WARRANT TO PURCHASE COMMON STOCK VOID AFTER 5:30 P.M., EASTERN TIME, ON THE EXPIRATION DATE
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WARRANT
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NO.
SUFH - ___
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________
Shares
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WARRANT
TO PURCHASE COMMON STOCK
VOID
AFTER 5:30 P.M., EASTERN
TIME,
ON THE EXPIRATION DATE
THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”),
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED
WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
THEREFROM.
FOR
VALUE
RECEIVED, SURFECT HOLDINGS, INC., a Delaware corporation (the “Company”),
hereby agrees to sell upon the terms and on the conditions hereinafter set
forth, but no later than 5:30 p.m., Eastern Time, on the Expiration Date (as
hereinafter defined) to ________________
or
registered assigns (the “Holder”),
under
the terms as hereinafter set forth, __________________
(_____________)
fully
paid and non-assessable shares of the Company’s Common Stock, par value $0.0001
per share (the “Warrant
Stock”),
at a
purchase price of EIGHT CENTS ($0.08) per share (the “Warrant
Price”),
pursuant to this warrant (this “Warrant”).
The
number of shares of Warrant Stock to be so issued and Warrant Price are subject
to adjustment in certain events as hereinafter set forth. The term “Common
Stock”
shall
mean, when used herein, unless the context otherwise requires, the stock and
other securities and property at the time receivable upon the exercise of this
Warrant.
1. Exercise
of Warrant.
a. The
Holder may exercise this Warrant according to its terms by (i) surrendering
this
Warrant, properly endorsed, to the Company at the address set forth in Section
10, (ii) the subscription form attached hereto having then been duly executed
by
the Holder (the “Form
of Exercise”),
and
(iii) payment of the purchase price being made to the Company for the number
of
shares of the Warrant Stock specified in the subscription form, or as otherwise
provided in this Warrant, prior to 5:30 p.m., Eastern Time, on December __,
2012
(the
“Expiration
Date”).
Such
exercise shall be effected by the surrender of the Warrant, together with a
duly
executed copy of the Form of Exercise, to Company at its principal office and
(i) the payment to the Company of an amount equal to the aggregate Warrant
Price
for the number of shares of Warrant Stock being purchased in cash, certified
check or bank draft or (ii) by surrendering such number of shares of Warrant
Stock received upon exercise of this Warrant with a Fair Market Value (as
defined below) equal to the aggregate Warrant Price for the Warrant Stock being
purchased (a “Cashless Exercise”).
b. If
the
Holder elects the Cashless Exercise method of payment, the Company shall issue
to the Holder a number of shares of Warrant Stock determined in accordance
with
the following formula:
X
= Y(A
-
B)
A
|
with:
|
X =
|
the number of shares of Warrant Stock to be issued to the Holder; |
|
Y =
|
the number of shares of Warrant Stock with respect to which the Warrant is being exercised; | |
|
A=
|
the fair value per share of Common Stock on the date of exercise of this Warrant; and | |
|
B
=
|
the then-current Warrant Price of the Warrant |
For
the
purposes of this Section 1(b), “fair value” per share of Common Stock shall mean
(A) the average of the closing sales prices, as quoted on the primary national
or regional stock exchange on which the Common Stock is listed, or,
if not
listed,
the OTC
Bulletin Board if quoted thereon, on the ten
(10)
trading
days immediately preceding the date on which the Form of Exercise is deemed
to
have been sent to the Company, or (B) if the Common Stock is not publicly traded
as set forth above, as reasonably and in good faith determined by the Board
of
Directors of the Company as of the date which the notice of exercise is deemed
to have been sent to the Company.
c. This
Warrant may be exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of Warrant Stock.
If
exercised in part, the Company shall deliver to the Holder a new Warrant,
identical in form, in the name of the Holder, evidencing the right to purchase
the number of shares of Warrant Stock as to which this Warrant has not been
exercised, which new Warrant shall be signed by the Chairman, Chief Executive
Officer or President and the Secretary or Assistant Secretary of the Company.
