sent or given to the Person asserting any such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the securities to such Person if it is determined that it was the responsibility of such Warrant Holder to provide such Person with a current copy of the prospectus and such current copy of the prospectus would have cured the defect giving rise to such losses, claims, damages, liabilities or expenses. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Warrant Holder or such director, officer or participating Person or controlling Person, and shall survive the transfer of such securities by such Warrant Holder. (b) Each Warrant Holder of any Registrable Securities, by acceptance thereof, agrees to indemnify and hold harmless DeepTech, its directors and officers and each other Person, if any, who controls DeepTech within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, to which DeepTech or any such director or officer or any such Person may become subject under the Securities Act or any other statute or at common law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) information in writing provided to DeepTech by such Warrant Holder of such Registrable Securities contained, on the effective date thereof, in any Registration Statement under which securities were registered under the Securities Act at the request of such Warrant Holder, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereto or (ii) the fact that a current copy of the prospectus was not sent to the Person asserting such losses, claims, damages, liabilities or expenses at or prior to the written confirmation of the sale of the securities with respect to such Person if it is determined that it was the responsibility of such Warrant Holder to provide such Person with a current copy of the prospectus and such current copy would have cured the defect giving rise to such losses, claims, damages, liabilities or expenses; provided, however, that such Warrant Holder's obligation under this Section 9.7(b) to indemnify and hold harmless DeepTech shall in no event exceed the damage attributable solely to the inclusion of such written information in such Registration Statement, preliminary prospectus, final prospectus, or amendment or supplement suffered by the Person or Persons whose claims gave rise to such losses, claims, damages or liabilities. (c) If the indemnification provided for in this Section 9 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the 27 31 indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well an any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party under this Section 9 as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 9.7(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this subsection (c), no Warrant Holder shall be required to contribute any amount in excess of the total amount received by it upon the sale of its securities pursuant to the Registration Statement to which the losses, claims, damages, liabilities and expenses referred to above relate. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The obligations of each of the Warrant Holders under this subsection (c) to contribute are several and not joint. (d) Conduct of Indemnification Proceedings. Any person or entity entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party after the receipt by the indemnified party of a written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which such indemnified party will claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under Section 9.7 hereof, except to the extent that the indemnifying party is actually prejudiced by such failure to give notice, and (ii) unless in such indemnified party's reasonable judgment a conflict of interest may exist between such indemnified and indemnifying parties with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If the indemnifying party is entitled to, and does, assume the defense of such claim, the indemnified party shall have the right to employ separate counsel and to participate in the defense thereof, but the 28 32 fees and expenses of such counsel shall be borne by the indemnified party. Whether or not such defense is assumed by the indemnifying party, the indemnifying party shall not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld). No indemnifying party shall be permitted to consent to the entry of any judgment or to enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel in any one jurisdiction for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. 9.8 Termination of Restrictions. Notwithstanding the foregoing provisions of Section 9, the restrictions imposed by this Section 9 upon the transferability of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) and the legend requirement of Section 9.1 shall terminate as to any particular Warrant or share of Warrant Stock or Restricted Common Stock (or Warrant Stock) (i) when and so long as such security shall have been registered under the Securities Act and disposed of pursuant thereto, or (ii) when the Warrant Holder thereof shall have delivered to DeepTech the written opinion of counsel to such Warrant Holder, which opinion shall be reasonably satisfactory to DeepTech, stating that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by Section 9 shall terminate as to any Warrants or any Restricted Common Stock, as hereinabove provided, the Warrant Holder thereof shall be entitled to receive from DeepTech, at the expense of DeepTech, a new Warrant Certificate or a new certificate representing such Common Stock, as the case may be, not bearing the restrictive legend set forth in Section 9.1. 9.9 Listing on Securities Exchange. So long as the Common Stock is traded on the Nasdaq National Market and if DeepTech shall list any shares of Common Stock on any other securities exchange, it will, at its expense, use its best efforts to list thereon, maintain and, when necessary, increase such listing of, all shares of Common Stock issued or, to the extent permissible under the applicable securities exchange rules, issuable upon the exercise of the Warrants so long as any shares of Common Stock shall be so listed during the Exercise Period. 