NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY
IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS
SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY
MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN SECURED BY SUCH SECURITIES.
UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF
THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE FEBRUARY 16,
2010.
UNLESS OTHERWISE PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY IN OR FROM
BRITISH COLUMBIA UNLESS THE CONDITIONS IN SECTION 12(2) OF BC
INSTRUMENT 51-509 ISSUERS QUOTED IN THE U.S. OVER-THE-COUNTER
MARKET ARE MET.
COMMON STOCK
PURCHASE WARRANT
STRATEGIC AMERICAN
OIL CORPORATION
|
Warrant Shares: _______
|
Initial Exercise Date:
October 15, 2009
|
THIS COMMON STOCK PURCHASE WARRANT (the " Warrant ")
certifies that, for value received, _____________ (the "
Holder ") is entitled, upon the terms and subject to the
limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the " Initial Exercise
Date ") and on or prior to the close of business on the five
(5) year anniversary of the Initial Exercise Date (the "
Termination Date ") but not thereafter, to subscribe for and
purchase from Strategic American Oil Corporation, a Nevada
corporation (the " Company "), up to ______ shares (the "
Warrant Shares ") of Common Stock. The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
Section 1
.
Definitions . Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (the " Purchase Agreement "),
dated October 15, 2009, among the Company and the purchasers
signatory thereto.
Section 2
. Exercise
.
a.
Exercise of Warrant . Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company (or such
other office or agency of the Company as it may designate by notice
in writing to the registered Holder at the address of the Holder
appearing on the books of the Company) of a duly executed facsimile
copy of the Notice of Exercise Form annexed hereto; and, within
three (3) Trading Days of the date said Notice of Exercise is
delivered to the Company, the Company shall have received payment
of the aggregate Exercise Price of the shares thereby purchased by
wire transfer or cashier's check drawn on a United States bank.
Notwithstanding anything herein to the contrary, the Holder shall
not be required to physically surrender this Warrant to the Company
until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which
case, the Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final
Notice of Exercise is delivered to the Company. 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. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such
purchases. The Company shall deliver any objection to any Notice of
Exercise Form within 1 Business Day of receipt of such notice. In
the event of any dispute or discrepancy, the records of the Holder
shall be controlling and determinative in the absence of manifest
error. The Holder 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.
b.
Exercise Price . The exercise price per share of the Common
Stock under this Warrant shall be $0.35 , subject to
adjustment hereunder (the " Exercise Price ").
c.
RESERVED .
d.
Mechanics of Exercise .
i.
Delivery of Certificates Upon Exercise . Certificates for
shares purchased hereunder shall be transmitted by the Transfer
Agent to the Holder by crediting the account of the Holder's prime
broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission (" DWAC ") system if the Company
is then a participant in such system and either (A) there is an
effective Registration Statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by the Holder or
(B) the shares are eligible for resale by the Holder without volume
or manner-of-sale limitations pursuant to Rule 144, and otherwise
by physical delivery to the address specified by the
Holder in the Notice of Exercise by
the date that is three (3) Trading Days after the latest of (A) the
delivery to the Company and Company Counsel of the Notice of
Exercise Form, (B) surrender of this Warrant (if required), and (C)
payment of the aggregate Exercise Price as set forth above (such
date, the " Warrant Share Delivery Date "). This Warrant
shall be deemed to have been exercised on the first date on which
all of the foregoing have been delivered to the Company. The
Warrant Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed
to have become a holder of record of such shares for all purposes,
as of the date the Warrant has been exercised, with payment to the
Company of the Exercise Price and all taxes required to be paid by
the Holder, if any, pursuant to Section 2(d)(vi) prior to the
issuance of such shares, having been paid. If the Company fails for
any reason to deliver to the Holder certificates evidencing the
Warrant Shares subject to a Notice of Exercise by the second (2
nd ) Trading Day following the Warrant Share Delivery
Date, the Company shall pay to the Holder, in cash, as liquidated
damages and not as a penalty, for each $1,000 of Warrant Shares
subject to such exercise (based on the VWAP of the Common Stock on
the date of the applicable Notice of Exercise), $10 per Trading Day
(increasing to $20 per Trading Day on the fifth Trading Day after
such liquidated damages begin to accrue) for each Trading Day after
such Warrant Share Delivery Date until such certificates are
delivered or Holder rescinds such exercise.
ii.
Delivery of New Warrants Upon Exercise . If this Warrant
shall have been exercised in part, the Company shall, at the
request of a Holder and upon surrender of this Warrant certificate,
at the time of delivery of the certificate or certificates
representing Warrant Shares, deliver to Holder a new Warrant
evidencing the rights of Holder to purchase the unpurchased Warrant
Shares called for by this Warrant, which new Warrant shall in all
other respects be identical with this Warrant.
iii.
