Exhibit 10.3

 
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY OTHER SECURITIES LAWS AND NEITHER THIS WARRANT NOR SUCH
SECURITIES MAY BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF (1) AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH
SECURITIES UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, OR
(2) AN APPLICABLE EXEMPTION UNDER THE SECURITIES ACT AND SUCH OTHER APPLICABLE
SECURITIES LAWS.

WARRANT TO PURCHASE
148,942 SHARES OF COMMON STOCK

of

X-FACTOR COMMUNICATIONS HOLDINGS, INC.

Issue Date: September __, 2012 Warrant No. 2

FOR VALUE RECEIVED, X-Factor Communications Holdings, Inc., a Delaware
corporation having an address at 3 Empire Boulevard, 5th Floor, South
Hackensack, NJ 07606   (the “Company”), hereby certifies and agrees that THE NEW
JERSEY ECONOMIC DEVELOPMENT AUTHORITY, or its registered transferees, successors
or assigns (each person or entity holding all or part of this Warrant from time
to time being referred to as a “Holder”), is the registered holder of the
warrant (“Warrant”) to subscribe for and purchase up to 148,942 shares (the
“Warrant Shares”) of the fully paid, validly issued and nonassessable common
stock, “no” par value per share, of the Company (“Common Stock”), at a purchase
price per share equal to $0.78 per share (the “Warrant Price”), at any time on
or before 5:00 P.M., Eastern Time, on May 15, 2022 (such time and date being
referred to as the “Expiration Time” and the “Expiration Date,” respectively),
subject to the provisions and upon the terms and conditions hereinafter set
forth.

This Warrant is issued in connection with, and is subject to, that certain
Convertible Loan Agreement dated July 31, 2009, as amended, by and between
X-Factor Communications, LLC and the Holder (as the same may be amended,
restated, supplemented or modified from time to time, the “Loan Agreement”), and
the terms and conditions of the Loan Agreement are hereby incorporated herein by
reference as though set forth herein at length.

 

Article  1. Definitions.  Capitalized terms used in this Warrant and not defined
in context have the respective meanings ascribed to them below (or if not
appearing below, then the respective meanings ascribed to them in the Loan
Agreement):

 
1.1 “Business Day” means any day, other than a Saturday or Sunday, on which
commercial banks located in the State of New Jersey, are open for the general
transaction of business.
 
1.2 “Company Value” means the fair market value that a willing buyer and willing
seller, with neither acting under compulsion, would agree upon for the purchase
and sale of the Company and its consolidated subsidiaries in an arms length
transaction, without any discounts for illiquidity, minority interest, or voting
or transfer restrictions, as determined pursuant to Article 2.3(b).
 
 
 

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1.3 “Exercise Date” means the date on which this Warrant is exercised, or
automatically deemed to have been exercised, as provided herein.
 
1.4 “Fair Market Value” of a Warrant Share, calculated as of any date of
determination, shall mean:
 
(a)  if the exercise occurs in connection with and contingent upon an initial
public offering of the Common Stock involving gross proceeds to the Company of
at least $10 million, and if the registration statement relating to such
offering has been declared effective, then the initial “Price to Public”
specified in the final prospectus or registration statement with respect to such
offering;

(b) for any other exercise, either (i) the Trading Value, if applicable, or,
otherwise (ii) the quotient of the Company Value divided by the number of shares
of the Common Stock outstanding on a fully-diluted basis (but excluding
instruments which are out-of-the-money).
 
1.5  “Trading Value” means, as applicable: (i) if the Common Stock is then
listed on a national securities exchange, then the closing sale price of one
share of Common Stock on such exchange on the last trading day prior to the
Exercise Date, provided, however, that if the Common Stock has not traded on
such trading day, then the average closing price of one share of Common Stock on
the three (3) most recent trading days during which the Common Stock has traded;
(ii) if the Common Stock is then included in the OTC Bulletin Board, then the
average closing price of one share of Common Stock for the three (3) most recent
trading days preceding the Exercise Date during which the Common Stock has
traded; (iii) if the Common Stock is then included in the Pink OTC Markets, Inc.
“pink sheets”, then the average closing price of one share of Common Stock for
the three (3) most recent trading days preceding the Exercise Date during which
the Common Stock has traded.  Notwithstanding the foregoing, in any of the
circumstances described in clauses (i) through (iii) above,  if the Common Stock
has not traded for the requisite number of days within the 10 trading days
immediately preceding the Exercise Date, then Fair Market Value shall be
determined under clause (b)(ii) of the definition of Fair Market Value and not
based upon Trading Value.