The term Warrant as used herein shall include any subsequent Warrant issued
as
provided herein.
d. No
fractional shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. The Company shall pay cash in lieu of fractions
with respect to the Warrants based upon the fair market value of such fractional
shares of Common Stock (which shall be the closing price of such shares on
the
exchange or market on which the Common Stock is then traded) at the time of
exercise of this Warrant.
e. In
the
event of any exercise of the rights represented by this Warrant, a certificate
or certificates for the Warrant Stock so purchased, registered in the name
of
the Holder, shall be delivered to the Holder within a reasonable time after
such
rights shall have been so exercised. The person or entity in whose name any
certificate for the Warrant Stock is issued upon exercise of the rights
represented by this Warrant shall for all purposes be deemed to have become
the
holder of record of such shares immediately prior to the close of business
on
the date on which the Warrant was surrendered and payment of the Warrant Price
and any applicable taxes was made, irrespective of the date of delivery of
such
certificate, except that, if the date of such surrender and payment is a date
when the stock transfer books of the Company are closed, such person shall
be
deemed to have become the holder of such shares at the opening of business
on
the next succeeding date on which the stock transfer books are open. The Company
shall pay any and all documentary stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant.
-2-
2. Disposition
of Warrant Stock and Warrant.
a. The
Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
pursuant hereto are, as of the date hereof, not registered: (i) under the
Securities Act of 1933, as amended (the “Act”),
on
the ground that the issuance of this Warrant is exempt from registration under
Section 4(2) of the Act as not involving any public offering or (ii) under
any
applicable state securities law because the issuance of this Warrant does not
involve any public offering; and that the Company’s reliance on the Section 4(2)
exemption of the Act and under applicable state securities laws is predicated
in
part on the representations hereby made to the Company by the Holder that it
is
acquiring this Warrant and will acquire the Warrant Stock for investment for
its
own account, with no present intention of dividing its participation with others
or reselling or otherwise distributing the same, subject, nevertheless, to
any
requirement of law that the disposition of its property shall at all times
be
within its control.
The
Holder hereby agrees that it will not sell or transfer all or any part of this
Warrant and/or Warrant Stock unless and until it shall first have given notice
to the Company describing such sale or transfer and furnished to the Company
either (i) an opinion, reasonably satisfactory to counsel for the Company,
of
counsel (skilled in securities matters, selected by the Holder and reasonably
satisfactory to the Company) to the effect that the proposed sale or transfer
may be made without registration under the Act and without registration or
qualification under any state law, or (ii) an interpretative letter from the
Securities and Exchange Commission to the effect that no enforcement action
will
be recommended if the proposed sale or transfer is made without registration
under the Act.
b. If,
at
the time of issuance of the shares issuable upon exercise of this Warrant,
no
registration statement is in effect with respect to such shares under applicable
provisions of the Act, the Company may at its election require that the Holder
provide the Company with written reconfirmation of the Holder’s investment
intent and that any stock certificate delivered to the Holder of a surrendered
Warrant shall bear legends reading substantially as follows:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
OF
THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
-3-
In
addition, so long as the foregoing legend may remain on any stock certificate
delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby
on
its books and records and with those to whom it may delegate registrar and
transfer functions.
3. Reservation
of Shares.
The
Company hereby agrees that at all times there shall be reserved for issuance
upon the exercise of this Warrant such number of shares of its Common Stock
as
shall be required for issuance upon exercise of this Warrant. The Company
further agrees that all shares which may be issued upon the exercise of the
rights represented by this Warrant will be duly authorized and will, upon
issuance and against payment of the exercise price, be validly issued, fully
paid and non-assessable, free from all taxes, liens, charges and preemptive
rights with respect to the issuance thereof, other than taxes, if any, in
respect of any transfer occurring contemporaneously with such issuance and
other
than transfer restrictions imposed by federal and state securities
laws.
4. Exchange,
Transfer or Assignment of Warrant.
