SURFNET MEDIA GROUP, INC.
COMMON STOCK PURCHASE WARRANT
DATED AS OF MARCH 17, 2004
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WARRANT AGREEMENT
THIS WARRANT AND THE SHARES OF COMMON STOCK COVERED HEREBY (COLLECTIVELY, THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER ANY STATE SECURITIES LAW OR THE
SECURITIES ACT OF 1933, AS AMENDED ("FEDERAL ACT") UPON RELIANCE OF EXEMPTIONS
AVAILABLE THEREFOR. THE SECURITIES WILL BE ACQUIRED FOR INVESTMENT AND MAY NOT
BE OFFERED FOR SALE, HYPOTHECATED, SOLD OR TRANSFERRED, NOR WILL ANY ASSIGNEE OR
TRANSFEREE THEREOF BE RECOGNIZED BY SURFNET MEDIA GROUP, INC. AS HAVING ANY
INTEREST IN SUCH SECURITIES IN THE ABSENCE OF (i) AN OPINION OF COUNSEL THAT THE
TRANSACTION BY WHICH SUCH SECURITIES WILL BE OFFERED FOR SALE, HYPOTHECATED,
SOLD OR TRANSFERRED IS EXEMPT UNDER THE FEDERAL ACT, AND APPLICABLE STATE
SECURITIES LAWS; OR (ii) AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE
SECURITIES UNDER THE FEDERAL ACT AND APPLICABLE STATE SECURITIES LAWS.
SURFNET MEDIA GROUP, INC.
COMMON STOCK PURCHASE WARRANT
Warrant No. 10
No. of Shares - 300,000
Dated: March 17, 2004
This certifies that, for value received, Xxxxxxx X. Xxxxxx, hereinafter
referred to as the registered holder or the "Warrant Holder," or his successors
and assigns, is entitled, subject to the terms and conditions hereinafter set
forth, at or before 5:00 o'clock P.M., Eastern time, subject to adjustment upon
the occurrence of the contingencies set forth, on or before March 17, 2009, but
not thereafter, to purchase 300,000 shares of $.0001 par value Common Stock (the
"Common Stock") of SurfNet Media Group, Inc., upon the exercise of this Warrant,
at one dollar and seventy-five cents ($1.75) per share (the "Warrant Price") and
is subject to adjustments upon the occurrence of the contingencies set forth in
this Warrant. The Warrant Holder and SurfNet are hereinafter referred to
collectively as the "Parties."
Upon delivery of this Warrant with the subscription form annexed hereto,
duly executed, together with payment of this Warrant Price for the shares of
Common Stock thereby purchased, at the principal office of SurfNet, 0000 Xxxx
Xxxxxxxxxx Xxxxx, Xxxxx 0, Xxxxx, Xxxxxxx 00000, or at such other address as
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SurfNet may designate by notice in writing to the registered holder hereof, the
registered holder of this Warrant shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. All shares of Common
Stock which may be issued upon the exercise of this Warrant will, upon issuance,
be fully-paid and non-assessable and free from all taxes, liens and charges with
respect thereto.
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant. This Warrant may be in whole at any time, or in any
part from time to time, prior to 5:00 o'clock P.M., Eastern time, on or
before March 17, 2009, but not thereafter, as to all or any part of the
number of whole shares of Common Stock then subject hereto. In case of any
partial exercise of this Warrant, SurfNet shall execute and deliver a new
Warrant of like tenor and date for the balance of the shares of Common
Stock purchasable hereunder. Upon any exercise of this Warrant, Warrant
Holder may, in lieu of payment of the Warrant Price in cash, surrender this
Warrant (or any successor hereto or fraction hereof) (valued for such
purpose at the Fair Market Value of the underlying Common Stock for which
such Warrant is exercisable on the date of such exercise less the Warrant
Price then in effect) and apply all or a portion of the amount so
determined to the payment of the Warrant Price for the number of shares of
Common Stock being xxxxxxxxx.xx to all the number of whole shares of Common
Stock then subject hereto. This Warrant vests sequentially at the rate of
25,000 shares per quarter, with the first increment of this Warrant
exercisable on and after May 30, 2004, and the 12th and final increment of
this Warrant exercisable on or after February 28, 2007. This Warrant may
only be exercised at any given time to the extent this Warrant has vested
in accordance with the foregoing. This Warrant may not be exercised as to
less than 1,000 shares at any one time unless the number of shares
purchased is the total number at the time available for purchase under this
Warrant. This Warrant may be exercised only as to whole shares; fractional
share interests will be disregarded except that they may be accumulated.
For purposes hereof, "Fair Market Value" means the average closing bid
price of the Common Stock on the OTCBB for the ten (10) trading days prior
to the date of exercise.
