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EXHIBIT 10.23
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF
THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THIS WARRANT
AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY
NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL
REASONABLY
SATISFACTORY TO SOUTH TEXAS OIL COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Right to Purchase 750,000 shares of Common Stock of South Texas
Oil Company
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. WVAM-001
Issue Date: January 31, 2007
Amendment Date: April 1, 2008
SOUTH TEXAS OIL COMPANY, a corporation organized under the laws
of the State of
Nevada (the "COMPANY"), hereby certifies that, for value
received, THE LONGVIEW
FUND, L.P., 600 Montgomery Street, 44th Floor, San Francisco, CA
94111, Fax:
(415) 981-5301, or its assigns (the "HOLDER"), is entitled,
subject to the
terms set forth below, to purchase from the Company at any time
commencing on
the Issue Date and through and until 5:00 p.m., E.S.T on the
fifth (5th)
anniversary of the Issue Date (the "EXPIRATION DATE"), 750,000
fully paid and
nonassessable shares of Common Stock at a per share purchase
price of $10.00.
The aforedescribed purchase price per share, as adjusted from
time to time as
herein provided, is referred to herein as the "PURCHASE PRICE."
The number and
character of such shares of Common Stock and the Purchase Price
are subject to
adjustment as provided herein. The Company may reduce the
Purchase Price of
some or all of the Warrant Shares, permanently or temporarily,
without the
consent of the Holder provided ten days prior notice of such
reduction is given
to the Holder. Capitalized terms used and not otherwise defined
herein shall
have the meanings set forth in that certain Subscription
Agreement (the
"SUBSCRIPTION AGREEMENT"), dated January 31, 2007, entered into
by the Company
and initial Holder of this Warrant.
As used herein the following terms, unless the context otherwise
requires, have
the following respective meanings:
(a) The term "COMPANY" shall mean South Texas Oil Company and
any
corporation which shall succeed or assume the obligations of
South Texas Oil
Company hereunder.
(b) The term "COMMON STOCK" includes (a) the Company's common
stock,
$.001 par value per share, as authorized on the date of the
Subscription
Agreement, and (b) any Other Securities into which or for which
any of the
securities described in (a) may be converted or exchanged
pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "OTHER SECURITIES" refers to any stock (other than
Common
Stock) and other securities of the Company or any other person
(corporate or
otherwise) which the holder of the Warrant at any time shall be
entitled to
receive, or shall have received, on the exercise of the Warrant,
in lieu of or
in addition to Common Stock, or which at any time shall be
issuable or shall
have been issued in exchange for or in replacement of Common
Stock or Other
Securities pursuant to Section 5 or otherwise.
(d) The term "WARRANT SHARES" shall mean the Common Stock
issuable upon
exercise of this Warrant.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after
the
Issue Date through and including the Expiration Date, the Holder
hereof shall
be entitled to receive, upon exercise of this Warrant in whole
in accordance
with the terms of subsection 1.2 or upon exercise of this
Warrant in part in
accordance with subsection 1.3, Common Stock of the Company,
subject to
adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full by
the
Holder hereof by delivery of an original or facsimile copy of
the form of
subscription attached as Exhibit A hereto (the "SUBSCRIPTION
FORM") duly
executed by such Holder and surrender of the original Warrant
within three (3)
days of exercise, to the Company at its principal office or at
the office of
its Warrant Agent (as provided hereinafter), accompanied by
payment, in cash,
wire transfer or by certified or official bank check payable to
the order of
the Company, in the amount obtained by multiplying the number of
shares of
Common Stock for which this Warrant is then exercisable by the
Purchase Price
then in effect.
1.3. Partial Exercise. This Warrant may be exercised in part
(but
not for a fractional share) by surrender of this Warrant in the
manner and at
the place provided in subsection 1.2 except that the amount
payable by the
Holder on such partial exercise shall be the amount obtained by
multiplying
(a) the number of whole shares of Common Stock designated
by the Holder in the Subscription Form by
(b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue and
deliver to or
upon the order of the Holder hereof a new Warrant of like tenor,
in the name of
the Holder hereof or as such Holder (upon payment by such Holder
of any
applicable transfer taxes) may request, the whole number of
shares of Common
Stock for which such Warrant may still be exercised for the
balance of.
1.4. Fair Market Value. Fair Market Value of a share of
Common
Stock as of a particular date (the "DETERMINATION DATE") shall
mean:
(a) If the Company's Common Stock is traded on an exchange
or is quoted on the National Association of Securities Dealers,
Inc. Automated
Quotation ("NASDAQ"), National Market System, the NASDAQ Capital
Market or the
American Stock Exchange, LLC, then the closing or last sale
price,
respectively, reported for the last business day immediately
preceding the
Determination Date;
(b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System, the NASDAQ
Capital Market or
the American Stock Exchange, Inc., but is traded in the
over-the-counter
market, then the average of the closing bid and ask prices
reported for the
last business day immediately preceding the Determination
Date;
(c) Except as provided in clause (d) below, if the
Company's Common Stock is not publicly traded, then as the
Holder and the
Company agree, or in the absence of such an agreement, by
arbitration in
accordance with the rules then standing of the American
Arbitration
Association, before a single arbitrator to be chosen from a
panel of persons
qualified by education and training to pass on the matter to be
decided; or
(d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a
liquidation, dissolution
or winding up pursuant to the Company's charter, then all
amounts to be payable
per share to holders of the Common Stock pursuant to the charter
in the event
of such liquidation, dissolution or winding up, plus all other
amounts to be
payable per share in respect of the Common Stock in liquidation
under the
charter, assuming for the purposes of this clause (d) that all
of the shares of
Common Stock then issuable upon exercise of all of the Warrants
are outstanding
at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time of
the
exercise of the Warrant, upon the request of the Holder hereof
acknowledge in
writing its continuing obligation to afford to such Holder any
rights to which
such Holder shall continue to be entitled after such exercise in
accordance
with the provisions of this Warrant. If the Holder shall fail to
make any such
request, such failure shall not affect the continuing obligation
of the Company
to afford to such Holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a
qualified
bank or trust company shall have been appointed as trustee for
the Holder of
the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have
all the powers and duties of a warrant agent (as hereinafter
described) and
shall accept, in its own name for the account of the Company or
such successor
person as may be entitled thereto, all amounts otherwise payable
to the Company
or such successor, as the case may be, on exercise of this
Warrant pursuant to
this Section 1.
