THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ANY
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED TO ANY PERSON, INCLUDING A PLEDGEE,
UNLESS (1) EITHER (A) A REGISTRATION STATEMENT WITH RESPECT
THERETO SHALL BE EFFECTIVE UNDER THE SECURITIES ACT, OR (B)
THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT IS AVAILABLE, AND (2)
THERE SHALL HAVE BEEN COMPLIANCE WITH ALL APPLICABLE STATE
SECURITIES OR "BLUE SKY" LAWS.
| No.
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For
the Purchase
of
________ shares
of
Common Stock
|
WARRANT
TO PURCHASE
COMMON
STOCK
OF
DRIFTWOOD
VENTURES, INC.
(A
DELAWARE CORPORATION)
DRIFTWOOD
VENTURES, INC., a Delaware corporation (the
“Company”), for value received, hereby certifies
that ___________________________________ (the
“Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company, at any time or from
time to time at or before the earlier of 5:00 p.m.
_________________ time on July __, 2013 (the “Expiration
Date”) and the termination of this Warrant as provided
in Section 7 hereof, ___________ shares of Common Stock, par
value $0.001 per share, of the Company (the “Common
Stock”), at a purchase price per share equal to $0.01
per share (the “Base Price”), as adjusted upon the
occurrence of certain events as set forth in Section 2 of this
Warrant. The shares of stock issuable upon exercise of this
Warrant, and the purchase price per share, are hereinafter
referred to as the “Warrant Stock” and the
“Purchase Price,” respectively.
1.
Exercise .
1.1
Manner of Exercise; Payment in Cash .
This Warrant may be exercised by the Holder, in whole or in part,
by surrendering this Warrant, with the purchase form appended
hereto as
Exhibit A duly
executed by the Holder, at the principal office of the Company, or
at such other place as the Company may designate, accompanied by
payment in full of the Purchase Price payable in respect of the
number of shares of Warrant Stock purchased upon such exercise.
Payment of the Purchase Price shall be in cash or by certified or
official bank check payable to the order of the
Company.
1.2
Effectiveness .
Each exercise of this Warrant shall be deemed to have been effected
immediately prior to the close of business on the day on which this
Warrant shall have been surrendered to the Company as provided in
Section 1.1 above. At such time, the person or persons in whose
name or names any certificates for Warrant Stock shall be issuable
upon such exercise as provided in Section 1.3 below shall be deemed
to have become the holder or holders of record of the Warrant Stock
represented by such certificates.
1.3.
Delivery of Certificates .
As soon as practicable after the exercise of this Warrant in full
or in part, and in any event within ten (10) business days
thereafter, the Company at its sole expense will cause to be issued
in the name of, and delivered to, the Holder, or, subject to the
terms and conditions hereof, as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct:
(a)
A
certificate or certificates for the number of full shares of
Warrant Stock to which such Holder shall be entitled upon such
exercise plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash in an amount
determined pursuant to Section 1.5 hereof, and
(b)
In
case such exercise is in part only, a new warrant or warrants
(dated the date hereof) of like tenor, calling in the
aggregate on the face or faces thereof for the number of
shares of Warrant Stock (without giving effect to any
adjustment therein) equal to the number of such shares called
for on the face of this Warrant minus the number of such
shares purchased by the Holder upon such exercise as provided
in Section 1.1 above.
1.4
Right to Convert Warrant into Stock: Net Issuance
.
(a)
Right to Convert .
Subject to Section 6, in addition to and without limiting the
rights of the Holder under the terms of this Warrant, the Holder
shall have the right to convert this Warrant or any portion thereof
(the “Conversion Right”) into shares of Warrant Stock
as provided in this Section 1.4 at any time or from time to time
during the term of this Warrant. Upon exercise of the Conversion
Right with respect to a particular number of shares subject to this
Warrant (the “Converted Warrant Shares”), the Company
shall deliver to the Holder (without payment by the Holder of any
Purchase Price or any cash or other consideration) that number of
shares of fully paid and nonassessable Warrant Stock equal to the
quotient obtained by dividing (X) the value of this Warrant (or the
specified portion hereof) on the Conversion Date (as defined in
subsection (b) hereof), which value shall be determined by
subtracting (A) the aggregate Purchase Price of the Converted
Warrant Shares immediately prior to the exercise of the Conversion
Right from (B) the aggregate fair market value of the Converted
Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Conversion Date (as herein
defined) by (Y) the fair market value of one share of Warrant Stock
on the Conversion Date (as herein defined).