29 33 9.10 Selection of Managing Underwriter. The managing underwriter or underwriters for any offering of Registrable Securities to be registered pursuant to Section 9.3 shall be an underwriter or underwriters of nationally recognized standing reasonably acceptable to DeepTech. 10. SUPPLYING INFORMATION DeepTech shall cooperate with each Warrant Holder of a Warrant and each Warrant Holder of Restricted Common Stock in supplying such information as may be reasonably necessary for such Warrant Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or Restricted Common Stock. 11. LOSS OR MUTILATION Upon receipt by DeepTech from any Warrant Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of a certificate representing Warrants or Warrant Stock and indemnity reasonably satisfactory to it (it being understood that the written agreement of the Warrant Holder or an Affiliate thereof shall be sufficient indemnity) and in case of mutilation upon surrender and cancellation hereof or thereof, DeepTech will execute and deliver in lieu hereof or thereof a new Warrant or new stock certificate as the case may be, of like tenor to such Warrant Holder; provided, in the case of mutilation, no indemnity shall be required if the certificate representing Warrants or Warrant Stock in identifiable form is surrendered to DeepTech for cancellation. 12. OFFICE OF DEEPTECH As long as any of the Warrants remain outstanding, DeepTech shall maintain an office or agency (which may be the principal executive offices of DeepTech) where the Warrants may be presented for exercise, registration or transfer, division or combination as provided in this Agreement. 13. APPRAISAL The determination of the Appraised Value per share of Common Stock shall be made by an investment banking firm of nationally recognized standing selected by DeepTech and acceptable to the Required Holders. If the investment banking firm selected by DeepTech is not acceptable to the Required Holders and DeepTech and 30 34 the Required Holders cannot agree on a mutually acceptable investment banking firm, then the Required Holders and DeepTech shall each choose one such investment banking firm and the respective chosen firms shall agree on another investment banking firm which shall make the determination. DeepTech shall retain, at its sole cost, such investment banking firm as may be necessary for the determination of Appraised Value required by the terms of this Agreement. 14. LIMITATION OF LIABILITY; NO RIGHTS AS STOCKHOLDER No provision hereof, in the absence of affirmative action by any Warrant Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of any Warrant Holder, shall give rise to any liability of such Warrant Holder for the purchase price of any Common Stock or as a stockholder of DeepTech, whether such liability is asserted by DeepTech or by creditors of DeepTech. Except as may otherwise be provided by law or by separate agreement between a Warrant Holder and DeepTech, no Warrant Holder, as such, shall be entitled to vote or be deemed the holder of Common Stock or any other securities (other than Warrants) of DeepTech which may at any time be issuable on the exercise hereof, nor shall anything contained herein be construed to confer upon any Warrant Holder the rights of a stockholder of DeepTech or the right to vote for the election of directors or upon any matters submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action or to receive notice of meetings or other actions affecting stockholders (except as provided herein), or to receive dividends or otherwise, until the Warrants shall have been exercised in accordance with the terms and conditions hereof. 15. MISCELLANEOUS 15.1 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of any Warrant Holder shall operate as a waiver of such right or otherwise prejudice such Warrant Holder's rights, powers or remedies. If DeepTech fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Agreement, DeepTech shall pay to the applicable Warrant Holders such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Warrant Holders in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 15.2 Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to 31 35 be made pursuant to the provisions of this Agreement shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, telex, telecopier or overnight air courier guaranteeing next day delivery, addressed as follows: (a) If to any Warrant Holder, at its last known address appearing on the books of DeepTech maintained for such purpose. (b) If to DeepTech at: DeepTech International Inc. 7400 Texas Commerce Tower 600 Travis Houston, Texas 77002 Attention: Thomas P. Tatham Telecopy No.: (713) 224-7574 with a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 711 Louisiana, Suite 1900 Houston, Texas 77002 Attention: Rick L. Burdick Telecopy No.: (713) 236-0822 or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, or three (3) Business Days after the same shall have been deposited in the United States mail. 15.3 Indemnification. Except to the extent otherwise provided in Section 9.7, DeepTech agrees to indemnify and hold harmless each Warrant Holder its officers, directors, employees, agents, and attorneys from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against such Warrant Holder relating to or arising out of (i) such Warrant Holder's exercise of the Warrants and/or ownership of any shares of Warrant Stock issued in consequence thereof, or (ii) any litigation to which such Warrant Holder is made a party in its capacity as a stockholder or Warrant Holder of DeepTech; provided, however, that DeepTech will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements (A) arise from any alleged violation by such Warrant 32 36 Holder of any law or regulation applicable to it or (B) are found in a final non-appealable judgment by a court to have resulted from such Warrant Holder's gross negligence, bad faith or willful misconduct or violation of law. The procedures to be followed for claims of indemnification under this Section 15.3 shall be as set forth in Section 9.7(d). 