NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES AS PERMITTED BY THE SECURITIES PURCHASE
AGREEMENT PURSUANT TO WHICH THE SECURITIES WERE ISSUED.
COMMON STOCK PURCHASE WARRANT NO. 1
To Purchase Shares of Common Stock of
MAVERICK OIL AND GAS, INC.
This COMMON STOCK PURCHASE WARRANT (this "Warrant") certifies
that, for value received, TRIDENT GROWTH FUND, L.P., a Delaware limited
partnership (the "Holder"), is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth, at any
time on or after the date hereof, October 26, 2005 (the "Initial Exercise
Date") and on or prior to the close of business on the fifth anniversary of
the Initial Exercise Date (the "Termination Date"), to subscribe for and
purchase from MAVERICK OIL AND GAS, INC., a Nevada corporation (the
"Company"), up to 500,000 shares of common stock, par value $.001 per
share, of the Company (the "Common Stock"), subject to adjustment herein
(the "Warrant Shares") provided, however, for every 150 day period
following the Initial Exercise Date that the Debenture remains unpaid in
full and outstanding, the Holder shall receive the right to subscribe for
and purchase an additional 500,000 shares of Common Stock in accordance
with the terms set forth herein.
The purchase price of one share of Common Stock under this
Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "Purchase Agreement"), of even date herewith,
entered into by and among the Company and the Purchasers signatory thereto.
Section 2. Exercise.
a) Exercise of Warrant. Exercise of the purchase rights
represented by this Warrant may be made at any time or times on or
after the Initial Exercise Date and on or before the Termination Date
(each, an "Exercise Date") by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed hereto
(or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of such
Holder appearing on the books of the Company); provided, however,
within 5 Business Days of the date said Notice of Exercise is delivered
to the Company, the Holder shall have surrendered this Warrant to the
Company and the Company shall have received payment of the aggregate
Exercise Price of the shares thereby purchased by wire transfer or
cashier's check drawn on a United States bank.
b) Exercise Price. The Exercise Price (so called herein) of
each share of Common Stock under this Warrant shall be equal to the
lesser of:
(i) the price per share of the Common Stock and
Common Stock Equivalents sold to any Person
in the first Qualifying Transaction to be
consummated following the Initial Exercise
Date; or
(ii) $1.00 per share.
c) Cashless Exercise. If at any time after one year from the
date of issuance of this Warrant there is no effective Registration
Statement registering the resale of the Warrant Shares by the Holder,
then this Warrant may also be exercised at such time by means of a
"cashless exercise" in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
(A) = the price of said Common Stock determined by
reference to the last reported sale price for the
Common Stock on such day on the principal securities
exchange on which the Common Stock is listed or
admitted to trading or if no such sale takes place on
such date, the average of the closing bid and asked
prices thereof as officially reported, or, if not so
listed or admitted to trading on any securities
exchange, the last sale price for the Common Stock on
the National Association of Securities Dealers
national market system on such date, or, if there
shall have been no trading on such date or if the
Common Stock shall not be listed on such system, the
average of the closing bid and asked prices in the
over-the-counter market as furnished by any NASD
member firm selected from time to time by the Company
for such purpose or, if the Common Stock is not
traded, then such price as is reasonably determined by
the Company's Board of Directors;
(B) = the Exercise Price of this Warrant, as adjusted; and
(X) = the number of Warrant Shares issuable upon exercise
of this Warrant in accordance with the terms of this
Warrant by means of a cash exercise rather than a
cashless exercise.
Notwithstanding anything herein to the contrary, on the
Termination Date, this Warrant shall be automatically exercised via
cashless exercise pursuant to this Section 2(c).
d) Exercise Limitations. At any time after the Common Stock
is registered under Section 12 of the Exchange Act, the Holder shall
not have the right to exercise any portion of this Warrant, pursuant to
Section 2(c) or otherwise, to the extent that after giving effect to
such issuance after exercise, the Holder (together with the Holder's
affiliates), as set forth on the applicable Notice of Exercise, would
beneficially own in excess of 4.99% (or as applicable, 9.99%) of the
number of shares of the Common Stock outstanding immediately after
giving effect to such issuance. For purposes of the foregoing
determination, the number of shares of Common Stock beneficially owned
by the Holder and its affiliates shall include the number of shares of
Common Stock issuable upon such exercise of this Warrant less the
number of shares of Common Stock which would be issuable upon (A)
exercise of the remaining, nonexercised portion of this Warrant and (B)
exercise or conversion of the unexercised or unconverted portion of any
other Securities (including, without limitation, any other Debentures
or Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the
Holder. Except as set forth in the preceding sentence, for purposes of
this Section 2(d), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Exchange Act. To the extent that
the limitation contained in this Section 2(d) applies, the
determination of whether this Warrant is exercisable (in relation to
other securities owned by the Holder) and of which a portion of this
Warrant is exercisable shall be in the sole discretion of such Holder.