Article  2. Exercise.

2.1 Method of Exercise; Payment; Issuance of New Warrant.
 
(a) Subject to the provisions hereof, the Holder may exercise this Warrant, in
whole or part, at any time and from time to time, by: (i) the surrender of this
Warrant on any Business Day at the office of the Company (or such other office
or agency of the Company as the Company may have designated by notice in writing
to the Holder as provided in this Warrant), (ii) delivery to the Company of a
completed and executed Notice of Exercise in the form attached hereto as
Appendix A, and (iii) unless the exercise is subject to Article 2.3, payment to
the Company equal to the Warrant Price multiplied by the number of Warrant
Shares then being acquired.  The Holder may pay the aggregate Warrant Price (or
shall be deemed to have paid such amount): (i) in cash or by check payable to
the Company or by wire transfer of immediately available funds to an account
designated to the Holder by the Company, (ii) by cancellation by the Holder of
indebtedness or other obligations of the Company to the Holder, (iii) in a
“cashless” exercise permitted under Article 2.3 below, or (iv) by any
combination of the methods described in (i) through (iii) above.
 
(b) Upon any exercise of this Warrant, the Holder (or such other person or
persons as directed by the Holder in its Notice of Exercise) shall be treated
for all purposes as the holder of record of the related Warrant Shares as of the
time immediately prior to the close of business on the date on which the Holder
shall have delivered the items required by Article 2.1(a) above.
 
 
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(c) Upon exercise of this Warrant, the Company shall deliver certificates for
the number of whole Warrant Shares so purchased to the Holder (or such other
person or persons as directed by the Holder in its Notice of Exercise) as
promptly as is reasonably practicable, but not later than three (3) Business
Days, after the applicable Exercise Date, at the Company’s expense, and, unless
this Warrant has been fully exercised, the Company shall also issue a new
Warrant (in the same form as this Warrant) representing the unexercised portion
of this Warrant, to the Holder (or such other person or persons as directed by
the Holder in its Notice of Exercise) as soon as reasonably practicable
thereafter, but not later than three (3) Business Days, after the applicable
Exercise Date.
 
(d) Notwithstanding any other provision hereof, if an exercise of any portion of
this Warrant is to be made in connection with a registered public offering, sale
of the Company or any other similar transaction involving the Company, the
exercise of any portion of this Warrant may, at the election of the Holder, be
conditioned upon the consummation of the public offering, sale of the Company or
other transaction, in which case such exercise shall not be deemed to be
effective until the consummation of such public offering, sale of the Company,
or other transaction, as applicable.
 
(e) No fractional shares of Common Stock shall be issued in connection with any
exercise or cashless exercise hereunder, and in lieu of any such fractional
shares the Company shall make a cash payment therefor to the Holder based on the
Fair Market Value of a Warrant Share on the date of exercise or cashless
exercise of this Warrant.
 
2.2 Automatic Exercise At Expiration Date.  If any portion of this Warrant
remains unexercised as of the Expiration Date and the Fair Market Value of one
Warrant Share as of the Expiration Date is greater than the applicable Warrant
Price as of the Expiration Date, then (i) this Warrant shall automatically (and
without any delivery, surrender or action by the Holder) be deemed to have been
fully exercised immediately prior to the Expiration Time in the manner provided
in Article 2.3 below, and (ii) the Holder shall be treated for all purposes as
the holder of record of the related Warrant Shares as of the close of business
on the Exercise Date. As promptly as is reasonably practicable on or after the
Exercise Date related to such an automatic exercise, but in no event before the
date on which this Warrant is surrendered to the Company as provided herein, the
Company, at its expense, shall issue and deliver to the Holder (or such other
person or persons as directed by the Holder) a certificate or certificates for
the number of Warrant Shares issuable upon such automatic exercise, in
accordance with Article 2.3.

