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Exhibit 10.5
[FORM OF]
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “1933 ACT”), OR APPLICABLE STATE SECURITIES LAWS
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR SUCH SECURITIES UNDER THE 1933 ACT, OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE ISSUER HEREOF, TO THE EFFECT THAT REGISTRATION
IS NOT REQUIRED UNDER THE 1933 ACT AS SOME OTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT AND APPLICABLE LAWS IS
AVAILABLE.
WARRANT
TO PURCHASE
COMMON
STOCK OF
PETROSEARCH
ENERGY CORPORATION
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Date
of Issuance: November 9, 2007
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Warrant
No.______
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This
certifies that, for value received, PETROSEARCH ENERGY
CORPORATION, a Nevada corporation (the
“Company”), grants ___________________
, a ____________ [corporation/limited
partnership/limited liability company]
(“Investor”) or its registered assigns (the
“Registered Holder”), the right to subscribe for
and purchase from the Company, at the Exercise Price (as
defined herein), at any time and from time to time from and
after 9:00 a.m. Central Standard Time on the Date of Issuance
(the “Exercise Date”) and to and including 5:00
p.m., Central Standard Time on the third anniversary of the
Exercise Date (the “Expiration Date”),
_______________________ (_______) shares, as
such number of shares may be adjusted from time to time as
described herein (the “Warrant Shares”), of the
Company’s common stock, par value $.001 per share (the
“Common Stock”), subject to the provisions and
upon the terms and conditions herein set forth. The
“Exercise Price” per share of Common Stock shall
be $1.50 per share.
This Warrant is issued in
connection with the transactions described in that certain
Note and Warrant Purchase Agreement between the Company and
Investor dated as of November 9, 2007 (the “Purchase
Agreement”). The holder of this Warrant is
subject to certain restrictions set forth in the Purchase
Agreement and shall be entitled to certain rights and
privileges set forth in the Purchase
Agreement. All capitalized terms not defined
herein shall have the meaning set forth in the 8% Senior
Secured Convertible Note between the Company and the Investor
dated of even date herewith.
Section 1.
Registration.
The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the
“Warrant Records”), in the name of the Registered
Holder. The Company may deem and treat the
Registered Holder as the absolute owner of this Warrant for
the purpose of any exercise hereof or any distribution to the
Registered Holder.
Section 2. Registration
of Transfers and Exchanges.
(a) Subject
to Section 9 hereof, the Company shall register the transfer
of this Warrant, in whole or in part, upon records to be
maintained by the Company for that purpose, upon surrender of
this Warrant, with the Form of Assignment attached hereto
completed and duly endorsed by the Registered Holder, to the
Company at the office specified in or pursuant to Section
3(b). Upon any such registration of transfer, a
new Warrant, in substantially the form of this Warrant,
evidencing the Common Stock purchase rights so transferred
shall be issued to the transferee and a new Warrant, in
similar form, evidencing the remaining Common Stock purchase
rights not so transferred, if any, shall be issued to the
Registered Holder.
(b) This
Warrant is exchangeable, upon the surrender hereof by the
Registered Holder at the office of the Company specified in
or pursuant to Section 3(b) hereof, for new Warrants, in
substantially the form of this Warrant evidencing, in the
aggregate, the right to purchase the number of Warrant Shares
which may then be purchased hereunder, each of such new
Warrants to be dated the date of such exchange and to
represent the right to purchase such number of Warrant Shares
as shall be designated by the Registered Holder at the time
of such surrender.
Section 3.
Duration and
Exercise of this Warrant.
(a) This
Warrant shall be exercisable by the Registered Holder as to
the Warrant Shares at any time and from time to time during
the period commencing on the Exercise Date and ending on the
Expiration Date. At 5:00 p.m., Central Standard Time, on the
Expiration Date, this Warrant, to the extent not previously
exercised, shall become void and of no further force or
effect.
(b) Subject
to Sections 4, and 7 hereof, upon exercise or surrender of
this Warrant, with the Form of Election to Purchase attached
hereto completed and duly endorsed by the Registered Holder,
to the Company at 675 Bering Drive, Suite 200, Houston, Texas
77057, Attention: President, or at such other address as the
Company may specify in writing to the Registered Holder, and
upon payment of the Exercise Price multiplied by up to the
number of Warrant Shares then issuable upon exercise of this
Warrant in lawful money of the United States of America, all
as specified by the Registered Holder in the Form of Election
to Purchase, the Company shall promptly issue and cause to be
delivered to or upon the written order of the Registered
Holder, and in such name or names as the Registered Holder
may designate, a certificate for the Warrant Shares issued
upon such exercise. Any person so designated in
the Form of Election to Purchase, duly endorsed by the
Registered Holder, as the person to be named on the
certificates for the Warrant Shares, shall be deemed to have
become holder of record of such Warrant Shares, evidenced by
such certificates, as of the Date of Exercise (as hereinafter
defined) of such Warrant.