For purposes of this Section 2(d), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number
of outstanding shares of Common Stock as reflected in (x) Schedule
3.1(g) to the Purchase Agreement, (y) a more recent
public announcement by the Company or (z) any other notice by the
Company or the Company's Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral request of
the Holder, the Company shall within two Business Days confirm orally
and in writing to the Holder the number of shares of Common Stock then
outstanding. The provisions of this Section 2(d) may be waived by the
Holder upon, at the election of the Holder, not less than 61 days'
prior notice to the Company, and the provisions of this Section 2(d)
shall continue to apply until such 61st day (or such later date, as
determined by the Holder, as may be specified in such notice of
waiver).
e) Mechanics of Exercise.
i. Authorization of Warrant Shares. The Company
covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this
Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than
taxes in respect of any transfer occurring contemporaneously
with such issue). The Company covenants that during the
period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon
the exercise of any purchase rights under this Warrant. The
Company further covenants that its issuance of this Warrant
shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to
execute and issue the necessary certificates for the Warrant
Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as
may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable
law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed.
ii. Delivery of Certificates Upon Exercise.
Certificates for shares purchased hereunder shall be
transmitted by the transfer agent of the Company to the
Holder by crediting the account of the Holder's prime broker
with the Depository Trust Company through its Deposit
Withdrawal Agent Commission ("DWAC") system if the Company is
a participant in such system, and otherwise by physical
delivery to the address specified by the Holder in the Notice
of Exercise within 3 Business Days from the delivery to the
Company of the Notice of Exercise Form, surrender of this
Warrant and payment of the aggregate Exercise Price as set
forth above ("Warrant Share Delivery Date"). This Warrant
shall be deemed to have been exercised on the date the
Exercise Price is received by the Company. The Warrant Shares
shall be deemed to have been issued, and 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 Warrant has been exercised by
payment to the Company of the Exercise Price and all taxes
required to be paid by the Holder, if any, pursuant to
Section 2(e)(vii) prior to the issuance of such shares, have
been paid.
iii. Delivery of New Warrants Upon Exercise. If
this Warrant shall have been exercised in part, the Company
shall, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a
new Warrant evidencing the rights of Holder to purchase the
unpurchased Warrant Shares called for by this Warrant, which
new Warrant shall in all other respects be identical with
this Warrant.
iv. Rescission Rights. If the Company fails to
cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Warrant Shares
pursuant to this Section 2(e)(iv) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind
such exercise.
v. Compensation for Buy-In on Failure to Timely
Deliver Certificates Upon Exercise. In addition to any other
rights available to the Holder, if while the Common Stock is
registered under the Exchange Act, the Company fails to cause
its transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to an
exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to
purchase (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated
receiving upon such exercise (a "Buy-In"), then the Company
shall (1) pay in cash to the Holder the amount by which (x)
the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A)
the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at
issue times (B) the price at which the sell order giving rise
to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the
Warrant and equivalent number of Warrant Shares for which
such exercise was not honored or deliver to the Holder the
number of shares of Common Stock that would have been issued
had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder
purchases Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to an attempted
exercise of shares of Common Stock with an aggregate sale
price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the
Company shall be required to pay the Holder $1,000. The
Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In,
together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall
limit a Holder's right to pursue any other remedies available
to it hereunder, at law or in equity including, without
limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to
timely deliver certificates representing shares of Common
Stock upon exercise of the Warrant as required pursuant to
the terms hereof.
vi. No Fractional Shares or Scrip. No fractional
shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. As to any fraction
of a share which Holder would otherwise be entitled to
purchase upon such exercise, the Company shall round such
fractional share up to the next whole number.
vii. Charges, Taxes and Expenses. Issuance of
certificates for Warrant Shares shall be made without charge
to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by
the Company, and such certificates shall be issued in the
name of the
Holder or in such name or names as may be directed by the
Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto
duly executed by the Holder; and the Company may require, as
a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.
viii. Closing of Books. The Company will not
close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the
terms hereof.