15.4 Remedies. Each Warrant Holder of Warrants and Warrant Stock, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under Section 9 of this Agreement. DeepTech agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of Section 9 of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. 15.5 Successors and Assigns. Subject to the provisions of Sections 3.1 and 9, this Agreement and the rights evidenced hereby shall inure to the benefit of and be binding upon the successor of DeepTech and the successors and assigns of any Warrant Holder. The provisions of this Agreement are intended to be for the benefit of all Warrant Holders from time to time of the Warrants and Warrant Stock, and shall be enforceable by any such Warrant Holder. 15.6 Amendment. This Agreement may be modified or amended or the provisions hereof waived with the written consent of DeepTech and the Required Holders, provided that no Warrant may be modified or amended to reduce the number of shares of Common Stock for which such Warrant is exercisable or to increase the price at which such shares may be purchased upon exercise of such Warrant (before giving effect to any adjustment as provided herein) or to accelerate the Expiration Date without the prior written consent of the Warrant Holder thereof and any amendment of Section 9 should also require the written consent of Warrant Holders of Warrants and/or Warrant Stock representing more than 50% of the total of (i) all shares of Warrant Stock then subject to purchase upon exercise of all Warrants then Outstanding and (ii) all shares of Warrant Stock then Outstanding. 15.7 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. 15.8 Headings. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement. 33 37 15.9 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 15.10 Consent to Jurisdiction and Venue. DEEPTECH AND EACH WARRANT HOLDER IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK OVER ANY SUIT, ACTION, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN THE EVENT DEEPTECH OR ANY WARRANT HOLDER SHALL CEASE TO MAINTAIN ITS PRINCIPAL PLACE OF BUSINESS IN THE STATE OF NEW YORK, IT SHALL IMMEDIATELY APPOINT CT CORPORATION SYSTEM, HAVING AN ADDRESS AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS AGENT UPON WHICH PROCESS MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS UPON SUCH AGENT, TOGETHER WITH NOTICE OF SUCH SERVICE GIVEN TO DEEPTECH OR A WARRANT HOLDER IN THE MANNER PROVIDED IN SECTION 15.2 HEREOF, SHALL BE DEEMED IN EVERY RESPECT (SUBJECT TO APPLICABLE LAW) EFFECTIVE SERVICE OF PROCESS UPON IT IN ANY SUIT, ACTION OR PROCEEDING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF EITHER DEEPTECH OR A WARRANT HOLDER TO SERVE ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN JURISDICTION OVER THE OTHER PARTY IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW. DEEPTECH AND EACH WARRANT HOLDER IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION, OR PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. 34 38 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed an of the date first above written. DEEPTECH INTERNATIONAL INC. By: ------------------------------------------ Printed Name: Donald V. Weir -------------------------------- Title: Chief Financial Officer --------------------------------------- --------------------------------------------- Thomas P. Tatham 35 39 (FORM OF WARRANT CERTIFICATE) EXHIBIT A TO Warrant Agreement THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF JANUARY 23, 1997, BETWEEN DEEPTECH INTERNATIONAL INC. AND THOMAS P. TATHAM, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF DEEPTECH AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that ____________________, or registered assigns thereof, is the restricted holder of 1,100,000 warrants (the "Warrants") to purchase shares of common stock of DeepTech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from DeepTech before 5:00 p.m., New York, New York time, on the Expiration Date, as such term is defined in the Warrant Agreement, one fully paid and nonassessable share of common stock of DeepTech ("Warrant Stock") at a price (the "Exercise Price") of $10.00 per share of Warrant Stock payable as set forth in the Warrant Agreement. The number of shares of Warrant Stock for which each Warrant is exercisable and the Exercise Price are each subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The holder hereof acknowledges that 300,000 of the Warrants represented by this Certificate may be exercisable only upon the occurence of certain events as set forth in the Warrant Agreement. DeepTech may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. 40 Warrant Certificates, when surrendered at the office of DeepTech by the registered holder hereof in person or by a legal representative duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of DeepTech at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as DeepTech may specify in writing to the registered holder of the Warrants evidenced hereby, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of January 23, 1997, between DeepTech and Thomas P. Tatham (the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of DeepTech and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. IN WITNESS WHEREOF, DeepTech has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: , 1997. --------------- DEEPTECH INTERNATIONAL INC. By: --------------------------------- Printed Name: ----------------------- Title: ------------------------------ (CORPORATE SEAL) ATTEST: - ------------------------- Secretary 41 EXHIBIT A TO WARRANT CERTIFICATE SUBSCRIPTION FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises Warrants for the purchase of shares of Common Stock of DeepTech International Inc. and herewith makes payment therefor $ in cash or ----- $ by reduction of an amount of outstanding principal and accrued ----- interest under the DeepTech Note or $ by transfer to DeepTech of an amount of outstanding principal and ----- accrued interest under the FPS Note, all at the price and on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement, and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of _________________________ __________________ and delivered to ________________________________________ whose address is ________________________________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in the Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable thereunder be delivered to the undersigned. - ----------------------------------------- (Name of Registered Owner) - ----------------------------------------- (Signature of Registered Owner) - ----------------------------------------- (Street Address) - ----------------------------------------- (City) (State) (Zip Code) 42 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below: Name and Address of Assignee: ----------------------------- ----------------------------- ----------------------------- ----------------------------- No. of Shares of Common Stock ------ and does hereby irrevocably constitute and appoint ____________________________ ___________ attorney-in-fact to register such transfer on the books of DeepTech International Inc. maintained for that purpose, with full power of substitution in the premises. Dated: -------------------------- Name: -------------------------- Signature: ------------------------ Witness: -------------------------- The assignee named above hereby agrees to purchase and take the attached Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of January 23, 1997, between DeepTech International Inc. and Thomas P. Tatham and agrees to be bound thereby. Dated: -------------------------- Name: -------------------------- Signature: ------------------------ 43 EXHIBIT B TO WARRANT AGREEMENT SHARES SUBJECT TO OUTSTANDING WARRANTS, OPTIONS, CONVERSION RIGHTS, ETC. DeepTech International Inc. 1. Convertible Senior Subordinated Note 87,938 shares o Warrant Exercise price of $3.41/share 2. Chemical Bank 250,000 shares o Exercise price of $4.00/share 3. Grant Sims 225,000 shares o Exercise price of $4.25/share 4. Citibank, N.A. 437,500 shares o Exercise price of $4.00/share 5. BBU 437,500 shares o Exercise price of $4.00/share
44 6. DLJ Warrants 1,182,872 shares o Effective conversion rate of $4.25/share 7. DLJ Conditional Warrants 178,575 shares o Effective conversion rate of $4.25/share 8. DTI Funding Warrants 137,079 shares o Effective conversion rate of $13.50/share 9. DTI Funding Conditional Warrants 33,460 shares o Effective conversion rate of $13.50/share 10. DeepTech Employee Stock Option Plan 465,000 shares o Effective conversion rate of $13.50/share 11. DeepTech Director Stock Options 300,000 shares --------- o Effective conversion rate of $10.00/share Total 3,734,924 shares =========
EX-4.13 4 WARRANT AGREEMENT - THOMAS P. TATHAM 1 EXHIBIT 4.13 AMENDMENT NO. 1 TO WARRANT AGREEMENT This Amendment No. 1 (the "Amendment") to that certain Warrant Agreement dated as of February 16, 1996 (the "Agreement") between DEEPTECH INTERNATIONAL INC., a Delaware corporation (the "Company"), and THOMAS P. TATHAM (the "Lender"), is entered into as of the 29th day of May, 1997, between the Company and the Lender. W I T N E S S E T H : WHEREAS, the Company and the Lender are parties to the Agreement; WHEREAS, the Lender is the registered owner of 100% of the Warrants; WHEREAS, in order to induce the Lender to exercise a portion of the Warrants, the Company agreed to extend the Expiration Date under the Agreement; NOW, THEREFORE, in consideration of the premises herein contained the parties hereto agree as follows: 1. Definitions. Unless otherwise defined herein, terms defined in the Agreement are used herein as therein defined. 2. Amendments. This Agreement is amended as follows: a. Section 1 of the Agreement. Section 1 of the Agreement is hereby amended by deleting "July 15, 1997" at the end of the definition of "Expiration Date" and replacing it with "July 15, 1998 or as otherwise defined in the Warrant Certificate." b. Exhibit A of the Agreement. Exhibit A of the Agreement is hereby amended as necessary to reflect the amendment in Section 2.(a) above. 3. No Other Amendments. Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms, without any waiver, amendment or modification to any provision thereof. 4. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 5. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 2 6. Headings. The headings used in this Amendment are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Amendment. 7. Entire Agreement. This Amendment and the Agreement, and the other agreements and certificates executed pursuant hereto and thereto, if any, constitute the entire agreement and supersede all prior (oral or written) or oral contemporaneous proposals or agreements, all previous negotiations and all other communications or understandings between the parties hereto and thereto with respect to the subject matter hereof and thereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. DEEPTECH INTERNATIONAL INC. By: -------------------------- Name: -------------------------- Title: -------------------------- --------------------------------- THOMAS P. TATHAM EX-4.14 5 AMEND. #1 TO WARRANT AGREEMENT - THOMAS P. TATHAM 1 Exhibit 4.14 AMENDMENT NO. 1 TO WARRANT AGREEMENT This Amendment No. 1 (the "Amendment") to that certain Warrant Agreement dated as of January 23, 1997 (the "Agreement") between DEEPTECH INTERNATIONAL INC., a Delaware corporation (the "Company"), and THOMAS P. TATHAM ("Tatham"), is entered into as of the 28 day of May, 1997, between the Company and Tatham. W I T N E S E T H : WHEREAS, the Company and Tatham are parties to the Agreement; WHEREAS, Tatham is the registered owner of 100% of the Warrants; WHEREAS, in order to induce Tatham to exercise a portion of the Warrants, the Company agreed to extend the Expiration Date under the Agreement; NOW, THEREFORE, in consideration of the premises herein contained the parties hereto agree as follows: 1. Definitions. Unless otherwise defined herein, terms defined in the Agreement are used herein as therein defined. 2. Amendments. This Agreement is amended as follows: a. Section 1 of the Agreement. Section 1 of the Agreement is hereby amended by deleting "November 7, 1997" at the end of the definition of "Expiration Date" and replacing it with "November 7, 1998 or as otherwise defined in the Warrant Certificate." b. Exhibit A of the Agreement. Exhibit A of the Agreement is hereby amended as necessary to reflect the amendment in Section 2.