All Energy Corp - FORM 10-Q - EX-4.10 - EXHIBIT 4.10 - September 16, 2011
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THE SECURITIES REPRESENTED HEREBY MAY NOT BE TRANSFERRED UNLESS (I)
SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED, (II) SUCH SECURITIES MAY BE SOLD
PURSUANT TO RULE 144 WITHOUT RESTRICTION, OR (III) THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH
TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933 OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES
LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY THE SECURITIES
ALL FUELS & ENERGY COMPANY
SERIES B WARRANT
For VALUE RECEIVED, Jinsun, LLC(“Warrantholder”), is entitled to purchase, subject to
the provisions of this Warrant, from All Fuels & Energy Company., a Delaware corporation
(“Company”), at any time from and after the date the Company effects the Reverse Split (as defined
in the Purchase Agreement) (the “Initial Exercise Date”) and not later than 5:00 P.M., Eastern time,
on August 15, 2015 (the “Expiration Date”), at an exercise price per share equal to $0.375 (the
exercise price in effect being herein called the “Warrant Price”), 42,000,000 shares (“Warrant
Shares”) of the Company’s Common Stock (“Common Stock”). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject to adjustment from
time to time as described herein.
This Warrant is issued by the Company pursuant to that certain Securities Purchase
Agreement dated August 15, 2011, among the Company and the Warrantholder (the “Purchase
Agreement”).
Section 1. Registration. The Company shall maintain books for the transfer and
registration of the Warrant. Upon the initial issuance of this Warrant, the Company shall issue and
register the Warrant in the name of the Warrantholder.
Section 2. Transfers. As provided herein, this Warrant may be transferred only pursuant
to a registration statement filed under the Securities Act of 1933, as amended (the “Securities Act”),
or an exemption from such registration. Subject to such restrictions, the Company shall transfer this
Warrant from time to time upon the books to be maintained by the Company for that purpose, upon
surrender hereof for transfer, properly endorsed or accompanied by appropriate instructions for
transfer and such other documents as may be reasonably required by the Company, including, if
required by the Company, an opinion of its counsel to the effect that such transfer is exempt from
the registration requirements of the Securities Act, to establish that such transfer is being made in
accordance with the terms hereof, and a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be canceled by the Company.
Section 3. Exercise of Warrant. Subject to the provisions hereof, the Warrantholder may
exercise this Warrant, in whole or in part, at any time after the Initial Exercise Date and prior to the
Expiration Date upon surrender of the Warrant, together with delivery of a duly executed Warrant
exercise form, in the form attached hereto as Appendix A (the “Exercise Agreement”) and payment
by cash, certified check, wire transfer of funds, or by cashless exercise (as provided below) of the
aggregate Warrant Price for that number of Warrant Shares then being purchased, to the Company
during normal business hours on any business day at the Company’s principal executive offices (or
such other office or agency of the Company as it may designate by notice to the Warrantholder).
Upon a determination by Warrantholder to avail itself of the cashless exercise provision, the
Company shall issue to the Warrantholder such number of fully paid, validly issued and
nonassessable shares of Common Stock as is computed using the following formula:
X = Y (A - B)
A
where
X = the number of shares of Common Stock to which the Warrantholder is entitled upon such
cashless exercise;
Y = the total number of shares of Common Stock covered by this Warrant for which the
Warrantholder has surrendered purchase rights at such time for cashless exercise (including both
shares to be issued to the Warrantholder and shares as to which the purchase rights are to be canceled
as payment therefor);
A = the “Market Price” of one share of Common Stock as of the date the net issue election is
made; and
B = the Warrant Price in effect under this Warrant at the time the net issue election is made.
