ACKNOWLEDGMENT AND AGREEMENT TO MODIFICATION OF WAIVER AND INVESTMENT AGREEMENT
ACKNOWLEDGMENT
AND AGREEMENT TO MODIFICATION OF
WAIVER
AND INVESTMENT AGREEMENT
Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed
to
such terms in that certain Securities Purchase Agreement, dated as of June
1,
2007, as amended by the Joinder and First Amendment to Securities Purchase
Agreement, dated as of July 20, 2007, among Surfect Holdings, Inc. (the
“Company”)
and
the Bridge Investors (the “Purchase
Agreement”)
entered into in connection with the Company’s 10% senior secured convertible
promissory notes due October 29, 2007 in the original principal amount of $1.8
million (the “Bridge
Loan”)
and
related bridge loan documents (the “Bridge
Loan Documents”),
as
amended through the date hereof or in the Waiver (as defined
below).
Each
existing bridge investor identified on the signature pages hereto (the
“Bridge
Investors”)
have
agreed to accept revisions to the Bridge Loan in order to permit the Company
to
accept new financing from new investors (the “New
Investors”)
in a
private placement offering (“Private
Placement”)
and
have agreed to waive any and all existing or prior breaches or defaults under
the Bridge Loan Documents pursuant to a waiver and
investment agreement (the “Waiver”),
dated as
of November 30, 2007 (“Waiver
Date”),
by
and among the Company and the Bridge Investors.
Notwithstanding
anything to the contrary contained in the Waiver, each Bridge Loan Investor
acknowledges and agrees and consents in the capacity of Bridge Loan Investor
and
as a stockholder, to the following::
1. The
outstanding principal amount of Bridge Loan debt, plus accrued interest, shall
be automatically converted as of the Waiver Date into common stock, par value
$0.0001 per share, of the Company (“Shares”)
at a
purchase price of $0.04 per share, with a five-year warrant for 100% of such
number of Shares sold, exercisable at $0.08 per share (the “Warrant”)
in
such form as has been distributed with this Agreement. Such conversion terms
shall replace and be in lieu of those terms set forth in paragraph 2(i) of
and
referred to elsewhere in the Waiver.
2. The
Board
of Directors has approved the grant of five-year incentive stock options
exercisable at $0.15 per share to the Company’s senior management, such options
exercisable into a number of shares of common stock equal to 20% of the issued
and outstanding shares of the Company’s common stock, on a fully-diluted basis,
as of the date hereof and giving effect to the transactions contemplated hereby.
Such options shall be issued pursuant to the current or a newly-adopted
incentive stock plan and contain such terms and provisions as are usual and
customary, but shall not have any vesting or similar restriction, and be awarded
in such amounts as shall be recommended by Xxxxx Xxxxxxxx, effective as of
the
Waiver Date.
3. The
Company is authorized to enter into up to $140,000 of Short-Term Loans that
shall be convertible into shares of the Company’s common stock at $0.02 per
share.
4. The
Company is authorized to issue 5,000,000 shares of the Company’s common stock,
pro-rata, to the converting Bridge Loan holders.
Except
as
specifically modified as set forth above, the Waiver shall remain unchanged
and
shall remain in full force and effect.
IN
WITNESS WHEREOF, the parties have duly executed this Acknowledgment and
Agreement as of December 4, 2007.
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By:
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Name:
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Xxxxxx
Xxxxxxxx
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Title:
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President
and CEO
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The
undersigned has caused this Acknowledgment and Agreement to Modification of
Waiver and Investment Agreement to be duly executed by its authorized signatory
as of December 4, 2007 and, notwithstanding anything to the contrary in the
Waiver, hereby acknowledges and agrees to the terms set forth
herein:
Name
of
Bridge Loan Investor:
________________________________________________________
Signature
of Authorized Signatory of Bridge Loan Investor:
__________________________________
Name
of
Authorized Signatory:
________________________________________________________
Title
of
Authorized Signatory:
_________________________________________________________
Email
Address of Bridge Loan
Investor:__________________________________________________
Fax
Number of Bridge Loan Investor:
___________________________________________________
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