STRATOS RENEWABLES CORPORATION WARRANT TO PURCHASE COMMON STOCK **** 714,286 Shares of Common Stock****
THIS
WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
AN
OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT
REQUIRED.
Warrant
No. SN-08-001
July
25, 2008
STRATOS
RENEWABLES CORPORATION
WARRANT
TO PURCHASE COMMON STOCK
****
714,286
Shares of Common Stock****
THIS
WARRANT CERTIFIES THAT, for value received, Whitebox
Hedged High Yield Partners, LP, a British Virgin Islands limited partnership
or
registered assigns (the “Holder”),
is
entitled to subscribe for and purchase from Stratos
Renewables Corporation, a Nevada corporation
(the
“Company”),
up to
and including the number of fully paid and nonassessable shares of common stock,
par value $0.001 per share (the “Common
Stock”)
of the
Company set forth above, at the exercise price of $0.75 per share ( the
“Warrant
Exercise Price”)
(and
as adjusted from time to time pursuant to Section III hereof), at any time
or
from time to time from the date first set forth above (the “Issue
Date”)
and
prior to or upon July 25, 2013 (the “Expiration
Date”),
subject to the provisions and upon the terms and conditions hereinafter set
forth:
I. Method
of Exercise; Cash Payment; Issuance of New Warrant.
A. Subject
to the provisions of this Warrant, the purchase right represented by this
Warrant may be exercised by the Holder hereof, in whole or in part and from
time
to time, at the election of the Holder hereof, by the surrender of this Warrant
(with the notice of exercise substantially in the form attached hereto as
Exhibit A
duly
completed and executed) at the principal executive offices of the Company and
accompanied by payment to the Company, by wire transfer to an account designated
by the Company, of an amount equal to the then applicable Warrant Exercise
Price
multiplied by the number of Warrant Shares then being purchased; or by
submitting the Warrant with an indication of election to use cashless exercise.
B. The
person or persons in whose name(s) any certificate(s) representing the shares
of
the Company’s capital stock to be issued upon exercise of this Warrant (the
“Warrant
Shares”)
shall
be deemed to have become the holder(s) of record of, and shall be treated for
all purposes as the record holder(s) of, the shares represented thereby (and
such shares shall be deemed to have been issued) immediately prior to the close
of business on the date or dates upon which this Warrant is exercised. In the
event of any exercise of the rights represented by this Warrant, certificates
for the Warrant Shares so purchased shall be delivered to the Holder hereof
as
soon as possible and in any event within twenty (20) days after such exercise
and, unless this Warrant has been fully exercised or expired, a new warrant
having the same terms as this Warrant and representing the remaining portion
of
such shares, if any, with respect to which this Warrant shall not then have
been
exercised shall also be issued to the Holder hereof as soon as possible and
in
any event within such 20-day period.
C. The
Holder may elect to receive, without the payment by the Holder of any additional
consideration, Warrant Shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant together with notice of
such election, in which event the Company shall issue to the Holder a number
of
Warrant Shares computed using the following formula:
|
X
=
Y
(A-B)
______
A
|
|
|
where:
|
X
= The
number of Warrant Shares to be issued to the Holder pursuant to this
cashless exercise;
|
|
Y
=
The
number of Warrant Shares in respect of which the cashless exercise
election is made;
|
|
|
A
=
The
fair market value of one Warrant Share at the time the cashless exercise
election is made; and
|
|
|
B
=
The
Warrant Exercise Price (as adjusted to the date of the cashless
issuance).
|
For
purposes of this subparagraph, the fair market value of one Warrant Share as
of
a particular date shall be determined as follows: (i) if traded on a securities
exchange, the value shall be deemed to be the average of the closing bid price
(as reported by Bloomberg) of the securities on such exchange over the twenty
trading day period ending one trading day prior to the net exercise election;
(ii) if traded over-the-counter, the value shall be deemed to be the average
of
the closing bid (as reported by Bloomberg) over the twenty trading day period
ending one trading day prior to the net exercise; and (iii) if there is no
active public market, the value shall be the fair market value thereof, as
determined in good faith by the Company’s board of directors.
II. Reservation
of Shares.
During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose
of
the issuance upon exercise of the purchase rights evidenced by this Warrant
a
sufficient number of shares of its capital stock to provide for the exercise
of
the rights represented by this Warrant.
