Contract
Exhibit
4.3
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER
SAID
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO TRUE NORTH ENERGY CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Right
to
Purchase up to 976,353 Shares of Common Stock of
TRUE
NORTH ENERGY CORPORATION
(subject
to adjustment as provided herein)
COMMON
STOCK PURCHASE WARRANT
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No.
_________________
|
Issue
Date: September 18, 2007
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TRUE
NORTH ENERGY CORPORATION, a corporation organized under the laws of the State
of
Nevada (the “Company”),
hereby certifies that, for value received, VALENS OFFSHORE SPV II, CORP.,
or
assigns (the “Holder”),
is
entitled, subject to the terms set forth below, to purchase from the Company
(as
defined herein) from and after the Issue Date of this Warrant and at any
time or
from time to time before 5:00 p.m., New York time, through the close of business
September 18, 2012 (the “Expiration
Date”),
up to
976,353 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.0001 par value per share, at the applicable Exercise Price per
share (as defined below). The number and character of such shares of Common
Stock and the applicable Exercise Price per share are subject to adjustment
as
provided herein.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Common
Stock”
includes (i) the Company’s Common Stock, par value $0.0001 per share; and (ii)
any other securities into which or for which any of the securities described
in
the preceding clause (i) may be converted or exchanged pursuant to a plan
of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(b) The
term
“Company”
shall
include True North Energy Corporation and any person or entity which shall
succeed, or assume the obligations of, True North Energy Corporation
hereunder.
(c) The
“Exercise
Price”
applicable under this Warrant shall be the lesser of:
(i) a
price
of $0.48; or
(ii) if
the
transactions consummated by that Purchase and Sale Agreement (the “Purchase
and Sale Agreement”)
to be
entered into on or about October 1, 2007 among Angel LLC, CN Energy LLC,
Xxxxxxx
Energy Company, LLC, Fuel Exploration, LLC, MHBR Energy, LLC, Rocky Mountain
Rig
LLC (collectively, the “Sellers”)
and
True North Energy Corporation shall have been consummated, a price equal
to the
then fully diluted price per share of those shares of Common Stock issued
by the
Company to the Sellers in connection with the Purchase and Sale
Agreement.
(d) The
term
“Other
Securities”
refers
to any stock (other than Common Stock) and other securities of the Company
or
any other person (corporate or otherwise) which the holder of the Warrant
at any
time shall be entitled to receive, or shall have received, on the exercise
of
the Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in replacement
of
Common Stock or Other Securities pursuant to Section 4 or
otherwise.
(e) The
term
“Purchase
Agreement”
means
the Securities Purchase Agreement dated as of the date hereof among the Holder,
all other Purchasers as defined thereunder, Valens U.S. SPV I, LLC, as agent
for
such Purchasers, True North Energy Corporation and the Company, as amended,
modified, restated and/or supplemented from time to time.
1. Exercise
of Warrant.
1.1. Number
of Shares Issuable upon Exercise.
From
and after the date hereof through and including the Expiration Date, the
Holder
shall be entitled to receive, upon exercise of this Warrant in whole or in
part,
by delivery of an original or fax copy of an exercise notice in the form
attached hereto as Exhibit A (the “Exercise
Notice”),
shares of Common Stock of the Company, subject to adjustment pursuant to
Section
4.
1.2. Fair
Market Value.
For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination
Date”)
shall
mean:
(a) If
the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or Capital Market of The Nasdaq
Stock Market, Inc. (“Nasdaq”),
then
the closing or last sale price, respectively, reported for the last business
day
immediately preceding the Determination Date.
(b) If
the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD Over the Counter
Bulletin Board, then the mean of the average of the closing bid and asked
prices
reported for the last business day immediately preceding the Determination
Date.
(c) Except
as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of
persons qualified by education and training to pass on the matter to be
decided.
2
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant
to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share
in
respect of the Common Stock in liquidation under the charter, assuming for
the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination
Date.
1.3. Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the holder hereof acknowledge in writing its continuing obligation to afford
to
such holder any rights to which such holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant. If the holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such
rights.
1.4. Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
2. Procedure
for Exercise.
2.1. Delivery
of Stock Certificates, Etc., on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of
this
Warrant shall be deemed to be issued to the Holder as the record owner of
such
shares as of the close of business on the date on which this Warrant shall
have
been surrendered and payment made for such shares in accordance herewith.
As
soon as practicable after the exercise of this Warrant in full or in part,
and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will
cause
to be issued in the name of and delivered to the Holder, or as such Holder
(upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates
for
the number of duly and validly issued, fully paid and nonassessable shares
of
Common Stock (or Other Securities) to which such Holder shall be entitled
on
such exercise, plus, in lieu of any fractional share to which such holder
would
otherwise be entitled, cash equal to such fraction multiplied by the then
Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such
Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.
