Document:

ex4_4.htm

Exhibit 4.4

 

	
No. __________ 

	
__________ B WARRANTS

 

 

 

 

THIS B WARRANT CERTIFICATE WILL BE VOID IF NOT EXERCISED PRIOR

 

TO 5:00 P.M. NEW YORK CITY TIME, [__________], 2014

 

 

GOOD TIMES RESTAURANTS INC.

 

 

B WARRANT CERTIFICATE

 

 

THIS CERTIFIES THAT, for value received, [_______________] (“B Warrantholder”) is the registered holder of [_______] B  Warrants (the “B Warrant” or “B Warrants”) to purchase fully paid and non-assessable shares of common stock, par value $0.001 per share (the “Share” or “Shares”), of GOOD TIMES RESTAURANTS INC., a Nevada corporation (the “Company”).

 

1.              Terms and Exercise of B Warrants.

 

(a)            B Warrant Exercise Price.  Two B Warrants shall entitle the registered holder thereof, subject to the provisions of such B Warrant to purchase from the Company one share of Common Stock at the price of [_____] per share, subject to the adjustments provided in Section 2 hereof and in the last sentence of this Section 1(a).  The term “B Warrant Exercise Price” as used in this Agreement refers to the price per share at which Common Stock may be purchased at the time two B Warrants are exercised.  The Company, in its sole discretion, may by notice to registered holders lower the B Warrant Exercise Price at any time prior to the Expiration Date (as defined below) for a specified period of not less than 20 business days.

 

(b)            Duration of B Warrants.  The B Warrants may be exercised only during the period (“Exercise Period”) commencing on the date of issuance and terminating at 5:00 p.m., New York City time, on the Expiration Date.  For purposes of this Agreement, the “Expiration Date” shall mean [__________], 2014.  Each B Warrant not exercised on or before the Expiration Date shall become void, and all rights thereunder and all rights in respect thereof shall cease at the close of business on the Expiration Date.  The Company may extend the duration of the B Warrants by delaying the Expiration Date; provided, however, that the Company shall provide notice to registered holders of the B Warrants of such extension of not less than 20 days.

  

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(c)            Exercise of B Warrants.

 

(i)             Payment.  Subject to the provisions of the B Warrants, the B Warrants may be exercised by the registered holder thereof by surrendering them at the Company with the subscription form as set forth herein duly executed and, except where otherwise permitted in accordance with Section 1(c)(ii), by paying in full in lawful money of the United States by certified check made payable to the Company or by wire transfer of immediately available funds to an account designated by the Company (or as otherwise agreed to by the Company), the B Warrant Exercise Price for each share of Common Stock as to which the B Warrants are exercised and any and all applicable taxes due in connection with the exercise of the B Warrants and the issuance of the Common Stock.  

(ii)            Cashless Exercise.  If, and only if, at the time of exercise of the B Warrants there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Common Stock to the B Warrantholder, then, and only then, the B Warrants may at the option of the B Warrantholder be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the B Warrantholder shall be entitled to receive a number of shares of Common Stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP (defined below) on the trading day immediately preceding the date on which the Warrantholder elects to exercise the B Warrants by means of a “cashless exercise,” as set forth in the applicable subscription form;

 

(B) = the B Warrant Price of the B Warrants, as adjusted hereunder; and

 

(X) = the number of shares of Common Stock that would be issuable upon exercise of the B Warrants being exercised  in accordance with the terms hereof if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“VWAP” means, for any date, the price per share of Common Stock determined by the first of the following clauses that applies:  (a) if the Common Stock is then listed or quoted on the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ Capital Market or the OTC Bulletin Board (each, a “Trading Market”), the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (“Bloomberg”) (based on a trading day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the Common Stock is not then listed or quoted for trading or quoted for trading on a Trading Market and if prices for the  Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (c) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Board of Directors of the Company, the fees and expenses of which shall be paid by the Company.

 

  

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(iii) Issuance of Certificates.  As soon as practicable after the exercise of any B Warrants and the clearance of the funds in payment of the B Warrant Exercise Price, the Company shall issue to the registered holder of such B Warrants a certificate or certificates representing the number of shares of Common Stock to which he, she or it is entitled, registered in such name or names as may be directed by him, her or it, and, if such B Warrants shall not have been exercised or surrendered in full, a new countersigned B Warrant Certificate for the number of shares as to which such B Warrants shall not have been exercised or surrendered.  Subject to Section 5(d) and notwithstanding the foregoing, the Company shall not be obligated to deliver any securities pursuant to the exercise of B Warrants unless (a) a registration statement under the Securities Act of 1933, as amended (the "Act") with respect to the Common Stock issuable upon exercise of the B Warrants is effective and a current prospectus relating to the shares of Common Stock issuable upon exercise of the B Warrants is available for delivery to the B Warrant holders, or (b) the exercise of the B Warrants is exempt from the registration requirements of the Act and such securities are qualified for sale or exempt from qualification under applicable securities laws of the state or other jurisdiction in which the registered holder resides. B Warrants may not be exercised by, or securities issued to, any registered holder in any state in which such exercise or issuance would be unlawful. In the event a registration statement under the Act with respect to the Common Stock underlying the B Warrants is not effective or a prospectus is not available, or because such exercise would be unlawful with respect to a registered holder in any state, the registered holder shall not be entitled to exercise such B Warrants and such B Warrants may have no value and expire worthless.  In no event will the Company be obligated to pay such registered holder any cash consideration upon exercise (except pursuant to Section 2(e)). The Company’s counsel shall deliver any legal opinions required by the transfer agent in connection with the exercise of the B Warrants at no cost to the B Warrantholder.

        

(iv)           Valid Issuance.  All shares of Common Stock issued upon the proper exercise or surrender of the B Warrants in conformity with this Agreement shall be validly issued, fully paid and nonassessable.

 

(v)           Date of Issuance.  Each person or entity in whose name any such certificate for shares of Common Stock is issued shall, for all purposes, be deemed to have become the holder of record of such shares on the date on which the B Warrants were surrendered and payment of the B Warrant Exercise Price was made, irrespective of the date of delivery of such certificate, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open.