(a) above. 3. No Other Amendments. Except as expressly amended hereby, the Agreement shall remain in full force and effect in accordance with its terms, without any waiver, amendment or modification to any provision thereof. 4. Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 5. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 2 6. Headings. The headings used in this Amendment are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Amendment. 7. Entire Agreement. This Amendment and the Agreement, and the other agreements and certificates executed pursuant hereto and thereto, if any, constitute the entire agreement and supersede all prior (oral or written) or oral contemporaneous proposals or agreements, all previous negotiations and all other communications or understandings between the parties hereto and thereto with respect to the subject matter hereof and thereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written. DEEPTECH INTERNATIONAL INC. By: ------------------------------- Name: ------------------------------- Title: ------------------------------- --------------------------------------- THOMAS P. TATHAM EX-4.15 6 AMEND. #1 TO WARRANT AGREEMENT - THOMAS P. TATHAM 1 Exhibit 4.15 WARRANT CERTIFICATE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 16, 1996, BETWEEN DEEPTECH INTERNATIONAL INC. AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. 00-01A WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that Thomas P. Tatham, or registered assigns, is the registered holder of 1,000,000 Warrants (the "Warrants") to purchase shares of common stock of Deeptech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from the Company before 5:00 p.m., New York City time, on the Expiration Date (as such term is defined in the Warrant Agreement), being July 15, 1998, one fully paid and nonassessable share of common stock of the Company (a "Warrant Share") at a price (the "Exercise Price") of $4.50 per Warrant Share payable in lawful money of the United States of America (subject to adjustment as provided in Section 4 of the Warrant Agreement), or, as provided in Section 2.2 of the Warrant Agreement, by applying such amounts as credit for outstanding principal and interest due under certain debt to the Company, upon surrender of this Warrant Certificate, execution of the annexed Election to Purchase Form and payment of the Exercise Price at the office of the Company at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as the Company may specify in writing to the registered holder of the Warrants evidenced hereby. The Exercise Price is subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The Company may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. Warrant Certificates, when surrendered at the office of the Company at the above-mentioned office address or at the 2 2 Company's headquarters by the registered holder hereof in person or by a legal representative duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of the Company at the above-mentioned address, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holder of Warrants party thereto (as amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 3 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: May ___, 1997 DEEPTECH INTERNATIONAL INC. By --------------------------------- Title: (CORPORATE SEAL) ATTEST: - -------------------------- Secretary 4 EXHIBIT A TO WARRANT CERTIFICATE ELECTION TO PURCHASE FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises _____ Warrants for the purchase of ______ Shares of Common Stock of Deeptech International Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to ________________ whose address is ___________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - ------------------------------- (Name of Registered Owner) - ------------------------------- (Signature of Registered Owner) - ------------------------------- (Street Address) - ------------------------------- (City) (State) (Zip Code) 5 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock - ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint ________________ attorney-in-fact to register such transfer on the books of Deeptech International Inc. maintained for the purpose, with full power of substitution in the premises. Dated: ------------------------- Name: -------------------------- Signature: --------------------- Witness: ----------------------- The assignee named above hereby agrees to purchase and take the Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of February 16, 1996, between Deeptech International Inc. and the initial holder named therein and agrees to be bound thereby. Dated: ------------------------- Name: -------------------------- Signature: --------------------- EX-4.16 7 WARRANT CERTIFICATE - THOMAS P. TATHAM 1 Exhibit 4.16 WARRANT CERTIFICATE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 16, 1996, BETWEEN DEEPTECH INTERNATIONAL INC. AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. 00-07A WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that THOMAS P. TATHAM, or registered assigns, is the registered holder of 18,750 Warrants (the "Warrants") to purchase shares of common stock of Deeptech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from the Company before 5:00 p.m., New York City time, on the Expiration Date (as such term is defined in the Warrant Agreement), being July 15, 1998, one fully paid and nonassessable share of common stock of the Company (a "Warrant Share") at a price (the "Exercise Price") of $4.50 per Warrant Share payable in lawful money of the United States of America (subject to adjustment as provided in Section 4 of the Warrant Agreement), or, as provided in Section 2.2 of the Warrant Agreement, by the transfer of certain debt to the Company, upon surrender of this Warrant Certificate, execution of the annexed Election to Purchase Form and payment of the Exercise Price at the office of the Company at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as the Company may specify