Document:

Unassociated Document

    

    
      	 	
              WARRANT

            	 
	
              NO.
                SUFH - ___

            	
              SURFECT
                HOLDINGS, INC.

            	
              ________
                Shares

            
	 	 	 

    

    WARRANT
      TO PURCHASE COMMON STOCK

     

    VOID
      AFTER 5:30 P.M., EASTERN 

    TIME,
      ON THE EXPIRATION DATE

     

    THIS
      WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
      BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”),
      AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED
      WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF
      APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS
      THEREFROM.

     

    FOR
      VALUE
      RECEIVED, SURFECT HOLDINGS, INC., a Delaware corporation (the “Company”),
      hereby agrees to sell upon the terms and on the conditions hereinafter set
      forth, but no later than 5:30 p.m., Eastern Time, on the Expiration Date (as
      hereinafter defined) to ________________
      or
      registered assigns (the “Holder”),
      under
      the terms as hereinafter set forth, __________________
      (_____________)
      fully
      paid and non-assessable shares of the Company’s Common Stock, par value $0.0001
      per share (the “Warrant
      Stock”),
      at a
      purchase price of EIGHT CENTS ($0.08) per share (the “Warrant
      Price”),
      pursuant to this warrant (this “Warrant”).
      The
      number of shares of Warrant Stock to be so issued and Warrant Price are subject
      to adjustment in certain events as hereinafter set forth. The term “Common
      Stock”
shall
      mean, when used herein, unless the context otherwise requires, the stock and
      other securities and property at the time receivable upon the exercise of this
      Warrant.

     

    1. Exercise
      of Warrant.

     

    a. The
      Holder may exercise this Warrant according to its terms by (i) surrendering
      this
      Warrant, properly endorsed, to the Company at the address set forth in Section
      10, (ii) the subscription form attached hereto having then been duly executed
      by
      the Holder (the “Form
      of Exercise”),
      and
      (iii) payment of the purchase price being made to the Company for the number
      of
      shares of the Warrant Stock specified in the subscription form, or as otherwise
      provided in this Warrant, prior to 5:30 p.m., Eastern Time, on December __,
      2012
(the
      “Expiration
      Date”).
      Such
      exercise shall be effected by the surrender of the Warrant, together with a
      duly
      executed copy of the Form of Exercise, to Company at its principal office and
      (i) the payment to the Company of an amount equal to the aggregate Warrant
      Price
      for the number of shares of Warrant Stock being purchased in cash, certified
      check or bank draft or (ii) by surrendering such number of shares of Warrant
      Stock received upon exercise of this Warrant with a Fair Market Value (as
      defined below) equal to the aggregate Warrant Price for the Warrant Stock being
      purchased (a “Cashless Exercise”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    b. If
      the
      Holder elects the Cashless Exercise method of payment, the Company shall issue
      to the Holder a number of shares of Warrant Stock determined in accordance
      with
      the following formula:

     

    X
       = Y(A
      -
      B)

    A

     

    
      	
               with:

            	
              X =

            	the number of shares of Warrant Stock
              to be
              issued to the Holder;
	 	 	 
	 	
              Y = 

            	the number of shares of Warrant Stock
              with
              respect to which the Warrant is being exercised;
	 	 	 
	 	
              A= 

            	the fair value per share of Common
              Stock on
              the date of exercise of this Warrant;
              and 
	 	 	 
	 	
              B
                = 

            	the then-current Warrant Price of
              the Warrant

    

     

    For
      the
      purposes of this Section 1(b), “fair value” per share of Common Stock shall mean
      (A) the average of the closing sales prices, as quoted on the primary national
      or regional stock exchange on which the Common Stock is listed, or,
      if not
      listed,
      the OTC
      Bulletin Board if quoted thereon, on the ten
      (10)
      trading
      days immediately preceding the date on which the Form of Exercise is deemed
      to
      have been sent to the Company, or (B) if the Common Stock is not publicly traded
      as set forth above, as reasonably and in good faith determined by the Board
      of
      Directors of the Company as of the date which the notice of exercise is deemed
      to have been sent to the Company.