3
2.2. Exercise.
Payment
may be made either in cash by wire transfer of immediately available funds
or by
certified or official bank check payable to the order of the Company equal
to
the applicable aggregate Exercise Price, for the number of Common Shares
specified in such Exercise Notice (as such exercise number shall be adjusted to
reflect any adjustment in the total number of shares of Common Stock issuable
to
the Holder per the terms of this Warrant) and the Holder shall thereupon
be
entitled to receive the number of duly authorized, validly issued, fully-paid
and non-assessable shares of Common Stock (or Other Securities) determined
as
provided herein.
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1. Reorganization,
Consolidation, Merger, Etc.
If
there occurs any capital reorganization or any reclassification of the Common
Stock of the Company, the consolidation or merger of the Company with or
into
another person (other than a merger or consolidation of the Company in which
the
Company is the continuing entity and which does not result in any reorganization
or reclassification of its outstanding Common Stock) or the sale or conveyance
of all or substantially all of the assets of the Company to another person,
then, as a condition precedent to any such reorganization, reclassification,
consolidation, merger, sale or conveyance, the Holder will be entitled to
receive upon surrender of the Warrant to the Company (a) to the extent there
are
cash proceeds resulting from the consummation of such reorganization,
reclassification, consolidation, merger, sale or conveyance, in exchange
for
such Warrant, cash in an amount equal to the cash proceeds that would have
been
payable to the Holder had the Holder exercised such Warrant immediately prior
to
the consummation of such reorganization, reclassification, consolidation,
merger, sale or conveyance, less the aggregate Exercise Price payable upon
exercise of the Warrant, and (b) to the extent that the Holder would be entitled
to receive Common stock (or Other Securities) (in addition to or in lieu
of cash
in connection with any such reorganization, reclassification, consolidation,
merger, sale or conveyance), the same kind and amounts of securities or other
assets, or both, that are issuable or distributable to the holders of
outstanding Common Stock (or Other Securities) of the Company with respect
to
their Common Stock (or Other Securities) upon such reorganization,
reclassification, consolidation, merger, sale or conveyance, as would have
been
deliverable to the Holder had the Holder exercised such Warrant immediately
prior to the consummation of such reorganization, reclassification,
consolidation, merger, sale or conveyance less an amount of such securities
having a value equal to the aggregate Exercise Price payable upon exercise
of
the Warrant.
3.2. Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently
with
any distributions made to holders of its Common Stock, shall at its expense
deliver or cause to be delivered to the Holder the stock and other securities
and property (including cash, where applicable) receivable by the Holder
pursuant to Section 3.1, or, if the Holder shall so instruct the Company,
to a
bank or trust company specified by the Holder and having its principal office
in
New York, NY as trustee for the Holder (the “Trustee”).
3.3. Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation
or
merger or the effective date of dissolution following any such transfer,
as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.
4
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) issue additional shares of the Common Stock
as
a dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company (b) subdivide its outstanding shares of Common
Stock, or (c) combine its outstanding shares of the Common Stock into a
smaller number of shares of the Common Stock, then, in each such event, the
Exercise Price shall, simultaneously with the happening of such event, be
adjusted by multiplying the then Exercise Price by a fraction, the numerator
of
which shall be the number of shares of Common Stock outstanding immediately
prior to such event and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after such event, and the product
so
obtained shall thereafter be the Exercise Price then in effect. The Exercise
Price, as so adjusted, shall be readjusted in the same manner upon the happening
of any successive event or events described herein in this Section 4. The
number
of shares of Common Stock that the Holder shall thereafter, on the exercise
hereof as provided in Section 1, be entitled to receive shall be adjusted
to a
number determined by multiplying the number of shares of Common Stock that
would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would otherwise (but for the provisions of this Section 4) be in effect,
and (b)
the denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or
receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed
to
be outstanding, and (c) the Exercise Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately
prior
to such adjustment or readjustment and as adjusted or readjusted as provided
in
this Warrant. The Company will forthwith mail a copy of each such certificate
to
the Holder and any Warrant agent of the Company (appointed pursuant to Section
11 hereof).
5
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance
and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”)
in
whole or in part. On the surrender for exchange of this Warrant, with the
Transferor’s endorsement in the form of Exhibit B attached hereto (the
“Transferor
Endorsement Form”)
and
together with evidence reasonably satisfactory to the Company demonstrating
compliance with applicable securities laws, which shall include, without
limitation, the provision of a legal opinion from the Transferor’s counsel (at
the Company’s expense) that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense (but
with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in
such
Transferor Endorsement Form (each a “Transferee”),
calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face or faces of the Warrant so surrendered
by
the Transferor.
