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 _______ shares of Common Stock of South Texas Oil Company
(subject to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. Spring
2009-__
Issue Date:
June __, 2009
SOUTH TEXAS OIL
COMPANY, a corporation organized under the laws of the State of
Nevada (the “ Company ”), hereby certifies that,
for value received, _______________________ , Fax.
#______________________, or his 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 ”), 80,000 fully paid and nonassessable shares of
Common Stock at a per share purchase price of $0.50. 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 Securities Purchase Agreement (the
“ SECURITIES PURCHASE AGREEMENT ”) and Note
(“ NOTE ”), each dated June 10, 2009, entered
into by the Company and Holder.
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 Securities Purchase 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.
1.1.
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 “
Securities Purchase 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 Securities Purchase 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 aggregate 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.