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time
while this Warrant is outstanding: (A) pays a stock dividend or
otherwise make a distribution or distributions on shares of its Common
Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not
include any shares of Common Stock issued by the Company pursuant to
this Warrant), (B) subdivides outstanding shares of Common Stock into a
larger number of shares, (C) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number
of shares, or (D) issues by reclassification of shares of the Common
Stock any shares of capital stock of the Company, then in each case the
Exercise Price shall be multiplied by a fraction of which the numerator
shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
after such event and the number of shares issuable upon exercise of
this Warrant shall be proportionately adjusted. Any adjustment made
pursuant to this Section 3(a) shall become effective immediately after
the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision,
combination or re-classification.
b) Subsequent Equity Sales. If the Company at any time while
this Warrant is outstanding, shall offer, sell, grant any option to
purchase or offer, sell or grant any right to reprice its securities,
or otherwise dispose of or issue (or announce any offer, sale, grant or
any option to purchase or other disposition) any Common Stock or Common
Stock Equivalents entitling any Person to acquire shares of Common
Stock, at an effective price per share less than the then Exercise
Price (such lower price, the "Base Share Price" and such issuances
collectively, a "Dilutive Issuance"), as adjusted hereunder (if the
holder of the Common Stock or Common Stock Equivalents so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which is
issued in connection with such issuance, be entitled to receive shares
of Common Stock at an effective price per share which is less than the
Exercise Price, such issuance shall be deemed to have occurred for less
than the Exercise Price),
then, the Exercise Price shall be reduced to equal the Base Share Price
and the number of Warrant Shares issuable hereunder shall be increased
such that the aggregate Exercise Price payable hereunder, after taking
into account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment. Such adjustment
shall be made whenever such Common Stock or Common Stock Equivalents
are issued. The Company shall notify the Holder in writing, no later
than the Business Day following the issuance of any Common Stock or
Common Stock Equivalents subject to this section, indicating therein
the applicable issuance price, or of applicable reset price, exchange
price, conversion price and other pricing terms (such notice the
"Dilutive Issuance Notice"). For purposes of clarification, whether or
not the Company provides a Dilutive Issuance Notice pursuant to this
Section 3(b), upon the occurrence of any Dilutive Issuance, after the
date of such Dilutive Issuance the Holder is entitled to receive a
number of Warrant Shares based upon the Base Share Price regardless of
whether the Holder accurately refers to the Base Share Price in the
Notice of Exercise.
c) Pro Rata Distributions. If the Company, at any time prior
to the Termination Date, shall distribute to all holders of Common
Stock (and not to Holders of the Warrants) evidences of its
indebtedness or assets or rights or warrants to subscribe for or
purchase any security other than the Common Stock (which shall be
subject to Section 3(b)), then in each such case the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of
which the denominator shall be the closing bid price of the Common
Stock on the then principal Trading Market determined as of the record
date mentioned above (if the closing bid price of the Common Stock on
the then principal Trading Market shall then be determinable and
otherwise the fair market value per share as determined by the Board of
Directors in good faith, and of which the numerator shall be such
closing bid price of the Common Stock on the then principal Trading
Market on such record date less the then per share fair market value at
such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the
Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided
to the Holders of the portion of assets or evidences of indebtedness so
distributed or such subscription rights applicable to one share of
Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record date mentioned above.
d) Fundamental Transaction. If, at any time while this
Warrant is outstanding, there occurs a Fundamental Transaction, then,
upon any subsequent conversion of this Warrant, the Holder shall have
the right to receive, for each Warrant Share that would have been
issuable upon such exercise absent such Fundamental Transaction, at the
option of the Holder, (a) upon exercise of this Warrant, the number of
shares of Common Stock of the successor or acquiring corporation or of
the Company, if it is the surviving corporation, and Alternate
Consideration 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 this Warrant
is exercisable immediately prior to such event or (b) if the Company is
acquired in an all cash transaction, cash equal to the value of this
Warrant as determined by the difference
between the applicable Exercise Price and the amount of cash paid per
share to the shareholders of the Company (the "Alternate
Consideration"). For purposes of any such exercise, the determination
of the Exercise Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among
the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to
the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the
Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the
Holder a new warrant consistent with the foregoing provisions and
evidencing the Holder's right to exercise such warrant into Alternate
Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of
this Section 3(d) and insuring that this Warrant (or any such
replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction.
