THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS (“BLUE SKY LAWS”). ANY TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT AND AS REQUIRED BY BLUE SKY LAWS IS IN EFFECT AS TO SUCH TRANSFER OR, IN THE OPINION OF COUNSEL SATISFACTORY TO NORTH AMERICAN ENERGY RESOURCES, INC., SUCH REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT AND BLUE SKY LAWS.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK OF
NORTH AMERICAN ENERGY RESOURCES, INC.
|Warrant No. NAEY 003B||5.000.000 SHARES @ PRICE OF $0.055|
1. Issuance. This Warrant is issued to Alan Massara, as of December 14, 2010 (the “Effective Date”), by North American Energy Resources, Inc. (hereinafter with its successors called the “Company”).
2. Exercise Price; Number of Shares. The registered holder of this Warrant (the “Holder”), commencing on the Effective Date, is entitled upon surrender of mis Warrant with the subscription form annexed hereto as Exhibit A duly executed, at the principal office of the Company, to purchase from the Company 5,000,000 fully paid and nonassessable shares of common stock of the Company (the “Shares”) at a price per share (the “Exercise Price”) of $0055. The person or persons in whose name or names any certificate representing Shares is issued hereunder shall be deemed to have become the holder of record of the Shares represented thereby as of the close of business on the date this Warrant is exercised, whether or not the transfer books of the Company shall be closed.
3. Payment of Exercise Price. The Exercise Price may be paid (i) in cash or by certified check or wire transfer, (ii) by the surrender or forgiveness by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Exercise Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.
4. No Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
5. Exercise; Expiration Date. This Warrant may be exercised in whole or in part at any time commencing on the Vesting Date as defined below. “Vesting Date” for purposes of this Warrant means the earlier of (1) the date the warrant NAEY 001B is exercised in whole, (2) the date that the Company has revenue of $12,500,000 in total for two consecutive quarters and records a pre-tax net profit for each of those two quarters, or (3) the effective date of a Reorganization as defined in Section 8.. This Warrant expires at 5:00 p.m. Central Time on the fifth anniversary of the Vesting Date (the “Expiration Date”) and shall be void thereafter.
6. Reserved Shares; Valid Issuance. The Company covenants that it will at all times from and after the Effective Date reserve and keep available such number of its authorized shares of common stock of the Company, free from all preemptive or similar rights therein, as will be sufficient to permit the exercise of this Warrant in full. The Company further covenants that such Shares as may be issued pursuant to such exercise will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.
7. Share Splits and Dividends. If, after the Effective Date, the Company shall subdivide its shares of common stock by share split or otherwise, or combine the shares of common stock, or issue additional shares of common stock in payment of a share dividend on the Shares, the number of Shares of common stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or share dividend, or proportionately decreased in the case of a combination, and the Exercise Price shall forthwith be proportionately decreased in the case of a subdivision or share dividend, or proportionately increased in the case of a combination.
8. Mergers and Reclassifications. If, after the Effective Date, the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Common stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, provisions for the adjustment of the Exercise Price and the number of shares issuable hereunder) shall thereafter be applicable in relation to any shares of Common stock or other securities and property thereafter deliverable upon exercise hereof. For the purposes of this Section 8, the term “Reorganization” shall include, without limitation, any reclassification, capital reorganization or change of the Common stock (other than as a result of a subdivision, combination or share dividend provided for in Section 7 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving entity and which does not result in any reclassification or change of the outstanding Common stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.
9. Price Protection. If the Company or any Subsidiary thereof, as applicable, shall offer in exchange any Common Stock or Common Stock Equivalents to acquire assets relating to the exploration, exploitation and production of an oil or natural gas well (an “Acquisition’) at an effective price per share less than the then the Exercise Price of the Warrant (such lower price, the “Base Share Price”), then, the Exercise Price shall be reduced to the effective price and the number of shares issuable hereunder shall be increased such that the aggregate Exercise Price payable hereunder, after taking into account the decrease in the Exercise Price, shall be equal to the aggregate Exercise Price prior to such adjustment. “Common Stock Equivalent” for purposes of this Warrant includes: options, warrants, preferred stock, or convertible securities that are convertible or can be exchanged for common stock of the Company.
10. Certain Events. If any change in the outstanding common stock of the Company or any other event occurs as to which the provisions of Section 7 through Section 9 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant, upon exercise for the same aggregate Exercise Price, the total number, class and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment.
11. Certificate of Adjustment Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
12. Issue Tax. The issuance of certificates for the Shares upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the men Holder of the Warrant being exercised.
13. Registration Rights. If the Company proposes to file a registration statement in connection with a public offering for the account of the Company (a “Primary Offering”) of its common stock (other than in connection with any exchange offer, merger, sale of substantially all assets or other reorganization or recapitalization of the Company or the issuance of securities in connection with employee stock options, stock awards or other employee benefit plans), or if the Company proposes to file a registration statement on behalf of any other holder of securities of the Company, then the Company shall include in such Registration Statement the Shares.