(c) The
Registered Holder may pay the applicable Exercise Price
pursuant to Section 3(b), at the option of the Registered
Holder, either (i) in cash or by cashier’s or certified
bank check payable to the Company, or (ii) by wire transfer
of immediately available funds to the account which shall be
indicated in writing by the Company to the Registered Holder,
in either case, in an amount equal to the product of the
Exercise Price multiplied by the number of Warrant Shares
being purchased upon such exercise (the “Aggregate
Exercise Price”).
(d) The
“Date of Exercise” of any Warrant means the date
on which the Company shall have received (i) this Warrant,
with the Form of Election to Purchase attached hereto
appropriately completed and duly endorsed, and (ii) payment of
the Aggregate Exercise Price as provided herein.
(e) This
Warrant shall not be exercisable until the Exercise Date (the
“Exercise Restriction
Period”). Subject to the Exercise
Restriction Period, this Warrant shall be exercisable either
in its entirety or, from time to time, for part only of the
number of Warrant Shares which are issuable
hereunder. If this Warrant shall have been
exercised only in part, the Company shall, at the time of
delivery of the certificates for the Warrant Shares issued
pursuant to such exercise, deliver to the Registered Holder a
new Warrant evidencing the rights to purchase the remaining
Warrant Shares, which Warrant shall be substantially in the
form of this Warrant.
Section 4.
Payment of
Taxes and Expenses.
(a) The
Company will pay all expenses and taxes (other than any
federal or state income tax or similar obligations of the
Registered Holder) and other governmental charges
attributable to the preparation, execution, issuance and
delivery of this Warrant, any new Warrant and the Warrant
Shares; provided, however , that the Company shall
not be required to pay any tax in respect of the transfer of
this Warrant or the Warrant Shares, or the issuance or
delivery of certificates for Warrant Shares upon the exercise
of this Warrant, to a person or entity other than a
Registered Holder or an Affiliate (as hereinafter defined) of
such Registered Holder.
(b) An
“Affiliate” of any person or entity means any
other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with
such person or entity.
Section 5.
Mutilated or Missing Warrant
Certificate. If this Warrant shall be
mutilated, lost, stolen or destroyed, upon request by the
Registered Holder, the Company will issue, in exchange for
and upon cancellation of the mutilated Warrant, or in
substitution for the lost, stolen or destroyed Warrant, a
substitute Warrant, in substantially the form of this
Warrant, of like tenor, but, in the case of loss, theft or
destruction, only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or
destruction of this Warrant and, if requested by the Company,
indemnity also reasonably satisfactory to it.
Section 6.
Reservation,
Listing and Issuance of Warrant Shares.
(a) The
Company will at all times have authorized, and reserve and
keep available, free from preemptive rights, for the purpose
of enabling it to satisfy any obligation to issue Warrant
Shares upon the exercise of the rights represented by this
Warrant, the number of Warrant Shares deliverable upon
exercise of this Warrant. The Company will, at its
expense, use it best efforts to cause such shares to be
included in or listed on (subject to issuance or notice of
issuance of Warrant Shares) all markets or stock exchanges in
or on which the Common Stock is included or listed not later
than the date on which the Common Stock is first included or
listed on any such market or exchange and will thereafter
maintain such inclusion or listing of all shares of Common
Stock from time to time issuable upon exercise of this
Warrant.
(b) Before
taking any action which could cause an adjustment pursuant to
Section 7 hereof reducing the Exercise Price below the par
value of the Warrant Shares, the Company will take any
corporate action which may be necessary in order that the
Company may validly and legally issue at the Exercise Price,
as so adjusted, Warrant Shares that are fully paid and
non-assessable.
(c) The
Company covenants that all Warrant Shares will, upon issuance
in accordance with the terms of this Warrant, be (i) duly
authorized, fully paid and nonassessable, and (ii) free from
all taxes with respect to the issuance thereof and from all
liens, charges and security interests.
Section 7.
Adjustment
of Number of Warrant Shares.
(a)
The number of Warrant Shares to be
purchased upon exercise hereof is subject to change or
adjustment from time to time as hereinafter
provided:
(i)
Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications . In case the Company shall
(a) pay a dividend with respect to its Common Stock in shares
of capital stock, (b) subdivide its outstanding shares of
Common Stock, (c) combine its outstanding shares of Common
Stock into a smaller number of shares of any class of Common
Stock or (d) issue any shares of its capital stock in a
reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger
in which the Company is the continuing corporation), other
than elimination of par value, a change in par value, or a
change from par value to no par value (any one of which
actions is herein referred to as an “Adjustment
Event”), the number of Warrant
Shares purchasable upon exercise of the Warrant
immediately prior to the record date for such Adjustment Event
shall be adjusted so that the Registered Holder shall
thereafter be entitled to receive the number of shares of
Common Stock or other securities of the Company (such other
securities thereafter enjoying the rights of shares of Common
Stock under this Warrant) that such Registered Holder would
have owned or have been entitled to receive after the
happening of such Adjustment E
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