e) Exempt Issuance. Notwithstanding the foregoing, no
adjustments, Alternate Consideration nor notices shall be made, paid or
issued under this Section 3 in respect of an Exempt Issuance.
f) Calculations. All calculations under this Section 3 shall
be made to the nearest cent or the nearest 1/100th of a share, as the
case may be. The number of shares of Common Stock outstanding at any
given time shall not includes shares of Common Stock owned or held by
or for the account of the Company, and the description of any such
shares of Common Stock shall be considered on issue or sale of Common
Stock. For purposes of this Section 3, the number of shares of Common
Stock deemed to be issued and outstanding as of a given date shall be
the sum of the number of shares of Common Stock (excluding treasury
shares, if any) issued and outstanding.
g) Voluntary Adjustment By Company. The Company may at any
time during the term of this Warrant reduce the then current Exercise
Price to any amount and for any period of time deemed appropriate by
the Board of Directors of the Company.
h) Intentionally Omitted.
i) Notice to Holders.
i. Adjustment to Exercise Price. Whenever the
Exercise Price is adjusted pursuant to this Section 3, the
Company shall promptly mail to each Holder a notice setting
forth the Exercise Price after such adjustment and setting
forth a brief statement of the facts requiring such
adjustment. If the Company issues a variable rate security,
despite the prohibition thereon in the Purchase Agreement,
the Company shall be deemed to have
issued Common Stock or Common Stock Equivalents at the lowest
possible conversion or exercise price at which such
securities may be converted or exercised in the case of a
Variable Rate Transaction (as defined in the Purchase
Agreement), or the lowest possible adjustment price in the
case of an MFN Transaction. The term "MFN Transaction" shall
mean a transaction in which the Company issues or sells any
securities in a capital raising transaction or series of
related transactions which grants to an investor the right to
receive additional shares based upon future transactions of
the Company on terms more favorable than those granted to
such investor in such offering.
ii. Notice to Allow Exercise by Xxxxxx. If (A)
the Company shall declare a dividend (or any other
distribution) on the Common Stock; (B) the Company shall
declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Company shall
authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights; (D) the approval
of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of
the Company, of any compulsory share exchange whereby the
Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the
affairs of the Company; then, in each case, the Company shall
cause to be mailed to the Holder at its last addresses as it
shall appear upon the Warrant Register of the Company, at
least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the
holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are
to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and
the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their
shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange;
provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect
the validity of the corporate action required to be specified
in such notice. The Holder is entitled to exercise this
Warrant during the 20-day period commencing the date of such
notice to the effective date of the event triggering such
notice.
Section 4. Transfer of Warrant.
a) Transferability. Subject to compliance with any applicable
securities laws and the conditions set forth in Sections 5(a) and 4(d)
hereof and to the provisions of Section 4.1 of the Purchase Agreement,
this Warrant and all rights hereunder are transferable, in whole or in
part, upon surrender of this Warrant at the principal office of the
Company, together with a written assignment of this Warrant
substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without
having a new Warrant issued.
b) New Warrants. This Warrant may be divided or combined with
other Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section
4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice.
c) Warrant Register. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the
"Warrant Register"), in the name of the record Holder hereof from time
to time. The Company may deem and treat the registered Holder of this
Warrant as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes,
absent actual notice to the contrary.
d) Transfer Restrictions. If, at the time of the surrender of
this Warrant in connection with any transfer of this Warrant, the
transfer of this Warrant shall not be registered pursuant to an
effective registration statement under the Securities Act and under
applicable state securities or blue sky laws, the Company may require,
as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be in form, substance
and scope customary for opinions of counsel in comparable transactions)
to the effect that such transfer may be made without registration under
the Securities Act and under applicable state securities or blue sky
laws, (ii) that the holder or transferee execute and deliver to the
Company an investment letter in form and substance acceptable to the
Company and (iii) that the transferee be an "accredited investor" as
defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or (a)(8)
promulgated under the Securities Act or a qualified institutional buyer
as defined in Rule 144A(a) under the Securities Act.
Section 5. Covenants.