2.3 Cashless Exercise.

 
(a) The Holder may elect to receive, without the payment of the Warrant Price,
Warrant Shares equal to the value of this Warrant or any portion hereof by so
electing in its Notice of Exercise.  Upon such an election, the Company shall
issue to the Holder a number of Warrant Shares determined in accordance with the
following formula:

X = Y x (FMV-WP)
FMV
where

X    =           the number of Warrant Shares to be issued to the Holder (or
such other person or persons as directed by the Holder) upon such exercise of
the rights under this Article 2.3.

Y    =           the total number of Warrant Shares covered by this Warrant
which the Holder has surrendered for cashless exercise.
 
 
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FMV     =     the Fair Market Value on the applicable Exercise Date.

WP    =        the Warrant Price in effect under this Warrant on the applicable
Exercise Date.

 
(b) The Company Value shall initially be determined in good faith by the Board
of Directors of the Company, on such basis as it shall reasonably
determine.  The Company shall promptly notify the Holder of the determination of
Company Value by its Board of Directors and shall send the Holder the data and
computation forming the basis of the valuation, together with an explanation
thereof.  The Holder shall have thirty (30) days after receipt of notice of such
determination in which to consult with the Company and request further
information and, in such case, the Company shall consult with the Holder and
provide such reasonably requested information.  At any time prior to the
expiration of the 30-day consulting period, the Holder may by notice in writing
(the “Appraisal Notice”) request an independent appraisal of the Company
Value.  In the event that the Holder requests an independent appraisal, then the
appraiser shall be a nationally recognized independent investment bank jointly
appointed by the Company and the Holder.  If the Holder and the Company are
unable to agree upon the selection of a nationally recognized independent
investment bank within twenty (20) days after delivery of the Appraisal Notice,
then the Holder and the Company shall, within twenty (20) days after delivery of
the Appraisal Notice, each select a nationally recognized independent investment
bank who shall select a third nationally recognized independent investment bank
to determine the fair market value, which valuation shall be final and binding
upon the Holder and the Company with respect to the determination of the Company
Value.  All fees, costs and expenses of any appraiser or investment bank shall
be borne by the Company.  The Holder shall have the right and be given the
opportunity to participate in the appraiser’s valuation process.  The Company
shall use its reasonable best efforts, and the Holder shall cooperate, to cause
the determination of the appraiser to be made within thirty (30) days after its
appointment.  The determination of the appraiser shall be final and binding on
the parties.

Article  3. Reservation of Shares; Status of Warrant Shares.  The Company shall
at all times through the Expiration Date reserve and keep and available for
issuance as Warrant Shares, a number of shares of its authorized and unissued
shares of Common Stock equal to the maximum number of Warrant Shares then
issuable hereunder.  The Company shall issue all Warrant Shares as duly
authorized, validly issued, fully paid and non-assessable shares, free and clear
of all liens, claim and encumbrances.

Article  4. Adjustments and Distributions.  The Warrant Price and the number and
kind of securities purchasable upon the exercise of this Warrant shall be
subject to adjustment from time to time upon the occurrence of certain events,
as follows:

4.1 Splits, Dividends and Subdivisions.  If the Company shall at any time or
from time to time while this Warrant is outstanding, pay a dividend or make a
distribution on its Common Stock in shares of Common Stock, subdivide its
outstanding shares of Common Stock into a greater number of shares or combine
its outstanding shares of Common Stock into a smaller number of shares (and in
each case where such an event occurs with respect to any other securities as to
which purchase rights under this Warrant then exist), then the Warrant Price and
the number of Warrant Shares purchasable upon exercise of this Warrant in effect
immediately prior to the date upon which such change shall become effective
shall be proportionally adjusted by the Company so that the Holder thereafter
exercising this Warrant shall be entitled to receive, for the same aggregate
Warrant Price payment, the number of shares of Common Stock or other capital
stock which the Holder would have received if this Warrant had been fully
exercised immediately prior to such event.  Such adjustments shall be made
successively whenever any event listed above shall occur.
 