III. Adjustment
of Warrant Exercise Price and Number of Shares.
The
number and kind of securities purchasable upon the exercise of this Warrant
and
the Warrant Exercise Price shall be subject to adjustment to the nearest whole
share (one-half and greater being rounded upward) and nearest cent (one-half
cent and greater being rounded upward) from time to time upon the occurrence
of
certain events, as follows. Each of the adjustments provided by the
subsections below shall be deemed separate adjustments and any adjustment
of this Warrant pursuant to one subsection of this Section III shall
preclude additional adjustments for the same event or transaction by the
remaining subsections.
A. Reclassification.
In case
of any reclassification or change of securities of the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value
to
no par value, or from no par value to par value, or as a result of a subdivision
or combination) into the same or a different number or class of securities,
the
Company shall duly execute and deliver to the Holder of this Warrant a new
warrant (in form and substance reasonably satisfactory to the Holder of this
Warrant), so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, at a total purchase price not to exceed
that payable upon the exercise of the unexercised portion of this Warrant,
and
in lieu of the shares of Common Stock theretofore issuable upon exercise of
this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification or change by a holder of the
number of shares then purchasable under this Warrant. The Company shall deliver
such new warrant as soon as possible and in any event within 20 days after
such
reclassification or change. Such new warrant shall provide for adjustments
that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section III. The provisions of this subparagraph (A)
shall
similarly apply to successive reclassifications or changes.
-2-
B. Stock
Splits or Combination of Shares.
If the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide (by stock split) or combine (by reverse stock split) its outstanding
shares of capital stock of the class into which this Warrant is exercisable,
the
Warrant Exercise Price shall be proportionately decreased in the case of a
subdivision or increased in the case of a combination, effective at the close
of
business on the date the subdivision or combination becomes effective and the
number of shares of Common Stock issuable upon exercise of this Warrant shall
be
proportionately increased in the case of a subdivision or decreased in the
case
of a combination, and in each case to the nearest whole share, effective at
the
close of business on the date the subdivision or combination becomes effective.
The provisions of this subparagraph (B)
shall
similarly apply to successive subdivisions or combinations of outstanding shares
of capital stock into which this Warrant is exercisable.
C. Common
Stock Dividends.
If the
Company at any time while this Warrant is outstanding and unexpired shall pay
a
dividend with respect to Common Stock payable in Common Stock, then (i) the
Warrant Exercise Price shall be adjusted, from and after the date of
determination of stockholders entitled to receive such dividend or distribution
(the “Record
Date”),
to
that price determined by multiplying the Warrant Exercise Price in effect
immediately prior to such date of determination by a fraction (A) the numerator
of which shall be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution, and (B) the denominator
of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution and (ii) the number of shares
of
Common Stock issuable upon exercise of this Warrant shall be proportionately
adjusted, to the nearest whole share, from and after the Record Date by
multiplying the number of shares of Common Stock purchasable hereunder
immediately prior to such Record Date by a fraction (A) the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
after such dividend or distribution, and (B) the denominator of which shall
be
the total number of shares of Common Stock outstanding immediately prior to
such
dividend or distribution. The provisions of this subparagraph (C)
shall
similarly apply to successive Common Stock dividends by the
Company.
D. Adjustments
Upon Issuance of Additional Shares of Common Stock.
If
shares
of the Company’s capital stock (other than as a result of a conversion or
exercise of a convertible debt
or
equity instrument or
options/warrants issued prior to the Issue Date) are issued after the Issue
Date and prior to the exercise in full or expiration of this Warrant for
consideration (as reasonably determined by the Company’s board of directors)
less than the Warrant Exercise Price then in effect or convertible securities
or
options are sold or issued which if converted or exercised would result in
the
issuance of shares of the Company’s capital stock for less than the Warrant
Exercise Price (based on the total consideration paid for the options or
convertible security, as well as the exercise price of the options or
convertible security, as reasonably determined by the Company’s board of
directors), then the Warrant Exercise Price will be adjusted to such lower
price.
IV. Notice
of Adjustments.
Whenever the Warrant Exercise Price or the number of shares of Common Stock
purchasable hereunder shall be adjusted pursuant to Section III above, the
Company shall deliver a written notice, setting forth, in reasonable detail,
the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Warrant Exercise Price and the
number of shares of Common Stock purchasable hereunder after giving effect
to
such adjustment, and shall use commercially reasonable efforts to cause copies
of such notice to be delivered to the Holder of this Warrant within twenty
(20)
days after the occurrence of the event resulting in such adjustment at such
Holder’s last known address in accordance with Section IX hereof.