This
Warrant is exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company or at the office of its stock
transfer agent, if any, for other Warrants of different denominations, entitling
the Holder or Holders thereof to purchase in the aggregate the same number
of
shares of Common Stock purchasable hereunder. Upon surrender of this Warrant
to
the Company or at the office of its stock transfer agent, if any, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant in the name of the assignee named in such instrument of assignment
and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other Warrants that carry the same rights upon presentation hereof at
the
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued and signed by the Holder hereof.
5. Capital
Adjustments.
This
Warrant is subject to the following further provisions:
a. If
and
whenever on or after the date hereof, the Company issues or sells, or is deemed
to have issued or sold, any shares of Common Stock or any Common Stock
Equivalents entitling any person to acquire shares of Common Stock (other than
Excluded Securities) for a consideration per share less than a price equal
to
the Warrant Price in effect immediately prior to such issuance or sale, then
immediately after such issue or sale the Warrant Price then in effect shall
be
reduced to an amount equal to such consideration per share. Upon each such
adjustment of the Warrant Price hereunder, the number of shares of Warrant
Stock
issuable upon exercise of this Warrant shall be adjusted to the number of shares
determined by multiplying the Warrant Price in effect immediately prior to
such
adjustment by the number of shares of Warrant Stock issuable upon exercise
of
this Warrant immediately prior to such adjustment and dividing the product
thereof by the Warrant Price resulting from such adjustment.
“Common
Stock Equivalents”
shall
mean any securities of the Company or any of its subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock
-4-
“Excluded
Securities”
shall
mean the issuance of: (a) shares of Common Stock or options to employees,
officers, directors, or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose by a majority of the non-employee
members of the Board of Directors of the Company or a majority of the members
of
a committee of non-employee directors, (b) securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Warrant, provided that such securities have
not
been amended since the date of this Warrant to increase the number of such
securities or to decrease the exercise, exchange or conversion price of such
securities; and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the
Company, provided that any such issuance shall only be to a person which is
either an owner of, or an entity that is, itself or through its subsidiaries,
an
operating company in a business synergistic with the business of the Company
and
in which the Company receives benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.
b. If
any
recapitalization of the Company or reclassification of its Common Stock or
any
merger or consolidation of the Company into or with a corporation or other
business entity, or the sale or transfer of all or substantially all of the
Company’s assets or of any successor corporation’s assets to any other
corporation or business entity (any such corporation or other business entity
being included within the meaning of the term “successor corporation”) shall be
effected, at any time while this Warrant remains outstanding and unexpired,
then, as a condition of such recapitalization, reclassification, merger,
consolidation, sale or transfer, lawful and adequate provision shall be made
whereby the Holder of this Warrant thereafter shall have the right to receive
upon the exercise hereof as provided in Section 1 and in lieu of the shares
of
Common Stock immediately theretofore issuable upon the exercise of this Warrant,
such shares of capital stock, securities or other property as may be issued
or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore issuable upon the exercise of this Warrant had such
recapitalization, reclassification, merger, consolidation, sale or transfer
not
taken place, and in each such case, the terms of this Warrant shall be
applicable to the shares of stock or other securities or property receivable
upon the exercise of this Warrant after such consummation.
c. If
the
Company at any time while this Warrant remains outstanding and unexpired shall
subdivide or combine its Common Stock, the number of shares of Warrant Stock
purchasable upon exercise of this Warrant and the Warrant Price shall be
proportionately adjusted.
d. If
the
Company at any time while this Warrant is outstanding and unexpired shall issue
or pay the holders of its Common Stock, or take a record of the holders of
its
Common Stock for the purpose of entitling them to receive, a dividend payable
in, or other distribution of, Common Stock, then (i) the Warrant Price shall
be
adjusted in accordance with Section 5(f) and (ii) the number of shares of
Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to
the
number of shares of Common Stock that the Holder would have owned immediately
following such action had this Warrant been exercised immediately prior
thereto.