Notwithstanding the foregoing, if the managing underwriter or underwriters of any such proposed offering delivers a letter to the Company and to Holder stating that the total number of shares of Common Stock that the Company intends to include in any such proposed Primary Offering (the “Primary Shares”) and that Holder and persons heretofore or hereafter granted registration rights with respect to the shares of common stock of the Company other than Holder (“Other Sellers”) have requested to be included (the “Secondary Shares”) would exceed the number of shares of Common Stock that could be sold without having an adverse effect on such Primary Offering (the “Allowable Secondary Shares”), the number of Secondary Shares permitted to be included in the offering on behalf of Holder and the Other Sellers shall be reduced so that the number of Secondary Shares included in such Registration Statement equals the number of Allowable Secondary Shares. The number of Allowable Secondary Shares to be included in such Registration Statement shall be allocated between Holder and the Other Sellers as follows: first, Holder shall be allowed to include pro rata (based on the number of Registrable Securities that each stockholder requested be included), to the extent of any Allowable Secondary Shares, all Shares and second, to the extent of any remaining Allowable Secondary Shares, the Other Sellers shall be allowed to include pro rata (based on the number of shares that each Other Seller requested be included) the shares that they requested be included in the Registration Statement.
14. Notices of Record Date, Etc. In the event of:
|a)||Any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of Common stock of any class or any other securities or property, or to receive any other right;|
|(b)||Any reclassification of the shares of Common stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets;|
|(c)||Any voluntary or involuntary dissolution, liquidation or winding-up of the Company; or|
|(d)||The filing of a registration statement under the Securities Act of 1933, as amended, in connection with an Initial Public Offering;|
then and in each such event the Company will provide or cause to be provided to the Holder a written notice thereof. Such notice shall be provided at least fifteen (15) business days prior to the date specified in such notice on which any such action is to be taken.
15. Representations, Warranties and Covenants. This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:
(a) The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder. This Warrant has been duly authorized, issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.
(b) The Shares of Common stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.
(c) The issuance, execution and delivery of this Warrant does not, and the issuance of the Shares of Common stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s articles of incorporation, bylaws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of, or the filing of any notice (other than, if any, post-issuance state securities laws filings) or registration with, any person or entity.
(d) So long as the Holder possesses registration rights with respect to the Shares under this Warrant, the Company shall provide such information to the Holder or its prospective transferee(s) as is necessary, and shall take any other action as may then be required of an issuer under Rule 144, for an offer or sale of such shares of Common Stock by the Holder to be qualified under Rule 144. As used herein, “Rule 144” shall mean Rule 144 promulgated under the Securities Act of 1933, as amended, and any amendments thereof and any successor thereto.
16. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the tight to vote or to consent or to receive notice as a shareholder of the Company or any other matters or any rights whatsoever as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the Shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised. No provisions hereof, in the absence of affirmative action by the Holder to purchase Shares, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors.
17. Amendment The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder.
18. Notices, Etc.
(a) Any notice or written communication required or permitted to be given to the Holder may be given by United States mail, by overnight courier or by facsimile transmission, at the address most recently provided by the Holder to the Company, or by hand, and shall be deemed received upon the earlier to occur of (i) receipt, (ii) if sent by overnight courier, then on the day after which the same has been delivered to such courier for overnight delivery, or (iii) if sent by United States mail, seventy-two (72) hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail.
(b) In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new Warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for, and upon surrender and cancellation of, any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant.
(a) No transfer of this Warrant Agreement and any shares of Common Stock issuable upon exercise hereof shall be effective unless the Company shall first receive from such proposed transferee a written agreement, satisfactory to the Company, providing that such transferee is subject to all of the terms and conditions hereof.
(b) This Warrant and all rights hereunder are transferable in whole or in part by the Holder and any successor transferee upon the prior written consent of the Company (which such consent shall not be unreasonably withheld). The Holder shall provide the Company with written representations from the Holder and the Holder’s proposed transferee satisfactory to the Company regarding the transfer or, at the election of the Company, an opinion of counsel reasonably satisfactory to the Company to the effect that the proposed transfer of this Warrant or disposition of shares may be effected without registration or qualification (under any Federal or State law) of this Warrant or the shares of Common Stock issuable or issued upon the exercise hereof. Upon receipt of such written notice and either such representations or opinion by the Company, the Holder shall be entitled to transfer this Warrant, or to exercise this Warrant in accordance with its terms and dispose of the shares received upon such exercise or to dispose of shares of Common Stock received upon the previous exercise of this Warrant, all in accordance with the terms of the notice delivered by the Holder to the Company; provided that, an appropriate legend, if any, respecting the aforesaid restrictions on transfer and disposition may be endorsed on this Warrant or the certificates for such shares.