 
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4.2 Recapitalization, Reclassification or Reorganization. If any
recapitalization, reclassification or reorganization involving the capital stock
of the Company (other than a change in par value or a subdivision or combination
as provided for in Article 4.1 above) shall be effected in such a manner
(including, without limitation, in connection with a consolidation or merger in
which the Company is the surviving corporation), that holders of Common Stock
shall be entitled to receive stock, securities, or other assets or property (a
“Reorganization”), then, as a condition of such Reorganization, the Company
shall make lawful and adequate provision whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the Warrant Shares
purchasable upon the exercise of this Warrant immediately prior to such
Reorganization) such shares of stock, securities or other assets or property as
would have been issued or payable in the Reorganization in exchange for the
number of Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such Reorganization.  In the event of any Reorganization,
appropriate provision shall be made by the Company with respect to the rights
and interests of the Holder of this Warrant so that the provisions hereof
(including, without limitation, provisions for adjustments of the Warrant Price
and of the number of Warrant Shares) shall thereafter be applicable, in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof.  The provisions of this Article 4.2 shall similarly apply to
successive Reorganizations.

4.3 Consolidation, Merger, Sale. If there shall occur (i) any consolidation or
merger of the Company with another entity in which the Company is not the
surviving entity or (ii) any sale, transfer or other disposition of all or
substantially all of the Company’s assets to another entity, then, as a
condition of such consolidation, merger, sale, transfer or other disposition,
the Company shall make lawful and adequate provision whereby the Holder shall
thereafter have the right to purchase and receive upon the basis and upon the
terms and conditions herein specified and in lieu of the Warrant Shares
immediately theretofore issuable under this Warrant, such shares of stock,
securities or assets (or any combination thereof) as would have been issuable or
payable with respect to, or in exchange for, the number of Warrant Shares
immediately theretofore issuable upon exercise of this Warrant, had such
consolidation, merger, sale, transfer or other disposition not taken place, and,
in any such case, appropriate provision shall be made with respect to the rights
and interests of the Holder so that the provisions hereof (including, without
limitation, provision for adjustment of the Warrant Price and of the number of
Warrant Shares) shall thereafter be applicable, as nearly equivalent as may be
practicable in relation to any shares of stock, securities or properties
thereafter deliverable upon the exercise thereof.  The Company shall not effect
any such consolidation, merger, sale, transfer or other disposition unless prior
to or simultaneously with the consummation thereof the successor entity
resulting from such consolidation or merger, or the entity purchasing or
otherwise acquiring such assets or other appropriate entity shall assume (1) the
obligation to deliver to the Holder such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such Holder may be entitled to
purchase, and (2) the Company’s other obligations under this Warrant.  The
provisions of this Article 4.3 shall similarly apply to successive
consolidations, mergers, sales, transfers or other dispositions.

4.4 Distributions.  If the Company shall fix a payment date for the making of a
distribution to all holders of Common Stock of rights or assets (other than
dividends or distributions referred to in Article 4.1 hereof), including notes,
subscription rights or warrants, the Holder shall be entitled to receive,
simultaneous with the holders of Common Stock, such rights or assets so
distributed, that the Holder would have received if this Warrant had been fully
exercised immediately prior to such event.

4.5 Further Adjustments to Other Securities.  In the event that, as a result of
an adjustment made pursuant to this Article 4, the Holder shall become entitled
to receive any shares of capital stock other than shares of Common Stock, then
the number of such other shares so receivable upon exercise of this Warrant
shall be subject thereafter to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Warrant Shares contained in this Warrant.
 
 
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4.6 Certain Dilutive Issuances of Common Stock.

 
(a) For purposes of this Article 4.6, a “Common Stock Distribution” means the
issuance, sale or distribution by or on behalf of the Company of any shares of
Common Stock, other than Common Stock that is (i) issued to employees pursuant
to an employee equity or stock option plan that has been approved by the
Company’s Board of Directors, or (ii) issued pursuant to a transaction subject
to Article 4.1 above.  Any security of the Company having rights substantially
equivalent to the Common Stock as to dividends or upon liquidation, dissolution
or winding up of the Company shall be treated, for purposes of this Article 4.6,
as if such security were Common Stock.
 