Rescission Rights . If the Company fails to cause the
Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to Section
2(d)(i) by the Warrant Share Delivery Date, then, the Holder will
have the right to rescind such exercise.
iv.
Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise . In addition to any other rights
available to the Holder, if the Company fails to cause the Transfer
Agent to transmit to the Holder a certificate or the certificates
representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the
Holder is required by its broker to purchase (in an open market
transaction or otherwise) or the Holder's
brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a " Buy-In "), then the Company shall
(A) pay in cash to the Holder the amount, if any, by which (x) the
Holder's total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the
amount obtained by multiplying (1) the number of Warrant Shares
that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which
the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver certificates
representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
v.
No Fractional Shares or Scrip . No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant. As to any fraction of a share which the
Holder would otherwise be entitled to purchase upon such exercise,
the Company shall, at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole
share.
vi.
Charges, Taxes and Expenses . Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any
issue or transfer tax or other incidental expense in respect of the
issuance of such certificate, all of which taxes and expenses shall
be paid by the Company, and such certificates shall be issued in
the name of the Holder or in such name or names as may be directed
by the Holder; provided , however , that in the event
certificates for Warrant Shares are to be issued in a name other
than the name of the Holder, this Warrant when
surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder and the Company may require, as a condition thereto, the
payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
vii.
Closing of Books . The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms hereof.
e) Holder's
Exercise Limitations . The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or
otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise,
the Holder (together with the Holder's Affiliates, and any other
Persons acting as a group together with the Holder or any of the
Holder's Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates and (ii) exercise or conversion of the unexercised
or nonconverted portion of any other securities of the Company
(including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any
of its Affiliates. Except as set forth in the preceding
sentence, for purposes of this Section 2(e), beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not
representing to the Holder that such calculation is in compliance
with Section 13(d) of the Exchange Act and the Holder is solely
responsible for any schedules required to be filed in accordance
therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder's determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable, in
each case subject to the Beneficial Ownership Limitation, and the
Company shall have no obligation to verify or confirm the accuracy
of such determination. In addition, a determination as to any group
status as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in
determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of
Common Stock as reflected in (A) the
Company's most recent periodic or annual report filed with the
Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder 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 this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock
was reported. The " Beneficial Ownership Limitation " shall
be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common
Stock issuable upon exercise of this Warrant. The Holder, upon not
less than 61 days' prior notice to the Company, may increase or
decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in
no event exceeds 9.99% 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 this Warrant held by the
Holder and the provisions of this Section 2(e) shall continue to
apply. Any such increase or decrease will not be effective until
the 61 st day after such notice is delivered to the
Company. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with
the terms of this Section 2(e) to correct 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. The limitations contained in this
paragraph shall apply to a successor holder of this Warrant.
Section 3
. Certain
Adjustments .
a.
Stock Dividends and Splits . If the Company, at any time
while this Warrant is outstanding: (i) pays a stock dividend or
otherwise makes a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company
upon exercise of this Warrant), (ii) subdivides outstanding shares
of Common Stock into a larger number of shares, (iii) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares or (iv) issues by
reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if
any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted such that the aggregate Exercise Price of this Warrant
shall remain unchanged. Any adjustment made pursuant to this
Section 3(a) shall become effective immediately after the
record
date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately after the effective date in the
case of a subdivision, combination or re-classification.
b.
Subsequent Equity Sales . If the Company or any Subsidiary
thereof, as applicable, at any time prior to the earlier of (i)
this Warrant no longer being outstanding or (ii) three (3) years
from the date hereof, shall sell or grant any option to purchase,
or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase
or other disposition) any Common Stock or Common Stock Equivalents
entitling any Person to acquire shares of Common Stock, at an
effective price per share less than the then Exercise Price (such
lower price, the " Base Share Price " and such issuances
collectively, a " Dilutive Issuance ") (if the holder of the
Common Stock or Common Stock Equivalents so issued shall at any
time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or
otherwise, or due to warrants, options or rights per share which
are issued in connection with such issuance, be entitled to receive
shares of Common Stock at an effective price per share that is less
than the Exercise Price, such issuance shall be deemed to have
occurred for less than the Exercise Price on such date of the
Dilutive Issuance), then, the Exercise Price shall be reduced and
only reduced to equal the Base Share Price and the number of
Warrant Shares issuable hereunder shall be increased such that the
aggregate Exercise Price payable hereunder, after taking into
account the decrease in the Exercise Price, shall be equal to the
aggregate Exercise Price prior to such adjustment, provided,
however, that the number of additional Warrant Shares issuable
hereunder shall not, in the aggregate (whether in connection with
one or more Dilutive Issuances), exceed the number