-5-
e. If
the
Company shall at any time after the date of issuance of this Warrant distribute
to all holders of its Common Stock any shares of capital stock of the Company
(other than Common Stock) or evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings or current year’s or
prior year’s earnings of the Company) or rights or warrants to subscribe for or
purchase any of its securities (excluding those referred to in the immediately
preceding paragraph) (any of the foregoing being hereinafter in this paragraph
called the “Securities”), then in each such case, the Company shall reserve
shares or other units of such securities for distribution to the Holder upon
exercise of this Warrant so that, in addition to the shares of the Common Stock
to which such Holder is entitled, such Holder will receive upon such exercise
the amount and kind of such Securities which such Holder would have received
if
the Holder had, immediately prior to the record date for the distribution of
the
Securities, exercised this Warrant.
f. Except
as
otherwise provided herein, whenever the number of shares of Warrant Stock
purchasable upon exercise of this Warrant is adjusted, as herein provided,
the
Warrant Price payable upon the exercise of this Warrant shall be adjusted to
that price determined by multiplying such Warrant Price immediately prior to
such adjustment by a fraction (i) the numerator of which shall be the number
of
shares of Warrant Stock purchasable upon exercise of this Warrant immediately
prior to such adjustment, and (ii) the denominator of which shall be the number
of shares of Warrant Stock purchasable upon exercise of this Warrant immediately
thereafter.
g. The
number of shares of Common Stock outstanding at any given time for purposes
of
the adjustments set forth in this Section 5 shall exclude any shares then
directly or indirectly held in the treasury of the Company.
h. The
Company shall not be required to make any adjustment pursuant to this Section
5
if the amount of such adjustment would be less than one percent (1%) of the
Warrant Price in effect immediately before the event that would otherwise have
given rise to such adjustment. In such case, however, any adjustment that would
otherwise have been required to be made shall be made at the time of and
together with the next subsequent adjustment which, together with any adjustment
or adjustments so carried forward, shall amount to not less than one percent
(1%) of the Warrant Price in effect immediately before the event giving rise
to
such next subsequent adjustment.
i. Following
each computation or readjustment as provided in this Section 5, the new adjusted
Warrant Price and number of shares of Warrant Stock purchasable upon exercise
of
this Warrant shall remain in effect until a further computation or readjustment
thereof is required.
6. Notice
to Holders.
a. In
case:
-6-
(i) the
Company shall take a record of the holders of its Common Stock (or other stock
or securities at the time receivable upon the exercise of this Warrant) for
the
purpose of entitling them to receive any dividend (other than a cash dividend
payable out of earned surplus of the Company) or other distribution, or any
right to subscribe for or purchase any shares of stock of any class or any
other
securities, or to receive any other right;
(ii) of
any
capital reorganization of the Company, any reclassification of the capital
stock
of the Company, any consolidation with or merger of the Company into another
corporation, or any conveyance of all or substantially all of the assets of
the
Company to another corporation; or
(iii) of
any
voluntary dissolution, liquidation or winding-up of the Company;
then,
and
in each such case, the Company will mail or cause to be mailed to the Holder
hereof at the time outstanding a notice specifying, as the case may be, (i)
the
date on which a record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such dividend,
distribution or right, or (ii) the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution, liquidation
or
winding-up is to take place, and the time, if any, is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution or winding-up. Such notice shall
be mailed at least thirty (30) days prior to the record date therein specified,
or if no record date shall have been specified therein, at least thirty (30)
days prior to such specified date, provided, however, failure to provide any
such notice shall not affect the validity of such transaction.
b. Whenever
any adjustment shall be made pursuant to Section 5 hereof, the Company shall
promptly make a certificate signed by its Chairman, Chief Executive Officer,
President, Vice President, Chief Financial Officer or Treasurer, 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
Price and number of shares of Warrant Stock purchasable upon exercise of this
Warrant after giving effect to such adjustment, and shall promptly cause copies
of such certificates to be mailed (by first class mail, postage prepaid) to
the
Holder of this Warrant.
7. Maximum
Exercise.