    

    c. This
      Warrant may be exercised in whole or in part so long as any exercise in part
      hereof would not involve the issuance of fractional shares of Warrant Stock.
      If
      exercised in part, the Company shall deliver to the Holder a new Warrant,
      identical in form, in the name of the Holder, evidencing the right to purchase
      the number of shares of Warrant Stock as to which this Warrant has not been
      exercised, which new Warrant shall be signed by the Chairman, Chief Executive
      Officer or President and the Secretary or Assistant Secretary of the Company.
      The term Warrant as used herein shall include any subsequent Warrant issued
      as
      provided herein.

     

    d. No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. The Company shall pay cash in lieu of fractions
      with respect to the Warrants based upon the fair market value of such fractional
      shares of Common Stock (which shall be the closing price of such shares on
      the
      exchange or market on which the Common Stock is then traded) at the time of
      exercise of this Warrant.

     

    e. In
      the
      event of any exercise of the rights represented by this Warrant, a certificate
      or certificates for the Warrant Stock so purchased, registered in the name
      of
      the Holder, shall be delivered to the Holder within a reasonable time after
      such
      rights shall have been so exercised. The person or entity in whose name any
      certificate for the Warrant Stock is issued upon exercise of the rights
      represented by this Warrant shall for all purposes be deemed to have become
      the
      holder of record of such shares immediately prior to the close of business
      on
      the date on which the Warrant was surrendered and payment of the Warrant Price
      and any applicable taxes was made, irrespective of the date of delivery of
      such
      certificate, except that, if the date of such surrender and payment is a date
      when the stock transfer books of the Company are closed, such person shall
      be
      deemed to have become the holder of such shares at the opening of business
      on
      the next succeeding date on which the stock transfer books are open. The Company
      shall pay any and all documentary stamp or similar issue or transfer taxes
      payable in respect of the issue or delivery of shares of Common Stock on
      exercise of this Warrant.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    2. Disposition
      of Warrant Stock and Warrant.

     

    a. The
      Holder hereby acknowledges that this Warrant and any Warrant Stock purchased
      pursuant hereto are, as of the date hereof, not registered: (i) under the
      Securities Act of 1933, as amended (the “Act”),
      on
      the ground that the issuance of this Warrant is exempt from registration under
      Section 4(2) of the Act as not involving any public offering or (ii) under
      any
      applicable state securities law because the issuance of this Warrant does not
      involve any public offering; and that the Company’s reliance on the Section 4(2)
      exemption of the Act and under applicable state securities laws is predicated
      in
      part on the representations hereby made to the Company by the Holder that it
      is
      acquiring this Warrant and will acquire the Warrant Stock for investment for
      its
      own account, with no present intention of dividing its participation with others
      or reselling or otherwise distributing the same, subject, nevertheless, to
      any
      requirement of law that the disposition of its property shall at all times
      be
      within its control.

     

    The
      Holder hereby agrees that it will not sell or transfer all or any part of this
      Warrant and/or Warrant Stock unless and until it shall first have given notice
      to the Company describing such sale or transfer and furnished to the Company
      either (i) an opinion, reasonably satisfactory to counsel for the Company,
      of
      counsel (skilled in securities matters, selected by the Holder and reasonably
      satisfactory to the Company) to the effect that the proposed sale or transfer
      may be made without registration under the Act and without registration or
      qualification under any state law, or (ii) an interpretative letter from the
      Securities and Exchange Commission to the effect that no enforcement action
      will
      be recommended if the proposed sale or transfer is made without registration
      under the Act.

