EXHIBIT 10.9
DIVERSIFIED RESOURCES, INC.
WARRANT TO PURCHASE COMMON STOCK
This is to certify that, FOR VALUE RECEIVED, _______________, or registered
assigns ("Holder") is entitled to purchase, subject to the provisions of this
Warrant, from Diversified Resources, Inc. (the "Company"), _________ shares of
the common stock of the Company ("Common Stock") at a price of $0.80 per share
at any time prior to __________, 2017. The number of shares of Common Stock to
be received upon the exercise of this Warrant and the price to be paid for a
share of Common Stock may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, as may be
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock"; and the exercise price of a share of Common Stock in effect at any time,
and as may be adjusted from time to time, is hereinafter sometimes referred to
as the "Exercise Price."
(a) Exercise of Warrant. This Warrant may be exercised in whole or in part
at any time or from time to time but not later than 5.00 P.M., Mountain Standard
time, _________, 2017. If the Expiration Date is a day on which banking
institutions are authorized by law to close, then this Warrant may be exercised
on the next succeeding day which shall not be such a day, by presentation and
surrender of this Warrant to the Company or at the office of its stock transfer
agent, if any, with the Purchase Form annexed hereto duly executed and
accompanied by payment of the Exercise Price for the number of Shares of Warrant
Stock specified in such form, together with all Federal and state taxes
applicable upon such exercise.
If this Warrant should be exercised in part only, the Company, upon surrender of
this Warrant for cancellation, shall execute and shall deliver a new Warrant
evidencing the right of the Holder to purchase the balance of the Shares of
Warrant Stock purchaseable hereunder. Upon receipt by the Company of this
Warrant at the office or the agency of the Company, in proper form for exercise,
the Holder shall be deemed to be the Holder of record of the Shares of Warrant
Stock issuable upon such exercise, notwithstanding that the stock transfer books
of the Company shall then be closed or that certificates representing such
Shares of Warrant Stock shall not then be actually delivered to the Holder.
(b) Reservation of Shares of Warrant Stock. The Company hereby agrees that,
at all times, there shall be reserved for issuance and/or delivery upon exercise
of this Warrant such number of shares of its Common Stock as shall be required
for issuance or delivery upon exercise of this Warrant.
(c) Fractional Shares. No fractional Shares of Warrant Stock or scrip
representing fractional Shares of Warrant Stock shall be issued upon the
exercise of this Warrant. With respect to any fraction of a Share of Warrant
Stock called for upon any exercise hereof, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied by the current market value
of such fractional share determined as follows:
(i) If the Company's Common Stock is publicly traded, the average daily
closing prices for 30 consecutive trading days immediately preceding the date of
exercise of this Warrant. The closing price for each day shall be the last sale
price regular-way or, in case no such sale takes place on such date, the average
of the closing bid and asked prices regular-way, on the principal national
1
securities exchange in which the Company's Common Stock is listed or admitted to
trading, or if it is not listed or admitted to trading on any national
securities exchange, the last sale price of such Common Stock on the
consolidated transaction reporting system of the National Association of
Securities Dealers ("NASD"), if such last sale information is reported on such
system, or if not so reported, the average of the closing bid and asked prices
of such Common Stock on the National Association of Securities Dealers Automatic
Quotation system ("NASDAQ"), or any comparable system, or if the Common Stock is
not listed on NASDAQ, or a comparable system, the average of the closing bid and
asked prices as furnished by two members of the NASD selected from time to time
by the Company for that purpose.
(ii) If the Company's Common Stock is not publicly traded, the current
value shall be an amount, not less than the book value, determined in such
reasonable manner as may be prescribed by the Board of Directors of the Company,
such determination to be final and binding on the Holder.
(d) Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable,
without expense, at the option of the Holder, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if any, for
other Warrants of different denominations entitling the Holder thereof to
purchase in the aggregate the same number of Shares of Warrant Stock purchasable
hereunder. This Warrant may not be sold, hypothecated, assigned, or transferred
prior to the date this Warrant is first exercisable. Any assignment shall be
made subject to the provisions of Section (j) by surrender of this Warrant to
the Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and with funds sufficient to pay
any transfer tax; whereupon, the Company, without charge, shall execute and
shall deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be cancelled.
This Warrant may be divided or may be combined with other Warrants which carry
the same rights upon presentation hereof at the office of the Company or at the
office of its stock transfer agent, if any, together with a written notice
specifying the names and the denominations in which new Warrants are to be
issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants issued in substitution for or replacement of this Warrant
or into which this Warrant may be divided or exchanged. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction, or
mutilation of this Warrant, and (in the case of loss, theft, or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and will deliver a new
Warrant of like tenor and date. Any such new Warrant executed and delivered
shall constitute an additional contractual obligation on the part of the
Company, whether or not this Warrant so lost, stolen, destroyed or mutilated
shall be at any time enforceable by anyone.