1.7. Delivery of Stock Certificates, etc. on Exercise. The
Company
agrees that the shares of Common Stock purchased upon exercise
of this Warrant
shall be deemed to be issued to the Holder hereof as the record
owner of such
shares as of the close of business on the date on which this
Warrant shall have
been surrendered and payment made for such shares as aforesaid.
As soon as
practicable after the exercise of this Warrant in full or in
part, and in any
event within three (3) business days thereafter ("WARRANT SHARE
DELIVERY
DATE"), the Company at its expense (including the payment by it
of any
applicable issue taxes) will cause to be issued in the name of
and delivered to
the Holder hereof, or as such Holder (upon payment by such
Holder of any
applicable transfer taxes) may direct in compliance with
applicable securities
laws, a certificate or certificates for the number of duly and
validly issued,
fully paid and nonassessable shares of Common Stock (or Other
Securities) to
which such Holder shall be entitled on such exercise, plus, in
lieu of any
fractional share to which such Holder would otherwise be
entitled, cash equal
to such fraction multiplied by the then Fair Market Value of one
full share of
Common Stock, together with any other stock or other securities
and property
(including cash, where applicable) to which such Holder is
entitled upon such
exercise pursuant to Section 1 or otherwise. The Company
understands that a
delay in the delivery of the Warrant Shares after the Warrant
Share Delivery
Date could result in economic loss to the Holder. As
compensation to the Holder
for such loss, the Company agrees to pay (as liquidated damages
and not as a
penalty) to the Holder for late issuance of Warrant Shares upon
exercise of
this Warrant the amount of $100 per business day after the
Warrant Share
Delivery Date for each $10,000 of Purchase Price of Warrant
Shares for which
this Warrant is exercised which are not timely delivered. The
Company shall pay
any payments incurred under this Section in immediately
available funds upon
demand. Furthermore, in addition to any other remedies which may
be available
to the Holder, in the event that the Company fails for any
reason to effect
delivery of the Warrant Shares by the Warrant Share Delivery
Date, the Holder
may revoke all or part of the relevant Warrant exercise by
delivery of a notice
to such effect to the Company whereupon the Company and the
Holder shall each
be restored to their respective positions immediately prior to
the exercise of
the relevant portion of this Warrant, except that the liquidated
damages
described above shall be payable through the date notice of
revocation or
rescission is given to the Company. The maximum amount of
liquidated damages
payable hereunder pursuant to this Section and Section 10 hereof
is fifteen
percent (15%) of the aggregate exercise price.
1.8. Buy-In. In addition to any other rights available to
the
Holder, if the Company fails to deliver to a Holder the Warrant
Shares as
required pursuant to this Warrant, within seven (7) business
days after the
Warrant Share Delivery Date and the Holder or a broker on the
Holder's behalf,
purchases (in an open market transaction or otherwise) shares of
common stock
to deliver in satisfaction of a sale by such Holder of the
Warrant Shares which
the Holder was entitled to receive from the Company (a
"BUY-IN"), then the
Company shall pay in cash to the Holder (in addition to any
remedies available
to or elected by the Holder) the amount by which (A) the
Holder's total
purchase price (including brokerage commissions, if any) for the
shares of
common stock so purchased exceeds (B) the aggregate Purchase
Price of the
Warrant Shares required to have been delivered together with
interest thereon
at a rate of 15% per annum, accruing until such amount and any
accrued interest
thereon is paid in full (which amount shall be paid as
liquidated damages and
not as a penalty). For example, if a Holder purchases shares of
Common Stock
having a total purchase price of $11,000 to cover a Buy-In with
respect to
$10,000 of Purchase Price of Warrant Shares to have been
received upon exercise
of this Warrant, the Company shall be required to pay the Holder
$1,000, plus
interest. The Holder shall provide the Company written notice
indicating the
amounts payable to the Holder in respect of the Buy-In.
2. Cashless Exercise.
(a) Except as described below, if a registration statement
registering
the Warrant Shares with the Securities and Exchange Commission
on a Form S-1,
SB-2 or S-3, for unrestricted public resale ("REGISTRATION
STATEMENT") is
effective and the Holder may sell its shares of Common Stock
upon exercise
hereof pursuant to the Registration Statement, this Warrant may
be exercisable
in whole or in part for cash only as set forth in Section 1
above. If such
Registration Statement is not available, payment upon exercise
may be made at
the option of the Holder either in cash, wire transfer or by
certified or
official bank check payable to the order of the Company equal to
the applicable
aggregate Purchase Price or (i) by cashless exercise in
accordance with Section
(b) below, or (ii) by a combination of any of the foregoing
methods, for the
number of shares of Common Stock specified in such form (as such
exercise
number shall be adjusted to reflect any adjustment in the total
number of
shares of Common Stock issuable to the Holder per the terms of
this Warrant)
and the Holder shall thereupon
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