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.
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 =
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.
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.
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 Holder’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.
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
