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Exhibit 4.2
Exhibit
B
THE SECURITIES REPRESENTED
HEREBY MAY NOT BE TRANSFERRED UNLESS (I) SUCH SECURITIES HAVE
BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD PURSUANT
TO RULE 144 WITHOUT RESTRICTION, OR (III) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933 OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT SECURED BY THE
SECURITIES
ARKANOVA ENERGY CORP.
WARRANT TO PURCHASE 250,000 SHARES OF
COMMON STOCK, PAR VALUE $0.001 PER SHARE
For VALUE RECEIVED, The
John Thomas Bridge & Opportunity Fund
(“Warrantholder”), is entitled to purchase,
subject to the provisions of this Warrant, from Arkanova
Energy Corp., a Nevada corporation (“Company”),
at any time from and after the date hereof (the
“Initial Exercise Date”) and not later than 5:00
P.M., Eastern time, on March 31, 2013 (the “Expiration
Date”), at an exercise price per share equal to $0.65
(the exercise price in effect being herein called the
“Warrant Price”), 250,000 shares (“Warrant
Shares”) of the Company’s Common Stock, par value
$0.001 per share (“Common Stock”). The
number of Warrant Shares purchasable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment
from time to time as described herein.
This Warrant is issued by
the Company pursuant to that certain Purchase Agreement dated
March 19, 2008, among the Company and the Warrantholder (the
“Purchase Agreement”).
Section
1.
Registration
. The Company shall maintain books for the
transfer and registration of the Warrant. Upon the
initial issuance of this Warrant, the Company shall issue and
register the Warrant in the name of the
Warrantholder.
Section
2.
Transfers
. As provided herein, this Warrant may be
transferred only pursuant to a registration statement filed
under the Securities Act of 1933, as amended (the
“Securities Act”), or an exemption from such
registration. Subject to such restrictions, the
Company shall transfer this Warrant from time to time upon
the books to be maintained by the Company for that purpose,
upon surrender hereof for transfer, properly endorsed or
accompanied by appropriate instructions for transfer and such
other documents as may be reasonably required by the Company,
including, if required by the Company, an opinion of its
counsel to the effect that such transfer is exempt from the
registration requirements of the Securities Act, to establish
that such transfer is being made in accordance with the terms
hereof, and a new Warrant shall be issued to the transferee
and the surrendered Warrant shall be canceled by the
Company.
Section
3.
Exercise of
Warrant . Subject to the provisions hereof,
the Warrantholder may exercise this Warrant, in whole or in
part, at any time after the Initial Exercise Date and prior
to the Expiration Date upon surrender of the Warrant,
together with delivery of a duly executed Warrant exercise
form, in the form attached hereto as Appendix A (the
“Exercise Agreement”) and payment by cash,
certified check, wire transfer of funds, or by cashless exercise (as provided below)
of the aggregate Warrant Price for that number of
Warrant Shares then being purchased, to the Company during
normal business hours on any business day at the
Company’s principal executive offices (or such other
office or agency of the Company as it may designate by notice
to the Warrantholder). Upon a determination by
Warrantholder to avail itself of the cashless exercise
provision, the Company shall issue to the Warrantholder such
number of fully paid, validly issued and nonassessable shares
of Common Stock as is computed using the following
formula:
X
= Y
(A - B)
A
where
X
= the
number of shares of Common Stock to which the Warrantholder is
entitled upon such cashless exercise;
Y
= the
total number of shares of Common Stock covered by this Warrant
for which the Warrantholder has surrendered purchase rights at
such time for cashless exercise (including both shares to be
issued to the Warrantholder and shares as to which the
purchase rights are to be canceled as payment
therefor);
A
= the
“Market Price” of one share of Common Stock as of
the date the net issue election is made; and
B
= the
Warrant Price in effect under this Warrant at the time the net
issue election is made.
The
Warrant Shares so purchased shall be deemed to be issued to
the Warrantholder or the Warrantholder’s designee, as
the record owner of such shares, as of the close of business
on the date on which this Warrant shall have been surrendered
(or the date evidence of loss, theft or destruction thereof
and security or indemnity satisfactory to the Company has been
provided to the Company), the Warrant Price shall have been
paid and the completed Exercise Agreement shall have been
delivered. Certificates for the Warrant Shares so
purchased shall be delivered to the Warrantholder within a
reasonable time, not exceeding three (3) business days, after
this Warrant shall have been so exercised. The
certificates so delivered shall be in such denominations as
may be requested by the Warrantholder and shall be registered
in the name of the Warrantholder or such other name as shall
be designated by the Warrantholder, as specified in the
Exercise Agreement. If this Warrant shall have been
exercised only in part, then, unless this Warrant has expired,
the Company shall, at its expense, at the time of delivery of
such certificates, deliver to the Warrantholder a new Warrant
representing the right to purchase the number of shares with
respect to which this Warrant shall not then have been
exercised. As used herein, “business
day” means a day, other than a Saturday or Sunday, on
which banks in New York City are open for the general
transaction of business. Each exercise hereof shall
constitute the re-affirmation by the Warrantholder that the
representations and warranties contained in Section 5 of the
Purchase Agreement are true and correct in all material
respects with respect to the Warrantholder as of the time of
such exercise. Notwithstanding the foregoing, to
effect the exercise of the Warrant hereunder, the
Warrantholder shall not be required to physically surrender
this Warrant to the Company unless the entire Warrant is
exercised. The Warrantholder and the Company shall
maintain records showing the amount exercised and the dates of
such exercise. The Warrantholder and any assignee,
by acceptance of this Warrant, acknowledge and agree that, by
reason of the provision of the paragraph, following exercise
of a portion of the Warrant, the number of Warrant Shares of
this Warrant may be less than the amount stated on the face
hereof.
