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EXHIBIT 10.6.3
Form of Warrant used in Company's
Private Offering of Convertible Notes
and Series C Warrants
SYNERGY RESOURCES CORPORATION
TERMS OF WARRANTS
Section 1 Definitions
The following terms used in this document shall have the following meanings
(unless otherwise expressly provided herein):
The "Act." The Securities Act of 1933, as amended.
The "Commission." The Securities and Exchange Commission.
The "Company." Synergy Resources Corporation, a Colorado corporation.
"Shares." The Shares of the Company's common stock or any other class of
stock resulting from successive changes or reclassifications of the Company's
common stock consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value.
"Current Market Price." The price of the Company's common stock on the OTC
Bulletin Board or any other market in the United States where the Company's
common stock is publicly traded.
"Exercise Period." The period extending to and through the Expiration Date.
"Exercise Price." $6.00 per Share, as modified in accordance with Section
8, below.
"Expiration Date." 5:00 p.m. Mountain time on December 31, 2014; provided,
however, if such date shall be a holiday or a day on which banks are authorized
to close in Colorado, the Expiration Date shall mean 5:00 p.m. Mountain Time on
the next following day which in Colorado is not a holiday or a day on which
banks are authorized to close.
"Holder" or "Warrant Holder." The person to whom a warrant certificate is
issued, and any valid transferee thereof pursuant to Section 9 below.
"OTC Bulletin Board." An electronic quotation medium operated by the
Financial Regulatory Authority.
"Termination of Business." Any sale, lease or exchange of all, or
substantially all, of the Company's assets or business or any dissolution,
liquidation or winding up of the Company.
"Warrants." The Warrants issued in accordance with the terms of this
Agreement and any Warrants issued in substitution for or replacement of such
Warrants, or any Warrants into which such Warrants may be divided or exchanged.
"Warrant Agent." The Company will be the Warrant Agent unless the Company
appoints a transfer agent that is registered under the Securities Exchange Act
of 1934 to act as Warrant Agent, upon notice to all Warrant Holders.
"Warrant Shares." The Shares acquired upon exercise of a Warrant, and the
Shares underlying the unexercised portion of a Warrant.
Section 2 Warrants and Issuance of Warrant Certificates
2.1 Description of Warrants. Each Warrant shall initially entitle the
Warrant Holder to purchase one Share on exercise thereof, subject to
modification and adjustment as hereinafter provided in Section 8. The Company
shall deliver Warrant Certificates in required whole number denominations to the
person entitled thereto in connection with the original issuance of Warrant
Certificates or any transfer or exchange permitted under this Agreement.
2.2 Warrant Shares. Share Certificates representing the Warrant Shares
shall be issued only upon the exercise of the Warrants or upon transfer or
exchange of the Warrant Shares following exercise of the Warrants.
2.3 Form of Certificates. The Warrant Certificates shall be substantially
in the form attached hereto as Attachment 1 and may have such letters, numbers
or other marks of identification and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement. The Warrant
Certificates shall be dated as of the date of issuance, whether on initial
issuance, transfer, exchange or in lieu of mutilated, lost, stolen or destroyed
Warrant Certificates.
2.4 Execution of Certificates.The Warrant Certificates shall be executed on
behalf of the Company by its President and Secretary, by manual signatures or by
facsimile signatures printed thereon. If any person whose facsimile signature
has been placed upon any Warrant Certificate as the signature of an officer of
the Company shall have ceased to be such officer before such Warrant Certificate
is countersigned, issued and delivered, such Warrant Certificate may be
countersigned, issued and delivered with the same effect as if such person had
not ceased to be such officer. Any Warrant Certificate may be signed by, or may
bear the facsimile signature of, any person who at the actual date of the
preparation of such Warrant Certificate shall be a proper officer of the Company
to sign such Warrant Certificate even though such person was not such an officer
upon the date of this Agreement.
2.5 Mutilated, Lost, Stolen, or Destroyed Certificate. In case the
certificate or certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrant Holder,
issue and deliver in exchange and substitution for and upon cancellation of the
mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant Certificate
or Certificates of like tenor and representing an equivalent right or interest,
but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount, at the applicant's cost. Applicants for such
substitute Warrant Certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
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Section 3 Term of Warrants Exercise of Warrant
3.1 Exercise of Warrant. Subject to the terms of this Agreement, the
Warrant Holder shall have the right, at any time during the Exercise Period, to
purchase from the Company up to the number of fully paid and nonassessable
Shares to which the Warrant Holder may at the time be entitled to purchase
pursuant to this Agreement, upon surrender to the Company, at its principal
office, of the certificate evidencing the Warrants to be exercised, together
with the purchase form on the reverse thereof, duly filled in and signed, and
upon payment to the Company of the Exercise Price for the number of Shares in
respect of which such Warrants are then exercised, but in no event for less than
100 Shares (unless fewer than an aggregate of 100 shares are then purchasable
under all outstanding Warrants held by a Warrant Holder).