(b) If a Common Stock Distribution is made for a consideration per share less
than the then current Warrant Price on the date of such Common Stock
Distribution, then, effective upon such Common Stock Distribution, the number of
Warrant Shares shall be adjusted by multiplying the then applicable number of
Warrant Shares by a fraction, the numerator of which shall be the total number
of shares of Common Stock outstanding immediately after such Common Stock
Distribution and the denominator of which shall be an amount equal to the sum of
(i) the number of shares of Common Stock outstanding immediately prior to such
Common Stock Distribution, plus (ii) the number of shares of Common Stock which
the aggregate consideration, if any, received by the Company (determined as
provided in Article 4.6(d)) for such Common Stock Distribution would buy at the
Warrant Price.  In the event of any such adjustment, the Warrant Price for each
Warrant shall be adjusted to a number determined by dividing the Warrant Price
immediately prior to such Common Stock Distribution by the fraction used for
purposes of the aforementioned adjustment.
 
(c) If the Company issues, sells, distributes or otherwise grants in any manner
(whether directly or by assumption in a merger or otherwise) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (such rights, warrants or options being herein called “Options” and
such convertible or exchangeable stock or securities being herein called
“Convertible Securities”), whether or not such Options or the rights to convert
or exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon conversion or exchange of such Convertible Securities shall be
less than the Warrant Price, then, for purposes of Article 4.6(b), the total
maximum number of shares of Common Stock issuable upon the exercise of such
Options or upon conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued as of the date of granting of such Options and
thereafter shall be deemed to be outstanding and the Company shall be deemed to
have received as consideration the price per share, determined as provided in
the next sentence.  The Company shall be deemed to have received the price per
share of Common Stock which is issuable on the exercise of Options to purchase
Common Stock or Convertible Securities determined by dividing: (i) the aggregate
amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus, in the case of Options to acquire Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options.  No
additional adjustment of the number of shares of Common Stock purchasable upon
the exercise of this Warrant or of the Warrant Price shall be made upon the
actual exercise of such Options or upon conversion or exchange of such
Convertible Securities.
 
 
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(d) If any shares of Common Stock, Options or Convertible Securities are issued,
sold or distributed for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor, after deduction
therefrom of any expenses incurred and any underwriting discounts, commissions
or concessions paid or allowed by the Company in connection therewith.  If any
shares of Common Stock, Options or Convertible Securities are issued, sold or
distributed for a consideration other than cash, the amount of the consideration
other than cash received by the Company shall be deemed to be the fair market
value of such consideration as reasonably determined by the Company’s Board of
Directors, after deduction of any expenses incurred and any underwriting
discounts, commissions or concessions paid by the Company in connection
therewith.  If any shares of Common Stock, Options or Convertible Securities
shall be issued in connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor shall be deemed to
be the fair market value of such portion of the assets and business of the
nonsurviving corporation as shall be attributable to such Common Stock, Options
or Convertible Securities, as the case may be.  If any Options shall be issued
in connection with the issue and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for consideration as may be reasonably determined by
the Company’s Board of Directors.

4.7 Notice of Adjustments.  With each adjustment pursuant to this Article 4, the
Company shall deliver to Holder a certificate signed by its chief financial
officer or chief executive officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, the Warrant Price and the number of
Warrant Shares purchasable hereunder after giving effect to such adjustment,
which shall be delivered to Holder within ten (10) Business Days.

4.8 Most Favored Terms.  If the Company hereafter grants any warrants, options
or convertible securities which have rights protecting dilution or impairment
that are more favorable than the rights granted in this Warrant, then, at the
Holder’s option and without further action of the Company, this Warrant shall be
deemed amended, as practicably as possible, to include such more favorable
rights as such other securities.

Article  5. Transfer Taxes.  The Company will pay any documentary stamp Taxes or
other transfer Taxes or fees attributable to the initial issuance of Warrant
Shares upon the exercise of this Warrant.

Article  6. Mutilated or Missing Warrants.  If this Warrant shall be mutilated,
lost, stolen, or destroyed, then the Company shall issue in exchange and
substitution of, and upon cancellation of a mutilated Warrant, or in lieu of and
substitution for the Warrant lost, stolen or destroyed, a new Warrant of like
tenor and for the purchase of a like number of Warrant Shares, subject to the
Company’s receipt of (i) evidence reasonably satisfactory to it of such loss,
theft or destruction, and, (ii) with respect to a lost, stolen or destroyed
Warrant, a reasonable indemnity with respect thereto, if requested by the
Company.