V. Fractional
Shares.
No
fractional shares will be issued in connection with any exercise hereunder,
but
in lieu of such fractional shares, the number of shares of Common Stock to
be
issued shall be rounded up to the nearest whole number.
-3-
VI. Compliance
with Securities Act of 1933; Transfer of Warrant or Shares.
A. Compliance
with Securities Act of 1933.
The
Holder of this Warrant, by acceptance hereof, agrees that this Warrant, the
Warrant Shares and the capital stock issuable upon conversion of the Warrant
Shares (collectively, the “Securities”)
are
being acquired for investment and that such holder will not offer, sell,
transfer or otherwise dispose of the Securities except under circumstances
which
will not result in a violation
of the Securities Act of 1933, as amended (the “Securities
Act”)
and
any applicable state securities laws. Upon exercise of this Warrant, unless
the
Warrant Shares being acquired are registered under the Securities Act and any
applicable state securities laws or an exemption from such registration is
available, the Holder hereof shall confirm in writing that the Warrant Shares
so
purchased are being acquired for investment and not with a view toward
distribution or resale in violation of the Securities Act and shall confirm
such
other matters related thereto as may be reasonably requested by the Company.
The
Warrant Shares (unless registered under the Securities Act and any applicable
state securities laws) shall be stamped or imprinted with a legend in
substantially the following form:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “ACT”).
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR
EVIDENCE
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
Such
legend shall be removed by the Company, upon the request of a Holder, at such
time as the restrictions on the transfer of the applicable security shall have
terminated.
B. Transferability
of the Warrant.
Subject
to compliance with Section VI.C. below, which provisions are intended to ensure
compliance with applicable federal and states securities laws, the Securities
may be transferred by the Holder hereof, in whole or in part and from time
to
time.
C. Method
of Transfer.
With
respect to any offer, sale, transfer or other disposition of the Securities,
the
Holder hereof shall prior to such offer, sale, transfer or other
disposition:
(i) surrender
this Warrant or certificate representing Warrant Shares at the principal
executive offices of the Company or provide evidence reasonably satisfactory
to
the Company of the loss, theft or destruction of this Warrant or certificate
representing Warrant Shares and an indemnity agreement reasonable satisfactory
to the Company,
(ii) pay
any
applicable transfer taxes or establish to the satisfaction of the Company that
such taxes have been paid,
(iii) deliver
a
written assignment to the Company in substantially the form attached hereto
as
Exhibit
B
or
appropriate stock power duly completed and executed prior to transfer,
describing briefly the manner thereof, and
(iv) deliver
evidence,
including a
written
opinion of such Xxxxxx’s counsel
if
reasonably requested by the Company, to the effect that such offer, sale,
transfer or other disposition may be effected without registration or
qualification (under the Securities Act as then in effect and any applicable
state securities law then in effect) of the Securities.
As
soon
as reasonably practicable after receiving the items set forth above, the Company
shall notify the Holder that it may sell, transfer or otherwise dispose of
the
Securities, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this Section VI.C. that
the opinion of counsel for the Holder or other evidence is not reasonably
satisfactory to the Company, the Company shall so notify the Holder promptly
with details of such determination. Notwithstanding the foregoing, the
Securities may, as to such federal laws, be offered, sold or otherwise disposed
of in accordance with Rule 144 under the Securities Act if the Company satisfied
the provisions thereof and provided that the Holder shall furnish such
information as the Company may reasonably request to provide a reasonable
assurance that the provisions of Rule 144 have been satisfied. Each certificate
representing this Warrant or Warrant Shares thus transferred (except a transfer
pursuant to Rule 144 or an effective registration statement) shall bear a legend
as to the applicable restrictions on transferability in order to ensure
compliance with applicable federal and state securities laws, unless in the
aforesaid opinion of counsel to the Holder and to the reasonable satisfaction
of
the Company, such legend is not required in order to ensure compliance with
such
laws. Upon any partial transfer of this Warrant, the Company will issue and
deliver to such new holder a new warrant (in form and substance similar to
this
Warrant) with respect to the portion transferred and will issue and deliver
to
the Holder a new warrant (in form and substance similar to this Warrant) with
respect to the portion not transferred as soon as possible and in any event
within 20 days after such transfer.