(c) Notwithstanding the above, Holder may, without the consent of the Company, transfer this Warrant Agreement to any direct, or indirect, wholly-owned subsidiary of Holder. The transfer shall be recorded on the books of the Company upon receipt by the Companies of a notice of transfer (“Transfer Notice”), at its principal offices and the payment to the Companies of all transfer taxes and other governmental charges imposed on such transfer.
20. No Impairment. The Company will not, by amendment of its articles of incorporation or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.
21. Descriptive Headings and Governing Law. The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. The provisions and terms of this Warrant shall be governed by, and construed in accordance with, the internal laws of the State of Louisiana.
22. Successors and Assigns. This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors and legal representatives.
|North American Energy Resources, Inc.|
|By:||/s/ Alan Massara|
|Date:||February 4, 2011|
EXHIBIT A TO WARRANT CERTIFICATE
Date: __________, _______
North American Energy Resources, Inc.
228 St. Charles Ave., Suite 724
New Orleans, LA 70130
Ladies and Gentlemen:
The undersigned hereby elects:
To exercise the warrant issued to it by North American Energy Resources, Inc. (the “Company”) and dated effective December 14 ,2010 (the “Warrant”) in full and to purchase all of the shares _________________ of common stock of the Company (the “Shares”) purchasable thereunder at a purchase price of $_____________ per Share or an aggregate purchase price of _____________Dollars ($ _____________) (the “Exercise Price”). Pursuant to the terms of the Warrant the undersigned has delivered the Exercise Price herewith in full, in cash or by certified check or wire transfer or as otherwise permitted pursuant to Section 3 of the Warrant.
The undersigned also makes the representations set forth on Exhibit B attached to the Warrant.
The certificate(s) for such Shares shall be issued in the name of the undersigned or as otherwise indicated below:
Very truly yours,
EXHIBIT B TO WARRANT CERTIFICATE
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO NORTH AMERICAN ENERGY RESOURCES, INC. ALONG WITH THE SUBSCRIPTION FORM BEFORE THE SHARES ISSUABLE UPON EXERCISE OF THE WARRANT CERTIFICATE DATED EFFECTIVE DECEMBER 14, 2010, WILL BE ISSUED.
North American Energy Resources, Inc.
228 St. Charles Ave.,
Suite 724 New Orleans, LA 70130
The undersigned,_________________ (“Purchaser”), intends to acquire up to_____________ shares of common stock (the “Shares”) of North American Energy Resources, Inc. (the “Company”) from the Company pursuant to the exercise of a certain Warrant to purchase Shares held by Purchaser. The Shares will be issued to Purchaser in a transaction not involving a public offering and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the “1933 Act”) and applicable state securities laws. In connection with such purchase and in order to comply with the exemptions from registration relied upon by the Company, Purchaser represents, warrants and agrees as follows:
1. Purchaser is acquiring the Shares for its own account, to hold for investment, and Purchaser shall not make any sale, transfer or other disposition of the Shares in violation of the 1933 Act or the General Rules and Regulations promulgated thereunder by the Securities and Exchange Commission (the “SEC”) or in violation of any applicable state securities law;
2. Purchaser has been advised that the Shares have not been registered under the 1933 Act or state securities laws on the ground that this transaction is exempt from registration, and that reliance by the Company on such exemptions is predicated in part on Purchaser’s representations set forth in this letter;
3. Purchaser has been informed that under the 1933 Act, the Shares must be held indefinitely unless they are subsequently registered under the 1933 Act or unless an exemption from such registration (such as Rule 144) is available with respect to any proposed transfer or disposition by Purchaser of the Shares;
4. The Company may refuse to permit Purchaser to sell, transfer or dispose of the Shares (except as permitted under Rule 144) unless there is in effect a registration statement under the 1933 Act and any applicable state securities laws covering such transfer, or unless Purchaser furnishes an opinion of counsel reasonably satisfactory to counsel for the Company, to the effect that such registration is not required;
5. Purchaser has invested in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Shares. Purchaser represents and warrants that it is an “accredited investor” within the meaning of Rule 501 of Regulation D of the 1933 Act.
Purchaser also understands and agrees that there will be placed on the certificate(s) for the Shares, or any substitutions therefor, legends stating in substance:
“These securities have not been registered under the Securities Act of 1933, as amended (the “Act”), or any applicable state securities laws, and may not be sold, offered for sale or transferred unless such sale or transfer is in accordance with the registration requirements of such Act and applicable laws or an exemption from the registration requirements of such Act and applicable laws is available with respect thereto.”
and any legend required pursuant to applicable state securities laws.
Purchaser has carefully read this letter and has discussed its requirements and other applicable limitations upon Purchaser’s resale of the Shares with Purchaser’s counsel.
Very truly yours,