     

    b. If,
      at
      the time of issuance of the shares issuable upon exercise of this Warrant,
      no
      registration statement is in effect with respect to such shares under applicable
      provisions of the Act, the Company may at its election require that the Holder
      provide the Company with written reconfirmation of the Holder’s investment
      intent and that any stock certificate delivered to the Holder of a surrendered
      Warrant shall bear legends reading substantially as follows:

     

    “THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE
      DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
      OF
      THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    In
      addition, so long as the foregoing legend may remain on any stock certificate
      delivered to the Holder, the Company may maintain appropriate “stop transfer”
orders with respect to such certificates and the shares represented thereby
      on
      its books and records and with those to whom it may delegate registrar and
      transfer functions.

     

    3. Reservation
      of Shares.
      The
      Company hereby agrees that at all times there shall be reserved for issuance
      upon the exercise of this Warrant such number of shares of its Common Stock
      as
      shall be required for issuance upon exercise of this Warrant. The Company
      further agrees that all shares which may be issued upon the exercise of the
      rights represented by this Warrant will be duly authorized and will, upon
      issuance and against payment of the exercise price, be validly issued, fully
      paid and non-assessable, free from all taxes, liens, charges and preemptive
      rights with respect to the issuance thereof, other than taxes, if any, in
      respect of any transfer occurring contemporaneously with such issuance and
      other
      than transfer restrictions imposed by federal and state securities
      laws.

     

    4. Exchange,
      Transfer or Assignment of Warrant.
      This
      Warrant is exchangeable, without expense, at the option of the Holder, upon
      presentation and surrender hereof to the Company or at the office of its stock
      transfer agent, if any, for other Warrants of different denominations, entitling
      the Holder or Holders thereof to purchase in the aggregate the same number
      of
      shares of Common Stock purchasable hereunder. Upon surrender of this Warrant
      to
      the Company or at the office of its stock transfer agent, if any, with the
      Assignment Form annexed hereto duly executed and funds sufficient to pay any
      transfer tax, the Company shall, without charge, execute and deliver a new
      Warrant in the name of the assignee named in such instrument of assignment
      and
      this Warrant shall promptly be canceled. This Warrant may be divided or combined
      with other Warrants that carry the same rights upon presentation hereof at
      the
      office of the Company or at the office of its stock transfer agent, if any,
      together with a written notice specifying the names and denominations in which
      new Warrants are to be issued and signed by the Holder hereof.

     

    5. Capital
      Adjustments.
      This
      Warrant is subject to the following further provisions:

     

    a. If
      and
      whenever on or after the date hereof, the Company issues or sells, or is deemed
      to have issued or sold, any shares of Common Stock or any Common Stock
      Equivalents entitling any person to acquire shares of Common Stock (other than
      Excluded Securities) for a consideration per share less than a price equal
      to
      the Warrant Price in effect immediately prior to such issuance or sale, then
      immediately after such issue or sale the Warrant Price then in effect shall
      be
      reduced to an amount equal to such consideration per share. Upon each such
      adjustment of the Warrant Price hereunder, the number of shares of Warrant
      Stock
      issuable upon exercise of this Warrant shall be adjusted to the number of shares
      determined by multiplying the Warrant Price in effect immediately prior to
      such
      adjustment by the number of shares of Warrant Stock issuable upon exercise
      of
      this Warrant immediately prior to such adjustment and dividing the product
      thereof by the Warrant Price resulting from such adjustment. 

     

    “Common
      Stock Equivalents”
shall
      mean any securities of the Company or any of its subsidiaries which would
      entitle the holder thereof to acquire at any time Common Stock, including,
      without limitation, any debt, preferred stock, rights, options, warrants or
      other instrument that is at any time convertible into or exercisable or
      exchangeable for, or otherwise entitles the holder thereof to receive, Common
      Stock