-4-
VII. No
Rights as Shareholders; Information.
Prior
to exercise of this Warrant, the Holder of this Warrant, as such, shall not
be
entitled to vote the Warrant Shares or receive dividends on or be deemed the
holder of such shares, nor shall anything contained herein be construed to
confer upon the Holder of this Warrant, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or
upon any matter submitted to shareholders at any meeting thereof, or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised and the shares of Common Stock
purchasable upon the exercise hereof shall have become deliverable, as provided
herein.
VIII. Modification
and Waiver; Effect of Amendment or Waiver.
This
Warrant and any provision hereof may be modified, amended, waived, discharged
or
terminated only by an instrument in writing, designated as an amendment to
this
Warrant and executed by a duly authorized officer of the Company and the Holder
of this Warrant. Any waiver or amendment effected in accordance with this
Section VIII shall be binding upon the Holder, each future holder of this
Warrant or of any shares purchased under this Warrant (including securities
into
which such shares have been converted) and the Company.
IX. Notices.
Any
notice, request, communication or other document required or permitted to be
given or delivered to the Holder hereof or the Company shall be delivered by
personal delivery, or shall be sent by certified United States mail, first-class
postage prepaid or by overnight delivery using a nationally recognized courier
service, to each such holder at its address as shown on the books of the Company
or to the Company at the address indicated on the signature page of this
Warrant. All such notices, requests, communications or other documents shall
be
deemed to have been received by the recipient (i) in the case of personal
delivery, on the date of such delivery, (ii) in the case of delivery by a
nationally recognized courier service, on the next business day subsequent
to
deposit with the courier and (iii) in the case of mailing, on the fourth
business day following the date of deposit in the United States mails,
first-class postage prepaid.
X. Reorganizations.
In case
of any reorganization of the Company, or in case of the consolidation or merger
of the Company with or into any other legal entity (other than a merger or
consolidation in which the Company is the continuing legal entity) or of the
sale of the properties and assets of the Company as, or substantially as, an
entirety to any other legal entity (collectively, "Reorganizations"), each
Warrant shall after such Reorganization be exercisable, upon the terms and
conditions specified in this Warrant Certificate, for the stock or other
securities or property (including cash) to which a holder of the number of
Common Shares purchasable (at the time of such Reorganization) upon exercise
of
such Warrant would have been entitled upon such Reorganization if such Warrant
had been exercised in full immediately prior to such Reorganization; and in
any
such case, if necessary, the provisions set forth in this Section X with respect
to the rights and interests thereafter of the holders of the Warrants shall
be
appropriately adjusted so as to be applicable, as nearly as may reasonably
be,
to any such stock or other securities or property thereafter deliverable upon
exercise of the Warrants.
-5-
XI. Piggy
Back Registration.
A. Registration
Requirements.
For a
period of two years after the date of issuance of this Warrant, the Company
proposes to register any of its securities under the Securities Act (other
than
pursuant to Form S-4, Form S-8 or any successor form of limited purpose), the
Company will give notice at least 20 days prior to the filing of each such
registration statement to the Holder or the holder of the Warrant Shares of
its
intention to effect such a registration and will include in such registration
all Warrant Shares with respect to which the Company has received requests
for
inclusion therein within 10 days after receipt of the Company's notice.