(e) Rights of the Holder. The Holder, by virtue hereof, shall not be
entitled to any rights of a stockholder in the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in the
Warrant and are not enforceable against the Company except to the extent set
forth herein.
(f) Anti-Dilution Provisions.
(i) Adjustment of Price. Anything in this Section (f) to the contrary
notwithstanding, if the Company shall issue, at any time, Common Stock or
convertible securities by way of dividend, forward stock split or other
2
distribution on any stock of the Company or subdivide or combine the outstanding
shares of Stock, the Exercise Price shall be proportionately decreased in the
case of such issuance, forward stock split, or distribution (on the day
following the date fixed for determining shareholders entitled to receive such
additional shares) or proportionately increased in the case of such combination
(on the date that such combination shall become effective), provided, however,
should the Company cancel or fail to make such dividend or other distribution or
other issuance, the Exercise Price shall be forthwith adjusted to the price
which would have prevailed prior to the Company setting such record date.
(ii) No Adjustment for Small Amounts. Anything in this Section to the
contrary notwithstanding, the Company shall not be required to give effect to
any adjustment in the Exercise Price unless and until the net effect of one or
more adjustments, determined as above provided, shall have required a change of
the Exercise Price by at least one cent, but when the cumulative net effect of
more than one adjustment so determined shall be to change the actual Exercise
Price by at least one cent, such change in the Exercise Price shall thereupon be
given effect.
(iii) Number of Shares Adjusted. Upon any adjustment of the Exercise Price,
the Holder of this Warrant shall thereafter (until another such adjustment) be
entitled to purchase, at the new Exercise Price, the number of Shares of Warrant
Stock, calculated to the nearest full shares, obtained by multiplying the number
of shares of Stock initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the product so obtained
by the new Exercise Price.
(g) Officer's Certificate. Whenever the Exercise Price shall be adjusted as
required by the provisions of Section (f) hereof, the Company shall forthwith
file with its Secretary or an Assistant Secretary at its principal office, and
with its stock transfer agent, if any, an Officer's Certificate showing the
adjusted Exercise Price, determined as herein provided, and setting forth in
reasonable detail the facts requiring such adjustment. Each such Officer's
Certificate shall be made available at all reasonable times for inspection by
the Holder; and the Company, after each such adjustment, shall forthwith deliver
a copy of such certificate to the Holder. Such certificate shall be conclusive
as to the correctness of such adjustment.
(h) Notices to Warrant Holders. So long as this Warrant shall be
outstanding and unexercised (i) if the Company shall pay any dividend or shall
make any distribution upon the Common Stock or (ii) if the Company shall offer
to the holders for subscription or purchase by them any shares of stock of any
class or any other rights or (iii) if any capital reorganization of the Company;
reclassification of the capital stock of the Company; consolidation or merger of
the Company with or into another corporation; sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation; or voluntary or involuntary dissolution, liquidation, or winding up
of the Company shall be effected, then, in any such case, the Company shall
cause to be delivered to the Holder, at least ten (l0) days prior to the date
specified in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x) a record is
to be taken for the purpose of such dividend, distribution, or rights, or (y)
such reclassification, reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation, or winding up is to take place and the date, if any,
is to be fixed, as of which the holders of record shall be entitled to exchange
their Shares for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation, or winding up.
3
(i) Reclassification, Reorganization or Merger. In case of any
reclassification, or capital reorganization (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of an issuance of Common Stock by way of dividend or other distribution
or of a subdivision or combination), or in case of any consolidation or merger
of the Company with or into another corporation (other than a merger with a
subsidiary, in which merger the Company is the continuing corporation and which
does not result in any reclassification, or capital reorganization) or in case
of any sale or conveyance to another corporation of the property of the Company
as an entirety or substantially as an entirety, the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of Stock and other securities and property receivable upon such
reclassification; capital reorganization; or other consolidation, merger, sale,
or conveyance as may be issued or payable with respect to or in exchange for the
number of Shares of the Company theretofore purchasable upon the exercise of
this Warrant had such recapitalization; capital reorganization; or other
consolidation, merger, sale or conveyance not taken place. Any such provisions
shall include provision for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Warrant. The
foregoing provisions of this Section (i) shall similarly apply to successive
reclassifications; capital reorganizations; and to successive consolidations,
mergers, sales, or conveyances.
In the event that in any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares shall be issued in
exchange, conversion, substitution or payment, in whole or in part, for a
security of the Company other than Stock, any such issue shall be treated as an
issue of Stock covered by the provisions of subsection (f) hereof with the
amount of the consideration received upon the issue thereof being determined by
the Board of Directors of the Company, such determination to be final and
binding on the Holder.