in writing to the registered holder of the Warrants evidenced hereby. The Exercise Price is subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The Company may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. Warrant Certificates, when surrendered at the office of the Company at the above-mentioned office address or at the Company's headquarters by the registered holder hereof in person or by a legal representative duly authorized in writing, may be 2 2 exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of the Company at the above-mentioned address, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holder of Warrants party thereto (as amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 3 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: May ___, 1997 DEEPTECH INTERNATIONAL INC. By --------------------------------- Title: (CORPORATE SEAL) ATTEST: - ------------------------------------- Its: --------------------------------- 4 EXHIBIT A TO WARRANT CERTIFICATE ELECTION TO PURCHASE FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises _____ Warrants for the purchase of ______ Shares of Common Stock of Deeptech International Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to ________________ whose address is ___________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - ------------------------------- (Name of Registered Owner) - ------------------------------- (Signature of Registered Owner) - ------------------------------- (Street Address) - ------------------------------- (City) (State) (Zip Code) 5 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock - ---------------------------- -----------------------------
and does hereby irrevocably constitute and appoint ________________ attorney-in-fact to register such transfer on the books of Deeptech International Inc. maintained for the purpose, with full power of substitution in the premises. Dated: ------------------------- Name: ------------------------- Signature: --------------------- Witness: ----------------------- The assignee named above hereby agrees to purchase and take the Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of February 16, 1996, between Deeptech International Inc. and the initial holder named therein and agrees to be bound thereby. Dated: --------------------------- Name: ---------------------------- Signature: ----------------------- EX-4.17 8 WARRANT CERTIFICATE - THOMAS P. TATHAM 1 Exhibit 4.17 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE SECURITIES LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER, IS AVAILABLE. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF JANUARY 23, 1997, BETWEEN DEEPTECH INTERNATIONAL INC. AND THOMAS P. TATHAM, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF DEEPTECH AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. 001A WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that Thomas P. Tatham, or registered assigns thereof, is the restricted holder of 825,000 warrants (the "Warrants") to purchase shares of common stock of DeepTech International Inc. ("DeepTech"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from DeepTech before 5:00 p.m., New York, New York time, on the Expiration Date (as such term is defined in the Warrant Agreement), being November 7, 1998, one fully paid and nonassessable share of common stock of DeepTech ("Warrant Stock") at a price (the "Exercise Price") of $10.00 per share of Warrant Stock payable as set forth in the Warrant Agreement. The number of shares of Warrant Stock for which each Warrant is exercisable and the Exercise Price are each subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The holder hereof acknowledges that 300,000 of the Warrants represented by this Certificate may be exercisable only upon the occurrence of certain events as set forth in the Warrant Agreement. DeepTech may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. Warrant Certificates, when surrendered at the office of DeepTech by the registered holder hereof in person or by a legal representative duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another 2 Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of DeepTech at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as DeepTech may specify in writing to the registered holder of the Warrants evidenced hereby, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of January 23, 1997, between DeepTech and Thomas P. Tatham (as amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of DeepTech and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 3 IN WITNESS WHEREOF, DeepTech has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: May ___, 1997 DEEPTECH INTERNATIONAL INC. By: -------------------------------- Donald V. Weir Chief Financial Officer (CORPORATE SEAL) ATTEST: - -------------------------------- Janet E. Sikes Secretary 4 EXHIBIT A TO WARRANT CERTIFICATE SUBSCRIPTION FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises Warrants for the purchase of shares of Common Stock of DeepTech International Inc. and herewith makes payment therefor $_____ in cash or $_____ by reduction of an amount of outstanding principal and accrued interest under the DeepTech Note or $_____ by transfer to DeepTech of an amount of outstanding principal and accrued interest under the FPS Note, all at the price and on the terms and conditions specified in the Warrant Certificate and the Warrant Agreement, and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of ____________________________________________ and delivered to _____ ___________________________________________ whose address is ________________________________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in the Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable thereunder be delivered to the undersigned. - ---------------------------------------- (Name of Registered Owner) - ---------------------------------------- (Signature of Registered Owner) - ---------------------------------------- (Street Address) - ---------------------------------------- (City) (State) (Zip Code) 5 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below: Name and Address of