3.2 Payment of Exercise Price. Payment of the aggregate Exercise Price
shall be made in cash or by check, or any combination thereof.
3.3 Delivery of Warrant Certificate. Subject to Section 3.6 and to Section
10, upon receipt of a Warrant Certificate with the exercise form thereon duly
executed, together with payment in full of the Exercise Price for the Warrant
Shares being purchased by such exercise, the Warrant Agent shall requisition
from any transfer agent for the Warrant Shares, and upon receipt shall make
delivery of certificates evidencing the total number of whole Warrant Shares for
which Warrants are then being exercised. The certificates shall be in such names
and denominations as are required for delivery to, or in accordance with the
instructions of the Warrant Holder; provided that if fewer than all Warrant
Shares issuable on exercise of a Warrant Certificate are purchased, the Warrant
Agent (if so requested) shall issue a new Warrant Certificate for the balance of
the Warrant Shares. Such certificates for the Warrant Shares shall be deemed to
be issued, and the person to whom such Warrant Shares are issued of record shall
be deemed to have become a holder of record of such Warrant Shares, as of the
date of the surrender of such Warrant Certificate and the payment of the
Exercise Price, whichever shall last occur; provided further that if the books
of the Company with respect to the Warrant Shares shall be closed as of such
date, the certificates for such Warrant Shares shall be deemed to be issued, and
the person to whom such Warrant Shares are issued of record shall be deemed to
have become a record holder of such Warrant Shares as of the date on which such
books shall next be open (whether before, on or after the applicable Expiration
Date) but at the Exercise Price and upon the other conditions in effect upon the
date of surrender of the Warrant Certificate and, if the Warrants are exercised,
payment of the Exercise Price, whichever shall have last occurred, to the
Company.
3.4 Cancellation of Certificates. All Warrant Certificates surrendered upon
exercise of Warrants shall be canceled.
3.5 Fractional Shares. On the exercise of the Warrants the Company shall
not be required to deliver fractions of Shares; and any fractional share will be
rounded to the nearest whole share. By accepting a Warrant Certificate, the
holder thereof expressly waives any right to receive a Warrant Certificate
evidencing any fraction of a Warrant or to receive any fractional shares upon
the exercise of a Warrant.
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Section 4. Reservation of Warrant Shares
There has been reserved, and the Company shall at all times keep reserved
so long as the Warrants remain outstanding, out of its authorized and unissued
Shares, such number of Shares as shall be subject to purchase under the Warrants
multiplied by 150%. Every transfer agent for the Shares and other securities of
the Company issuable upon the exercise of the Warrants will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
and other securities as shall be requisite for such purpose. The Company will
supply every such transfer agent with duly executed stock and other
certificates, as appropriate, for such purpose.
Section 5. Payment of Taxes
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of the Warrants or the securities comprising the Warrant
Shares and any tax (except federal or state income tax) which may be payable in
respect of any transfer or exercise of the Warrants or the securities comprising
the Warrant Shares.
Section 6. Warrant Shares to be Fully Paid
The Company covenants that all Warrant Shares that may be issued and
delivered to a Holder of this Warrant upon the exercise of this Warrant will be,
upon such delivery, validly and duly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof.
Section 7. Registration of Transfer
7.1. Exchange of Certificate. A Warrant Certificate may be exchanged for
another certificate or certificates entitling the Warrant Holder to purchase a
like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitled such Warrant Holder to purchase. Any Warrant Holder
desiring to exchange a Warrant Certificate shall make such request in writing
delivered to the Company, and shall surrender, properly endorsed, with
signatures guaranteed, the Warrant Certificate to be so exchanged. Thereupon,
the Company shall execute and deliver to the person entitled thereto a new
Warrant Certificate as so requested.
7.2. Assignment or Transfer. Any assignment or transfer of a Warrant shall
be made by the presentation and surrender of the Warrant Certificate to the
Company, accompanied by a duly executed Assignment Form. Upon the presentation
and surrender of these items to the Company, the Company, at its own expense,
shall execute and deliver to the new Holder or Holders a new Warrant Certificate
or Warrant Certificates, in the name of the new Holder or Holders as named in
the Assignment Form, and the Warrant Certificate presented or surrendered shall
at that time be canceled.
7.3 Ownership Records. The Warrant Agent shall keep books for registration
of ownership and transfer of Warrant Certificates. Such books shall show the
names and addresses of the respective holders of the Warrant Certificates and
the number of Warrants evidenced by each such Warrant Certificate.
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7.4 Ownership Prior to Presentment. Prior to due presentment for
registration of transfer thereof, the Company may treat the Warrant Holder as
the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company) and the parties hereto
shall not be affected by any notice to the contrary.