(a) Negative Covenants. So long as any portion of this
Warrant is outstanding, without the prior written consent of the
Holder, which consent may be withheld in the sole discretion of the
Holder, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:
i. Repayment of Shares. Repay, repurchase or offer to
repay, repurchase or otherwise acquire any shares of its
Common Stock or other equity securities or as otherwise
permitted by the Transaction Documents;
ii. Bylaws. Amend its certificate of incorporation,
bylaws or other charter documents so as to adversely affect
any rights of the Holder in its capacity as a holder of the
Warrant;
iii. Sale of Assets, Dissolution, Etc. Transfer,
sell, assign, lease or otherwise dispose of any of its
properties or assets, or any assets or properties necessary or
desirable for the proper conduct of its business, or transfer,
sell, assign or otherwise dispose of any of its accounts, or
contract rights to any person or entity, or change the nature
of its business, wind-up, liquidate or dissolve, or agree to
any of the foregoing, other than in the ordinary course of
business;
iv. Compensation. Increase the compensation of any of
its officers or consultants making more than $100,000 per
year, hire any relative of any officer, director or
shareholder of the Company, or pay a bonus to any such person;
v. Subsidiaries. Establish or form a partially or
wholly owned Subsidiary. Sell, transfer or assign any interest
in the Company's existing Subsidiaries;
vi. No Further Issuance of Securities. Other than in
accordance herewith, create, issue or permit the issuance of
any additional securities of the Company or of any of its
Subsidiaries (including with respect to any Qualifying
Transaction), if any, or any rights, options or warrants to
acquire any such securities, and in the event that Company
desires to issue securities with preferences or rights greater
than that which the Common Stock has, the Holder will have the
option of purchasing such stock in lieu of the Common Stock
hereby;
vii. No Dividends; No Redemption. Declare any
dividend, pay or set aside for payment any dividend or other
distribution, in cash, stock, or other property, or make any
payment to any related parties, including to any preferred
stockholders, as a dividend, redemption, or otherwise, other
than the payment of salaries in the ordinary course of
business;
viii. Stock Splits. Undertake a reverse or forward
stock split or reclassification of the Common Stock; or
ix. Agreement. Enter into any agreement obligating
the Company to undertake any of the matters set forth in this
Section 6(a).
(b) Affirmative Covenants. So long as any portion of this
Warrant is outstanding and unless the Holder otherwise consents in
writing, which consent may be withheld in the sole discretion of the
Holder, the Company will:
i. True Books. Keep true books of record and account
in which full, true and correct entries will be made of all of
its dealings and transactions, and set aside on its books such
reserves as may be required by GAAP, consistently applied,
with respect to all taxes, assessments, charges, levies and
claims referred to in (a) above, and with respect to its
business in general, and include such reserves in interim as
well as year-end financial statements;
ii. Right of Inspection. Permit any person designated
by the Holder, at the Holder's expense, to visit and inspect
any of the properties, books and financial reports of the
Company, all at such reasonable times upon three (3) Business
Days prior notice to Company, and as often as the Holder may
reasonably request, provided the Holder does not unreasonably
interfere with the daily operations of the Company and Holder
executes a confidentiality agreement; and
iii. Financial Reporting. The Company shall provide
to Holder audited annual financial statements, audited by
mutually agreed upon independent certified public accounting
firm. Said financial statements shall be prepared in
accordance with GAAP, consistently applied, and shall be
delivered to Holder within ninety (90) days after the close of
the Company's fiscal year. The report of the auditor that
accompanies the financial statements shall not contain any
qualifications or limitations, such auditor to be a mutually
agreeable accounting firm. The Company's fiscal year ends on
December 31, and shall not be changed without the prior
written consent of the Holder. The Company shall provide to
Holder unaudited monthly financial statements (including month
to date and year to date actual to prior periods) and a report
in such form as is acceptable to Holder, both presented in
accordance with GAAP, consistently applied (subject to such
exceptions for interim financials as may be noted by the
Company thereon), and shall be delivered to Holder within
twenty-five (25) days after the close of the Company's month.
The Company shall also deliver any other reports reasonably
requested by Xxxxxx. If the statements or reports are not
delivered within twenty-five (25) days of the close of any
month, then the Company will pay a late fee of $250 per day
until the report is delivered in adequate form in the sole
discretion of Holder.