The Warrant Shares so purchased shall be deemed to be issued to the Warrantholder or the
Warrantholder’s designee, as the record owner of such shares, as of the close of business on the date
on which this Warrant shall have been surrendered (or the date evidence of loss, theft or destruction
thereof and security or indemnity satisfactory to the Company has been provided to the Company),
the Warrant Price shall have been paid and the completed Exercise Agreement shall have been
delivered. Certificates for the Warrant Shares so purchased shall be delivered to the Warrantholder
within a reasonable time, not exceeding three (3) business days, after this Warrant shall have been
so exercised. The certificates so delivered shall be in such denominations as may be requested by
the Warrantholder and shall be registered in the name of the Warrantholder or such other name as
shall be designated by the Warrantholder, as specified in the Exercise Agreement. If this Warrant
shall have been exercised only in part, then, unless this Warrant has expired, the Company shall, at
its expense, at the time of delivery of such certificates, deliver to the Warrantholder a new Warrant
representing the right to purchase the number of shares with respect to which this Warrant shall not
then have been exercised. As used herein, “business day” means a day, other than a Saturday or
Sunday, on which banks in New York City are open for the general transaction of business. Each
exercise hereof shall constitute the re-affirmation by the Warrantholder that the representations and
warranties contained in Section 5 of the Purchase Agreement are true and correct in all material
respects with respect to the Warrantholder as of the time of such exercise. Notwithstanding the
foregoing, to effect the exercise of the Warrant hereunder, the Warrantholder shall not be required
to physically surrender this Warrant to the Company unless the entire Warrant is exercised. The
Warrantholder and the Company shall maintain records showing the amount exercised and the dates
of such exercise. The Warrantholder and any assignee, by acceptance of this Warrant, acknowledge
and agree that, by reason of the provision of the paragraph, following exercise of a portion of the
Warrant, the number of Warrant Shares of this Warrant may be less than the amount stated on the
face hereof.
Section 4. Compliance with the Securities Act of 1933. Except as provided in the
Purchase Agreement, the Company may cause the legend set forth on the first page of this Warrant
to be set forth on each Warrant, and a similar legend on any security issued or issuable upon exercise
of this Warrant, unless counsel for the Company is of the opinion as to any such security that such
legend is unnecessary.
Section 5. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Warrant Shares issuable upon the exercise of the Warrant;
provided, however, that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance or delivery of any certificates for Warrant
Shares in a name other than that of the Warrantholder in respect of which such shares are issued, and
in such case, the Company shall not be required to issue or deliver any certificate for Warrant Shares
or any Warrant until the person requesting the same has paid to the Company the amount of such tax
or has established to the Company’s reasonable satisfaction that such tax has been paid. The
Warrantholder shall be responsible for income taxes due under federal, state or other law, if any such
tax is due.
Section 6. Mutilated or Missing Warrants. In case this Warrant shall be mutilated, lost,
stolen, or destroyed, the Company shall issue in exchange and substitution of and upon surrender and
cancellation of the mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant of like tenor and for the purchase of a like number of Warrant Shares, but
only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction of the Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
indemnity or bond with respect thereto, if requested by the Company.
Section 7. Reservation of Common Stock. At any time when this Warrant is exercisable,
the Company shall at all applicable times keep reserved until issued (if necessary) as contemplated
by this Section 7, out of the authorized and unissued shares of Common Stock, sufficient shares to
provide for the exercise of the rights of purchase represented by this Warrant. The Company agrees
that all Warrant Shares issued upon due exercise of the Warrant shall be, at the time of delivery of
the certificates for such Warrant Shares, duly authorized, validly issued, fully paid and
non-assessable shares of Common Stock of the Company.
Section 8. Adjustments. Subject and pursuant to the provisions of this Section 8, the Warrant
Price and number of Warrant Shares subject to this Warrant shall be subject to adjustment from time
to time as set forth hereinafter.