Section 8 Adjustment of Exercise Price and Shares
The number and kind of securities purchasable upon the exercise of the
Warrants and the Exercise Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
8.1 Adjustments. The number of Warrant Shares purchasable upon the exercise
of the Warrants shall be subject to adjustments as follows:
(a) In case the Company shall (i) pay a dividend in Shares or securities
convertible into Shares or make a distribution to its stockholders in Shares or
securities convertible into Shares; (ii) subdivide its outstanding Shares; (iii)
combine its outstanding Shares into a smaller number of Shares; or (iv) issue by
reclassification of its Shares other securities of the Company; then the number
of Warrant Shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrant Holder shall be entitled to
receive the kind and number of Warrant Shares or other securities of the Company
which it would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had such Warrants been
exercised or converted immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subsection 8.1(a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) If, prior to the expiration of the Warrants by exercise or, by their
terms, or by redemption, the Company shall reclassify its outstanding Shares, or
in the event of any other material change of the capital structure of the
Company or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful and
adequate provision shall be made whereby any Warrant Holder shall thereafter
have the right to purchase, on the basis and the terms and conditions specified
in this Agreement, in lieu of the Warrant Shares theretofore purchasable on the
exercise of any Warrant, such securities or assets as may be issued or payable
with respect to or in exchange for the number of Warrant Shares theretofore
purchasable on exercise of the Warrants had the warrants been exercised
immediately prior to such reclassification, recapitalization or conveyance; and
in any such event, the rights of any Warrant Holder to any adjustment in the
number of Warrant Shares purchasable on exercise of such Warrant, as set forth
above, shall continue to be preserved in respect of any stock, securities or
assets which the Warrant Holder becomes entitled to purchase.
(c) In case the Company shall issue rights, options, warrants, or
convertible securities to all or substantially all holders of its Shares,
without any charge to such holders, entitling them to subscribe for or purchase
Shares at a price per share which is lower at the record date described in
Section 12 than the then Current Market Price, the number of Shares thereafter
purchasable upon the exercise of each Warrant shall be determined by multiplying
the number of Shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the number of Shares outstanding
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immediately prior to the issuance of such rights, options, warrants or
convertible securities plus the number of additional Shares offered for
subscription or purchase, and of which the denominator shall be the number of
Shares outstanding immediately prior to the issuance of such rights, options,
warrants, or convertible securities plus the number of shares which the
aggregate offering price of the total number of shares offered would purchase at
such Current Market Price. Such adjustment shall be made whenever such rights,
options, warrants, or convertible securities are issued, and shall become
effective immediately and retroactively to the record date for the determination
of shareholders entitled to receive such rights, options, warrants, or
convertible securities.
(d) In case the Company shall distribute to all or substantially all
holders of its Shares evidences of its indebtedness or assets (excluding cash
dividends or distributions out of earnings) or rights, options, warrants, or
convertible securities containing the right to subscribe for or purchase Shares
(excluding those referred to in subsection 8.1(b) above), then in each case the
number of Warrant Shares thereafter purchasable upon the exercise of the
Warrants shall be determined by multiplying the number of Warrant Shares
theretofore purchasable upon exercise of the Warrants by a fraction, of which
the numerator shall be the then Current Market Price on the date of such
distribution, and of which the denominator shall be such Current Market Price on
such date minus the then fair value (determined as provided in subsection
8.1(g)(y) below) of the portion of the assets or evidences of indebtedness so
distributed or of such subscription rights, options, warrants, or convertible
securities applicable to one share. Such adjustment shall be made whenever any
such distribution is made and shall become effective on the date of distribution
retroactive to the record date for the determination of stockholders entitled to
receive such distribution.
(e) Except for Exempt Issuances, if the Company sells any additional shares
of common stock, or any securities convertible into common stock at a price
below the then applicable Exercise Price of the Warrants, the Warrant Exercise
Price will be lowered to the price at which the shares were sold or the lowest
price at which the securities are convertible, as the case may be.
(f) No adjustment in the number of Warrant Shares purchasable pursuant to
the Warrants shall be required unless such adjustment would require an increase
or decrease of at least one percent in the number of Warrant Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of Warrant Shares purchasable upon the exercise of the
Warrants on the first date thereafter that the Warrants become exercisable;
provided, however, that any adjustments which by reason of this subsection are
not required to be made immediately shall be carried forward and taken into
account in any subsequent adjustment.
(g) Whenever the number of Warrant Shares purchasable upon the exercise of
the Warrant is adjusted, as herein provided, the Exercise Price payable upon
exercise of the Warrant shall be adjusted by multiplying such Exercise Price
immediately prior to such adjustment by a fraction, of which the numerator shall
be the number of Warrant Shares purchasable upon the exercise of the Warrant
immediately prior to such adjustment, and of which the denominator shall be the
number of Warrant Shares so purchasable immediately thereafter.
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(h) In the event that at any time, as a result of an adjustment made
pursuant to this Section, the Warrant Holder shall become entitled to purchase
any securities of the Company other than Shares, if the Warrant Holder's right
to purchase is on any other basis than that available to all holders of the
Company's Shares, the Company shall obtain an opinion of an independent
investment banking firm valuing such other securities; and thereafter the number
of such other securities so purchasable upon exercise of the Warrants shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant Shares
contained in this Section.
