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Exhibit
10.6
EXHIBIT C
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.
THIS SECURITY AND THE SECURITIES
ISSUABLE UPON CONVERSION OF THIS SECURITY ARE SUBJECT TO THE
TRANSFER RESTRICTIONS AND OTHER PROVISIONS OF THE SECURITIES
PURCHASE AGREEMENT WITH THE COMPANY DATED AS OF
, 2007, AND THE OTHER TRANSACTION DOCUMENTS (AS DEFINED
THEREIN).
COMMON STOCK PURCHASE
WARRANT
STAR ENERGY
CORPORATION
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| Warrant
Shares:
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Initial Exercise Date: February
, 2007 |
THIS COMMON STOCK PURCHASE
WARRANT (as the same may be supplemented, modified, amended,
restated or replaced from time to time in the manner provided
herein, the “ Warrant ”) certifies that, for
value received,
(the “ Holder ”) is entitled, upon the terms and
subject to the limitations on exercise and 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 five (5) year anniversary of the
Initial Exercise Date (the “ Termination Date ”)
but not thereafter, to subscribe for and purchase from Star Energy
Corporation, a Nevada corporation (the “ Company
” and together with the Holder, each a “ party
” and collectively, the “ parties ”), up
to
shares (the “ Warrant Shares ”) of common stock,
par value $.001 per share, of the Company (the “ Common
Stock ”). 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).
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Section 1 .
Definitions . Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain
Securities Purchase Agreement (as the same may be supplemented,
modified, amended, restated or replaced from time to time in the
manner provided therein, the “ Purchase Agreement
”), dated February , 2007,
among the Company and the “Purchasers” (as defined
therein) who are signatories thereto or other applicable
Transaction Document (as defined 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 such other office or
agency of the Company as the Company may designate by notice in
writing to the registered Holder at facsimile number or the address
of such Holder appearing on the signature page of the Purchase
Agreement or in any transfer document delivered to the Company, as
applicable, or such other facsimile number or address as such
Holder may specify for such purpose by written notice to the
Company; provided, however, that delivered in accordance with this
Section 2(a)); and, within three (3) Trading 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
surrender physically 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 whereupon, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of delivery of such final Notice of Exercise
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 one (1) Business Day of receipt of such notice.
The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this
paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount
stated on the face hereof.
b) Exercise Price .
The exercise price per share of the Common Stock under this Warrant
shall be $
, subject to adjustment hereunder (the “ Exercise
Price ”).
c) Cashless Exercise .
If at any time after one (1) year from the date of issuance of
this Warrant there (i) is no effective Registration Statement
registering the Warrant Shares in the name of the Holder, or
(ii) no current prospectus available for the resale of the
Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a
certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:
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| (A) |
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the VWAP
on the Trading Day immediately preceding the date of such
election; |
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| (B) |
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the Exercise
Price of this Warrant, as adjusted; and |
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| (X) |
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the number
of Warrant Shares issuable upon exercise of this Warrant in
accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise. |
Notwithstanding anything
herein to the contrary, this Warrant shall be automatically
exercised on the Termination Date via cashless exercise pursuant to
this Section 2(c).
d) Exercise
Limitations .