 (vi)           .Exercise Limitation.  Notwithstanding any provisions herein to the contrary, the B Warrantholder shall not be entitled to exercise the B Warrants for a number of shares of Common Stock in excess of that number of shares of Common Stock which, upon giving effect to such exercise, would cause the aggregate number of shares of Common Stock beneficially owned by such B Warrantholder to exceed 9.99% of the outstanding shares of Common Stock following such exercise.  For purposes of the foregoing proviso, the aggregate number of shares of Common Stock beneficially owned by the B Warrantholder shall include the number of shares of Common Stock issuable upon exercise of the B Warrants with respect to which determination of such proviso is being made, but shall exclude the shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised B Warrants beneficially owned by the B Warrantholder and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the B Warrantholder subject to a limitation on conversion or exercise analogous to the limitation contained herein.  Except as set forth in the preceding sentence, for purposes of this Section 1(c)(vi), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.  The B Warrantholder may waive the foregoing limitation by written notice to the Company upon not less than 61 days prior written notice (such waiver taking effect only upon the expiration of such 61 day notice period and applying only to the B Warrantholder and not to any other holder of B Warrants).  For purposes of this Section 1(c)(vi), in determining the number of outstanding shares of Common Stock, the B Warrantholder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-Q or Form 10-K, as the case may be, filed with the Securities and Exchange Commission on the date thereof, (2) a more recent public announcement by the Company as to the number of shares of Common Stock outstanding, or (3) any other notice by the Company or its transfer agent setting forth the number of shares of Common Stock outstanding.  Upon the written request of the B Warrantholder, the Company shall within three trading days confirm in writing or by electronic mail to the B Warrantholder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the B Warrants, by the B Warrantholder since the date as of which such number of outstanding shares of Common Stock was reported. 

 

 2.            Adjustments. 

 

(a)           Stock Dividends; Stock Splits.  If, after the date hereof, and subject to the provisions of Section 2(f) below, the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split of shares of Common Stock, or other similar event, then, on the effective date of such stock dividend, stock split or similar event, the number of shares of Common Stock issuable on exercise of the B Warrants shall be increased in proportion to such increase in outstanding shares of Common Stock.

 

  

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(b)           Aggregation of Shares.  If, after the date hereof, and subject to the provisions of Section 2(f) below, the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable on exercise of the B Warrants shall be decreased in proportion to such decrease in outstanding shares of Common Stock.

 

(c)           Adjustments in B Warrant Exercise Price.  Whenever the number of shares of Common Stock purchasable upon the exercise of the B Warrants is adjusted, as provided in Sections 2(a) and 2(b), the B Warrant Exercise Price shall be adjusted (to the nearest cent) by multiplying such B Warrant Exercise Price, immediately prior to such adjustment, by a fraction, (i) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the B Warrants immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.

 

(d)           Extraordinary Dividends.  If the Company, at any time during the Exercise Period, shall pay a dividend in cash, securities or other assets to the holders of Common Stock (or other shares of the Company’s capital stock into which the B Warrants are convertible), other than (i) as described in Sections 2(a), 2(b) or 2(e), or (ii) regular quarterly or other periodic dividends (any such non-excluded event being referred to herein as an “Extraordinary Dividend”), then the B Warrant Exercise Price shall be decreased, effective immediately after the effective date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Company’s Board of Directors, in good faith) of any securities or other assets paid on each share of Common Stock in respect of such Extraordinary Dividend in order that subsequent thereto upon exercise of the B Warrants the B Warrantholder may obtain the equivalent benefit of such Extraordinary Dividend.

 

(e)           Replacement of Securities upon Reorganization, Etc.  In case of any reclassification or reorganization of the outstanding shares of Common Stock (other than a change covered by Sections 2(a) or 2(b) hereof or one that solely affects the par value of such shares of Common Stock), or, in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), or, in the case of any sale or conveyance to another corporation or entity of the assets or other property of the Company as an entirety or substantially as an entirety, in connection with which the Company is dissolved, the B Warrants shall thereafter represent the right to purchase and receive, upon the basis and upon the terms and conditions specified in the B Warrants and in lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the B Warrants holder would have received if such B Warrants holder had exercised his, her or its B Warrants immediately prior to such event; and if any reclassification also results in a change in shares of Common Stock covered by Sections 2(a) or 2(b), then such adjustment shall be made pursuant to Sections 2(a), 2(b), 2(c) and this Section 2(e). The provisions of this Section 2 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.

 

  

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(f)           Notices of Changes in B Warrants.  Upon every adjustment of the B Warrant Exercise Price or the number of shares issuable upon exercise of the B Warrants, the Company shall give written notice thereof to each registered holder, which notice shall state the B Warrant Exercise Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of the B Warrants, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of any event specified in Sections 2(a), 2(b), 2(d) or 2(e) the Company shall give written notice to each B Warrants holder, at the last address set forth for such holder in the B Warrants register, of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such event.

 

(g)           Form of B Warrant.  The form of B Warrant need not be changed because of any adjustment pursuant to this Section 2, and B Warrants issued after such adjustment may state the same B Warrant Exercise Price and the same number of shares as is stated in the B Warrants initially issued pursuant to this Agreement. However, the Company may, at any time, in its sole discretion, make any change in the form of B Warrants that the Company may deem appropriate and that does not affect the rights of holders thereof, and any B Warrants thereafter issued or countersigned, whether in exchange or substitution for outstanding B Warrants or otherwise, may be in the form as so changed.