Section
4.
Compliance with
the Securities Act of 1933 . Except as provided in the
Purchase Agreement, the Company may cause the legend set
forth on the first page of this Warrant to be set forth on
each Warrant, and a similar legend on any security issued or
issuable upon exercise of this Warrant, unless counsel for
the Company is of the opinion as to any such security that
such legend is unnecessary.
Section
5.
Payment of
Taxes . The Company will pay any
documentary stamp taxes attributable to the initial issuance
of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to
pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any
certificates for Warrant Shares in a name other than that of
the Warrantholder in respect of which such shares are issued,
and in such case, the Company shall not be required to issue
or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company
the amount of such tax or has established to the
Company’s reasonable satisfaction that such tax has
been paid. The Warrantholder shall be responsible
for income taxes due under federal, state or other law, if
any such tax is due.
Section
6.
Mutilated or
Missing Warrants . In case this Warrant
shall be mutilated, lost, stolen, or destroyed, the Company
shall issue in exchange and substitution of and upon
surrender and cancellation of the mutilated Warrant, or in
lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and for the purchase
of a like number of Warrant Shares, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a
lost, stolen or destroyed Warrant, reasonable indemnity or
bond with respect thereto, if requested by the
Company.
Section
7.
Reservation of
Common Stock . At any time when this
Warrant is exercisable, the Company shall at all applicable
times keep reserved until issued (if necessary) as
contemplated by this Section 7, out of the authorized and
unissued shares of Common Stock, sufficient shares to provide
for the exercise of the rights of purchase represented by
this Warrant. The Company agrees that all Warrant
Shares issued upon due exercise of the Warrant shall be, at
the time of delivery of the certificates for such Warrant
Shares, duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the
Company.
Section
8.
Adjustments
. Subject and pursuant to the provisions of this
Section 8, the Warrant Price and number of Warrant Shares
subject to this Warrant shall be subject to adjustment from
time to time as set forth hereinafter.
(a) If
the Company shall, at any time or from time to time while
this Warrant is outstanding, pay a dividend or make a
distribution on its Common Stock in shares of Common Stock,
subdivide its outstanding shares of Common Stock into a
greater number of shares or combine its outstanding shares of
Common Stock into a smaller number of shares or issue by
reclassification of its outstanding shares of Common Stock
any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing corporation), then (i)
the Warrant Price in effect immediately prior to the date on
which such change shall become effective shall be adjusted by
multiplying such Warrant Price by a fraction, the numerator
of which shall be the number of shares of Common Stock
outstanding immediately prior to such change and the
denominator of which shall be the number of shares of Common
Stock outstanding immediately after giving effect to such
change and (ii) the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted by multiplying the
number of Warrant Shares purchasable upon exercise of this
Warrant immediately prior to the date on which such change
shall become effective by a fraction, the numerator of which
is shall be the Warrant Price in effect immediately prior to
the date on which such change shall become effective and the
denominator of which shall be the Warrant Price in effect
immediately after giving effect to such change, calculated in
accordance with clause (i) above. Such adjustments
shall be made successively whenever any event listed above
shall occur. Additional adjustments in the
Exercise Price shall be made pursuant to section 8(d) in the
event of the payment of a dividend or distribution on its
Common Stock in shares of Common Stock.
(b) If
any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company
with another corporation in which the Company is not the
survivor, or sale, transfer or other disposition of all or
substantially all of the Company’s assets to another
corporation shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall
thereafter have the right to purchase and receive upon the
basis and upon the terms and conditions herein specified and
in lieu of the Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, such shares of stock,
securities or assets as would have been issuable or payable
with respect to or in exchange for a number of Warrant Shares
equal to the number of Warrant Shares immediately theretofore
issuable upon exercise of the Warrant, had such
reorganization, reclassification, consolidation, merger,
sale, transfer or other disposition not taken place, and in
any such case appropriate provision shall be made with
respect to the rights and interests of each Warrantholder to
the end that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may
be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise
hereof. The Company shall not effect any such
consolidation, merger, sale, transfer or other disposition
unless prior to or simultaneously with the consummation
thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger, or the
corporation purchasing or otherwise acquiring such assets or
other appropriate corporation or entity shall assume the
obligation to deliver to the Warrantholder, at the last
address of the Warrantholder appearing on the books of the
Company, such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the Warrantholder
may be entitled to purchase, and the other obligations under
this Warrant. The provisions of this paragraph (b)
shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales, transfers
or other dispositions.
(c) In
case the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock (including any
such distribution made in connection with a consolidation or
merger in which the Company is the continuing corporation) of
evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions
referred to in Section 8(a)), or subscription rights or
warrants, the Warrant Price to be in effect after such
payment date shall be determined by multiplying the Warrant
Price in effect immediately prior to such payment date by a
fraction, the numerator of which shall be the total number of
shares of Common Stock outstanding multiplied by the Market
Price (as defined below) per share of Common Stock
immediately prior to such payment date, less the fair market
value (as determined by the Company’s Board of
Directors in good faith) of said assets or evidences of
indebtedness so distributed, or of such subscription rights
or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by
such Market Price per share of Common Stock immediately prior
to such payment date. “Market Price”
as of a particular date (the “Valuation Date”)
shall mean the following: (a) if the Common Stock is then
listed on a national stock exchange, the closing sale price
of one share of Common Stock on such exchange on the last
trading day prior to the Valuation Date; (b) if the Common
Stock is then quoted on The Nasdaq Stock Market, Inc.
(“Nasdaq”), the National Association of
Securities Dealers, Inc. OTC Bulletin Board (the
“Bulletin Board”) or such similar quotation
system or association, the closing sale price of one share of
Common Stock on Nasdaq, the Bulletin Board or such other
quotation system or association on the last trading
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