EXHIBIT 10.40

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE LAW, AND NO
INTEREST IN SAID SECURITIES MAY BE SOLD, DISTRIBUTED, ASSIGNED, OFFERED, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS COVERING ANY SUCH
TRANSACTION INVOLVING SAID SECURITIES, (ii) THE COMPANY RECEIVES AN OPINION OF
LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES SATISFACTORY TO THE COMPANY
STATING THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION, OR (iii) THE COMPANY
OTHERWISE SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM REGISTRATION.

 

 

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STOCK PURCHASE WARRANT

 

to Purchase up to

 

1,000,000 Shares of Common Stock

 

of

 

AVIVA PETROLEUM INC.

 

Void after December 12, 2004

 

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This is to certify that, for value received and subject to the terms and
conditions set forth below, the Warrantholder (hereinafter defined) is entitled
to purchase, and the Company promises and agrees to sell and issue to the
Warrantholder, at any time on or after the date of this Warrant and on or before
December 12, 2004 up to 1,000,000 Shares (hereinafter defined) at the Exercise
Price (hereinafter defined).

 

This Stock Purchase Warrant is issued subject to the following terms and
conditions.

 

1.    Definitions of Certain Terms.    Except as may be otherwise clearly
required by the context, the following terms have the following meanings:

 

(a) “Common Stock” means the common stock, without par value, of the Company.

 

(b) “Company” means Aviva Petroleum Inc., a Texas corporation, and any successor
thereto.

 

(c) “Exercise Price” means the price at which the Warrantholder may purchase one
Share (or Securities obtainable in lieu of one Share) upon exercise of Warrants
as determined from time to time pursuant to the provisions hereof. The initial
Exercise Price is $0.07 per Share.

 

(d) “Expiration Time” means 5 p.m. central standard time on December 12, 2004.

 

(e) “Securities” means the securities obtained or obtainable upon exercise of
the Warrant or securities obtained or obtainable upon exercise, exchange, or
conversion of such securities.

 

(f) “Share” shall mean one share of Common Stock for which the Warrant is
initially exercisable.

 

(g) “Warrant Certificate” means a certificate evidencing the Warrant.

 

(h) “Warrantholder” means a record holder of the Warrant or Securities. The
initial Warrantholder is Ronald Suttill.

 

(i) “Warrant” means the warrant evidenced by this Warrant Certificate or any
certificate obtained upon transfer or partial exercise of the Warrant evidenced
by any such Warrant Certificate.

 

2.    Exercise of Warrant.    All or any part of the Warrant may be exercised
commencing on the date of this Warrant and ending at the Expiration Time by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by his duly authorized attorney, at the
office of the Company, 8235 Douglas Avenue, Suite 400, Dallas, Texas 75225, or
at such other office or agency as the Company may designate. Upon receipt of
notice of exercise, the Company shall immediately prepare, or instruct its
transfer agent to prepare, certificates for the Securities to be received by the
Warrantholder upon

 

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completion of the Warrant exercise. When such certificates are prepared, the
Company shall notify the Warrantholder and deliver such certificates to the
Warrantholder or in accordance with the Warrantholder’s instructions immediately
upon payment in full by the Warrantholder, in lawful money of the United States,
of the Exercise Price payable with respect to the Securities being purchased.

 

If fewer than all the Securities purchasable under the Warrant are purchased,
the Company will, upon such partial exercise, execute and deliver to the
Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.

 

3.    Adjustments in Certain Events.    The number, class, and price of
Securities for which this Warrant Certificate may be exercised are subject to
adjustment from time to time upon the happening of certain events as follows:

 

(a)  If the outstanding shares of the Company’s Common Stock are divided into a
greater number of shares or a dividend in stock is paid on the Common Stock, the
number of shares of Common Stock for which the Warrant is then exercisable will
be proportionately increased and the Exercise Price will be proportionately
reduced; and, conversely, if the outstanding shares of Common Stock are combined
into a smaller number of shares of Common Stock, the number of shares of Common
Stock for which the Warrant is then exercisable will be proportionately reduced
and the Exercise Price will be proportionately increased. The increases and
reductions provided for in this subsection (a) will be made with the intent and,
as nearly as practicable, the effect that neither the percentage of the total
equity of the Company obtainable on exercise of the Warrants nor the price
payable for such percentage upon such exercise will be affected by any event
described in this subsection (a).

 

(b)  In case of (i) any reclassification or change of outstanding shares of
Common Stock or other capital stock issuable upon exercise of this Warrant
(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 a subdivision or combination), (ii) any
consolidation or merger of the Company with or into another corporation (other
than a merger in which the Company is the surviving corporation and which does
not result in any reclassification or change of the then outstanding shares of
Common Stock or other capital stock issuable upon exercise of this Warrant
(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 subdivision or combination)) or (iii)
any sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such other successor or purchasing corporation, as the case may be,
shall make lawful and adequate provision whereby the Warrantholder shall have
the right thereafter to receive on exercise of such Warrant the kind and amount
of securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. The
provisions of this subsection (b) shall

 

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similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales and conveyances.