 

(h)           Notice of Certain Transactions.  In the event that the Company shall propose to (i) offer the holders of its Common Stock rights to subscribe for or to purchase any securities convertible into shares of Common Stock or shares of stock of any class or any other securities, rights or options, (ii) issue any rights, options or warrants entitling the holders of Common Stock to subscribe for shares of Common Stock or (iii) make a tender offer, redemption offer or exchange offer with respect to the Common Stock, the Company shall send to the B Warrant holders a notice of such proposed action or offer. Such notice shall be mailed to the registered holders at their addresses as they appear in the B Warrants register, which shall specify the record date for the purposes of such dividend, distribution or rights, or the date such issuance or event is to take place and the date of participation therein by the holders of Common Stock, if any such date is to be fixed, and shall briefly indicate the effect of such action on the Common Stock and on the number and kind of any other shares of stock and on other property, if any, and the number of shares of Common Stock and other property, if any, issuable upon exercise of the B Warrants and the B Warrant Exercise Price after giving effect to any adjustment pursuant to this Section 2 which would be required as a result of such action. Such notice shall be given as promptly as practicable after the Company has determined to take any such action and (x) in the case of any action covered by clause (i) or (ii) above, at least 10 days prior to the record date for determining the holders of the Common Stock for purposes of such action or (y) in the case of any other such action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the holders of Common Stock, whichever shall be the earlier.

 

(i)           Other Events.  If any event occurs as to which the foregoing provisions of this Section 2 are not strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Company’s Board of Directors, fairly and adequately protect the purchase rights of the registered holders of the B Warrants in accordance with the essential intent and principles of such provisions, then the Company shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Company, to protect such purchase rights as aforesaid.

 

  

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3.             Transfer and Exchange of B Warrants.

 

(a)           Registration of Transfer.  The Company shall register the transfer, from time to time, of any outstanding B Warrants into the B Warrant register, upon surrender of such B Warrants for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, new B Warrants representing an equal aggregate number of B Warrants shall be issued and the old B Warrants shall be cancelled by the Company.

 

(b)           Procedure for Surrender of B Warrants.  B Warrants may be surrendered to the Company, together with a written request for exchange or transfer, and, thereupon, the Company shall issue in exchange therefor one or more new B Warrants as requested by the registered holder of the B Warrants so surrendered, representing an equal aggregate number of B Warrants; provided, however, that, in the event the B Warrants surrendered for transfer bear a restrictive legend, the Company shall not cancel such B Warrants and issue new B Warrants in exchange therefor until the Company has received an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new B Warrants must also bear a restrictive legend.

 

(c)           Service Charges.  No service charge shall be made for any exchange or registration of transfer of B Warrants.

 

4.             Other Provisions Relating to Rights of Holders of B Warrants.

 

(a)           No Rights as Stockholder.  The B Warrants do not entitle the registered holder thereof to any of the rights of a stockholder of the Company, including, without limitation, the right to receive dividends or other distributions, to exercise any preemptive rights, or to vote, consent or receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter.

(b)           Lost, Stolen, Mutilated or Destroyed B Warrant Certificates.  If any B Warrant Certificate is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may in its discretion impose (which terms shall, in the case of a mutilated B Warrant Certificate, include the surrender thereof), issue a new B Warrant Certificate of like denomination, tenor and date as the B Warrant Certificate so lost, stolen, mutilated or destroyed. Any such new B Warrant Certificate shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed B Warrant Certificate shall be at any time enforceable by anyone.

 

(c)           Reservation of Common Stock.  The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common Stock that will be sufficient to permit the exercise in full of all outstanding B Warrants issued pursuant to this Agreement.

 

(d)           Registration of Common Stock.  The Company agrees that prior to the commencement of the Exercise Period, it shall use its best efforts to prepare and file with the Securities and Exchange Commission a post-effective amendment to the registration statement, or a new registration statement, for the registration under the Act of the Common Stock issuable upon exercise of the B Warrants, and it shall take such action as is necessary to qualify for sale, in those states in which the B Warrants were initially offered by the Company, the Common Stock issuable upon exercise of the B Warrants. In either case, the Company will use its best efforts to cause the same to become effective on or prior to the commencement of the Exercise Period and to maintain the effectiveness of such registration statement and ensure that a prospectus is available for delivery to the B Warrant holders until the expiration of the B Warrants in accordance with the provisions of this Agreement.  Except as provided in Section 1(c)(ii) of this B Warrant Certificate, the B Warrants shall not be exercisable and the Company shall not be obligated to issue Common Stock unless, at the time a holder seeks to exercise B Warrants, a prospectus related to the Common Stock issuable upon exercise of the B Warrants is current and the Common Stock has been registered or qualified under the laws of the state of residence of the holder of the B Warrants or unless the issuance of the Common Stock is deemed to be exempt from such requirements.  In addition, the Company agrees to use its best efforts to register such securities under the blue sky laws of the states of residence of exercising B Warrant holders, if permitted by the blue sky laws of such jurisdictions, in the event that an exemption is not available.

 

  

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(e)           Notices.  Any notice, statement or demand authorized by this Certificate to be given or made by the Company or by the holder of the B Warrants to or on the Company shall be delivered by hand or sent by registered or certified mail or overnight courier service, addressed (until another address is provided in writing by the Company) as follows:

 

Good Times Restaurants Inc.

601 Corporate Circle

Golden, CO 80401

Attn:  President and CEO

Any notice, sent pursuant to this Certificate shall be effective, if delivered by hand, upon receipt thereof by the party to whom it is addressed, if sent by overnight courier, on the next business day of the delivery to the courier, and if sent by registered or certified mail on the third day after registration or certification thereof.

 

(f)           Applicable Law.  The validity, interpretation, and performance of this Certificate and of the B Warrants shall be governed in all respects by the laws of the State of Nevada, without giving effect to any conflict of laws principles. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way to this Certificate and to the B Warrants shall be brought and enforced in the courts of the State of Nevada or the United States District Court for the District of Nevada, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any such process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 5(e) hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim.

 

GOOD TIMES RESTAURANTS INC.

 

	
By:

	  	  
	  	
Boyd E. Hoback, President & CEO

	  

	
By:

	  	  
	  	
Susan M. Knutson, Secretary

	  

 

 

 

 

 

 

  

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GOOD TIMES RESTAURANTS INC.