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in
the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
9. Registration
Rights.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of the date hereof, as the same may
be
amended, modified and/or supplemented from time to time.
10. Maximum
Exercise.
Notwithstanding anything herein to the contrary, in no event shall the Holder
be
entitled to exercise any portion of this Warrant in excess of that portion
of
this Warrant upon exercise of which the sum of (a) the number of shares of
Common Stock beneficially owned by the Holder and its Affiliates (other than
shares of Common Stock which may be deemed beneficially owned through the
ownership of the unexercised portion of the Warrant or the unexercised or
unconverted portion of any other security of the Holder subject to a limitation
on conversion analogous to the limitations contained herein) and (b) the
number
of shares of Common Stock issuable upon the exercise of the portion of this
Warrant with respect to which the determination of this proviso is being
made,
would result in beneficial ownership by the Holder and its Affiliates of
any
amount greater than 9.99% of the then outstanding shares of Common Stock
(whether or not, at the time of such exercise, the Holder and its Affiliates
beneficially own more than 9.99% of the then outstanding shares of Common
Stock). As used herein, the term “Affiliate”
means
any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
person or entity, as such terms are used in and construed under Rule 144
under
the Securities Act. For purposes of the second preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except
as
otherwise provided in clause (a) of such sentence. For any reason at any
time,
upon written or oral request of the Holder, the Company shall within one
(1)
business day confirm orally and in writing to the Holder the number of shares
of
Common Stock outstanding as of any given date. The limitations set forth
herein (x) may be waived by the Holder upon provision of no less than sixty-one
(61) days prior written notice to the Company and (y) shall automatically
become
null and void following notice to the Company upon the occurrence and during
the
continuance of an Event of Default (as defined in the Notes referred to and
as
defined in the purchase Agreement).
6
11. Warrant
Agent.
The
Company may, by written notice to the each Holder of the Warrant, appoint
an
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of
the
foregoing, and thereafter any such issuance, exchange or replacement, as
the
case may be, shall be made at such office by such agent.
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books of the Company, the Company may
treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Notices,
Etc.
All
notices and other communications from the Company to the Holder shall be
mailed
by first class registered or certified mail, postage prepaid, at such address
as
may have been furnished to the Company in writing by such Holder or, until
any
such Holder furnishes to the Company an address, then to, and at the address
of,
the last Holder who has so furnished an address to the Company.
14. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. THIS WARRANT
SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT
ONLY
IN THE STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE
OF
NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION
AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing
this Warrant on behalf of the Company agree to submit to the jurisdiction
of
such courts and waive trial by jury. The prevailing party shall be entitled
to
recover from the other party its reasonable attorneys’ fees and costs. In the
event that any provision of this Warrant is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any such provision
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant. The headings in
this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of
any
other provision hereof. The Company acknowledges that legal counsel participated
in the preparation of this Warrant and, therefore, stipulates that the rule
of
construction that ambiguities are to be resolved against the drafting party
shall not be applied in the interpretation of this Warrant to favor any party
against the other party.
[Signatures
Appear on the Following Page]
7
Exhibit
4.3
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
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TRUE
NORTH ENERGY CORPORATION
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WITNESS:
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| /s/ Xxxx Xxxxxxx | ||
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| By: | /s/ Xxxx X. Folnovic | |
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Name:
Xxxx X. Folnovic
Title:
President and Chief Executive
Officer
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Exhibit
4.3
EXHIBIT
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise Of Warrant)
TO: True
North Energy Corporation
Attention: Chief
Financial Officer
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by such Warrant.
The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Warrant, which is $___________.
Such
payment takes the form of $__________
in lawful money of the United States; and/or
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to ____________________________ whose address is
_____________________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of the Common Stock under the Securities Act of
1933,
as amended (the “Securities
Act”)
or
pursuant to an exemption from registration under the Securities
Act.
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Dated:
______________________
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__________________________________________________ |
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(Signature
must conform to name of holder as specified on the face of the
Warrant)
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Address:_____________________________________
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_____________________________________
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_____________________________________
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Exhibit
4.3
EXHIBIT
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
Be
Signed Only On Transfer Of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of True North Energy Corporation into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of True North
Energy Corporation with full power of substitution in the premises.
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Transferees
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Address
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Percentage
Transferred
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Number
Transferred
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Dated:
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(Signature
must conform to name of holder as
specified
on the face of the Warrant)
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|
Address:
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SIGNED
IN THE PRESENCE OF:
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(Name)
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ACCEPTED
AND AGREED:
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[TRANSFEREE]
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(Name)
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