The
Holder shall not be entitled to exercise this Warrant on an exercise date,
in
connection with that number of shares of Common Stock which would be in excess
of the sum of (i) the number of shares of Common Stock beneficially owned by
the
Holder and its affiliates on an exercise date, and (ii) the number of shares
of
Common Stock issuable upon the exercise of this Warrant with respect to which
the determination of this limitation is being made on an exercise date, which
would result in beneficial ownership by the Holder and its affiliates of more
than 4.99% of the outstanding shares of Common Stock on such date. For the
purposes of the immediately preceding sentence, beneficial ownership shall
be
determined in accordance with Section 13(d) of the Securities Exchange Act
of
1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing,
the
Holder shall not be limited to aggregate exercises which would result in the
issuance of more than 4.99%. The restriction described in this paragraph may
be
waived, in whole or in part, upon sixty-one (61) days prior notice from the
Holder to the Company to increase such percentage to up to 9.99%, but not in
excess of 9.99%.
-7-
8. Loss,
Theft, Destruction or Mutilation.
Upon
receipt by the Company of evidence satisfactory to it, in the exercise of its
reasonable discretion, of the ownership and the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction,
of
indemnity reasonably satisfactory to the Company and, in the case of mutilation,
upon surrender and cancellation thereof, the Company will execute and deliver
in
lieu thereof, without expense to the Holder, a new Warrant of like tenor dated
the date hereof.
9. Warrant
Holder Not a Stockholder.
The
Holder of this Warrant, as such, shall not be entitled by reason of this Warrant
to any rights whatsoever as a stockholder of the Company.
10. Notices.
Any
notice required or contemplated by this Warrant shall be deemed to have been
duly given if transmitted by registered or certified mail, return receipt
requested, or nationally recognized overnight delivery service,
to
the
Company at its principal executive offices located at 0000 X. Xxxxxxxx Xxxx,
Xxxxx, Xxxxxxx 00000, Attn: Xxxxxxx X. Xxxxxx, Xx., Chief Financial Officer,
or
to the Holder at the name and address set forth in the Warrant Register
maintained by the Company.
11. Choice
of Law.
THIS
WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
12. Jurisdiction
and Venue.
The
Company and Holder hereby agree that any dispute which may arise between them
arising out of or in connection with this Warrant shall be adjudicated before
a
court located in Kent County, Delaware and they hereby submit to the exclusive
jurisdiction of the federal and state courts of the State of Delaware located
in
Kent County with respect to any action or legal proceeding commenced by any
party, and irrevocably waive any objection they now or hereafter may have
respecting the venue of any such action or proceeding brought in such a court
or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Warrant or any acts or omissions relating to the sale of
the
securities hereunder, and consent to the service of process in any such action
or legal proceeding by means of registered or certified mail, return receipt
requested, in care of the address set forth herein or such other address as
either party shall furnish in writing to the other.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-8-
IN
WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
behalf, in its corporate name and by its duly authorized officers, as of this
___ day of December, 2007.
SURFECT
HOLDINGS,
INC.
By:
_______________________________
Name:
Xxxxxx Xxxxxxxx
Title:
Chief Executive Officer
-9-
FORM
OF
EXERCISE
(to
be
executed by the registered holder hereof)
The
undersigned hereby exercises the right to purchase _________ shares of common
stock, par value $0.0001 per share (“Common
Stock”),
of
Surfect
Holdings,
Inc.
evidenced by the within Warrant Certificate for a Warrant Price of $____ per
share and herewith makes payment of the purchase price in full of (i)
$__________ in cash or (ii) shares of Common Stock (pursuant to a Cashless
Exercise in accordance with Section 1(b)). Kindly issue certificates for shares
of Common Stock (and for the unexercised balance of the Warrants evidenced
by
the within Warrant Certificate, if any) in accordance with the instructions
given below.
Dated:____________________
, 20___ .
______________________________
Instructions
for registration of stock
_____________________________
Name
(Please Print)
Social
Security or other identifying Number:
Address:__________________________________
City/State
and Zip Code
Instructions
for registration of certificate representing
the
unexercised balance of Warrants (if any)
_____________________________
Name
(Please Print)
Social
Security or other identifying Number: ___________
Address:____________________________________
City,
State and Zip Code
-10-