 

SUBSCRIPTION FORM

 

(To Be Executed by the B Warrantholder in Order to Exercise B Warrants)

 

The undersigned B Warrantholder hereby irrevocably elects to exercise __________ B Warrants represented by this B Warrant Certificate, and to purchase the shares of Common Stock issuable upon the exercise of such B Warrants.  Payment shall take the form of (check applicable box):

 

o in lawful money of the United States by certified check made payable to the Company or by wire transfer of immediately available funds to an account designated by the Company; or

 

 

o if permitted by the terms of the B Warrant Certificate, the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 1(c)(ii), to exercise the B Warrants with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 1(c)(ii).

 

 

The undersigned B Warrantholder requests that certificates for such shares shall be issued in the name of:

 

	
Name:   

	  	  
	
Address:   

	  	  
	  	  	  
	
Tax Identification Number:   

	  	  

 

 

and be delivered to:

 

 

 

	
Name:   

	  	  
	
Address:   

	  	  
	  	  	  

 

 

and, if the number of B Warrants shall not be all the B Warrants evidenced by this B Warrant Certificate, that a new B Warrant Certificate for the balance of such B Warrants be registered in the name of, and delivered to, the B Warrantholder at the address stated below.

 

 

	
Dated:

	  	  	  	  	
Signature: 

	  	  
	 	 	 	 	 	Address   	 	 

	 	  	  	  	  	
Tax Identification Number

	  	  

 

 Signature Guaranteed:

 

	  	  

 

 

THE SIGNATURE TO THIS B WARRANT EXERCISE FORM MUST CORRESPOND TO THE NAME WRITTEN UPON THE FACE OF THIS B WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR CHICAGO STOCK EXCHANGE.

 

  

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GOOD TIMES RESTAURANTS INC.

 

ASSIGNMENT

 

(To Be Executed by the B Warrantholder in Order to Assign B Warrants)

 

 

 

For Value Received, ____________________ hereby sells, assigns and transfers unto:

 

 

	
Name:   

	  	  
	  	  	  
	
Address:   

	  	  
	  	  	  
	  	  	  
	  	  	  
	
Tax Identification Number:   

	  	  

 

_________ of the B Warrants represented by this B Warrant Certificate, and hereby irrevocably constitutes and appoints ____________________ Attorney to transfer this B Warrant Certificate on the books of the Company, with full substitution in the premises.

 

 

                                                             

 

	
Dated:

	  	  	  	  	
Signature: 

	  	  

 

 

 

 

Signature Guaranteed:

 

 

 

 

	  	  

 

 

THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND TO THE NAME WRITTEN UPON THE FACE OF THIS B WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR CHICAGO STOCK EXCHANGE.

 

 

 - 9 -ex4-1.htm

Exhibit 4.1

 

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS INVOLVED.

	
Warrant to Purchase

	  
	
279,851 shares

	
 Warrant Number M-1

Common Stock Purchase Warrant

of

Lucas Energy, Inc.

THIS CERTIFIES that Robertson Global Credit, LLC, or any subsequent holder hereof (“Robertson”) has the right to purchase from Lucas Energy, Inc., a Nevada company (“LEI”), Two Hundred and Seventy-Nine Thousand Eight Hundred and Fifty-One (279,851) fully paid and nonassessable shares, of LEI's common stock, $0.001 par value per share (“Common Stock”), subject to adjustment as provided herein, at a price equal to the Exercise Price as defined in Section 3 below, at any time during the Term of this Warrant (as defined below).

Robertson agrees with LEI that this Common Stock Purchase Warrant of LEI (this “Warrant” or this “Agreement”) is issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions set forth herein.

1.           Date of Issuance and Term; Ownership Limitation.

This Warrant shall be deemed to be granted on August 13, 2013 (“Date of Issuance”), provided that the grant of this Warrant and the issuance of any Warrant Shares (as defined below) shall be subject in all cases to the listing of the Warrant Shares on the NYSE MKT and the execution by Robertson of the Accredited Investor Certification attached hereto.  The term of this Warrant begins on the Date of Issuance and ends at 5:00 p.m., Central Standard Time, on the earlier of the date (a) that is five (5) years after the Date of Issuance, or (b) three (3) years after the date of payment in full by LEI of all obligations due on the Loan Agreement (the “Term”).  This Warrant was issued in conjunction with the entry by Louise H. Rogers and LEI into a Letter Loan Agreement on August 13, 2013 (the “Loan Agreement”). Capitalized terms not defined herein shall have the meanings ascribed to such terms as provided in the Loan Agreement and exhibits thereto.

 

 

 

 

 

 

 

 

 

 

Common Stock Purchase Warrant (#M-1)

Lucas Energy, Inc.

Page  1 of 14

  

  

Notwithstanding anything to the contrary herein, the applicable portion of this Warrant shall not be exercisable during any time that, and only to the extent that, the number of shares of Common Stock to be issued to Robertson upon such Exercise (as defined in Section 2(a)), when added to the number of shares of Common Stock, if any, that Robertson otherwise beneficially owns (outside of this Warrant, and not including any other warrants or securities of Robertson’s having a provision substantially similar to this paragraph) at the time of such Exercise, would exceed 4.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon Exercise of this Warrant held by Robertson, as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Beneficial Ownership Limitation”).  The Beneficial Ownership Limitation shall be conclusively satisfied if the applicable Notice of Exercise includes a signed representation by Robertson that the issuance of the shares in such Notice of Exercise will not violate the Beneficial Ownership Limitation, and LEI shall not be entitled to require additional documentation of such satisfaction.