(j) Transfer to Comply with the Securities Act of l933.
(i) This Warrant or the Warrant Stock or any other security issued or
issuable upon exercise of this Warrant may not be sold, transferred, or
otherwise disposed of except to a person who, in the opinion of counsel for the
Company, is a person to whom this Warrant or such Warrant Stock may legally be
transferred pursuant to Section (d) hereof without registration and without the
delivery of a current Prospectus under the Act with respect thereto and then
only against receipt of an agreement of such person to comply with the
provisions of this Section (k) with respect to any resale or other disposition
of such securities.
(ii) The Company may cause the following legend or one similar thereto to
be set forth on each certificate representing Warrant Stock or any other
security issued or issuable upon exercise of this Warrant not theretofore
distributed to the public or sold to underwriters for distribution to the public
pursuant to Section (j) hereof, unless counsel for the Company is of the opinion
as to any such certificate that such legend is unnecessary:
The shares represented by this Certificate have not been registered under the
Securities Act of l933 (the "Act") and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not be offered for sale,
sold, or otherwise transferred except pursuant to an effective registration
statement under the Act or pursuant to an exemption from registration under the
Act, the availability of which is to be established to the satisfaction of the
Company.
4
(k) Registration Rights. If the Company proposes to undertake an offering
of securities for its account or for the account of other stockholders and the
registration form to be used for such offering may be used for the registration
of the shares of common stock issuable upon the exercise of this warrant (a
"Piggyback Registration"), each such time the Company will give prompt written
notice to the Holder of its intention to effect such a registration (each, a
"Piggyback Notice") and the Company will use its best efforts to cause to be
included in such registration the shares of common stock respect to which the
Company has received written requests for inclusion therein within ten days
after the date of sending the Piggyback Notice.
a. Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the
managing underwriter advises the Company in writing that in its opinion the
number of securities requested to be included in such registration exceeds
the number that can be sold in an orderly manner within a price range
acceptable to the Company, the Company will include in such registration
(a) first, the securities the Company proposes to sell, and (b) second, the
shares of common stock requested to be included in such registration by the
Holder as well as any other securities requested to be included in such
registration that are held by persons other than the Holder pursuant to
registration rights, pro rata among the Holder and the holders of such
other securities requesting such registration on the basis of the number of
shares of such securities owned by each such person, but in all cases not
exceeding the amount specified by the managing underwriter.
b. Priority on Secondary Registrations. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of the
Company's securities (the "Other Holders") other than the Holder, and the
managing underwriter advises the Company in writing that in its opinion the
number of securities requested to be included in such registration exceeds
the number that can be sold in an orderly manner in such offering within a
price range acceptable to the Other Holders requesting such registration,
the Company will include in such registration (a) first, the securities
requested to be included therein by the Other Holders, and (b) second, the
shares of common stock requested to be included in such registration by the
Holder, as well as any other securities requested to be included in such
registration that are held by persons other than the Holder pursuant to
registration rights (except those in subsection a. above), pro rata among
the Holder and the holders of such other securities requesting such
registration on the basis of the number of shares of such securities owned
by each such person, but in all cases not exceeding the amount specified by
the managing underwriter.
c. Expense Borne by the Company. Except as specifically otherwise
provided in subsection d., the Company will be responsible for payment of
all expenses incident to any registration hereunder, including, without
limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger
and delivery expenses, road show expenses, and fees and disbursements of
counsel for the Company and all accountants and other persons retained by
the Company in connection with such registration.
d. Expense Borne by Selling Security Holders. The Holder will be
responsible for payment of his own legal fees (if he retains legal counsel
separate from that of the Company), underwriting fees and brokerage
discounts, commissions and other sales expenses incident to the sale of any
shares to be sold by the Holder.
5
(l) Applicable Law. This Warrant shall be governed by and construed in
accordance with the laws of Colorado.
DIVERSIFIED RESOURCES, INC.
By
-----------------------------------
Xxxx Xxxxx, Chief Executive Officer
6
PURCHASE FORM
Dated
---------
The undersigned hereby irrevocable elects to exercise the within Warrant to
the extent of purchasing Shares of Warrant Stock and hereby makes payment of
$____________ in payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
----------------------------------------------------------------------
(Please typewrite or print in block letters)
Address
------------------------------------------------------------------
Signature
----------------------------------------------------------------
ASSIGNMENT FORM
FOR VALUE RECEIVED,
---------------------------------------------
hereby sell, assigns, and transfers unto:
Name:
---------------------------------------------------------------------
(Please typewrite or print in block letters)
Address:
-----------------------------------------------------------------
the right to purchase the Common Stock represented by this Warrant to the extent
of shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint attorney, to transfer the same on the books of the
Company with full power of substitution in the premises.
Signature
------------------------------------
Dated:
---------------