(i) Upon the expiration of any rights, options, warrants, or conversion
privileges, if such shall have not been exercised or converted, the number of
Shares purchasable upon exercise of the Warrants, to the extent the Warrants
have not then been exercised or converted, shall, upon such expiration, be
readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (i) the fact that the only Shares so issued were
the Shares, if any, actually issued or sold upon the exercise of such rights,
options, warrants, or conversion privileges, and (ii) the fact that such Shares,
if any, were issued or sold for the consideration actually received by the
Company upon such exercise plus the consideration, if any, actually received by
the Company for the issuance, sale or grant of all such rights, options,
warrants, or conversion privileges whether or not exercised; provided, however,
that no such readjustment shall have the effect of decreasing the number of
Shares purchasable upon exercise of the Warrants by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale, or
grant of such rights, options, warrants, or conversion rights.
8.2 No Adjustment for Dividends. Except as provided in subsection 8.1, no
adjustment in respect of any dividends or distributions out of earnings shall be
made during the term of the Warrants or upon the exercise of the Warrants.
8.3 No Adjustment in Certain Cases. No adjustments shall be made pursuant
to this Section in connection with an Exempt Issuance.
"Exempt Issuance" means the sale or issuance of:
o shares of common stock or options to officers or directors of the
Company, not to exceed 1,000,000 shares or options per fiscal
year for any single officer or director (not to exceed 5,000,000
shares or options per year in total), pursuant to any stock or
option plan duly adopted by the directors of the Company.
o shares of common stock or options to employees or independent
consultants of the Company, not to exceed 5,000,000 shares or
options per year, pursuant to any stock or option plan duly
adopted by the directors of the Company.
o shares issued in connection with an acquisition of oil and gas
properties, the acquisition of an unaffiliated company, a joint
venture or similar strategic transaction where the primary
purpose is not to raise cash.
o securities upon the conversion of the Notes (issued with this
warrant) or the exercise of the Warrants held by the note
holders.
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o securities upon the conversion of notes or the exercise of
options or warrants issued by the Company and outstanding on
November 15, 2009, provided that the securities have not been
amended to increase the number of such securities or to decrease
the exercise, exchange or conversion price of the securities.
8.4 Preservation of Purchase Rights upon Reclassification, Consolidation,
etc. In case of any consolidation of the Company with or merger of the Company
into another corporation, or in case of any sale or conveyance to another
corporation of the property, assets, or business of the Company as an entirety
or substantially as an entirety, the Company or such successor or purchasing
corporation, as the case may be, shall execute an agreement that the Warrant
Holder shall have the right thereafter upon payment of the Exercise Price in
effect immediately prior to such action to purchase, upon exercise of the
Warrants, the kind and amount of shares and other securities and property which
it would have owned or have been entitled to receive after the happening of such
consolidation, merger, sale, or conveyance had the Warrants been exercised or
converted immediately prior to such action. In the event of a merger described
in Section 368(a)(2)(E) of the Internal Revenue Code of 1986, in which the
Company is the surviving corporation, the right to purchase Warrant Shares under
the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrants, its Warrants which entitle the
holder thereof to purchase upon their exercise the kind and amount of shares and
other securities and property which it would have owned or been entitled to
receive had the Warrants been exercised or converted immediately prior to such
merger. Any such agreements referred to in this subsection 8.4 shall provide for
adjustments, which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section. The provisions of this subsection
shall similarly apply to successive consolidations, mergers, sales, or
conveyances.
8.5 Independent Public Accountants. The Company may retain a firm of
independent public accountants of recognized national standing (which may be any
such firm regularly employed by the Company) to make any computation required
under this Section, and a certificate signed by such firm shall be conclusive
evidence of the correctness of any computation made under this Section.
8.6 Statement on Warrant Certificates. Irrespective of any adjustments in
the number of securities issuable upon exercise of the Warrants, Warrant
Certificates theretofore or thereafter issued may continue to express the same
number of securities as are stated in the similar Warrant Certificates initially
issuable pursuant to this Agreement. However, the Company may, at any time in
its sole discretion (which shall be conclusive), make any change in the form of
Warrant Certificate that it may deem appropriate and that does not affect the
substance thereof; and any Warrant Certificate thereafter issued, whether upon
registration of transfer of, or in exchange or substitution for, an outstanding
Warrant Certificate, may be in the form so changed.
8.7 Officers' Certificate. Whenever the Exercise Price or the aggregate
number of Warrant Shares purchasable pursuant to this Warrant shall be adjusted
as required by the provisions of this Section, the Company shall promptly
prepare an officers' certificate executed by the Company's President and
Secretary or Assistant Secretary, describing the adjustment and setting forth,
in reasonable detail, the facts requiring such adjustment and the basis for and
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calculation of such adjustment in accordance with the provisions of this
document. Each such officers' certificate shall be made available to the Holders
for inspection at all reasonable times, and the Company, after each such
adjustment, shall promptly deliver a copy of the officers' certificate relating
to that adjustment to the Holders. The officers' certificate described in this
subsection shall be deemed to be conclusive as to the correctness of the
adjustment reflected therein if, and only if, no Holder delivers written notice
to the Company of an objection to the adjustment within 30 days after the
officers' certificate is delivered to the Holders. The Company will make its
books and records available for inspection and copying during normal business
hours by the Holder so as to permit a determination as to the correctness of the
adjustment. If written notice of an objection is delivered by a Holder to the
Company and the parties cannot reconcile the dispute, the Holder and the Company
shall submit the dispute to arbitration pursuant to the provisions of Section
(15) below. Failure to prepare or provide the officers' certificate shall not
modify the parties' rights hereunder.