The Beneficial Ownership Limitation provisions of this Section 1 may be waived by Robertson, at the election of Robertson, upon not less than sixty-one (61) days’ prior written notice to LEI, to change the Beneficial Ownership Limitation to any other percentage of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon Exercise of the Warrants held by Robertson.  The provisions of this paragraph shall be construed or implemented in a manner in strict conformity with the terms of this Section 1 which may include, but not be limited to correcting this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

2.           Exercise.

(a) Manner of Exercise. During the Term and upon occurrence of an Exercise Event, this Warrant may be Exercised as to all or any lesser number of full shares of Common Stock covered hereby (the “Warrant Shares” or the “Shares”) upon surrender of this Warrant, with the Notice of Exercise Form attached hereto as Exhibit A (the “Notice of Exercise”) duly completed and executed, together with the full Exercise Price (as defined below, which may be satisfied by either a Cash Exercise or a Cashless Exercise, as each is defined below, provided a Cashless Exercise may not be used until after six (6) months from the date hereof and a Cashless exercise may not be used if the Warrant Shares have been registered with the Securities and Exchange Commission) for each share of Common Stock as to which this Warrant is Exercised, provided that the holder shall be prohibited from exercising any portion of this Warrant until the earlier of (a) the repayment in full of the Loan; or (b) the occurrence of an Event of Default under the Loan Agreement (each (a) and (b), an “Exercise Event”). The Notice of Exercise shall be delivered to the office of LEI, Attn: Secretary; Lucas Energy, Inc., 3555 Timmons Lane, Suite 1550, Houston, Texas 77027 or at such other location as LEI may then be located or such other office or agency as LEI may designate in writing, by overnight mail, by facsimile (such surrender and payment of the Exercise Price hereinafter called the “Exercise” of this Warrant).  In the case of a Cashless Exercise, the Exercise Price is deemed to have been delivered upon Robertson’s delivery of a Notice of Exercise to LEI.

 

 

 

 

 

 

 

 

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(b)  Date of Exercise.  The “Date of Exercise” of the Warrant shall be defined as the date that a copy of the Notice of Exercise Form attached hereto as Exhibit A, completed and executed, is sent by facsimile to LEI or its transfer agent (“Transfer Agent”) (including but not limited to a scanned “PDF” file which is delivered as an attachment to an e-mail to LEI), provided that the original Warrant (if delivery of the original Warrant is required pursuant to Section 2(h) hereof) and Notice of Exercise Form are received by LEI and the Exercise Price is satisfied, each as soon as practicable thereafter.  Alternatively, the Date of Exercise shall be defined as the date the original Notice of Exercise Form is received by LEI, if Robertson has not sent advance notice by facsimile.  Upon delivery of the Notice of Exercise Form to LEI by facsimile or otherwise, Robertson shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such Warrant Shares are credited to Robertson’s DTC account or the date of delivery of the certificates evidencing such Warrant Shares as the case may be.  LEI shall deliver any objection to any Notice of Exercise within five (5) Business Days of receipt of such notice.  In the event of any dispute or discrepancy, the records of Robertson shall be controlling and determinative in the absence of manifest error.  "Business Day" shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the City of Houston, Texas are authorized or required by law or executive order to remain closed.

(c)  Delivery of Common Stock Upon Exercise.  Within ten (10) Trading Days from the delivery to LEI of the Notice of Exercise, surrender of this Warrant (if required) and payment of the aggregate Exercise Price (which, in the case of a Cashless Exercise, shall be deemed to have been paid upon the submission by Robertson of a Notice of Exercise)(the “Warrant Shares Delivery Deadline”), LEI shall issue and deliver (or cause its transfer agent to issue and deliver) in accordance with the terms hereof to or upon the order of Robertson that number of shares of Common Stock (“Exercise Shares”) for the portion of this Warrant converted as shall be determined in accordance herewith.  Upon the Exercise of this Warrant or any part thereof, LEI shall, at its own cost and expense, take all necessary action, which shall not include obtaining and delivering an opinion of counsel to assure that LEI's transfer agent shall issue stock certificates in the name of Robertson (or its nominee) or such other persons as designated by Robertson and in such denominations to be specified at Exercise representing the number of shares of Common Stock issuable upon such Exercise, which action shall be the sole responsibility of Robertson. LEI warrants that no instructions other than these instructions have been or will be given to the transfer agent of LEI's Common Stock and that, unless waived by Robertson, in the event the Exercise Shares are eligible to be issued without legend pursuant to Rule 144 under the Securities Act of 1933, as amended (the “1933 Act” or the “Securities Act”) in the reasonable determination of LEI’s counsel, upon receipt from Robertson of an opinion of counsel as to the fact that such Exercise Shares are eligible to be issued without legend, the Exercise Shares will be free-trading, and freely transferable, and will not contain a legend restricting the resale or transferability of the Exercise Shares if the Unrestricted Conditions (as defined below) are met, and Robertson has supplied LEI with an opinion of counsel as to such fact, acceptable to LEI, which acceptance shall not be unreasonably withheld.

 

 

 

 

 

 

 

 

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(d)  Legends.

(i) Restrictive Legend. Robertson understands that (a) the Warrant and, (b) until such time as Exercise Shares have been registered under the 1933 Act, if ever, or, may be sold pursuant to Rule 144 under the 1933 Act without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Exercise Shares, shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such securities):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

(ii) Removal of Restrictive Legends.  Certificates evidencing the Exercise Shares shall not contain any legend restricting the transfer thereof (including the legend set forth above in subsection 2(d)(i)): (i) while a registration statement covering the resale of such security is effective under the Securities Act (provided that Robertson has agreed to sell the Exercise Shares in connection with and pursuant to the registration statement), or (ii) following any valid and applicable sale of such Exercise Shares pursuant to Rule 144, which determination shall be made in the sole determination of LEI’s counsel, provided that LEI may request an opinion from Robertson as to the applicability of such rule, or (iii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Securities and Exchange Commission (the “Commission”)), which determination shall be made in the sole determination of LEI’s counsel (collectively, the “Unrestricted Conditions”). If the Unrestricted Conditions are met at the time of issuance or resale of Exercise Shares, then such Exercise Shares shall be issued free of all legends.

(iii) Sale of Unlegended Shares.  Robertson agrees that the removal of the restrictive legend from certificates representing Securities as set forth in Section 2(d)(i) above is predicated upon LEI’s reliance that Robertson will sell any Exercise Shares pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

 

 

 

 

 

 

 

 

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(e) Cancellation of Warrant.  This Warrant shall be cancelled upon the full Exercise of this Warrant, and, as soon as practical after the Date of Exercise, Robertson shall be entitled to receive Common Stock for the number of shares purchased upon such Exercise of this Warrant, and if this Warrant is not Exercised in full and Robertson has delivered an original copy of the Warrant, Robertson shall be entitled to receive a new Warrant (containing terms identical to this Warrant) representing any unexercised portion of this Warrant in addition to such Common Stock.