Article  7. Compliance with Securities Act and Legends. The Holder, by
acceptance hereof, agrees that this Warrant and the Warrant Shares are being
acquired for investment only and not with a view toward distribution or
resale.  The Holder will not offer, sell or otherwise dispose of this Warrant or
any Warrant Shares except under circumstances which will not result in a
violation of the Securities Act or any state securities laws.  All certificates
evidencing Warrant Shares (unless the Warrant Shares have been registered under
the Securities Act) may contain any legend required, in the opinion of counsel
to the Company, by applicable state and federal securities laws.
 
 
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Article  8. Additional Rights; Information.

8.1 No Status as Stockholder Prior to Exercise.   Except as expressly provided
in this Warrant, the Loan Agreement or the Transaction Documents, the Holder, as
such, shall not be entitled to vote or receive dividends or be deemed the holder
of Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the Holder, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of the
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive dividends or subscription rights or otherwise, until this Warrant
shall have been exercised and the Warrant Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.

8.2 Stockholder Notices.  For its information, the Company will transmit to the
Holder any such information, documents and reports as are generally distributed
to the holders of any class or series of the securities of the Company,
concurrently with the distribution thereof to such holders.

8.3 Continuing Obligations.  For so long as this Warrant is outstanding,
X-Factor Communications, LLC shall continue to comply in all respects with the
following provisions of the Loan Agreement whether or not the Loan remains
outstanding: Section 6(a)(ii), Section 6(a)(iii), Section 6(a)(iv), Section
6(a)(xii), Section 6(b)(x) and Section 6(b)(xi). Additionally, for so long as
this Warrant is outstanding, the Company shall continue to comply in all
respects with the following provisions of the Corporate Guarantee Agreement
whether or not the Loan remains outstanding: Section 9, Section 11 and Rider A,
subsections (a), (b), (d) and (e).

8.4 Notices of Certain Events and Actions.  The Company shall give the Holder at
least 30 and not more than 90 days prior written notice of the expiration of
this Warrant on the Expiration Date.  In addition, if the Company:
 
(a) takes a record of the holders of the Common Stock (or other securities at
the time receivable upon the exercise of this Warrant or upon conversion of
Warrant Shares) for the purpose of entitling them to receive any dividend or
other distribution, or any right to subscribe for or purchase any securities, or
to receive any other right; or
 
(b) will pay any dividends or other distributions to holders of any class of
securities; or
 
(c) intends to effect any Reorganization, consolidation, merger, conveyance of
all or substantially all of the assets of the Company to another entity, or any
other transaction of the type described in Article 4 of this Warrant; or
 
(d) intends to effect any voluntary dissolution, liquidation or winding-up of
the Company;
 
then, in each such case, the Company will provide the Holder with thirty (30)
days advance written notice of such an event, 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,
consolidation, merger, conveyance, dissolution, liquidation, winding-up or other
transaction 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 or on conversion of Warrant Shares)
shall be entitled to exchange their Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
Reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding-up.

Article  9. Modification and Waiver.  This Warrant and any provision hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the then current Holder, and such change, waiver,
discharge or termination shall be binding on all future Holders.

 
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Article  10. Notices.

10.1 Method of Notice.  All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) delivered by
facsimile, (iii) sent by a nationally recognized overnight courier, or (iv) sent
by U.S. certified mail, return receipt requested, postage prepaid.

If to the Company:
3 Empire Blvd.

South Hackensack, New Jersey 07606
Telephone:  551-804-8177
Attention: Charles Saracino, President & CEO

If to the Holder:                                    New Jersey Economic
Development Authority
PO Box 990
36 West State Street
Trenton, New Jersey 08625-0990
Attn: Director-Technology and Life Sciences

or to such other address as any party hereto shall notify the other parties
hereto (as provided above) from time to time.