2. Adjustment of Warrant Price and Number of Shares Purchasable Hereunder. In
case SurfNet shall at any time subdivide the outstanding shares of its
Common Stock, this Warrant Price in effect immediately prior to such
subdivision shall be proportionately decreased, and in case SurfNet shall
at any time combine the outstanding shares of its Common Stock, this
Warrant Price in effect shall immediately prior to such combination be
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proportionately increased, effective from and after the record date of such
subdivision or combination, as the case may be.
3. Notice of Adjustments. Upon any adjustment of this Warrant Price and any
increase or decrease in the number of shares of Common Stock purchasable
upon the exercise of this Warrant, then and in each such case, SurfNet,
within thirty (30) days thereafter, shall give written notice thereof to
the registered holder of this Warrant at the address of such holder as
shown on the books of SurfNet, which notice shall state this Warrant Price
as adjusted and the increased or decreased number of shares purchasable
upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation of each. The holder of this Warrant shall have ten
(10) days in which to review the proposed adjustment and to object to the
proposed adjustment by notifying SurfNet in writing of such objection,
setting forth in reasonable detail the reasons for such objection. If the
holder fails to object to the proposed adjustment during such ten (10) day
period the proposed adjustment shall become final. If the holder objects to
the proposed adjustment then SurfNet and the holder shall attempt to
reconcile their differences and if unable to do so such adjustment shall be
determined by SurfNet's independent accountants whose determination shall
be final.
4. Notice of Exercise of Warrant. This Warrant may be exercised by this
Warrant Holder by a written notice signed by this Warrant Holder, and
delivered or mailed to SurfNet to the attention of the President. The
notice shall specify the number of shares of Stock which this Warrant
Holder elects to purchase hereunder, and be accompanied by (i) a certified
or cashier's check payable to SurfNet in payment of the total Exercise
Price applicable to such shares as provided herein. Upon receipt of an such
notice and accompanying payment, SurfNet agrees to issue to this Warrant
Holder stock certificates for the number of shares specified in such notice
registered in the name of this Warrant Holder.
5. Charges, Taxes and Expenses. The issuance of certificates for shares of
Common Stock upon any exercise of this Warrant shall be made without charge
to the holder hereof for any tax or other expense in respect to the
issuance of such certificates, all of which taxes and expenses shall be
paid by SurfNet, and such certificates shall be issued in the name of, or
in such name or names as may be directed by, the holder of this Warrant;
provided, however, that in the event that certificates for shares of Common
Stock are to be issued in a name other than the name of the holder of this
Warrant, this Warrant when surrendered for exercise shall be accompanied by
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an instrument of transfer in form satisfactory to SurfNet, duly executed by
the holder hereof in person or by an attorney duly authorized in writing.
6. Certain Obligations of SurfNet. SurfNet will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act or
deed, avoid or seek to avoid the performance or observance of any of the
covenants, stipulations or conditions to be performed or observed by
SurfNet, but will at all times in good faith assist, insofar as it is able,
in the carrying out of all provisions of this Warrant and in the taking of
all other action which may be necessary in order to protect the rights of
the holder of this Warrant against dilution. Without limiting the
generality of the foregoing, SurfNet agrees that it will not establish or
increase the par value of the shares of any Common Stock which are at the
time issuable upon exercise of this Warrant above the then prevailing
Warrant Price hereunder and that, before taking any action which would
cause an adjustment reducing this Warrant Price hereunder below the then
par value, if any, of the shares of any Common Stock issuable upon exercise
hereof, SurfNet will take any corporate action which may, in the opinion of
its counsel, be necessary in order that SurfNet may validly and legally
issue fully-paid and non-assessable shares of such Common Stock at this
Warrant Price as so adjusted.
7. Continuance of Engagement. Nothing contained in this Warrant shall confer
upon this Warrant Holder any right to continue in the engagement of SurfNet
or constitute any contract or agreement of engagement. Nothing contained in
this Warrant shall interfere in any way with the right of SurfNet to (i)
terminate the engagement of this Warrant Holder, or (ii) reduce the
compensation received by this Warrant Holder from time to time, provided
that nothing herein shall modify any written engagement or consulting
agreement as may now exist or hereinafter be entered into between Warrant
Holder and SurfNet.
8. Effect of Termination of Relationship. If this Warrant Holder ceases to be
engaged by SurfNet for any reason, this Warrant shall terminate to the
extent not vested. Upon termination of Warrant Holder's engagement by
reason of retirement, disability or death, this Warrant, to the extent
vested, may be exercised by this Warrant Holder or his executor or
administrator, as the case may be, at any time prior to March 17, 2009.