(f)  Holder of Record.  Each person in whose name any Warrant for shares of Common Stock is issued shall, for all purposes, be deemed to be the holder of record of such shares on the Date of Exercise of this Warrant, irrespective of the date of delivery of the Common Stock purchased upon the Exercise of this Warrant.  Nothing in this Warrant shall be construed as conferring upon Robertson any rights as a stockholder of LEI.

(g)  Delivery of Electronic Shares.   In lieu of delivering physical certificates representing the unlegended shares of Common Stock issuable upon Exercise (the “Unlegended Shares”), provided LEI’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon written request of Robertson, so long as the certificates therefor do not bear a legend, and are not required to bear a legend, and Robertson is not obligated to return such certificate for the placement of a legend thereon, LEI shall cause its transfer agent to electronically transmit the Unlegended Shares to Robertson by crediting the account of Robertson's broker with DTC identified in the written request through its Deposit Withdrawal Agent Commission (“DWAC”) system. Otherwise, delivery of the Common Stock shall be by physical delivery to the address specified by Robertson in the Notice of Exercise.  The time periods for delivery and liquidated damages described herein shall apply to the electronic transmittals described herein, or to physical delivery, whichever is applicable.

(h)  Surrender of Warrant Upon Exercise; Book-Entry.  Notwithstanding anything to the contrary set forth herein, upon Exercise of this Warrant in accordance with the terms hereof, Robertson shall not be required to physically surrender the original Warrant Certificate to LEI unless all of this Warrant is Exercised, in which case Robertson shall deliver the original Warrant being Exercised to LEI promptly following the Date of Exercise at issue.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  Robertson and LEI shall maintain records showing the amount of this Warrant that is Exercised and the dates of such Exercises or shall use such other method, reasonably satisfactory to Robertson and LEI, so as not to require physical surrender of this original Warrant upon each such Exercise.  In the event of any dispute or discrepancy, such records of Robertson shall be controlling and determinative in the absence of manifest error.  Robertson and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

 

 

 

 

 

 

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3.           Payment of Warrant Exercise Price.

The Exercise Price (“Exercise Price”) shall be $1.35 per share, subject to adjustment pursuant to the terms hereof, including but not limited to Section 5 below.

Payment of the Exercise Price may be made by either of the following, or a combination thereof, at the election of Robertson:

(i)      Cash Exercise: Robertson may exercise this Warrant in cash, via bank or cashier’s check or via wire transfer (a “Cash Exercise”); or

(ii)     Cashless Exercise:  Robertson, at its option, in the event the Warrant Shares have not been registered with the Securities and Exchange Commission, and in the event the Market Price (defined below) of LEI’s Common Stock is greater than the Exercise Price, may exercise this Warrant in one or more cashless exercise transactions any time after (a) the occurrence of an Exercise Event and (b) the expiration of six (6) months from the Date of Issuance then in effect covering the resale of the Warrant Shares issuable upon such exercise, subject to the following sentence.  In the event a registration statement is in effect which relates to some or all of the Warrant Shares, Robertson shall be required to affect a Cash Exercise of this Warrant until such time as Robertson has extinguished the full number of registered Warrant Shares, at which time Robertson shall be eligible for a Cashless Exercise for the remaining unregistered Warrant Shares, if any. In order to effect a Cashless Exercise, Robertson shall surrender this Warrant at the principal office of LEI together with notice of cashless election, in which event LEI shall issue Robertson a number of shares of Common Stock computed using the following formula (a “Cashless Exercise”), assuming that the Exercise Price is less than the Market Price (as defined below):

X = Y (A-B)/A

where:    X = the number of shares of Common Stock to be issued to Robertson.

Y = the number of shares of Common Stock for which this Warrant is beingExercised.

A = the Market Price of one (1) share of Common Stock (for purposes of this Section 3(ii), where “Market Price,” as of any date, means the average of the  Closing Prices of LEI’s Common Stock during the five (5) consecutive Trading Day period immediately preceding the date of Exercise, or other applicable date).

B = the Exercise Price.

As used herein, the term “Closing Price” for any security as of any date means the last sales price of the security as reported by, or based upon data reported by, Bloomberg L.P. or an equivalent, reliable reporting service mutually acceptable to and hereafter designated by holders of a majority in interest of the Warrants and LEI (“Bloomberg”). If the Closing Price cannot be calculated for such security on such date in the manner provided above or if LEI’s Common Stock is not publicly-traded, the Closing Price shall be the fair market value as mutually determined by LEI and Robertson. “Trading Day” shall mean any day on which the Common Stock is traded for any period on a principal securities exchange or other securities market on which the Common Stock is then being traded.

 

 

 

 

 

 

 

 

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For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended, understood and acknowledged that the Common Stock issuable upon Exercise of this Warrant in a Cashless Exercise transaction shall be deemed to have been acquired at the time this Warrant was issued.  Moreover, it is intended, understood and acknowledged that the holding period for the Common Stock issuable upon Exercise of this Warrant in a Cashless Exercise transaction shall be deemed to have commenced on the date this Warrant was issued.

4.           Transfer and Registration. Subject to the provisions of Section 8 of this Warrant, this Warrant may be transferred on the books of LEI, in whole or in part, in person or by attorney, upon surrender of this Warrant properly completed and endorsed.  This Warrant shall be cancelled upon such surrender and, as soon as practicable thereafter, the person to whom such transfer is made shall be entitled to receive a new Warrant or Warrants as to the portion of this Warrant transferred, and Robertson shall be entitled to receive a new Warrant as to the portion hereof retained.