10.2 Effectiveness of Notice.  All notices, requests, consents and other
communications hereunder shall be deemed to have been given either (i) if by
hand, at the time of the delivery thereof to the receiving party at the address
of such party set forth above, (ii) if sent by facsimile, at the time that
receipt thereof has been acknowledged by electronic confirmation or otherwise,
(iii) if sent by overnight courier, on the next Business Day following the day
such notice is timely delivered to the courier service, or (iv) if sent by U.S.
or certified mail, on the fifth (5th) Business Day following the day such
mailing is made.

Article  11. Descriptive Headings.  The descriptive headings contained in this
Warrant are inserted for convenience only and do not constitute a part of this
Warrant.

Article  12. Governing Law; Consent to Jurisdiction.

12.1 Governing Law.  This Warrant shall be governed by, and construed in
accordance with, the internal laws of the State of New Jersey, without reference
to the choice of law principles thereof.

12.2 Jurisdiction and Service.  Any legal action, suit or proceeding arising out
of or relating to this Warrant, or the transactions contemplated hereby, shall
only be instituted, heard and adjudicated in a state or federal court located in
the State of New Jersey, and each party hereto knowingly, voluntarily and
intentionally waives any objection which such party may now or hereafter have to
the laying of the venue of any such action, suit or proceeding, and irrevocably
submits to the exclusive personal jurisdiction of any such court in any such
action, suit or proceeding.  Service of process in connection with any such
action, suit or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Warrant except as otherwise required by law.  Notwithstanding the foregoing to
the contrary, the Holder may institute and prosecute any action, suit or
proceeding in any court of competent jurisdiction it shall deem advisable in
connection the enforcement of its rights hereunder.
 
 
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Article  13. Waiver of Jury Trial.  THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT THE COMPANY
MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.  The Company certifies and acknowledges that (i) no other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver, (ii) the Company
understands and has considered the implications of this waiver, and (iii) the
Holder is relying upon and has been induced to enter into this Warrant by, among
other things, the waivers and certifications in this Article 13.

Article  14. No Impairment of Rights.  The Company shall not, by amendment of
its Certificate of Incorporation or through any other means, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder against material impairment.

Article  15. Assignment.  A Holder may transfer its rights hereunder, in whole
or in part, to any other Person provided that written notice is given to the
Company of any such transfer and such transfer is in accordance with applicable
law.  Upon receipt by the Company of notice by a Holder of a transfer of any
portion of this Warrant, the Company shall promptly deliver to a transferee a
Warrant in the form hereof exercisable for the number of Warrant Shares as to
which the right to purchase has been transferred.
 
Article  16. Severability.  In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Warrant shall be unenforceable in any respect, then such
provision shall be deemed limited to the extent that such court deems it
enforceable, and as so limited shall remain in full force and effect.  In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Warrant shall nevertheless
remain in full force and effect.
 
Article  17. Shareholders Agreements.  If all of the holders of Common Stock are
party to a shareholders’ agreement or investor rights agreement, then the Holder
will, if requested by the Company, enter into such an agreement on terms
reasonably acceptable to the Holder, but, so long as New Jersey Economic
Development Authority is the Holder, only if, by virtue of a side letter or
otherwise, binding  provisions as set forth in Appendix B attached hereto are
incorporated therein.
 
Article  18. Counterparts. This Warrant may be executed and delivered by
telecopier, e-mail, PDF or other facsimile transmission all with the same force
and effect as if the same were a fully executed and delivered original manual
counterpart.
 
[SIGNATURE PAGE FOLLOWS]

 
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 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed on its
behalf by one of its officers thereunto duly authorized.

 
COMPANY:
    X-FACTOR COMMUNICATIONS HOLDINGS,INC.          
 
By:
/s/Charles Saracino     Name:      Charles Saracino     Title:        President
& CEO  

 
Consented and Agreed as to Section 8.3 only
X-FACTOR COMMUNICATIONS, LLC
        By: /s/ Charles Saracino     Charles Saracino     President & CEO  

 
 
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APPENDIX A

NOTICE OF EXERCISE

To:           X-Factor Communications Holdings, Inc. (the “Company”)

This Notice of Exercise is being issued to you pursuant to the terms and
conditions of that certain Warrant, No. 2, issued by the Company as of
____________, 2012 (the “Warrant”).  Capitalized terms used in this Notice of
Exercise and not otherwise defined shall have the respective meanings ascribed
to them in the Warrant.