Section 9. Restrictions on Transfer; Registration Rights.
9.1. Restrictions on Transfer. The Warrant Holder agrees that prior to
making any disposition of the Warrants or the Warrant Shares, the Warrant Holder
shall give written notice to the Company describing briefly the manner in which
any such proposed disposition is to be made; and no such disposition shall be
made if the Company has notified the Warrant Holder that in the opinion of
counsel reasonably satisfactory to the Warrant Holder a registration statement
or other notification or post-effective amendment thereto (hereinafter
collectively a "Registration Statement") under the Act is required with respect
to such disposition and no such Registration Statement has been filed by the
Company with, and declared effective, if necessary, by, the Commission.
9.2. Registration Rights. Prior to June 12, 2010, the Company will file a
registration statement with the Securities and Exchange Commission to register,
at the Company's sole expense, the Warrant Shares.
The Company shall comply with the requirements of this Section 9.2 and the
related requirements of Section 9.5 at its own expense. That expense shall
include, but not be limited to, legal, accounting, consulting, printing, federal
and state filing fees, out-of-pocket expenses incurred by counsel, accountants
and consultants retained by the Company, and miscellaneous expenses directly
related to the registration statement or offering statement and the offering.
However, this expense shall not include the portion of any underwriting
commissions, transfer taxes and any underwriter's accountable or nonaccountable
expense allowances attributable to the offer and sale of the Warrant Shares, all
of which expenses shall be borne by the Holder or Holders of the Warrant Shares
registered or qualified.
9.3. Inclusion of Information. The Company shall include in the
registration statement or qualification, and the prospectus included therein,
all information and materials necessary or advisable to comply with the
applicable statutes and regulations so as to permit the public sale of the
Warrant Shares. As used in Section 9.3, reference to the Company's securities
shall include, but not be limited to, any class or type of the Company's
securities or the securities of any of the Company's subsidiaries or affiliates.
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9.4 Condition of Company's Obligations. As to each registration statement,
the Company's obligations contained in this Section 9 shall be conditioned upon
a timely receipt by the Company in writing of the following:
(a) Information as to the terms of the contemplated public offering
furnished by and on behalf of each Holder or holder intending to make a
public distribution of the Warrant Shares or; and
(b) Such other information as the Company may reasonably require from
such Holders or holders, or any underwriter for any of them, for inclusion
in the registration statement or offering statement.
(9.5) Additional Requirements. In each instance in which the Company shall
take any action to register or qualify the Warrant Shares pursuant to this
Section the Company shall do the following:
(a) supply to the Holders of the of Warrant Shares are being
registered or qualified, if requested by such Holders, one copy of each
registration statement or offering statement, and all amendments thereto,
and a reasonable number of copies of the preliminary, final or other
prospectus, all prepared in conformity with the requirements of the Act and
the rules and regulations promulgated thereunder, and such other documents
as the Holders shall reasonably request;
(b) cooperate with respect to (i) all necessary or advisable actions
relating to the preparation and the filing of any registration statements
or offering statements, and all amendments thereto, arising from the
provisions of this Section, (ii) all reasonable efforts to establish an
exemption from the provisions of the Act or any other federal or state
securities statutes, (iii) all necessary or advisable actions to register
or qualify the public offering at issue pursuant to federal securities
statutes and the state "blue sky" securities statutes of each jurisdiction
that the Holders of the Warrant or holders of Warrant Shares shall
reasonably request, and (iv) all other necessary or advisable actions to
enable the Holders of the Warrant Shares to complete the contemplated
disposition of their securities in each reasonably requested jurisdiction;
and
(c) keep all registration statements or offering statements to which
this Section applies, and all amendments thereto, effective under the Act
for a period of at least 9 months after their initial effective date and
cooperate with respect to all necessary or advisable actions to permit the
completion of the public sale or other disposition of the securities
subject to a registration statement or offering statement.
9.6 Reciprocal Indemnification. In each instance in which pursuant to this
Section the Company shall take any action to register or qualify the Warrant
Shares, prior to the effective date of any registration statement or offering
statement, the Company and each Holder or holder of Warrant Shares being
registered or qualified shall enter into reciprocal indemnification agreements,
in the form customarily used by reputable investment bankers with respect to
public offerings of securities. These indemnification agreements also shall
contain an agreement by the Holder or shareholder at issue to indemnify and hold
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harmless the Company, its officers and directors from and against any and all
losses, claims, damages and liabilities, including, but not limited to, all
expenses reasonably incurred in investigating, preparing, defending or settling
any claim, directly resulting from any untrue statements of material facts, or
omissions to state a material fact necessary to make a statement not misleading,
contained in a registration statement or offering statement to which this
Section applies, if, and only if, the untrue statement or omission directly
resulted from information provided in writing to the Company by the indemnifying
Holder or shareholder expressly for use in the registration statement or
offering statement at issue.