9. Change of Control. This Warrant shall accelerate to the extent not vested
in the event of a Change of Control, provided Warrant Holder remained
engaged by SurfNet under that certain Consulting Agreement between SurfNet
and SurfNet of event date herewith not less than six months prior to the
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Change of Control. For purposes hereof, "Change Of Control" means a change
in control of SurfNet of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether
or not SurfNet is subject to the Exchange Act at such time, including any
of the following events:
(a) Any Person becomes the Beneficial Owner, directly or indirectly, of
securities of SurfNet representing a majority of the combined voting
power of or equity interest in SurfNet in connection with a merger or
otherwise. In applying the preceding sentence, securities acquired
directly from SurfNet, its subsidiaries, or affiliates by or for the
Person shall not be taken into account.
(b) A merger or consolidation of SurfNet is consummated with any other
corporation or entity or any other form of business combination
pursuant to which the outstanding stock of SurfNet is exchanged for
cash, securities or other property paid, issued or caused to be issued
by the surviving or acquiring corporation or entity unless the
stockholders immediately before the merger or consolidation would
continue to own equity securities that represent (either by remaining
outstanding or by being converted into equity securities of the
surviving entity) at least a controlling interest in SurfNet or such
surviving or acquiring entity corporation immediately after such
merger or consolidation.
(c) A sale, transfer or lease by SurfNet of all, or substantially all, of
SurfNet's assets is consummated.
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Securities Act of 1993, as amended. "Person" has the meaning given in
Section 3(a)(9) of the Securities Act of 1933, amended, as modified
and used in Section 13(d) of the Securities Act of 1933, amended, and
will include a "group," as defined in Rule 13d-5 promulgated
thereunder. However, a person will not include SurfNet or any of its
affiliates.
10. Notices. All notices and other communications required or permitted under
this Warrant will be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that they
hereafter designate by notice to all other parties in accordance with this
Section. All notices and communications will be deemed to be received in
accordance with the following: (i) in the case of personal delivery, on the
date of such delivery; (ii) in the case of facsimile transmission, on the
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date on which the sender receives confirmation by facsimile transmission
that such notice was received by the addressee, provided that a copy of
such transmission is additionally sent by mail as set forth in (iv) below;
(iii) in the case of overnight air courier, on the second business day
following the day sent, with receipt confirmed by the courier; and (iv) in
the case of mailing by first class certified mail, postage prepaid, return
receipt requested, on the fifth business day following such mailing.
11. Compulsory Arbitration. Any controversy, claim and/or dispute arising out
of or relating to this Warrant or the breach hereof or subject matter
hereof (including any action in tort) will be finally and fully settled by
arbitration in Maricopa County, Arizona in accordance with the
then-existing Commercial Arbitration Rules of the American Arbitration
Association (the "AAA"), and judgment upon the award rendered by the
arbitrators may be entered in any court having applicable jurisdiction.
Written notice of demand for arbitration will be given to the other parties
and to the AAA within six (6) months after the controversy, claim or
dispute has arisen or be barred, and in no event after the date when the
institution of court proceedings based on such dispute would be barred by
the applicable statute of limitations. Controversies, claims and/or
disputes will be resolved by one arbitrator selected by the mutual
agreement of the parties or, failing that agreement within forty-five (45)
days after written notice demanding arbitration, by the AAA. There will be
limited discovery prior to the arbitration hearing as follows: (i) exchange
of witness lists and copies of documentary evidence and documents related
to or arising out of the issues to be arbitrated, and (ii) depositions of
all Party witnesses. Depositions will be conducted in accordance with the
rules or code of Civil Procedure of the jurisdiction in which the
arbitration is conducted, and a court reporter will record all hearings,
with such record constituting the official transcript of such proceedings.
All decisions of the arbitrator will be in writing, and the arbitrator will
provide reasons for the decision. Each of the Parties will bear its own
respective attorney's fees and costs in accordance with any dispute or
arbitration.
12. Governing Law. This Warrant will be deemed to have been executed in the
State of Delaware and will be governed and construed as to both substantive
and procedural matters in accordance with the laws of the State of
Delaware, but excepting (i) any State of Delaware rule which would result
in judicial failure to enforce the arbitration provisions of Section 11
hereof or any portion thereof and (ii) any State of Delaware rule which
would result in the application of the law of a jurisdiction other than the
State of Delaware. Any dispute arising from this Warrant must be filed in
the county in which the principal office of SurfNet is located.
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13. Complete Agreement. This Warrant, along with the Consulting Agreement,
contains the entire agreement of the parties relating to the subject matter
hereof and supersedes all prior agreements and understandings, whether
written or oral, with respect to such subject matter, and the Parties have
made no agreements, representations or warranties relating to the subject
matter of this Warrant which are not set forth herein. If a conflict is
determined to exist among any of the aforementioned agreements, the terms
of this Warrant will control.