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    “Excluded
      Securities”
shall
      mean the issuance of: (a) shares of Common Stock or options to employees,
      officers, directors, or consultants of the Company pursuant to any stock or
      option plan duly adopted for such purpose by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the members
      of
      a committee of non-employee directors, (b) securities exercisable or
      exchangeable for or convertible into shares of Common Stock issued and
      outstanding on the date of this Warrant, provided that such securities have
      not
      been amended since the date of this Warrant to increase the number of such
      securities or to decrease the exercise, exchange or conversion price of such
      securities; and (c) securities issued pursuant to acquisitions or strategic
      transactions approved by a majority of the disinterested directors of the
      Company, provided that any such issuance shall only be to a person which is
      either an owner of, or an entity that is, itself or through its subsidiaries,
      an
      operating company in a business synergistic with the business of the Company
      and
      in which the Company receives benefits in addition to the investment of funds,
      but shall not include a transaction in which the Company is issuing securities
      primarily for the purpose of raising capital or to an entity whose primary
      business is investing in securities.

     

    b. If
      any
      recapitalization of the Company or reclassification of its Common Stock or
      any
      merger or consolidation of the Company into or with a corporation or other
      business entity, or the sale or transfer of all or substantially all of the
      Company’s assets or of any successor corporation’s assets to any other
      corporation or business entity (any such corporation or other business entity
      being included within the meaning of the term “successor corporation”) shall be
      effected, at any time while this Warrant remains outstanding and unexpired,
      then, as a condition of such recapitalization, reclassification, merger,
      consolidation, sale or transfer, lawful and adequate provision shall be made
      whereby the Holder of this Warrant thereafter shall have the right to receive
      upon the exercise hereof as provided in Section 1 and in lieu of the shares
      of
      Common Stock immediately theretofore issuable upon the exercise of this Warrant,
      such shares of capital stock, securities or other property as may be issued
      or
      payable with respect to or in exchange for a number of outstanding shares of
      Common Stock equal to the number of shares of Common Stock immediately
      theretofore issuable upon the exercise of this Warrant had such
      recapitalization, reclassification, merger, consolidation, sale or transfer
      not
      taken place, and in each such case, the terms of this Warrant shall be
      applicable to the shares of stock or other securities or property receivable
      upon the exercise of this Warrant after such consummation.

     

    c. If
      the
      Company at any time while this Warrant remains outstanding and unexpired shall
      subdivide or combine its Common Stock, the number of shares of Warrant Stock
      purchasable upon exercise of this Warrant and the Warrant Price shall be
      proportionately adjusted.

     

    d. If
      the
      Company at any time while this Warrant is outstanding and unexpired shall issue
      or pay the holders of its Common Stock, or take a record of the holders of
      its
      Common Stock for the purpose of entitling them to receive, a dividend payable
      in, or other distribution of, Common Stock, then (i) the Warrant Price shall
      be
      adjusted in accordance with Section 5(f) and (ii) the number of shares of
      Warrant Stock purchasable upon exercise of this Warrant shall be adjusted to
      the
      number of shares of Common Stock that the Holder would have owned immediately
      following such action had this Warrant been exercised immediately prior
      thereto.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    e. If
      the
      Company shall at any time after the date of issuance of this Warrant distribute
      to all holders of its Common Stock any shares of capital stock of the Company
      (other than Common Stock) or evidences of its indebtedness or assets (excluding
      cash dividends or distributions paid from retained earnings or current year’s or
      prior year’s earnings of the Company) or rights or warrants to subscribe for or
      purchase any of its securities (excluding those referred to in the immediately
      preceding paragraph) (any of the foregoing being hereinafter in this paragraph
      called the “Securities”), then in each such case, the Company shall reserve
      shares or other units of such securities for distribution to the Holder upon
      exercise of this Warrant so that, in addition to the shares of the Common Stock
      to which such Holder is entitled, such Holder will receive upon such exercise
      the amount and kind of such Securities which such Holder would have received
      if
      the Holder had, immediately prior to the record date for the distribution of
      the
      Securities, exercised this Warrant.

     

    f. Except
      as
      otherwise provided herein, whenever the number of shares of Warrant Stock
      purchasable upon exercise of this Warrant is adjusted, as herein provided,
      the
      Warrant Price payable upon the exercise of this Warrant shall be adjusted to
      that price determined by multiplying such Warrant Price immediately prior to
      such adjustment by a fraction (i) the numerator of which shall be the number
      of
      shares of Warrant Stock purchasable upon exercise of this Warrant immediately
      prior to such adjustment, and (ii) the denominator of which shall be the number
      of shares of Warrant Stock purchasable upon exercise of this Warrant immediately
      thereafter.