B. The
Company shall use its best efforts to:
(i) furnish
to the Holder with respect to the Warrant Shares registered under the
registration statement such number of copies of the registration statement
and
the prospectus (including supplemental prospectuses) filed with the Securities
and Exchange Commission (the “SEC”)
in
conformance with the requirements of the Securities Act and other such documents
as the Holder may reasonably request, in order to facilitate the public sale
or
other disposition of all or any of the Warrant Shares by the Holder;
(ii) make
any
necessary blue sky filings to permit the Warrant Shares to be sold in any state
requested by the Holder;
(iii) pay
the
expenses incurred by the Company and the Holder in complying with this Section
XI, including, all registration and filing fees, FINRA fees, exchange listing
fees, printing expenses, fees and disbursements of counsel for the Company,
blue
sky fees and expenses and the expense of any special audits incident to or
required by any such registration (and including attorneys’ fees of one counsel
to the Holder, but excluding any and all underwriting discounts and selling
commissions applicable to the sale of Warrant Shares by the
Holder);
(iv) advise
the Holder, promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the registration statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable best efforts
to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued; and
(v) with
a
view to making available to the Holder the benefits of Rule 144 and any other
rule or regulation of the SEC that may at any time permit the Holder to sell
Warrant Shares to the public without registration, the Company covenants and
agrees to use its commercially reasonable best efforts to: (i) make and keep
public information available, as those terms are understood and defined in
Rule
144, until the earlier of (A) such date as all of the Warrant Shares qualify
to
be resold pursuant to Rule 144 within any 90 day period without restriction
or
any other rule of similar effect or (B) such date as all of the Warrant Shares
shall have been resold; (ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and under
the Securities Exchange Act of 1934 (the “Exchange
Act”);
and
(iii) furnish to the Holder upon request, as long as the Holder owns any Warrant
Shares, (A) a written statement by the Company as to whether it has complied
with the reporting requirements of the Securities Act and the Securities
Exchange Act of 1934, (B) a copy of the Company’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information
as
may be reasonably requested in order to avail the Holder of any rule or
regulation of the SEC that permits the selling of any such Warrant Shares
without registration.
The
Company understands that the Holder disclaims being an underwriter, but
acknowledges that a determination by the SEC that the Holder is deemed an
underwriter shall not relieve the Company of any obligations it has
hereunder.
C. For
the
purpose of this Section XI:
(a) the
term
“Selling Shareholder” shall mean the Holder, its executive officers and
directors and each person, if any, who controls the Holder within the meaning
of
Section 15 of the Securities Act or Section 20 of the Exchange Act;
-6-
(b) the
term
“Registration Statement” shall include any final prospectus, exhibit, supplement
or amendment included in or relating to, and any document incorporated by
reference in, the Registration Statement (or deemed to be a part thereof)
referred to in this section; and
(c) the
term
“untrue statement” shall mean any untrue statement or alleged untrue statement
of a material fact, or any omission or alleged omission to state in the
Registration Statement a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) The
Company agrees to indemnify and hold harmless each Selling Shareholder from
and
against any losses, claims, damages or liabilities to which such Selling
Shareholder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon (i) any untrue statement of
a
material fact contained in the Registration Statement, (ii) any inaccuracy
in
the representations and warranties of the Company contained in this Warrant
or
the failure of the Company to perform its obligations hereunder or (iii) any
failure by the Company to fulfill any undertaking included in the Registration
Statement, and the Company will reimburse such Selling Shareholder for any
reasonable legal expense or other actual accountable out of pocket expenses
reasonably incurred in investigating, defending or preparing to defend any
such
action, proceeding or claim; provided, however, that the Company shall not
be
liable in any such case to the extent that such loss, claim, damage or liability
arises out of, or is based upon, an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Selling Shareholder specifically for
use
in preparation of the Registration Statement or the failure of such Selling
Shareholder to comply with its covenants and agreements contained herein or
any
statement or omission in any prospectus that is corrected in any subsequent
prospectus that was delivered to the Selling Shareholder prior to the pertinent
sale or sales by the Selling Shareholder.
(e) The
Holder severally (as to itself), and not jointly, agrees to indemnify and hold
harmless the Company (and each person, if any, who controls the Company within
the meaning of Section 15 of the Securities Act, each officer of the Company
who
signs the Registration Statement and each director of the Company) from and
against any losses, claims, damages or liabilities to which the Company (or
any
such officer, director or controlling person) may become subject (under the
Securities Act or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or
are
based upon, (i) any failure by that Holder to comply with the covenants and
agreements contained herein or (ii) any untrue statement of a material fact
contained in the Registration Statement if, and only if, such untrue statement
was made in reliance upon and in conformity with written information furnished
by or on behalf of the Holder specifically for use (and identified as such)
in
preparation of the Registration Statement, and the Holder will reimburse the
Company (or such officer, director or controlling person, as the case may be),
for any reasonable legal expense or other reasonable actual accountable
out-of-pocket expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim. The obligation to
indemnify shall be limited to the net amount of the proceeds received by the
Holder from the sale of the Common Shares pursuant to the Registration
Statement.