5.           Adjustments; Additional Adjustments; Purchase Rights.

(a)  Recapitalization or Reclassification.  If LEI shall at any time prior to the end of the Term, effect a recapitalization, reclassification or other similar transaction of such character that the shares of Common Stock shall be changed into or become exchangeable for a larger or smaller number of shares, then upon the effective date thereof, the number of shares of Common Stock which Robertson shall be entitled to purchase upon Exercise of this Warrant shall be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of Common Stock by reason of such recapitalization, reclassification or similar transaction, and the Exercise Price shall be, in the case of an increase in the number of shares, proportionally decreased and, in the case of a decrease in the number of shares, proportionally increased.  LEI shall give Robertson the same notice it provides to holders of Common Stock of any transaction described in this Section 5(a).

(b)  Exercise Price Adjusted.  As used in this Warrant, the term “Exercise Price” shall mean the purchase price per share specified in Section 3 of this Warrant, until the occurrence of an event stated in this Section 5 or otherwise set forth in this Warrant, and thereafter shall mean said price as adjusted from time to time in accordance with the provisions of said subsection.  No such adjustment under this Section 5 shall be made unless such adjustment would change the Exercise Price at the time by $.01 or more; provided, however, that all adjustments not so made shall be deferred and made when the aggregate thereof would change the Exercise Price at the time by $.01 or more. No adjustment made pursuant to any provision of this Section 5 shall have the net effect of increasing the Exercise Price in relation to the split adjusted and distribution adjusted price of the Common Stock.

 

 

 

 

 

 

 

 

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(c)  Adjustments: Additional Shares, Securities or Assets.  In the event that at any time, as a result of an adjustment made pursuant to this Section 5 or otherwise, Robertson shall, upon Exercise of this Warrant, become entitled to receive shares and/or other securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5.

(d)  Subdivision or Combination of Common Stock.  If LEI at any time prior to the end of the Term subdivides (by any stock split, stock dividend, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a greater number of shares, then, after the date of record for effecting such subdivision, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of shares represented by this Warrant shall proportionally increase.  If LEI at any time combines (by reverse stock split, recapitalization, reorganization, reclassification or otherwise) the shares of Common Stock acquirable hereunder into a smaller number of shares, then, after the date of record for effecting such combination, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of shares represented by this Warrant shall proportionally decrease.

(e)  Voluntary Adjustment By Company. LEI 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 LEI (a “Voluntary Adjustment”).

(f)  Adjustment to Number of Shares.  In the event of any adjustment to the Exercise Price prior to the expiration of the Term of this Warrant, pursuant to the terms of this Warrant, including but not limited to any Voluntary Adjustment, the number of Warrant Shares issuable upon Exercise of this Warrant shall be increased such that the aggregate Exercise Price payable in a full Cash Exercise hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price payable in a full Cash Exercise prior to such adjustment, and the number of Warrant Shares issuable in a Cashless Exercise shall be increased accordingly.

(g)  Notice of Adjustments; Notice Failure Adjustment.  Whenever the Exercise Price is required to be adjusted pursuant to the terms of this Warrant, LEI shall within Five (5) Business Days mail to Robertson a notice (an “Exercise Price Adjustment Notice”) setting forth the new Exercise Price and specifying the new number of shares into which the Warrant is convertible after such adjustment and setting forth a statement of the facts requiring such adjustment. LEI shall, upon the written request at any time of Robertson, furnish to Robertson a like Warrant setting forth (i) such adjustment or readjustment, (ii) the Exercise Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon Exercise of the Warrant, following delivery of the original Warrant to LEI for exchange.  For purposes of clarification, whether or not LEI provides an Exercise Price Adjustment Notice pursuant to this Section 5(g), upon the occurrence of any event that leads to an adjustment of the Exercise Price, Robertson is entitled to receive an Exercise Price and a number of Exercise Shares based upon the new Exercise Price, as adjusted, for exercises occurring on or after the date of such adjustment, regardless of whether Robertson accurately refers to the adjusted Exercise Price in the Notice of Exercise.  

 

 

 

 

 

 

 

 

 

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6.           Fractional Interests. No fractional shares or scrip representing fractional shares shall be issuable upon the Exercise of this Warrant, but on Exercise of this Warrant, Robertson may purchase only a whole number of shares of Common Stock.  If, on Exercise of this Warrant, Robertson would be entitled to a fractional share of Common Stock or a right to acquire a fractional share of Common Stock, such fractional share shall be disregarded and the number of shares of Common Stock issuable upon Exercise shall be the next closest number of whole shares.

7.           Reservation of Shares. From and after the date hereof, LEI shall at all times reserve for issuance such number of authorized and unissued shares of Common Stock (or other securities substituted therefor as herein above provided) equal to 100% (the “Minimum Warrant Share Reservation Amount”) of such number as shall be sufficient for the Exercise of this Warrant and payment of the Exercise Price in full. If at any time the number of shares of Common Stock authorized and reserved for issuance is below 100% of the number of shares sufficient for the Exercise of this Warrant (a “Share Authorization Failure”)(based on the Exercise Price in effect from time to time), LEI will promptly take all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a special meeting of stockholders to authorize additional shares to meet LEI's obligations under this Section 7, in the case of an insufficient number of authorized shares, and using its best efforts to obtain stockholder approval of an increase in such authorized number of shares such that the number of shares authorized and reserved for the Exercise of this Warrant shall exceed the Minimum Warrant Share Reservation Amount. LEI covenants and agrees that upon the Exercise of this Warrant, all shares of Common Stock issuable upon such Exercise shall be duly and validly issued, fully paid, nonassessable and not subject to liens, claims, preemptive rights, rights of first refusal or similar rights of any person or entity.

8.           Restrictions on Transfer.

(a) Registration or Exemption Required.  This Warrant has been issued in a transaction exempt from the registration requirements of the Act by virtue of Regulation D of the 1933 Act. The Warrant and the Common Stock issuable upon the Exercise of this Warrant may not be transferred, sold or assigned except pursuant to an effective registration statement or an exemption to the registration requirements of the Act and applicable state laws.