     

    g. The
      number of shares of Common Stock outstanding at any given time for purposes
      of
      the adjustments set forth in this Section 5 shall exclude any shares then
      directly or indirectly held in the treasury of the Company.

     

    h. The
      Company shall not be required to make any adjustment pursuant to this Section
      5
      if the amount of such adjustment would be less than one percent (1%) of the
      Warrant Price in effect immediately before the event that would otherwise have
      given rise to such adjustment. In such case, however, any adjustment that would
      otherwise have been required to be made shall be made at the time of and
      together with the next subsequent adjustment which, together with any adjustment
      or adjustments so carried forward, shall amount to not less than one percent
      (1%) of the Warrant Price in effect immediately before the event giving rise
      to
      such next subsequent adjustment.

     

    i. Following
      each computation or readjustment as provided in this Section 5, the new adjusted
      Warrant Price and number of shares of Warrant Stock purchasable upon exercise
      of
      this Warrant shall remain in effect until a further computation or readjustment
      thereof is required.

     

    6. Notice
      to Holders.

     

    a. In
      case:

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (i) the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time receivable upon the exercise of this Warrant) for
      the
      purpose of entitling them to receive any dividend (other than a cash dividend
      payable out of earned surplus of the Company) or other distribution, or any
      right to subscribe for or purchase any shares of stock of any class or any
      other
      securities, or to receive any other right;

     

    (ii) of
      any
      capital reorganization of the Company, any reclassification of the capital
      stock
      of the Company, any consolidation with or merger of the Company into another
      corporation, or any conveyance of all or substantially all of the assets of
      the
      Company to another corporation; or

     

    (iii) of
      any
      voluntary dissolution, liquidation or winding-up of the Company;

     

    then,
      and
      in each such case, the Company will mail or cause to be mailed to the Holder
      hereof at the time outstanding a notice 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,
      reclassification, consolidation, merger, conveyance, dissolution, liquidation
      or
      winding-up 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) shall be entitled to exchange
      their shares of Common Stock (or such other stock or securities) for securities
      or other property deliverable upon such reorganization, reclassification,
      consolidation, merger, conveyance, dissolution or winding-up. Such notice shall
      be mailed at least thirty (30) days prior to the record date therein specified,
      or if no record date shall have been specified therein, at least thirty (30)
      days prior to such specified date, provided, however, failure to provide any
      such notice shall not affect the validity of such transaction.

     

    b. Whenever
      any adjustment shall be made pursuant to Section 5 hereof, the Company shall
      promptly make a certificate signed by its Chairman, Chief Executive Officer,
      President, Vice President, Chief Financial Officer or Treasurer, 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
      Price and number of shares of Warrant Stock purchasable upon exercise of this
      Warrant after giving effect to such adjustment, and shall promptly cause copies
      of such certificates to be mailed (by first class mail, postage prepaid) to
      the
      Holder of this Warrant.

     

