Exhibit 10.8
NEITHER THIS SECURITY NOR THE SECURITIES
INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH
THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES
ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY
SUCH SECURITIES.
COMMON STOCK PURCHASE
WARRANT
To Purchase 210,000 Shares of Common
Stock of
GULFSTREAM
INTERNATIONAL GROUP, INC.
THIS COMMON STOCK PURCHASE WARRANT (the
“ Warrant ”) certifies that, for value received,
Gulfstream Funding, LLC or its registered assigns (the
“ Holder ”), is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or
after the date hereof (the “ Initial Exercise Date
”) and on or prior to the close of business on the sixth
anniversary of the Initial Exercise Date (the “
Termination Date ”) to purchase up to 210,000 shares
(the “ Warrant Shares ”) of Common Stock, par
value $0.01 per share (the “ Common Stock ”), of
Gulfstream International Group, Inc., a Delaware corporation (the
“ Company ”). The purchase price of one
share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).
Section 1 .
Definitions . Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement, dated as of the date hereof (the
“ Agreement ”), between the Company and the
initial Holder and in the Transaction Documents referred to
therein.
Section 2 .
Exercise .
a)
Exercise of Warrant
. Exercise of the purchase rights
represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or
before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed
hereto (or to such other office or agency of the Company as it may
designate by notice in writing to the
registered Holder at the address of such
Holder appearing on the books of the Company); and, within five
Business Days of the date said Notice of Exercise is delivered to
the Company, the Company shall have received payment of the
aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank.
Notwithstanding anything herein to the contrary, the Holder
shall not be required to physically surrender this Warrant to the
Company until the Holder has purchased all of the Warrant Shares
available hereunder and the Warrant has been exercised in full, in
which case, the Holder shall surrender this Warrant to the Company
for cancellation within three Business Days of the date the final
Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of
the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares
purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall
maintain records showing the number of Warrant Shares purchased and
the date of such purchases. The Company shall deliver any
objection to any Notice of Exercise Form within two Business Days
of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Company shall be controlling and
determinative in the absence of manifest error, negligence or
willful misconduct. The Holder, by acceptance of this Warrant,
acknowledges and agrees that the number of Warrant Shares available
for purchase hereunder at any given time may be less than the
amount stated on the face hereof.
In lieu of the payment of the aggregate
Exercise Price in cash, the Holder shall have the right (but not
the obligation), to pay all or a portion of such aggregate Exercise
Price by offset against such aggregate Exercise Price or portion
thereof of all or a portion of the principal amount outstanding
under that certain $1,000,000 Junior Subordinated Debenture
1 dated as of September [ ], 2008
issued by the Company to the Holder and any new Debenture issued
pursuant thereto or hereunder (the “ Debenture
”) and/or any accrued and unpaid interest due thereunder
(whether or not then payable) (the “ Debenture Offset
Right ”).
The Debenture Offset Right may be
exercised by surrendering the Debenture and this Warrant to the
Company, with an executed Notice of Exercise with the Debenture
Offset Right completed and specifying the total number of shares of
Common Stock that the Holder will be issued pursuant to the
exercise of such Debenture Offset Right. Following receipt
thereof the Company shall deliver to the Holder (x) that number of
shares of Common Stock equal to the quotient obtained by dividing
(i) the aggregate amount of such principal and/or interest to be
offset by (ii) the Exercise Price per share and (y) a new Debenture
in a principal amount equal to (i) the outstanding principal amount
of the Debenture as of the date of the exercise by the Holder of
the Debenture Offset Right, less (ii) the principal amount
of the Debenture, if any, to be offset against such aggregate
Exercise Price pursuant to such Notice of Exercise. The
Company shall indicate on such new Debenture that the accrued an
unpaid interest due thereunder as of the date of the issuance
thereof shall equal (i) the accrued and unpaid
1
We have deleted the
reference to “Original Issue Discount” from the name of
the Debenture since the face amount of the Debenture has been
reduced to $1,000,000.
2
interest under the Debenture as of the
date of the exercise by the Holder of the Debenture Offset Right,
less (ii) the accrued and unpaid interest under Debenture,
if any, to be offset against such aggregate Exercise Price pursuant
to such Notice of Exercise.
In lieu of the payment of the aggregate
Exercise Price or exercising the Debenture Offset Right, the Holder
shall have the right (but not the obligation), to require the
Company to convert this Warrant, in whole or in part, into shares
of Common Stock (the “ Cashless Exercise Right
”). Upon exercise of the Cashless Exercise Right, the
Company shall deliver to the Holder (without payment of the
Exercise Price) that number of shares of Common Stock equal to the
quotient obtained by dividing (i) the value of this Warrant or
portion thereof at the time the Cashless Exercise Right is
exercised (determined by subtracting the aggregate Exercise Price
at the time of the exercise of the Cashless Exercise Right from the
aggregate volume weighted average price (the “VWAP”) of
the shares of Common Stock to be issued upon such exercise) by (ii)
the VWAP of one share of Common Stock at the time of the exercise
of the Cashless Exercise Right. The Cashless Exercise Right
may be exercised by surrendering this Warrant to the Company, with
an executed Notice of Exercise with the Cashless Exercise Right
completed and specifying the total number of shares of Common Stock
that the Holder will be issued pursuant to the exercise of such
Cashless Exercise Right.