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i. |
Holder’s Restrictions . The Company shall not
effect any exercise of this Warrant, Holder, nor shall the Holder
have the right to exercise any portion of this Warrant pursuant to
Section 2(c) or otherwise if, after giving effect to such
issuance as set forth on the applicable Notice of Exercise, the
Holder (together with such Holder’s Affiliates, and any other
Person acting as a group together with such Holder or any of such
Holder’s Affiliates), identified on the applicable Notice of
Exercise would beneficially own in excess of the Beneficial
Ownership Limitation (as defined in Section 2(d)(ii)
below). 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 such
determination is being made, but shall also exclude the number of
shares of Common Stock that would be issuable upon
(A) exercise of the remaining, nonexercised portion of this
Warrant beneficially owned by such Holder or any of its Affiliates
and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company
beneficially owned by such Holder or any of its Affiliates
(including, without limitation, any other Debentures or Warrants)
subject to a limitation on conversion or exercise analogous to the
limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this Section 2(d)(i),
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; 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
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exercisable (in relation
to other securities owned by the Holder together with any
Affiliates) and which a portion of this Warrant is exercisable
shall be in the sole discretion of the Holder. The submission of a
Notice of Exercise and the portion of the Warrant that is exercised
shall be at the discretion of the Holder; provided, however, that
any such exercise shall in each case be subject to such aggregate
percentage limitations applicable thereto. The Company shall have
no obligation to verify or confirm the accuracy of the
Holder’s determination that the warrant is exercisable. In
addition, a determination by the Holder 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 number of outstanding shares
of Common Stock, a Holder may rely on the number of outstanding
shares of Common Stock as reflected in (x) the Company’s
most recent Form 10-QSB or Form 10-KSB, as the case may be,
(y) a more recent public announcement by the Company or
(z) any other notice by the Company or the Company’s
Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of the Holder,
the Company shall within two Trading Days confirm orally and in
writing to such Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of
Common Stock shall be determined after giving effect to the
conversion or exercise of securities of the Company, including this
Warrant, by such Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was
reported.
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ii. |
The “ Beneficial Ownership Limitation ”
shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The
Beneficial Ownership Limitation provisions of this
Section 2(d) may be waived by the Holder, at the election of
such Holder, upon not less than sixty-one (61) days’
prior written notice to the Company to change the Beneficial
Ownership Limitation to 9.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock upon exercise of this Warrant, whereupon
the provisions of Section 2(d)(i) and 2(d)(ii) shall continue
to apply. Upon such a change by the Holder of the Beneficial
Ownership Limitation from such 4.99% limitation to such 9.99%
limitation, the Beneficial Ownership Limitation may not be further
waived by such Holder. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(d) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant. |
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e) Mechanics of
Exercise .
i. Authorization of
Warrant Shares . The Company covenants that all Warrant Shares
that 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 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 three (3) Trading 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 (or by cashless
exercise, if permitted) and all taxes required to be paid by the
Holder, if any, pursuant to Section 2(e)(vii) prior to the
issuance of such shares, have been paid. If the Company fails for
any reason to deliver to the Holder certificates evidencing the
Warrant Shares subject to a Notice of Exercise by the Warrant Share
Delivery Date, the Company shall pay to such Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the VWAP of the Common
Stock on the date of the applicable Notice of Exercise), $10 per
Trading Day (increasing to $20 per Trading Day on the fifth Trading
Day after such liquidated damages begin to accrue) for each Trading
Day after such Warrant Share Delivery Date until such certificates
are delivered.
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.
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iv. Rescission Rights
. If the Company should fail to cause its transfer agent to
transmit to the Holder a certificate or certificates representing
the Warrant Shares pursuant to this Section 2(e)(iv) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise.
v. 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 should fail 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) or
the Holder’s brokerage firm otherwise purchases, 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
(A) pay in cash to the Holder the amount by which (1) the
Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (2) the amount obtained by multiplying (x) the
number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times
(y) the price at which the sell order giving rise to such
purchase obligation was executed, and (B) 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 (A) 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 and, upon request of the Company, evidence of the amount
of such loss. 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
Company’s failure to timely deliver certificates representing
shares of Common Stock upon exercise of the Warrant as required
pursuant to the terms hereof.
vi. 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.
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vii. Charges, Taxes and
Expenses . Issuance of certificates for Warrant Shares shall be
made without charge to the Holder for any issue or 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.
viii. 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.
Section 3 .
Certain Adjustments .
a) Stock Dividends and
Splits . If, at any time while this Warrant is outstanding, the
Company: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any
other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by
way of reverse stock split) outstanding shares of Common Stock into
a smaller number of shares, or (iv) issues by reclassification
of shares of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted. Any adjustment made
pursuant to this Section 3(a) shall become effective
immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and
shall become effective immediately afte
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