9.7 Survival. The Company's obligations described in this Section shall
continue in full force and effect regardless of the exercise, conversion,
surrender, cancellation or expiration of this Warrant.
Section (10) Merger or Consolidation of the Company
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section 8.4 are complied with.
Section (11) Modification of Agreement.
The Company may by supplemental agreement make any changes or corrections
in this Agreement it shall deem appropriate to cure any ambiguity or to correct
any defective or inconsistent provision or mistake or error herein contained.
Additionally, the Company may make any changes or corrections deemed necessary
which shall not adversely affect the interests of the Warrant Holders, including
lowering the exercise price or extending the Exercise Period of the Warrants;
provided, however, this Agreement shall not otherwise be modified, supplemented
or altered in any respect except with the consent in writing of the Warrant
Holders who hold not less than a majority of the Warrants then outstanding and
provided further that no such amendment shall accelerate the Warrant Expiration
Date or increase the Exercise Price without the approval of all the holders of
all outstanding Warrants.
Section (12) Notices to Warrant Holders
12.1 Declaration of Dividend; Reorganization; Dissolutions; Etc. If, prior
to the expiration of this Warrant either by its terms or by its exercise in
full, any of the following shall occur:
(i) the Company shall declare a dividend or authorize any other
distribution on its Shares; or
(ii) the Company shall authorize the granting to the stockholders of
its Shares of rights to subscribe for or purchase any securities
or any other similar rights; or
(iii) any reclassification, reorganization or similar change of the
Shares, or any consolidation or merger to which the Company is a
party, or the sale, lease, or exchange of any significant portion
of the assets of the Company; or
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(iv) the voluntary or involuntary dissolution, liquidation or winding
up of the Company; or
(v) any purchase, retirement or redemption by the Company of its
Shares;
then, and in any such case, the Company shall deliver to the Holder or
Holders written notice thereof at least 30 days prior to the earliest applicable
date specified below with respect to which notice is to be given, which notice
shall state the following:
(u) the purpose for which a record of stockholders is to be taken;
(w) the number, amount, price, and nature of the Shares or other
stock, securities, or assets which will be deliverable on Warrant
Shares following exercise of the Warrants if such exercise occurs
prior to the record date for such action;
(x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or, if a record is not to be
taken, the date as of which the stockholders of Shares of record
to be entitled to such dividend, distribution or rights are to be
determined;
(y) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation,
winding up or purchase, retirement or redemption is expected to
become effective, and the date, if any, as of which the Company's
stockholders of Shares of record shall be entitled to exchange
their Shares for securities or other property deliverable upon
such reclassification, reorganization, consolidation, merger,
sale, transfer, dissolution, liquidation, winding up, purchase,
retirement or redemption; and
(z) if any matters referred to in the foregoing clauses (x) and (y)
are to be voted upon by stockholders of Shares, the date as of
which those stockholders to be entitled to vote are to be
determined.
12.2 Failure to Give Notice. Without limiting the obligation of the Company
hereunder to provide notice to each Warrant Holder, it is agreed that failure of
the Company to give notice shall not invalidate corporate action taken by the
Company.
Section 13 No Rights as Shareholder
Nothing contained in this Agreement or in the Warrants shall be construed
as conferring upon the Warrant Holder or its transferees any rights as a
shareholder of the Company, including the right to vote, receive dividends,
consent or receive notices as a shareholder in respect to any meeting of
shareholders for the election of directors of the Company or any other matter.
The Company covenants, however, that for so long as this Warrant is at least
partially unexercised, it will furnish any Holder of this Warrant with copies of
all reports and communications furnished to the shareholders of the Company. In
addition, if at any time prior to the expiration of the Warrants and prior to
their exercise, any one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to Section
8.1 or 8.4; or
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(b) a dissolution, liquidation, or winding up of the Company (other
than in connection with a consolidation, merger, or sale of its property,
assets, and business as an entirety or substantially as an entirety) shall
be proposed:
then the Company shall give notice in writing of such event to the Warrant
Holder, as provided in Section 12 hereof, at least 20 days prior to the date
fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to any relevant dividend,
distribution, subscription rights or other rights or for the determination of
stockholders entitled to vote on such proposed dissolution, liquidation, or
winding up. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to mail or receive notice or any
defect therein shall not affect the validity of any action taken with respect
thereto.