For purposes of this warrant the VWAP
shall be the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price
of the Common Stock for a period of twenty (20) Trading Days ending
on such date (or the nearest preceding date) on the Trading Market
on which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. New York City
time to 4:02 p.m. New York City time); (b) if the OTC Bulletin
Board is not a Trading Market, the volume weighted average price of
the Common Stock for a period of twenty (20) Trading Days ending on
such date (or the nearest preceding date) on the OTC Bulletin
Board; (c) if the Common Stock is not then listed or quoted on the
OTC Bulletin Board and if prices for the Common Stock are then
reported in the “Pink Sheets” published by Pink Sheets,
LLC (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of the Common Stock so reported; or (d) in all other cases, the
fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Purchaser and
reasonably acceptable to the Company.
b)
Exercise Price . The exercise price per share of the Common
Stock under this Warrant shall be $3.20 (the “ Exercise
Price ”).
c)
Mechanics of Exercise
.
i.
Authorization of Warrant
Shares . The Company
covenants that all Warrant Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will,
upon exercise of the purchase rights represented by this Warrant,
be duly authorized, validly issued, fully paid and nonassessable
and free from all taxes, liens and
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charges created by the Company in respect
of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
ii.
Delivery of Certificates Upon
Exercise . Certificates
for shares purchased hereunder shall be transmitted by the transfer
agent of the Company to the Holder by crediting the account of the
Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“
DWAC ”) system if the Company is a participant in such
system, and otherwise by physical delivery to the address specified
by the Holder in the Notice of Exercise within fifteen Business
Days from the delivery to the Company of the Notice of Exercise
Form, surrender of this Warrant (if required) and payment of the
aggregate Exercise Price as set forth above (“ Warrant
Share Delivery Date ”). This Warrant shall be
deemed to have been exercised on the date the Exercise Price is
received by the Company. The Warrant Shares shall be deemed
to have been issued, and Holder or any other Person so designated
to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant
has been exercised by payment to the Company of the Exercise Price
and all taxes required to be paid by the Holder, if any, pursuant
to Section 2(c)(vi) prior to the issuance of such shares, have been
paid.
iii.
Delivery of New Warrants Upon
Exercise . If this
Warrant shall have been exercised in part, the Company shall, at
the request of a Holder and upon surrender of this Warrant
certificate, at the time of delivery of the certificate or
certificates representing Warrant Shares, deliver to Holder a new
Warrant evidencing the rights of Holder to purchase the unpurchased
Warrant Shares called for by this Warrant, which new Warrant shall
in all other respects be identical with this Warrant.
iv.
Rescission Rights
. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or
certificates representing the Warrant Shares pursuant to Section
2(c)(ii) by the Warrant Share Delivery Date, then the Holder will
have the right to rescind such exercise.
v.
No Fractional Shares or
Scrip . No fractional
shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. As to any fraction of a share
which Holder would otherwise be entitled to purchase upon such
exercise, the Company shall at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to
such fraction multiplied by the Exercise Price or round up to the
next whole share.
vi.
Charges, Taxes and Expenses
. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for
any
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issuance tax, transfer tax or other
incidental expense in respect of the issuance of such certificate,
all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in
such name or names as may be directed by the Holder;
provided , however , that in the event certificates
for Warrant Shares are to be issued in a name other than the name
of the Holder, this Warrant when surrendered for exercise shall be
accompanied by the Assignment Form attached hereto duly executed by
the Holder; and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer
tax incidental thereto.
vii.
Closing of Books
. The Company will not close its
stockholder books or records in any manner which prevents the
timely exercise of this Warrant, pursuant to the terms
hereof.
viii. Compensation for Buy-In on
Failure to Timely Deliver Certificates Upon Exercise . In
addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder
a certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker
to purchase (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of
the Warrant Shares which the Holder anticipated receiving upon such
exercise (a “ Buy-In” ), then the Company shall
(1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (B) the price
at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored or deliver to the Holder the
number of shares of Common Stock that would have been issued had
the Company timely complied with its exercise and delivery
obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted exercise of shares of Common
Stock with an aggregate sale price giving rise to such purchase
obligation of $10,000, under clause (1) of the immediately
preceding sentence, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the
Buy-In, together with applicable confirmations and other evidence
reasonably requested by the Company. Nothing herein shall
limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to the
5
Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of
the Warrant as required pursuant to the terms hereof.
d)
Exercise Limitations
. The Company shall not effect any
exercise of this Warrant and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2(a) or
otherwise, to the extent that after giving effect to such issuance
after exercise, such Holder (together with such Holder’s
Affiliates, and any other person or entity acting as a group
together with such Holder or any of such Holder’s
Affiliates), as set forth on the applicable Notice of Exercise,
would beneficially own in excess of 4.99% of the number of shares
of the Common Stock outstanding immediately after giving effect to
such issuance. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by such Holder
and its Affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which
the determination of such sentence is being made, but shall exclude
the number of shares of Common Stock which would be issuable upon
(A) exercise of the remaining, unexercised portion of this Warrant
beneficially owned by such Holder or any of its Affiliates and (B)
exercise or conversion of the unexercised or unconverted portion of
any other securities of the Company (including, without limitation,
any Warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by
such Holder or any of its Affiliates. Except as set forth in
the preceding sentence, for purposes of this Section 2(d),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to such Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation
contained in this Section 2(d) applies, the determination of
whether this Warrant is exercisable (in relation to other
securities owned by such Holder) and of which a portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder)
and of which portion of this Warrant is exercisable, in each case
subject to such aggregate percentage limitation, and the Company
shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status
as contemplated above shall be determined in accordance with
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(d), in
determining the n