(f) Promptly
after receipt by any indemnified person of a notice of a claim or the beginning
of any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section XI(C), such indemnified person
shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section XI(C) (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this Section
XI(C). Subject to the provisions hereinafter stated, in case any such action
shall be brought against an indemnified person, the indemnifying person shall
be
entitled to participate therein, and, to the extent that it shall elect by
written notice delivered to the indemnified party promptly after receiving
the
aforesaid notice from such indemnified party, shall be entitled to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified person
of
its election to assume the defense thereof (unless it has failed to assume
the
defense thereof and appoint counsel reasonably satisfactory to the indemnified
party), such indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof; provided, however, that if there exists
or
shall exist a conflict of interest that would make it inappropriate, in the
reasonable opinion of counsel to the indemnified person, for the same counsel
to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel (who shall not be the same as the opining counsel) at
the
expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified parties.
In no event shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person shall have
approved the terms of such settlement; provided that such consent shall not
be
unreasonably withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
reasonably have been a party and indemnification could have been sought
hereunder by such indemnified person, unless such settlement includes an
unconditional release of such indemnified person from all liability on claims
that are the subject matter of such proceeding.
-7-
(g) If
the
indemnification provided for in this Section XI(C) is unavailable to or
insufficient to hold harmless an indemnified party under subsection (d) or
(e)
above in respect of any losses, claims, damages or liabilities (or actions
or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Holder on the other in connection
with the statements or omissions or other matters which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as
any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the
one
hand or the Holder on the other and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement. The Company and the Holder agrees that it would not be just and
equitable if contribution pursuant to this subsection (g) were determined by
pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to above in this subsection (g).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above
in this subsection (g) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (g), Holder shall not be required to contribute any amount in excess
of the amount by which the net amount received by the Holder from the sale
of
the Warrant Shares to which such loss relates exceeds the amount of any damages
which the Holder has otherwise been required to pay to the Company by reason
of
such untrue statement. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(h) The
parties to this Agreement hereby acknowledge that they are sophisticated
business persons who were represented by counsel during the negotiations
regarding the provisions hereof including, without limitation, the provisions
of
this Section XI(C), and are fully informed regarding said provisions. They
further acknowledge that the provisions of this Section XI(C) fairly allocate
the risks in light of the ability of the parties to investigate the Company
and
its business in order to assure that adequate disclosure is made in the
Registration Statement as required by the Securities Act and the Exchange
Act.
(i) The
obligations of the Company and of the Holder under this Section XI(C) shall
survive completion of any offering of Warrant Shares in such Registration
Statement for a period of two years from the effective date of the Registration
Statement. No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent
to
entry of any judgment or enter into any settlement which does not include as
an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim
or
litigation.
-8-
XII. Lost
Warrants or Stock Certificates.
Upon
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant or any stock certificate and, in
the
case of any such loss, theft or destruction, upon receipt of an indemnity
agreement reasonably satisfactory to the Company, or in the case of any such
mutilation upon surrender and cancellation of such mutilated Warrant or stock
certificate, the Company will issue and deliver a new warrant (containing the
same terms as this Warrant) or stock certificate, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
XIII. Descriptive
Headings.
The
descriptive headings of the several paragraphs of this Warrant are inserted
for
convenience only and do not constitute a part of this Warrant. The language
in
this Warrant shall be construed as to its fair meaning without regard to which
party drafted this Warrant.
XIV. Governing
Law.
This
Warrant shall be construed and enforced in accordance with, and the rights
of
the parties shall be governed by, the laws of the State of California, without
reference to principles governing choice or conflicts of laws.
XV. Entire
Agreement.
This
Warrant constitutes the full and entire understanding and agreement between
the
parties with regard to the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, and undertakings of the parties,
whether oral or written, with respect to such subject matter.
XVI. No
Impairment.
The
Company will not, by an voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed under this
Warrant by the Company, but will at all times in good faith assist in carrying
out all the provisions of this Warrant and in the taking of all such actions
as
may be necessary or appropriate in order to protect the rights of the Holder
of
this Warrant against impairment.
XVII. Issue
Taxes.
The
Company shall pay any and all issue and other taxes payable in respect of any
issue or delivery of Common Stock upon the exercise of this Warrant that may
be
imposed under the laws of the United States of America or by any state,
political subdivision or taxing authority of the United States of America;
provided,
however,
that
the Company shall not be required to pay any tax or taxes that may be payable
in
respect of any transfer involved in the issue or delivery of any Warrant or
certificates for Common Stock in a name other than that of the registered holder
of such Warrant, and no such issue or delivery shall be made unless and until
the person or entity requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction
of
the Company that such tax has been paid.