Assignee: ------------------------------ ------------------------------ ------------------------------ ------------------------------ No. of Shares of Common Stock ______ and does hereby irrevocably constitute and appoint________________________ _____________________ attorney-in-fact to register such transfer on the books of DeepTech International Inc. maintained for that purpose, with full power of substitution in the premises. Dated: -------------------------- Name: -------------------------- Signature: ----------------------- Witness: ----------------------- The assignee named above hereby agrees to purchase and take the attached Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of January 23, 1997, between DeepTech International Inc. and Thomas P. Tatham and agrees to be bound thereby. Dated: ---------------------------- Name: ---------------------------- Signature: ------------------------ EX-4.18 9 WARRANT CERTIFICATE - THOMAS P. TATHAM 1 EXHIBIT 4.18 WARRANT CERTIFICATE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 16, 1996, BETWEEN DEEPTECH INTERNATIONAL INC. AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. 00-03A WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that Thomas P. Tatham, or registered assigns, is the registered holder of 249,999 Warrants (the "Warrants") to purchase shares of common stock of DeepTech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from the Company before 5:00 p.m., New York City time, on the Expiration Date (as such term is defined in the Warrant Agreement), being July 15, 1998, one fully paid and nonassessable share of common stock of the Company (a "Warrant Share") at a price (the "Exercise Price") of $4.50 per Warrant Share payable in lawful money of the United States of America (subject to adjustment as provided in Section 4 of the Warrant Agreement), or, as provided in Section 2.2 of the Warrant Agreement, by the transfer of certain debt to the Company, upon surrender of this Warrant Certificate, execution of the annexed Election to Purchase Form and payment of the Exercise Price at the office of the Company at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as the Company may specify in writing to the registered holder of the Warrants evidenced hereby. The Exercise Price is subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The Company may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. Warrant Certificates, when surrendered at the office of the Company at the above-mentioned office address or at the Company's headquarters by the registered holder hereof in person or by a legal representative duly authorized in writing, may be 2 exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of the Company at the above-mentioned address, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holder of Warrants party thereto (as amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 3 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: May __, 1997 DEEPTECH INTERNATIONAL INC. By: ----------------------------------- Title: -------------------------------- (CORPORATE SEAL) ATTEST: - ----------------------------- Secretary 4 EXHIBIT A TO WARRANT CERTIFICATE ELECTION TO PURCHASE FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises ______ Warrants for the purchase of ________ Shares of Common Stock of DeepTech International Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _______________________ whose address is ________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - ----------------------------------- (Name of Registered Owner) - ----------------------------------- (Signature of Registered Owner) - ----------------------------------- (Street Address) - ----------------------------------- (City) (State) (Zip Code) 5 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ________________________ attorney-in-fact to register such transfer on the books of DeepTech International Inc. maintained for the purpose, with full power of substitution in the premises. Dated: --------------------------- Name: ---------------------------- Signature: ----------------------- Witness: ------------------------- The assignee named above hereby agrees to purchase and take the Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of February 16, 1996, between DeepTech International Inc. and the initial holder named therein and agrees to be bound thereby. Dated: --------------------------- Name: ---------------------------- Signature: ----------------------- EX-4.19 10 WARRANT CERTIFICATE - THOMAS P. TATHAM 1 Exhibit 4.19 WARRANT CERTIFICATE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND PRIVILEGES SPECIFIED IN THE WARRANT AGREEMENT, DATED AS OF FEBRUARY 16, 1996, BETWEEN DEEPTECH INTERNATIONAL INC. AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE BOUND THEREBY. No. 00-06A WARRANT CERTIFICATE DEEPTECH INTERNATIONAL INC. This Warrant Certificate certifies that THOMAS P. TATHAM, or registered assigns, is the registered holder of 75,000 Warrants (the "Warrants") to purchase shares of common stock of Deeptech International Inc. (the "Company"). Each Warrant entitles the holder, but only subject to the conditions set forth herein and in the Warrant Agreement referred to below, to purchase from the Company before 5:00 p.m., New York City time, on the Expiration date (as such term is defined in the Warrant Agreement), being July 15, 1998, one fully paid and nonassessable share of common stock of the Company (a "Warrant Share") at a price (the "Exercise Price") of $4.50 per Warrant Share payable in lawful money of the United States of America (subject to adjustment as provided in Section 4 of the Warrant Agreement), or, as provided in Section 2.2 of the Warrant Agreement, by the transfer of certain debt to the Company, upon surrender of this Warrant Certificate, execution of the annexed Election to Purchase Form and payment of the Exercise Price at the office of the Company at 7400 Texas Commerce Tower, 600 Travis, Houston, Texas 77002 or such other address as the Company may specify in writing to the registered holder of the Warrants evidenced hereby. The Exercise Price is subject to adjustment prior to