(a) If the Company shall, at any time or from time to time while this Warrant is
outstanding, pay a dividend or make a distribution on its Common Stock in shares of Common
Stock, subdivide its outstanding shares of Common Stock into a greater number of shares or combine
its outstanding shares of Common Stock into a smaller number of shares or issue by reclassification
of its outstanding shares of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the Company is the continuing
corporation), then (i) the Warrant Price in effect immediately prior to the date on which such change
shall become effective shall be adjusted by multiplying such Warrant Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding immediately prior
to such change and the denominator of which shall be the number of shares of Common Stock
outstanding immediately after giving effect to such change and (ii) the number of Warrant Shares
purchasable upon exercise of this Warrant shall be adjusted by multiplying the number of Warrant
Shares purchasable upon exercise of this Warrant immediately prior to the date on which such
change shall become effective by a fraction, the numerator of which is shall be the Warrant Price in
effect immediately prior to the date on which such change shall become effective and the
denominator of which shall be the Warrant Price in effect immediately after giving effect to such
change, calculated in accordance with clause (i) above. Such adjustments shall be made successively
whenever any event listed above shall occur. Additional adjustments in the Exercise Price shall be
made pursuant to section 8(d) in the event of the payment of a dividend or distribution on its
Common Stock in shares of Common Stock.
(b) If any capital reorganization, reclassification of the capital stock of the
Company, consolidation or merger of the Company with another corporation in which the Company
is not the survivor, or sale, transfer or other disposition of all or substantially all of the Company’s
assets to another corporation shall be effected, then, as a condition of such reorganization,
reclassification, consolidation, merger, sale, transfer or other disposition, lawful and adequate
provision shall be made whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in lieu of the Warrant
Shares immediately theretofore issuable upon exercise of the Warrant, such shares of stock,
securities or assets as would have been issuable or payable with respect to or in exchange for a
number of Warrant Shares equal to the number of Warrant Shares immediately theretofore issuable
upon exercise of the Warrant, had such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition not taken place, and in any such case appropriate provision shall be
made with respect to the rights and interests of each Warrantholder to the end that the provisions
hereof (including, without limitation, provision for adjustment of the Warrant Price) shall thereafter
be applicable, as nearly equivalent as may be practicable in relation to any shares of stock, securities
or assets thereafter deliverable upon the exercise hereof. The Company shall not effect any such
consolidation, merger, sale, transfer or other disposition unless prior to or simultaneously with the
consummation thereof the successor corporation (if other than the Company) resulting from such
consolidation or merger, or the corporation purchasing or otherwise acquiring such assets or other
appropriate corporation or entity shall assume the obligation to deliver to the Warrantholder, at the
last address of the Warrantholder appearing on the books of the Company, such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the Warrantholder may be
entitled to purchase, and the other obligations under this Warrant. The provisions of this paragraph
(b) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers,
sales, transfers or other dispositions.
(c) In case the Company shall fix a payment date for the making of a distribution
to all holders of Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of evidences of
indebtedness or assets (other than cash dividends or cash distributions payable out of consolidated
earnings or earned surplus or dividends or distributions referred to in Section 8(a)), or subscription
rights or warrants, the Warrant Price to be in effect after such payment date shall be determined by
multiplying the Warrant Price in effect immediately prior to such payment date by a fraction, the
numerator of which shall be the total number of shares of Common Stock outstanding multiplied by
the Market Price (as defined below) per share of Common Stock immediately prior to such payment
date, less the fair market value (as determined by the Company’s Board of Directors in good faith)
of said assets or evidences of indebtedness so distributed, or of such subscription rights or warrants,
and the denominator of which shall be the total number of shares of Common Stock outstanding
multiplied by such Market Price per share of Common Stock immediately prior to such payment
date. “Market Price” as of a particular date (the “Valuation Date”) shall mean the following: (a) if
the Common Stock is then listed on a national stock exchange, the closing sale price of one share
of Common Stock on such exchange on the last trading day prior to the Valuation Date; (b) if the
Common Stock is then quoted on The Nasdaq Stock Market, Inc. (“Nasdaq”), the National
Association of Securities Dealers, Inc. OTC Bulletin Board (the “Bulletin Board”) or such similar
quotation system or association, the closing sale price of one share of Common Stock on Nasdaq,
the Bulletin Board or such other quotation system or association on the last trading day prior to the
Valuation Date or, if no such closing sale price is available, the average of the high bid and the low
asked price quoted thereon on the last trading day prior to the Valuation Date; or (c) if the Common
Stock is not then listed on a national stock exchange or quoted on Nasdaq, the Bulletin Board or such
other quotation system or association, the fair market value of one share of Common Stock as of the
Valuation Date, as determined in good faith by the Board of Directors of the Company and the
Warrantholder. If the Common Stock is not then listed on a national securities exchange, Nasdaq,
the Bulletin Board or such other quotation system or association, the Board of Directors of the
Company shall respond promptly, in writing, to an inquiry by the Warrantholder prior to the exercise
hereunder as to the fair market value of a share of Common Stock as determined by the Board of
Directors of the Company. In the event that the Board of Directors of the Company and the
Warrantholder are unable to agree upon the fair market value in respect of subpart (c) of this
paragraph, the Company and the Warrantholder shall jointly select an appraiser, who is experienced
in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne equally by the Company and the Warrantholder. Such adjustment shall be
made successively whenever such a payment date is fixed.