Expressed
as a formula, such conversion shall be computed as
follows:
X
=
B-A
Y
| |
where:
|
|
X
=
|
the
number of shares of Warrant Stock that may be issued to
Holder
|
| |
Y
=
|
the
fair market value (FMV) of one share of Warrant Stock
|
| |
A
=
|
the
aggregate Warrant Price (i.e., Converted Warrant Shares x Purchase
Price)
|
|
B
= |
the
aggregate FMV (i.e., FMV x Converted Warrant Shares)
|
No
fractional shares shall be issuable upon exercise of the
Conversion Right, and, if the number of shares to be issued
determined in accordance with the foregoing formula is other
than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting
fractional share of the Conversation Date (as herein
defined).
(b)
Method of Exercise .
The Conversion Right may be exercised by the Holder by the
surrender of this Warrant at the principal office of the Company
together with the Subscription Form in the form attached hereto
duly completed and executed and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in
Section 1.4(a) hereof as the Converted Warrant Shares) in exercise
of the Conversion Right. Such conversion shall be effective upon
receipt by the Company of this Warrant together with the aforesaid
written statement, or on such later date as is specified therein
(the “Conversion Date”), and, at the election of the
Holder hereof, may be made contingent upon the occurrence of any of
the events specified in Section 7. Certificates for the shares
issuable upon exercise of the Conversion Right and, if applicable,
a new Warrant evidencing the balance of the shares remaining
subject to this Warrant, shall be issued as of the Conversion Date
and shall be delivered to the Holder within thirty (30) days
following the Conversion Date.
(c)
Determination of Fair Market Value .
For purposes of this Section 1.4, “fair market value”
of a share of Warrant Stock as of a particular date (the
“Determination Date”) shall be
determined as follows:
(1)
If
the Company's Common Stock is traded on an exchange or is
quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") Stock Market, then the closing
price on the day before the Determination Date;
or
(2)
If
the Company's Common Stock is not traded on an exchange or on
the NASDAQ Stock Market but is traded in the over-the-counter
market, then the closing price on the day before the
Determination Date; or
(3)
In the event that the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to
be a liquidation, dissolution or winding up with respect to
the Warrant Stock under the Company’s Certificate of
Incorporation, then the fair market value per share of the
Warrant Stock shall be determined by aggregating all amounts
to be payable per share to holders of the Warrant Stock in the
event of such liquidation, dissolution or winding up, plus all
other amounts to be payable per share in respect of the
Warrant Stock in liquidation, assuming for the purposes of
this subsection that all of the shares of Warrant Stock
issuable upon exercise of all of the Warrants are outstanding
at the Determination Date; or
(4)
In all other cases, the fair market value per share of the
Warrant Stock shall be determined in good faith by the
Company’s Board of Directors upon review of relevant
factors.
1.5.
Fractional Shares .
The Company shall not be required upon the exercise of this Warrant
to issue any fractional shares, but shall make an adjustment
therefor in cash on the basis of the fair market value of the
Warrant Stock reasonably determined by The Board of Directors of
the Company (and, in the case of a conversion of this Warrant, in
accordance with Section 1.4(c)).
2.
Certain Adjustments .
The Purchase Price and the number of shares of Warrant Stock
deliverable
upon exercise of the Warrant shall be subject to adjustment from
time to time as follows:
2.1
Subdivision, Consolidation, Reclassification or Change in Common
Stock .
In the event of any subdivision, consolidation, reclassification or
change of the Common Stock into a greater or lesser number or
different class or classes of stock, the number of shares of
Warrant Stock deliverable upon exercise of this Warrant shall be
determined in accordance with the terms of the Certificate of
Incorporation, and the Purchase Price for such Warrant Stock shall
be proportionately reduced.
2.2
Subdivision, Consolidation, Reclassification or Change in Warrant
Stock. In
the event of any consolidation, reclassification or change of the
Warrant Stock into a lesser number or different class or classes of
stock, the number of shares of Warrant Stock deliverable upon
exercise of this Warrant shall be proportionally decreased and the
Purchase Price for such Warrant Stock shall be proportionately
increased. In the event of any subdivision, reclassification or
change of the Warrant Stock into a greater number or different
class or classes of stock, the number of shares of Warrant Stock
deliverable upon exercise of this Warrant shall be proportionally
increased and the Purchase Price for such Warrant Stock shall be
proportionately reduced.
2.3
Dividends or Other Distributions .
In the event that the Company issues additional shares of Common
Stock as a dividend or other distribution with respect to the
Common Stock, the number of shares of Warrant Stock deliverable
upon exercise of this W
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