XVIII. Severability.
In the
event that any one or more of the provisions contained in this Warrant shall
for
any reason be held to be invalid, illegal or unenforceable in any respect,
such
provision(s) shall be ineffective only to the extent of such invalidity,
illegality or unenforceability, without invalidating the remainder of such
provision or the remaining provisions of this Warrant and such invalidity,
illegality or unenforceability shall not affect any other provision of this
Warrant, which shall remain in full force and effect.
XIX. Survival
of Representations, Warranties and Agreements.
All
representations and warranties of the Company and the Holder hereof shall
survive the Issue Date of this Warrant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the Holder hereof contained herein
shall survive indefinitely, until by their respective terms, they are no longer
operative.
XX. Counterparts.
This
Warrant may be executed in two or more counterparts, each of which shall be
an
original, and all of which together shall constitute one
instrument.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
-9-
IN
WITNESS WHEREOF,
the
parties hereto have caused this Warrant to be duly executed as of the issue
date
of this Warrant by its duly authorized officers.
|
STRATOS RENEWABLES CORPORATION
|
|
|
a Nevada
corporation
|
|
|
By:
|
/s/
XXX XXXXXX
|
| Name: |
Xxx
Xxxxxx
|
| Title: |
President
|
SIGNATURE
PAGE TO WARRANT TO PURCHASE COMMON STOCK
-10-
EXHIBIT
A
NOTICE
OF EXERCISE
To:
STRATOS RENEWABLES CORPORATION (the “Company”)
1. The
undersigned hereby elects to purchase __________ shares of Common Stock of
the
Company pursuant to the terms of the attached Warrant, and tenders herewith
:
____ payment
of the purchase price of such shares in full
or
____ ____________
of the shares purchasable under the Warrant pursuant to the cashless exercise
provisions of this Warrant.
2. Please
issue a certificate or certificates representing said shares in the name of
the
undersigned or in such other name or names as are specified below:
|
(Name)
|
|
(Address)
|
|
(City,
State)
|
3. The
undersigned represents that the aforesaid shares being acquired for the account
of the undersigned for investment and not with a view to, or for resale in
connection with, the distribution thereof and that the undersigned has no
present intention of distributing or reselling such shares, all except as in
compliance with applicable securities laws, and that the undersigned is an
“accredited investor” within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act of 1933, as amended.
|
(Date)
|
|
(Signature)
|
NOTICE:
Signature
must be guaranteed by a commercial bank or trust company or a member firm of
a
major stock exchange if shares of capital stock are to be issued, or securities
are to be delivered, other than to or in the name of the registered holder
of
this Warrant. In addition, signature must correspond in all respects with the
name as written upon the face of the Warrant in every particular without
alteration or any change whatever.
-11-
EXHIBIT
B
FORM
OF ASSIGNMENT
FOR
VALUE RECEIVED,
the
undersigned holder of the attached Warrant hereby sells, assigns and transfers
unto _______________________ whose address is
_______________________________________ and whose taxpayer identification number
is _________________the undersigned’s right, title and interest in and to the
Warrant issued by Stratos Renewables Corporation, a Nevada corporation (the
“Company”)
to
purchase _______ shares of the Company’s Common Stock, and does hereby
irrevocably constitute and appoint __________________________ attorney to
transfer said Warrant on the books of the Company with full power of
substitution in the premises.
In
connection with such sale, assignment, transfer or other disposition of this
Warrant, the undersigned hereby confirms that:
| o |
such
sale, transfer or other disposition may be effected without registration
or qualification (under the Securities Act as then in effect and
any
applicable state securities law then in effect) of this Warrant or
the
shares of capital stock of the Company issuable thereunder and has
attached hereto a written opinion of the undersigned’s counsel to that
effect; or
|
| o |
such
sale, transfer or other disposition has been registered under the
Securities Act of 1933, as amended, and registered and/or qualified
under
all applicable state securities
laws.
|
|
(Date)
|
|
(Signature)
|
NOTICE:
Signature
must correspond in all respects with the name as written upon the face of the
Warrant in every particular without alteration or any change
whatever.
-12-