(d) An adjustment to the Warrant Price shall become effective immediately after
the payment date in the case of each dividend or distribution and immediately after the effective date
of each other event which requires an adjustment.
(e) In the event that, as a result of an adjustment made pursuant to this Section
8, the Warrantholder shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, the number of such other shares so receivable upon exercise
of this Warrant shall be subject thereafter 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 Warrant.
(f) To the extent permitted by applicable law and the listing requirements of any
stock market or exchange on which the Common Stock is then listed, the Company from time to
time may decrease the Warrant Price by any amount for any period of time if the period is at least
twenty (20) days, the decrease is irrevocable during the period and the Board shall have made a
determination that such decrease would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Warrant Price is decreased pursuant to the preceding sentence,
the Company shall provide written notice thereof to the Warrantholder at least five (5) days prior to
the date the decreased Warrant Price takes effect, and such notice shall state the decreased Warrant
Price and the period during which it will be in effect. Notwithstanding the foregoing, the Company
shall treat all holders of the Company Warrants equally.
Section 9. Fractional Interest. The Company shall not be required to issue fractions of
Warrant Shares upon the exercise of this Warrant. If any fractional share of Common Stock would,
except for the provisions of the first sentence of this Section 9, be deliverable upon such exercise,
the Company, in lieu of delivering such fractional share, shall pay to the exercising Warrantholder
an amount in cash equal to the Market Price of such fractional share of Common Stock on the date
of exercise.
Section 10. Benefits. Nothing in this Warrant shall be construed to give any person, firm
or corporation (other than the Company and the Warrantholder) any legal or equitable right, remedy
or claim, it being agreed that this Warrant shall be for the sole and exclusive benefit of the Company
and the Warrantholder.
Section 11. Notices to Warrantholder. Upon the happening of any event requiring an
adjustment of the Warrant Price, the Company shall promptly give written notice thereof to the
Warrantholder at the address appearing in the records of the Company, stating the adjusted Warrant
Price and the adjusted number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such calculation is based.
Failure to give such notice to the Warrantholder or any defect therein shall not affect the legality or
validity of the subject adjustment.
Section 12. Identity of Transfer Agent. The Transfer Agent for the Common Stock is
Pacific Stock Transfer Company. Upon the appointment of any subsequent transfer agent for the
Common Stock or other shares of the Company’s capital stock issuable upon the exercise of the
rights of purchase represented by the Warrant, the Company will mail to the Warrantholder a
statement setting forth the name and address of such transfer agent.
Section 13. Notices. Unless otherwise provided, any notice required or permitted under
this Warrant shall be given in writing and shall be deemed effectively given and received as
hereinafter described (i) if given by personal delivery, then such notice shall be deemed received
upon such delivery, (ii) if given by telex or facsimile, then such notice shall be deemed received
upon receipt of confirmation of complete transmittal, (iii) if given by certified mail return receipt
requested, then such notice shall be deemed received upon the day such return receipt is signed, and
(iv) if given by an internationally recognized overnight air courier, then such notice shall be deemed
given one business day after delivery to such carrier. Copies of such notices shall also be transmitted
by email to the email address provided for on the signature page of the Purchase Agreement. All
notices shall be addressed as follows: if to the Warrantholder, at its address as set forth on the
signature page of the Purchase Agreement (copied to the counsel for Investor) and, if to the
Company, at the address as follows, or at such other address as the Warrantholder or the Company
may designate by ten days’ advance written notice to the other:
If to the Company:
All Fuels and Energy Company
6165 N.W. 86th Street
Johnston, Iowa 50131
Section 15. Successors. All the covenants and provisions hereof by or for the benefit of
the Warrantholder shall bind and inure to the benefit of its respective successors and assigns
hereunder.