(b) Assignment.  If Robertson can provide LEI with reasonably satisfactory evidence that the conditions above regarding registration or exemption have been satisfied, Robertson may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part. Robertson shall deliver a written notice to Company, substantially in the form of the Assignment reasonably requested by LEI, indicating the person or persons to whom the Warrant shall be assigned and the respective number of warrants to be assigned to each assignee. LEI shall effect the assignment within ten (10) days of receipt of such notice, and shall deliver to the assignee(s) designated by Robertson a Warrant or Warrants of like tenor and terms for the appropriate number of shares.

 

 

 

 

 

 

 

 

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9.           Non-circumvention.  LEI hereby covenants and agrees that LEI will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, 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, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be required to protect the rights of Robertson.  Without limiting the generality of the foregoing, LEI (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, and (ii) shall take all such actions as may be necessary or appropriate in order that LEI may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.

11.          Remedies, Other Obligations, Breaches and Injunctive Relief.  The remedies provided in this Warrant, if any, shall be cumulative and in addition to all other remedies available under this Warrant, at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of Robertson to pursue actual damages for any failure by LEI to comply with the terms of this Warrant.  LEI acknowledges that a breach by it of its obligations hereunder could cause irreparable harm to Robertson and that the remedy at law for any such breach may be inadequate.  LEI therefore agrees that, in the event of any such breach or threatened breach, Robertson of this Warrant could seek, in addition to all other available remedies, an injunction restraining any breach.

12.          Dispute Resolution. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the number of Warrant Shares issuable upon any exercise of this Warrant, LEI shall promptly issue to Robertson the number of Warrant Shares that are not disputed and resolve such dispute in accordance with this subsection.  In the case of a dispute as to the arithmetic calculation of the Exercise Price, LEI shall submit the disputed determinations or arithmetic calculations via facsimile within five (5) Business Days of receipt, or deemed receipt, of the Notice of Exercise or Redemption Notice or other event giving rise to such dispute, as the case may be, to Robertson. If Robertson and LEI are unable to agree upon such determination or calculation within five (5) Business Days of such disputed determination or arithmetic calculation being submitted to Robertson, then LEI shall, within five (5) Business Days submit via facsimile, the disputed arithmetic calculation of the Exercise Price to LEI’s independent, outside accountant or any other matter referred to above that is not expressly designated to the independent investment bank or the independent outside accountant pursuant to an expert attorney from a nationally recognized outside law firm (having at least 50 attorneys and having with no prior relationship with LEI) selected by LEI and approved by Robertson. LEI, at LEI’s expense, shall cause the investment bank or the accountant, law firm, or other expert, as the case may be, to perform the determinations or calculations and notify LEI and Robertson of the results no later than five (5) Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error (collectively, the “Dispute Resolution Procedures”). 

 

 

 

 

 

 

 

 

 

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13.           Benefits of this Warrant. Nothing in this Warrant shall be construed to confer upon any person other than LEI and Robertson any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of LEI and Robertson.

14.           Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Texas, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of Houston, Texas.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Houston, Texas for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Loan Documents (as defined in the Loan Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.  The parties hereby waive all rights to a trial by jury.  If either party shall commence an action or proceeding to enforce any provisions of this Agreement, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

15.           Loss of Warrant. Upon receipt by LEI of evidence of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to LEI, and upon surrender and cancellation of this Warrant, if mutilated, LEI shall execute and deliver a new Warrant of like tenor and date within ten (10) Business Days.

 

 

 

 

 

 

 

 

 

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16.      Notice or Demands.  Notices or demands pursuant to this Warrant to be given or made by Robertson to or on LEI shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, until another address is designated in writing by LEI, to the address set forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be given or made by LEI to or on Robertson shall be sufficiently given or made if sent by certified or registered mail, return receipt requested, postage prepaid, and addressed, to the address of Robertson set forth in LEI’s records, until another address is designated in writing by Robertson.

17.       Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of LEI and Robertson.

18.            Capacity.   Each signatory below confirms and acknowledges that they have received valid authorization and that each respective party has authorized such signatory to sign this Warrant on such party’s behalf.

 

 

19.           Effect of Facsimile and Photocopied Signatures. This Warrant may be executed in several counterparts, each of which is an original.  It shall not be necessary in making proof of this Warrant or any counterpart hereof to produce or account for any of the other counterparts.  A copy of this Warrant signed by one party and faxed to another party shall be deemed to have been executed and delivered by the signing party as though an original.  A photocopy of this Warrant shall be effective as an original for all purposes.

[Remainder of page left intentionally blank.  Signature page follows.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the 13th day of August 2013.

 

	 	 	
Lucas Energy, Inc.

By: /s/ Anthony C. Schnur               

Its: Chief Executive Officer

Printed Name: Anthony C. Schnur

Date: August 13, 2013

	 	 	 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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EXHIBIT A

NOTICE OF EXERCISE FORM FOR WARRANT

TO:  LUCAS ENERGY, INC.

The undersigned hereby irrevocably Exercises the right to purchase ____________ of the shares of Common Stock (the “Common Stock”) of LUCAS ENERGY, INC., a Nevada company ( “LEI”), evidenced by the attached Common Stock Purchase Warrant (#M-1, the “Warrant”), and herewith makes payment of the applicable Exercise Price with respect to such shares in full, all in accordance with the conditions and provisions of said Warrant.

1.           The undersigned agrees not to offer, sell, transfer or otherwise dispose of any of the Common Stock obtained on Exercise of the Warrant, except in accordance with the applicable provisions of the Warrant.

2.           The undersigned requests that stock certificates for such shares be issued free of any restrictive legend, if appropriate, and a warrant representing any unexercised portion hereof be issued, pursuant to the Warrant in the name of the undersigned and delivered to the undersigned at the address set forth below:

Dated:________

________________________________________________________________________

Signature

_______________________________________________________________________

Print Name

_______________________________________________________________________

IF Entity, Entity Name

_______________________________________________________________________

Signatory’s Position With Entity

________________________________________________________________________

Address

_______________________________________________________________________

NOTICE

The signature to the foregoing Notice of Exercise Form must correspond to the name as written upon the face of the attached Warrant in every particular, without alteration or enlargement or any change whatsoever.

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Common Stock Purchase Warrant (#M-1)

Lucas Energy, Inc.

Page  14 of 14

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