Section (14) Notices
14.1 The Company. All notices, demands, claims, elections, opinions,
requests or other communications hereunder (however characterized or described)
shall be in writing and shall be deemed duly given or made if (and then two
business days after) sent by registered or certified mail, return receipt
requested, postage prepaid and addressed to, in the case of the Company as
follows:
Synergy Resources Corporation
20203 Highway 60
Platteville, CO 80651
14.2 The Warrant Holders. Any distribution, notice or demand required or
authorized by this Agreement to be given or made by the Company to or on the
Warrant Holders shall be sufficiently given or made if sent by mail, first
class, certified or registered, postage prepaid, addressed to the Warrant
Holders at their last known addresses as they shall appear on the registration
books for the Warrant Certificates maintained by the Company.
14.3 Effectiveness of Notice. The Company may send any notice, demand,
claim, election, opinion, request or communication hereunder to the intended
recipient at the address set forth above using any other means (including
personal delivery, expedited courier, messenger service, telecopy, ordinary mail
or electronic mail), but no such notice, demand, claim, election, opinion,
request or other communication shall be deemed to have been duly given or made
unless and until it actually is received by the intended recipient. The Company
may change the address to which notices, demands, claims, elections, opinions,
requests and other communications hereunder are to be delivered by giving the
Warrant Holders notice in the manner herein set forth.
Section (15) Arbitration
The Company and the Holder, and by receipt of a Warrant Certificate or any
Warrant Shares, all subsequent Holders or holders of Warrant Shares, agree to
submit all controversies, claims, disputes and matters of difference with
respect to this Agreement and the Warrant Certificates, including, without
limitation, the application of this Section, to arbitration in Denver, Colorado,
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according to the rules and practices of the American Arbitration Association
from time to time in force. This agreement to arbitrate shall be specifically
enforceable. Arbitration may proceed in the absence of any party if notice of
the proceeding has been given to that party. The parties agree to abide by all
awards rendered in any such proceeding. These awards shall be final and binding
on all parties to the extent and in the manner provided by the rules of civil
procedure enacted in Colorado. All awards may be filed, as a basis of judgment
and of the issuance of execution for its collection, with the clerk of one or
more courts, state or federal, having jurisdiction over either the party against
whom that award is rendered or its property. No party shall be considered in
default hereunder during the pendency of arbitration proceedings relating to
that default.
Section (16) Miscellaneous Provisions
16.1 Persons Benefiting. This Agreement shall be binding upon and inure to
the benefit of the Company, the Warrant Agent and their respective successors
and assigns and the Warrant Holders. By acceptance of a Warrant Certificate, the
Holder accepts and agrees to comply with all of the terms and provisions hereof.
Nothing in this Agreement is intended or shall be construed to confer on any
other person any right, remedy or claim or to impose on any other person any
duty, liability or obligation.
16.2 Severability. If any term contained herein shall be held, declared or
pronounced void, voidable, invalid, unenforceable or inoperative for any reason
by any court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other term,
which shall otherwise remain in full force and effect, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
16.3 Termination. This Agreement shall terminate as of the close of
business on the Expiration Date, or such earlier date upon which all Warrants
shall have been exercised or converted or redeemed; except that the exercise of
a Warrant in full or the Expiration Date shall not terminate the provisions of
this Agreement as it relates to holders of Warrant Shares.
16.4 Governing Law. These terms and each Warrant Certificate issued
hereunder shall be deemed to be a contract under the laws of Colorado and for
all purposes shall be construed in accordance with the laws of said state
without giving effect to conflicts of laws provisions of such state.
16.5 Agreement Available to Warrant Holders. A copy of these terms shall be
available at all reasonable times at the office of the Warrant Agent for
inspection by any Warrant Holder. As a condition of such inspection, the Company
may require any Warrant Holder to submit a Warrant Certificate held of record
for inspection.
16.6 Failure to Perform. If the Company fails to perform any of its
obligations hereunder, it shall be liable to the Warrant Holder for all damages,
costs and expenses resulting from the failure, including, but not limited to,
all reasonable attorney's fees and disbursements.
16.7 Paragraph Headings. Paragraph headings used in this Warrant are for
convenience only and shall not be taken or construed to define or limit any of
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the terms or provisions of this Warrant. Unless otherwise provided, or unless
the context shall otherwise require, the use of the singular shall include the
plural and the use of any gender shall include all genders.
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ATTACHMENT 1
[FORM OF WARRANT CERTIFICATE]
The Warrant and the underlying Shares represented by this Certificate have not
been registered under the Securities Act of 1933 (the "Act"), and are
"restricted securities" as that term is defined in Rule144 under the Act. The
securities may not be offered for sale, sold or otherwise transferred except
pursuant to an effective registration statement under the Act, or pursuant to an
exemption from registration under the Act, the availability of which is to be
established to the satisfaction of the Company. Additionally, Warrants are only
exercisable or convertible when such exercise, and the issuance of the
underlying Shares, can be affected in compliance with applicable state
securities laws.