1.           The undersigned hereby elects (check and complete where
applicable):

□ to purchase ___________  shares of the Common Stock of the Company pursuant to
the terms of the Warrant.

□ to surrender the right to purchase ____________ shares of the Common Stock of
the Company pursuant to Article 2.3 of the Warrant and hereby requests the
issuance of such number of Warrant Shares as are prescribed by Article 2.3 of
the Warrant.

2.           Please issue a certificate or certificates representing the
applicable number of Warrant Shares in the name or names as are specified below
(or if not otherwise specified, in the name of the undersigned):
 
________________________________
________________________________
________________________________

3.           Please issue a new Warrant of equivalent form and tenor for the
unexercised portion of the attached Warrant in the name or names as are
specified below (or if not otherwise specified, in the name of the undersigned):

________________________________
________________________________
________________________________

NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY

By: _______________________
      Name: _____________________
      Title: ______________________
      Date: ______________________
Address:
New Jersey Economic Development Authority
36 West State Street
PO Box 990
Trenton, New Jersey 08625-0990

 
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APPENDIX B
 
Immunities. The Company understands and acknowledges that the NJEDA reserves all
immunities, defenses, rights or actions arising out of its status as a sovereign
entity, including those under the Eleventh Amendment to the United States
Constitution and applicable New Jersey law.  No provision of this letter
agreement or the Shareholders Agreement shall be construed as a waiver or
limitation of such immunities, defenses, rights or actions.  Due to the NJEDA’s
status as a sovereign entity, notwithstanding anything to the contrary in this
letter agreement or the Shareholders Agreement, any claims asserted against the
NJEDA arising out of aforesaid agreements shall be subject to such immunities,
defenses, rights or actions, including, but not limited to the New Jersey Tort
Claims Act (N.J.S.A. 59:1-1 et seq.) and the New Jersey Contractual Liability
Act (N.J.S.A. 59:13-1 et seq.).

Indemnification.  The Company acknowledges that the NJEDA does not have
authority to provide indemnification and agrees that the NJEDA shall not be
obligated to provide indemnification to any other party in connection with its
investment in the Company and that its failure to provide such indemnification
shall not constitute a breach under this letter agreement or the Shareholders
Agreement.

Public Disclosure.  The Company acknowledges that the NJEDA is a public agency
subject to New Jersey state laws, regulations and policies and applicable case
law which could result in the disclosure of information regarding the Company
that is provided to the NJEDA, including without limitation, the Open Public
Records Act, NJSA 47:1A-1 et seq., which provides for government records to be
readily accessible for inspection, copying or examination by citizens.    NJEDA
shall not be required to maintain the confidentiality of non-public information
furnished to the NJEDA in connection with its investment in the Company to the
extent the NJEDA  is required to disclose such confidential information pursuant
to the Open Public Records Act, N.J.S.A. 47:1A-1 et seq., as determined by the
NJEDA in its reasonable discretion.

New Jersey Venue.  By reason of the laws, regulations and public policies of the
State of New Jersey applicable to the NJEDA as a governmental entity in the
State of New Jersey, the Company freely agrees that, notwithstanding anything to
the contrary in this letter agreement or the Shareholders Agreement, any legal
proceeding involving any claim asserted arising out of or related to this letter
agreement or the Shareholder Agreement that (i) is brought by the Company
against the NJEDA may be brought only in, and shall be subject to the exclusive
jurisdiction of, the trial division of the Superior Court of the State of New
Jersey, and that such proceeding shall be governed by the procedural rules and
laws of the State of New Jersey, without regard to principles of conflicts of
law and (ii) is brought by the NJEDA against the Company may be brought in, and
subject to the jurisdiction of, the Superior Court of the State of New Jersey,
in which case such proceeding shall be governed by the procedural rules and laws
of the State of New Jersey, without regard to principles of conflicts of
law.  The Company agrees that the NJEDA shall not be deemed to have waived any
objection that it may now or hereafter have to the laying of jurisdiction or
venue of any such action or proceeding in the courts of any state other than the
courts of the State of New Jersey, nor deemed to waive any claim that any such
action or proceeding brought in any such court has been brought in a court
without jurisdiction or an inconvenient or improper forum.
 
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