 

(c)  Irrespective of any adjustments or changes in the Exercise Price or the
Securities purchasable upon exercise of this Warrant pursuant to this Section 3,
the Warrant Certificate, whether or not thereafter reissued, may continue to
express the Exercise Price per share and the number of shares of Common Stock
purchasable thereunder as the Exercise Price per share and the number of shares
of Common Stock purchasable thereunder were expressed in the Warrant Certificate
when the same was originally issued.

 

(d)  No fractional shares of Common Stock or other Securities will be issued in
connection with the exercise of the Warrant, but the Company will pay, in lieu
of fractional shares, a cash payment therefor on the basis of the fair market
value of the Shares or other Securities as determined in good faith by the Board
of Directors of the Company.

 

4.    Reservation of Shares.    The Company agrees that the number of shares of
Common Stock or other Securities sufficient to provide for the exercise of the
Warrant upon the basis set forth above will at all times during the term of the
Warrant be reserved for exercise.

 

5.    Validity of Securities.    All Securities delivered upon the exercise of
the Warrant will be duly and validly issued in accordance with their terms and,
in the case of Common Stock, will be fully paid and nonassessable. The Company
will pay all documentary and transfer taxes, if any, in respect of the original
issuance thereof upon exercise of the Warrant.

 

6.    No Rights as a Shareholder.    The Warrantholder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company, either at law
or in equity, and the rights of the Warrantholder as such are limited to those
expressed in the Warrant Certificate and are not enforceable against the Company
except to the extent set forth herein. Furthermore, the Warrantholder, by
acceptance hereof, consents to and agrees to be bound by and to comply with all
the provisions of this Warrant. In addition, the Warrantholder, by accepting
this Warrant, agrees that the Company and the transfer agent may deem and treat
the person in whose name this Warrant is registered as the absolute, true and
lawful owner for all purposes whatsoever, and neither the Company nor its
transfer agent, if any, shall be affected by any notice to the contrary.

 

7.    Notice.    Any notices required or permitted to be given hereunder will be
in writing and may be served personally or by mail; and if served will be
addressed as follows:

 

If to the Company:

  

Aviva Petroleum Inc.

    

8235 Douglas Avenue

    

Suite 400

    

Dallas, Texas 75225

    

Attention: Chief Financial Officer

If to the Warrantholder:

  

Ronald Suttill

    

4146 La Place

    

Dallas, Texas 75220

 

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Any notice so given by mail will be deemed effectively given 48 hours after
mailing when deposited in the United States mail, registered or certified mail,
return receipt requested, postage prepaid and addressed as specified above. Any
party may by written notice to the other specify a different address for notice
purposes.

 

8.    Securities Law Compliance.    By accepting this Warrant, the Warrantholder
represents that the Warrantholder is acquiring the Warrant, and will acquire any
shares of Common Stock or other Securities that may be acquired upon exercise of
this Warrant, solely for the Warrantholder’s own account and not with a view to
or for sale in connection with any distribution of the Warrant, the Common
Stock, or other Securities of the Company. Unless the issuance of the Common
Stock or other Securities issuable upon exercise of this Warrant shall have been
registered under the Securities Act of 1933 and applicable state securities
laws, as a condition of its delivery of certificates for such Securities, the
Company may require the Warrantholder to deliver to the Company, in writing,
representations regarding the Warrantholder’s sophistication, investment intent,
acquisition for his own account and such other matters as are reasonable and
customary for purchasers of securities in an unregistered private offering. The
Company may place conspicuously upon each Warrant Certificate and upon each
certificate representing the Securities a legend substantially in the following
form, the terms of which are agreed to by the Warrantholder:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (i) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES
LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES, (ii) THE COMPANY
RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER OF SAID SECURITIES
SATISFACTORY TO THE COMPANY STATING THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION, OR (iii) THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.

 

9.    Applicable Law.    This Warrant Certificate will be governed by and
construed in accordance with the laws of the State of Texas, without reference
to conflict of laws principles thereunder.

 

 

       

AVIVA PETROLEUM INC.,

a Texas corporation

 

Dated:  December 12, 2002

     

 

By:

 

 

/s/  James L. Busby    

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James L. Busby

Chief Financial Officer

 

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PURCHASE FORM

 

Dated:

 

 

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The undersigned irrevocably elects to exercise the within Warrant to the extent
of purchasing              shares of Common Stock and hereby makes payment of
$             in payment of the actual exercise price thereof.

 

INSTRUCTIONS FOR REGISTRATION OF STOCK

 

 

Name

 

 

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(Please type or print in block letters)

Address

 

 

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Signature

 

 

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IT SHALL BE A CONDITION TO THE VALIDITY OF THIS ASSIGNMENT THAT THE ASSIGNEE
DELIVER TO AVIVA PETROLEUM INC. HIS OR ITS WRITTEN AGREEMENT TO ACCEPT AND BE
BOUND BY ALL OF THE TERMS AND CONDITIONS OF THIS WARRANT.

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED,                                                   hereby
sells, assigns and transfers unto

 

 

Name

 

 

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(Please type or print in block letters)

Address

 

 

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the right to purchase 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.

 

Date

 

 

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Signature

 

 

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