Section 16. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial. This Warrant
shall be governed by, and construed in accordance with, the internal laws of the State of Texas,
without reference to the choice of law provisions thereof. The Company and, by accepting this
Warrant, the Warrantholder, each irrevocably submits to the exclusive jurisdiction of the courts of
the State of Texas located in Harris County and the United States District Court for the Southern
District of Texas for the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Warrant and the transactions contemplated hereby. Service of process in connection with
any such suit, action or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Warrant. The Company and, by
accepting this Warrant, the Warrantholder, each irrevocably consents to the jurisdiction of any such
court in any such suit, action or proceeding and to the laying of venue in such court. The Company
and, by accepting this Warrant, the Warrantholder, each irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has been brought in an
inconvenient forum. EACH OF THE COMPANY AND, BY ITS ACCEPTANCE HEREOF, THE
WARRANTHOLDER HEREBY WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN
ANY LITIGATION WITH RESPECT TO THIS WARRANT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER.
Section 17. No Rights as Stockholder. Prior to the exercise of this Warrant, the
Warrantholder shall not have or exercise any rights as a stockholder of the Company by virtue of its
ownership of this Warrant.
Section 18. Amendment; Waiver. Any term of this Warrant may be amended or waived
(including the adjustment provisions included in Section 8 of this Warrant) upon the written consent
of the Company and the Warrantholder.
Section 19. Section Headings. The section headings in this Warrant are for the
convenience of the Company and the Warrantholder and in no way alter, modify, amend, limit or
restrict the provisions hereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed, as of the 15th
day of August 2011.
ALL FUELS & ENERGY COMPANY.
By: /s/ DEAN E. SUKOWATEY
Name: Dean E Sukowatey
Title: Pres/CEO
------------------------------
APPENDIX A
ARKANOVA ENERGY CORP.
WARRANT EXERCISE FORM
To Arkanova Energy Corp.:
The undersigned hereby irrevocably elects to exercise the right of purchase represented by
the within Warrant (“Warrant”) for, and to purchase thereunder by the payment of the Warrant Price
and surrender of the Warrant, _______________ shares of Common Stock (“Warrant Shares”)
provided for therein, and requests that certificates for the Warrant Shares be issued as follows:
_______________________________
Name
________________________________
Address
________________________________
________________________________
Federal Tax ID or Social Security No.
and delivered by (certified mail to the above address, or
(electronically (provide DWAC Instructions:___________________), or
(other (specify): __________________________________________).
and, if the number of Warrant Shares shall not be all the Warrant Shares purchasable upon exercise
of the Warrant, that a new Warrant for the balance of the Warrant Shares purchasable upon exercise
of this Warrant be registered in the name of the undersigned Warrantholder or the undersigned’s
Assignee as below indicated and delivered to the address stated below.
Dated: ___________________, ____
Note: The signature must correspond with Signature:______________________________
the name of the Warrantholder as written
on the first page of the Warrant in every ______________________________
particular, without alteration or enlargement Name (please print)
or any change whatever, unless the Warrant
has been assigned. ______________________________
______________________________
Address
______________________________
Federal Identification or
Social Security No.
APPENDIX B
ARKANOVA ENERGY CORP.
NET ISSUE ELECTION NOTICE
To: Arkanova Energy Corp.
Date:[_________________________]
The undersigned hereby elects under Section 3 of this Warrant to surrender the right to purchase
[____________] shares of Common Stock pursuant to this Warrant and hereby requests the issuance
of [_____________] shares of Common Stock. The certificate(s) for the shares issuable upon such
net issue election shall be issued in the name of the undersigned or as otherwise indicated below.
_________________________________________
Signature
_________________________________________
Name for Registration
_________________________________________
Mailing Address
