Exhibit 10.1
THIS
WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, IS AVAILABLE.
JOHN D. OIL AND GAS COMPANY
COMMON STOCK PURCHASE WARRANT
This certifies that, for good and
valuable consideration, John D. Oil and Gas Company , a
Maryland corporation (the “Company”), grants to
Richard M. Osborne (the “Warrantholder”), the
right to purchase from the Company Fifty Thousand (50,000) validly
issued, fully paid and nonassessable shares (the “Warrant
Shares”) of the Company’s common stock (as hereinafter
defined), at the purchase price per share of one dollar ($1.00)
(the “Exercise Price”), at any time prior to 5:00 p.m.,
Cleveland time, on the Expiration Date, all subject to the terms,
conditions and adjustments herein set forth.
1.
Duration and Exercise of Warrant.
1.1 Subject to the terms and
conditions set forth herein, this Warrant may be exercised, in
whole or in part, by the Warrantholder by:
(a) the surrender of this Warrant to
the Company, with a duly executed Exercise Form specifying the
number of Warrant Shares to be purchased, during normal business
hours on any Business Day (i) beginning on June 20, 2008
and (ii) prior to the Expiration Date; and
(b) the delivery of payment to the
Company, for the account of the Company, by cash, wire transfer,
certified or official bank check or any other means approved by the
Company, of the Exercise Price for the number of Warrant Shares
specified in the Exercise Form in lawful money of the United States
of America.
Notwithstanding the foregoing, the Warrantholder may, without the
payment of cash or other consideration (other than the surrender of
the right to purchase certain Warrant Shares implicit in
the
following formula), exercise this Warrant for “Net Warrant
Shares.” The Warrantholder shall provide written notice to
the Company specifying the gross number of Warrant Shares as to
which this Warrant is then exercised. The number of Net Warrant
Shares deliverable upon such exercise will be determined by the
following formula: Net Warrant Shares = [WS x (CP - EP)]/CP, where
“WS” is the gross number of Warrant Shares as to which
this Warrant is to be exercised; “CP” is the Current
Market Price of the Common Stock on the last trading day preceding
the date of the request to exercise this Warrant; and
“EP” shall mean the then applicable Exercise
Price.
The
Company agrees that such Warrant Shares shall be deemed to be
issued to the Warrantholder as the record holder of such Warrant
Shares as of the close of business on the date on which this
Warrant shall have been surrendered and payment has been made for
the Warrant Shares. Notwithstanding the foregoing, no such
surrender shall be effective to constitute the Person entitled to
receive such shares as the record holder thereof while the transfer
books of the Company for the Common Stock are closed for any
purpose (but not for any period in excess of five days), but any
such surrender of this Warrant for exercise during any period while
such books are so closed shall become effective for exercise
immediately upon the reopening of such books, as if the exercise
had been made on the date this Warrant was surrendered and for the
number of shares of Common Stock and at the Exercise Price in
effect at the date of such surrender.
1.2 Warrant Shares
Certificate. A stock certificate or certificates for the
Warrant Shares specified in the Exercise Form (or in the
alternative, electronic delivery of the Warrant Shares in a manner
reasonably satisfactory to the Warrantholder) shall be delivered to
the Warrantholder within three Business Days after receipt of the
Exercise Form by the Company and payment of the purchase price. No
fractional shares shall be issued upon the exercise of this
Warrant, provided that the Warrantholder shall receive, in lieu of
any fractional shares, cash in an amount equal to the product of
the fraction multiplied by the Current Market Price per share of
Common Stock. If this Warrant shall been exercised only in part,
the Company shall, at the time of delivery of the stock certificate
or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with
this Warrant.
2. Restrictions on Transfer;
Restrictive Legends.
2.1
This Warrant may not be offered, sold, transferred, pledged or
otherwise disposed of in whole or in part, to any person; provided
that the Warrantholder may offer, sell or transfer this Warrant to
any Affiliate of the Warrantholder.
2.2
Except as otherwise permitted by this Section 2, each stock
certificate for Warrant Shares issued upon the exercise of any
Warrant and each stock certificate issued upon the direct or
indirect transfer of any such Warrant Shares shall be stamped or
otherwise imprinted with a legend in substantially the following
form:
2
THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER
THE SECURITIES NOR ANY INTEREST HEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN
THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION
ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS
AVAILABLE.
Notwithstanding the foregoing, the
Warrantholder may require the Company to issue a Warrant or a stock
certificate for Warrant Shares, in each case without a legend, if
either (i) such Warrant or such Warrant Shares, as the case
may be, have been registered for resale under the Securities Act,
(ii) the Warrantholder has delivered to the Company an opinion
of legal counsel (from a firm reasonably satisfactory to the
Company) which opinion shall be addressed to the Company and be
reasonably satisfactory in form and substance to the
Company’s counsel, to the effect that such registration is
not required with respect to such Warrant or such Warrant Shares,
as the case may be, or (iii) such Warrant or Warrant Shares
are sold in compliance with Rule 144 (or any successor
provision then in effect) under the Securities Act, the Company
receives customary representations to such effect and the Company
receives an opinion of counsel to the Company in customary form
that such legend may be removed.
3.
Reservation and Resignation of Shares.
The Company covenants and agrees as
follows:
(a) All Warrant Shares that are
issued upon the exercise of this Warrant shall, upon issuance, be
validly issued, fully paid and nonassessable, not subject to any
preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the
issuance thereof.
(b) During the period within which
this Warrant may be exercised, the Company shall at all times have
authorized and reserved, and keep available free from preemptive
rights, a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant.
4.
Loss or Destruction of Warrant.
Subject to the terms and conditions
hereof, upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, or destruction or mutilation
of this Warrant and, in the case of loss, theft or destruction, of
such bond or indemnification as the Company may reasonably require,
and, in the case of such mutilation, upon surrender and
cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor.
3
5.
Ownership of Warrant.
The Company may deem and treat the
person in whose name this Warrant is registered as the holder and
owner hereof (notwithstanding any notations of ownership or writing
hereon made by anyone other than the Company) for all purposes and
shall not be affected by any notice to the contrary, until
presentation of this Warrant for registration of transfer.
6.
Certain Adjustments.
6.1 The number of Warrant Shares
purchasable upon the exercise of this Warrant and the Exercise
Price shall be subject to adjustment as follows:
(a) Stock Dividends, Splits,
Combinations. If at any time after the date of the issuance of
this Warrant the Company (i) declares a dividend or other
distribution payable in Common Stock or subdivides its outstanding
shares of Common Stock into a larger number or (ii) combines
its outstanding shares of Common Stock into a smaller number, then
(x) the number of Warrant Shares to be delivered upon exercise
of this Warrant will, upon the occurrence of an event set forth in
clause (i) above, be increased and, upon the occurrence of an
event set forth in clause (ii) above, be decreased so that
such Warrantholder will be entitled to receive the number of shares
of Common Stock that such Warrantholder would have owned
immediately following such action had this Warrant been exercised
immediately prior thereto and (y) the Exercise Price in effect
immediately prior to such dividend, other distribution, subdivision
or combination, as the case may be, shall be adjusted
proportionately by multiplying such Exercise Price by a fraction,
of which the numerator shall be the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior to such
adjustment and of which the denominator shall be the number of
Warrant Shares purchasable immediately thereafter.
(b) Distribution of Stock, Other
Securities, Evidence of Indebtedness. In case the Company shall
distribute to the holders of Common Stock, shares of its capital
stock (other than Common Stock for
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