SERIES C WARRANT
WARRANT CERTIFICATE
Synergy Resources Corporation
____________Warrants
This Warrant Certificate certifies that or registered assigns (the "Warrant
Holder"), is the registered owner of the above-indicated number of Warrants
("Warrants") expiring at 5:00 p.m., Mountain time, on December 31, 2014 (the
"Expiration Date"). Each Warrant entitles the Warrant Holder to purchase from
Synergy Resources Corporation (the "Company"), a Colorado corporation, at any
time commencing on the date it is issued but before the Expiration Date, one
fully paid and non-assessable share ("Share") of the Company's common stock at a
purchase price of $6.00 per Share (the "Exercise Price") upon surrender of this
Warrant Certificate, with the exercise form hereon duly completed and executed,
with payment of the Exercise Price, at the principal office of the Company, but
only subject to the conditions set forth herein and in the Terms of Warrants
("Warrant Terms"). The Exercise Price, the number of Shares purchasable upon
exercise of each Warrant, and the number of Warrants outstanding are subject to
adjustments upon the occurrence of certain events set forth in the Warrant
Terms. Reference is hereby made to the other provisions of this Warrant
Certificate and the provisions of the Warrant Terms, all of which are hereby
incorporated by reference herein and made a part of this Warrant Certificate and
which shall for all purposes have the same effect as though fully set forth at
this place.
Upon due presentment for registration of transfer of this Warrant
Certificate at the office of the Company a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants, subject to any adjustments made in accordance with the Warrant Terms,
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Terms.
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The Warrant Holder evidenced by this Warrant Certificate may exercise all
or any whole number of such Warrants in the manner stated hereon and in the
Warrant Terms. The Exercise Price shall be payable in lawful money of the United
States of America in cash or by certified or cashier's check or bank draft
payable to the order of the Company. Upon any exercise of any Warrants evidenced
by this Warrant Certificate in an amount less than the number of Warrants so
evidenced, there shall be issued to the Warrant Holder a new Warrant Certificate
evidencing the number of Warrants not so exercised or converted. No adjustment
shall be made for any dividends on any shares issued upon exercise of this
Warrant.
No Warrant may be exercised after 5:00 p.m., Mountain time, on the
Expiration Date, and any Warrant not exercised by such time shall become void.
COPIES OF THE WARRANT TERMS, WHICH DEFINES THE RIGHTS, RESPONSIBILITIES AND
OBLIGATIONS OF THE COMPANY AND THE WARRANT HOLDERS, ARE ON FILE WITH THE
COMPANY. ANY WARRANT HOLDER MAY OBTAIN A COPY OF THE WARRANT TERMS, FREE OF
CHARGE, BY WRITTEN A REQUEST TO THE PRINCIPAL OFFICE OF THE COMPANY.
This Warrant Certificate, when surrendered to the Company, in person or by
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Terms, without payment of a charge,
except for any tax or other governmental charge imposed in connection with such
exchange, for another Warrant Certificate or Warrant Certificates of like tenor
and evidencing a like number of Warrants, subject to any adjustment made in
accordance with the Warrant Terms.
The Company may deem and treat the registered holder hereof as the absolute
owner of this Warrant Certificate (notwithstanding any notation of ownership or
other writing hereon made by anyone) for all purposes and the Company shall not
be affected by any notice to the contrary. No Warrant Holder, as such, shall
have the rights of a stockholder of the Company, either at law or in equity, and
the rights of the Warrant Holder, as such, are limited to those rights expressly
provided in the Warrant Terms and in the Warrant Certificates.
The Company shall not be required to issue fractions of Warrants upon any
such adjustment or to issue fractions of shares upon the exercise of any
Warrants after any such adjustment, but the Company, in lieu of issuing any such
fractional interest, shall pay an amount in cash equal to such fraction times
the current market value of one Warrant or one share, as the case may be,
determined in accordance with the Warrant Terms.
Unless the amendment is able to be effected by the Company in accordance
with the Warrant Terms, the Warrant Terms are subject to amendment only upon the
approval of holders of not less than a majority of the outstanding Warrants,
except that no such amendment shall accelerate the Expiration Date or increase
the Exercise Price without the approval of all the holders of all outstanding
Warrants.
IMPORTANT: The Warrants represented by this Certificate may not be
exercised or converted by a Warrant Holder unless at the time of exercise the
underlying Shares are qualified for sale, by registration or otherwise, in the
state where the Warrant Holder resides or unless the issuance of the Shares
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would be exempt under the applicable state securities laws. Further, a
registration statement under the Securities Act of 1933, as amended, covering
the exercise of the Warrants must be in effect and current at the time of
exercise unless the issuance of Shares upon any exercise is exempt from the
registration requirements of the Securities Act of 1933, as amended.
Notwithstanding the provisions hereof, unless such registration statement and
qualification are in effect and current at the time of exercise, or unless
exemptions are available, the Company may decline to permit the exercise of the
Warrants and the holder hereof would then only have the choice of either
attempting to sell the Warrants, if a market existed therefor, or letting the
Warrants expire.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
signed by its President and by its Secretary, each by a facsimile of said
officers' signatures, and has caused a facsimile of its corporate seal to be
imprinted hereon.
Dated: Synergy Resources Corporation
By: By:
------------------------------- --------------------------------
Secretary Chief Executive Officer
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