14. Amendment. This Warrant may not be amended, modified, superseded, canceled
or terminated, and any of the matters, covenants, representations,
warranties or conditions hereof may not be waived, except by written
instrument executed by the Parties or, in the case of a waiver, by such of
the Parties to be charged with such waiver.
15. Waiver. The failure of either of the Parties to insist upon strict
adherence to any term, condition or other provision of this Warrant will
not be considered a waiver or deprive that Party of the right thereafter to
insist upon strict adherence to that term or any other term, condition or
other provision of this Warrant.
16. Headings. The headings of this Warrant are solely for convenience of
reference and will not affect its interpretation.
17. Severability. If any one clause or part of this Warrant is deemed invalid,
unenforceable or illegal by the arbitrators or court of competent
jurisdiction, then it is severed from this Warrant and the rest of this
Warrant remains in full force and effect. Warrant Holder acknowledges the
uncertainty of the law in this respect and expressly stipulates that this
Warrant be given the construction which renders its
18. Further Assurances. The Parties will sign such other instruments, cause
such meetings to be held, resolutions passed and by-laws enacted, exercise
their vote and influence, do and perform and cause to be done and performed
such further and other acts.
19. Legal Counsel. Warrant Holder hereby acknowledges that he has been advised
that the party who drafted this Warrant on behalf of SurfNet is a licensed
attorney, that such party is representing SurfNet's interests only and that
Warrant Holder been urged to retain legal counsel to advise him.
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20. Miscellaneous.
(a) SurfNet covenants that it will at all times reserve and keep
available, solely for the purpose of issue upon the exercise hereof, a
sufficient number of shares of Common Stock to permit the exercise
hereof in full and a sufficient number of shares of Common Stock to
permit the conversion of all such shares of Common Stock.
(b) The terms of this Warrant shall be binding upon and shall inure to the
benefit of any successors or assigns of SurfNet and of the holder or
holders hereof and of the Common Stock issued or issuable on the
exercise hereof.
(c) No holder of this Warrant, as such, shall be entitled under this
Warrant to vote or receive dividends (except as provided in paragraph
2 hereof) or be deemed to be a stockholder of SurfNet for any purpose.
(d) Except as otherwise provided herein, this Warrant and all rights
hereunder are transferable by the registered holder hereof in person
or by duly authorized attorney on the books of SurfNet upon surrender
of this Warrant, properly endorsed, to SurfNet. SurfNet may deem and
treat the registered holder of this Warrant at any time as the
absolute owner hereof for all purposes and shall not be affected by
any notice to the contrary.
(e) By acceptance of this Warrant the registered holder represents and
warrants to SurfNet that such holder is acquiring this Warrant and
will acquire any shares of Common Stock issued upon the exercise of
this Warrant for the holder's own account with the intent of holding
such warrant or shares for investment and without the intent of
participating directly or indirectly in a distribution of the same.
Any certificates for Common Stock issued upon the exercise of this
Warrant shall bear a legend similar to the legend appearing on the
first page of this Warrant.
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IN WITNESS WHEREOF, SurfNet has caused this Warrant to be signed by its
duly authorized officers and its corporation seal to be affixed hereto as of the
date first written on.
SURFNET MEDIA GROUP, INC.
/s/ Xxxxxx Xxxxx
By:___________________
Xxxxxx Xxxxx
Chairman
Accepted:
/s/ Xxxxxxx X. Xxxxxx
____________________________
Xxxxxxx X. Xxxxxx
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ASSIGNMENT
(To be Executed by the Registered Holder to effect a Transfer of the foregoing Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, and assigns and transfers unto
the foregoing Warrant and the rights represented thereto to purchase shares of
Common Stock of SURFNET MEDIA GROUP, INC., in accordance with the terms and
conditions thereof, and does hereby irrevocably constitute and appoint
________________________________________
Attorney to transfer the said Warrant on the books of SurfNet, with full power
of substitution.
______________________________________ By _______________________________
Signature
______________________________________
______________________________________
______________________________________
Address
Dated:________________________________
In the presence of:
______________________________________
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SUBSCRIPTION FORM
(To be Executed by the Registered Holder to Exercise the Rights to Purchase
Stock evidenced by the foregoing Warrant)
TO: SURFNET MEDIA GROUP, INC.
The undersigned hereby exercises the right to purchase _______ shares of
Common Stock covered by the attached Warrant in accordance with the terms and
conditions thereof, and herewith makes payment of this Warrant Price of such
shares in full.
The undersigned represents and warrants to you that the undersigned is
acquiring such shares for the undersigned's own account with the intent of
holding such shares for investment and without the intent of participating
directly or indirectly in a distribution of such shares.
By: _____________________________
Signature
_____________________________
_____________________________
Address
Dated: _________________.
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