the Expiration Date upon the occurrence of certain events as set forth in the Warrant Agreement. The Company may deem and treat the registered holders of the Warrants evidenced hereby as the absolute owner thereof (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and of any distribution to the holders hereof, and for all other purposes. Warrant Certificates, when surrendered at the office of the Company at the above-mentioned office address or at the Company's headquarters by the registered holder hereof in person or by a legal representative duly authorized in writing, may be 2 exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants. Upon due presentment for registration of transfer of this Warrant Certificate at the office of the Company at the above-mentioned address, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate to the transferee(s) and, if less than all the Warrants evidenced hereby are to be transferred, the registered holder hereof, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith. This Warrant Certificate is one of the Warrant Certificates referred to in the Warrant Agreement, dated as of February 16, 1996, between the Company and the initial holder of Warrants party thereto (as amended, the "Warrant Agreement"). Said Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and the holders, and in the event of any conflict between the terms of this Warrant Certificate and the provisions of the Warrant Agreement, the provisions of the Warrant Agreement shall control. 3 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed and its corporate seal to be impressed hereon and attached by its Secretary. Dated: May ___, 1997 DEEPTECH INTERNATIONAL INC. By ---------------------------------- Title: (CORPORATE SEAL) ATTEST: - ------------------------------------- Its: --------------------------------- 4 EXHIBIT A TO WARRANT CERTIFICATE ELECTION TO PURCHASE FORM [To be executed only upon exercise of Warrants] The undersigned registered owner of this Warrant Certificate irrevocably exercises _____ Warrants for the purchase of ______ Shares of Common Stock of Deeptech International Inc. and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant Certificate and the Warrant Agreement and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to ________________ whose address is ___________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant Certificate, that a new Warrant Certificate of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - ------------------------------ (Name of Registered Owner) - ------------------------------ (Signature of Registered Owner) - ------------------------------ (Street Address) - ------------------------------ (City) (State) (Zip Code) 5 EXHIBIT B TO WARRANT CERTIFICATE ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant Certificate hereby sells, assigns and transfers unto the assignee named below all of the rights of the undersigned under this Warrant Certificate, with respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint ________________ attorney-in-fact to register such transfer on the books of Deeptech International Inc. maintained for the purpose, with full power of substitution in the premises. Dated: ------------------------- Name: -------------------------- Signature: --------------------- Witness: ----------------------- The assignee named above hereby agrees to purchase and take the Warrant Certificate pursuant to and in accordance with the terms and conditions of the Warrant Agreement, dated as of February 16, 1996, between Deeptech International Inc. and the initial holder named therein and agrees to be bound thereby. Dated: --------------------------- Name: ---------------------------- Signature: ----------------------- EX-5.1 11 OPINION OF AKIN, GUMP, STRAUSS, HAUER & FELD LLP 1 EXHIBIT 5.1 [AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD] June 2, 1997 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: DeepTech International Inc. Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as counsel to DeepTech International Inc. (the "Company") in connection with the preparation for filing with the Securities and Exchange Commission of a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"). The Registration Statement relates to 9,506,363 shares (the "Shares") of the Company's common stock, par value $0.01 per share ("Common Stock") and warrants to purchase 4,060,695 shares of Common Stock (the "Warrants," and collectively with the Shares, the "Securities"). The Securities are being registered under the Securities Act on behalf of Selling Stockholders who have acquired such Securities in certain private placements, other transactions not involving a public offering or who otherwise do not have an available exemption from registration, in order to permit the public sale or other public distribution of the Securities. We have examined such corporate records, documents, instruments and certificates of the Company and have received such representations from the officers and directors of the Company and have reviewed such questions of law as we have deemed necessary, relevant or appropriate to enable us to render the opinion expressed herein. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents, instruments, records and certificates submitted to us as originals. Based upon such examination and review and upon the representations made to us by the officers and directors of the Company, we are of the opinion that the Securities have been duly and validly authorized and, assuming that the Shares to be issued upon the exercise of Warrants are issued for an amount at least equal to their par value, will, upon issuance pursuant to the terms and conditions of the respective agreements and arrangements pursuant to which the Warrants were issued, be validly issued, fully paid and nonassessable. This firm consents to the filing of this opinion as an exhibit to the Registration Statement and to the reference to the firm in any documents incorporated by reference in the Registration Statement. Very truly yours, AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. -----END PRIVACY-ENHANCED MESSAGE-----