Section 6. Miscellaneous.
a) Title to Warrant. Prior to the Termination Date and
subject to compliance with applicable laws and Section 4 of this
Warrant, this Warrant and all rights hereunder are transferable, in
whole or in part, at the office or agency of the Company by the Holder
in person or by duly authorized attorney, upon surrender of this
Warrant together with the Assignment Form annexed hereto properly
endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.
b) No Rights as Shareholder Until Exercise. This Warrant does
not entitle the Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise hereof. Upon the
surrender of this Warrant and the payment of the aggregate Exercise
Price (or by means of a cashless exercise), the Warrant Shares so
purchased shall be and be deemed to be issued to such Holder as the
record owner of such shares as of the close of business on the later of
the date of such surrender or payment.
c) Loss, Theft, Destruction or Mutilation of Warrant. The
Company covenants that upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender
and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of
like tenor and dated as of such cancellation, in lieu of such Warrant
or stock certificate.
d) Saturdays, Sundays, Holidays, etc. If the last or
appointed day for the taking of any action or the expiration of any
right required or granted herein shall be a Saturday, Sunday or a legal
holiday, then such action may be taken or such right may be exercised
on the next succeeding day not a Saturday, Sunday or legal holiday.
e) Authorized Shares.
The Company covenants that during the period the Warrant is
outstanding, it will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the
Warrant Shares upon the exercise of any purchase rights under this
Warrant. The Company further covenants that its issuance of this
Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the
necessary certificates for the Warrant Shares upon the exercise of the
purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant
Shares may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the
Holder, 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
Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be
necessary or appropriate to protect the rights of Holder as set forth
in this Warrant against impairment. Without limiting the generality of
the foregoing, the Company will (a) not increase the par value of any
Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable Warrant Shares
upon the exercise of this Warrant, and (c) use commercially reasonable
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
Warrant.
Before taking any action which would result in an adjustment
in the number of Warrant Shares for which this Warrant is exercisable
or in the Exercise Price, the Company 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.
f) Jurisdiction. All questions concerning the construction,
validity, enforcement and interpretation of this Warrant shall be
determined in accordance with the provisions of the Purchase Agreement.
g) Restrictions. The Holder acknowledges that the Warrant
Shares acquired upon the exercise of this Warrant, if not registered,
will have restrictions upon resale imposed by state and federal
securities laws.
h) Expenses. If the Company willfully and knowingly fails to
comply with any provision of this Warrant, which results in any
material damages to the Holder, the Company shall pay to Holder 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 Holder in collecting any
amounts due pursuant hereto or in otherwise enforcing any of its
rights, powers or remedies hereunder.
i) Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder by the Company shall
be delivered in accordance with the notice provisions of the Purchase
Agreement.
j) Limitation of Liability. No provision hereof, in the
absence of any affirmative action by Holder to exercise this Warrant or
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of Holder, shall give rise to any liability of 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.
k) Remedies. Holder, 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 this Warrant. 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
this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
l) Successors and Assigns. Subject to applicable securities
laws, this Warrant and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the
Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all
Holders from time to time of this Warrant and shall be enforceable by
any such Holder or holder of Warrant Shares.
m) Amendment and Waiver. This Warrant may be modified or
amended only with the written consent of the Company and the Holder. No
course of dealing or any delay or failure to exercise any right
hereunder on the part of Holder shall operate as a waiver of such right
or otherwise prejudice Xxxxxx's rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the
Termination Date.
n) Severability. Wherever possible, each provision of this
Warrant shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Warrant 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 provisions or the remaining
provisions of this Warrant.
o) Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant.
p) Registration Rights. The Holder has certain rights with
respect to the registration of the Warrant Shares upon exercise of this
Warrant, such rights being specifically set forth in the Purchase
Agreement entered into by and between Holder and the Company on the
date hereof.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized effective as of the
Initial Exercise Date.
MAVERICK OIL AND GAS, INC.
By:/s/ X. Xxx Xxxxxx
____________________________________
Name: X. Xxx Xxxxxx
Title: Chief Executive Officer
NOTICE OF EXERCISE
TO: MAVERICK OIL AND GAS, INC.
(1) The undersigned hereby elects to purchase ________ Warrant
Shares of Maverick Oil and Gas, Inc. pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the
exercise price in full, together with all applicable transfer taxes, if any.
(2) Payment shall take the form of (check applicable box):
[ ] in lawful money of the United States; or
[ ] the cancellation of such number of Warrant Shares
as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant
with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise
procedure set forth in subsection 2(c).
(3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:
----------------------------------------
The Warrant Shares shall be delivered to the following:
----------------------------------------
----------------------------------------
----------------------------------------
(4) Accredited Investor. The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
[SIGNATURE OF HOLDER]
Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
_________________________________________________________________.
_________________________________________________________________
Dated: ______________, _______
Holder's Signature:_____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