    7. Maximum
      Exercise.
      The
      Holder shall not be entitled to exercise this Warrant on an exercise date,
      in
      connection with that number of shares of Common Stock which would be in excess
      of the sum of (i) the number of shares of Common Stock beneficially owned by
      the
      Holder and its affiliates on an exercise date, and (ii) the number of shares
      of
      Common Stock issuable upon the exercise of this Warrant with respect to which
      the determination of this limitation is being made on an exercise date, which
      would result in beneficial ownership by the Holder and its affiliates of more
      than 4.99% of the outstanding shares of Common Stock on such date. For the
      purposes of the immediately preceding sentence, beneficial ownership shall
      be
      determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934, as amended, and Regulation 13d-3 thereunder. Subject to the foregoing,
      the
      Holder shall not be limited to aggregate exercises which would result in the
      issuance of more than 4.99%. The restriction described in this paragraph may
      be
      waived, in whole or in part, upon sixty-one (61) days prior notice from the
      Holder to the Company to increase such percentage to up to 9.99%, but not in
      excess of 9.99%.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    8. Loss,
      Theft, Destruction or Mutilation.
      Upon
      receipt by the Company of evidence satisfactory to it, in the exercise of its
      reasonable discretion, of the ownership and the loss, theft, destruction or
      mutilation of this Warrant and, in the case of loss, theft or destruction,
      of
      indemnity reasonably satisfactory to the Company and, in the case of mutilation,
      upon surrender and cancellation thereof, the Company will execute and deliver
      in
      lieu thereof, without expense to the Holder, a new Warrant of like tenor dated
      the date hereof.

     

    9. Warrant
      Holder Not a Stockholder.
      The
      Holder of this Warrant, as such, shall not be entitled by reason of this Warrant
      to any rights whatsoever as a stockholder of the Company.

     

    10. Notices.
      Any
      notice required or contemplated by this Warrant shall be deemed to have been
      duly given if transmitted by registered or certified mail, return receipt
      requested, or nationally recognized overnight delivery service,
      to
      the
      Company at its principal executive offices located at 1800 W. Broadway Road,
      Tempe, Arizona 85282, Attn: Anthony M. Maffia, Jr., Chief Financial Officer,
      or
      to the Holder at the name and address set forth in the Warrant Register
      maintained by the Company.

     

    11. Choice
      of Law.
      THIS
      WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED
      IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING
      EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

     

    12. Jurisdiction
      and Venue.
      The
      Company and Holder hereby agree that any dispute which may arise between them
      arising out of or in connection with this Warrant shall be adjudicated before
      a
      court located in Kent County, Delaware and they hereby submit to the exclusive
      jurisdiction of the federal and state courts of the State of Delaware located
      in
      Kent County with respect to any action or legal proceeding commenced by any
      party, and irrevocably waive any objection they now or hereafter may have
      respecting the venue of any such action or proceeding brought in such a court
      or
      respecting the fact that such court is an inconvenient forum, relating to or
      arising out of this Warrant or any acts or omissions relating to the sale of
      the
      securities hereunder, and consent to the service of process in any such action
      or legal proceeding by means of registered or certified mail, return receipt
      requested, in care of the address set forth herein or such other address as
      either party shall furnish in writing to the other.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has duly caused this Warrant to be signed on its
      behalf, in its corporate name and by its duly authorized officers, as of this
      ___ day of December, 2007.

     

    SURFECT
      HOLDINGS,
      INC.

     

    By:
      _______________________________

    Name:
      Steven Anderson

    Title:
      Chief Executive Officer

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    FORM
      OF
      EXERCISE

     

    (to
      be
      executed by the registered holder hereof)

     

    The
      undersigned hereby exercises the right to purchase _________ shares of common
      stock, par value $0.0001 per share (“Common
      Stock”),
      of
Surfect
      Holdings,
      Inc.
      evidenced by the within Warrant Certificate for a Warrant Price of $____ per
      share and herewith makes payment of the purchase price in full of (i)
      $__________ in cash or (ii) shares of Common Stock (pursuant to a Cashless
      Exercise in accordance with Section 1(b)). Kindly issue certificates for shares
      of Common Stock (and for the unexercised balance of the Warrants evidenced
      by
      the within Warrant Certificate, if any) in accordance with the instructions
      given below.

     

     

     

    Dated:____________________
      , 20___ .

     

    

    

    ______________________________

    

    Instructions
      for registration of stock

    

    

    _____________________________

      Name
      (Please Print)

    

    Social
      Security or other identifying Number:

    

    Address:__________________________________

       City/State
      and Zip Code

     

    

    Instructions
      for registration of certificate representing 

    the
      unexercised balance of Warrants (if any)

     

    

    _____________________________
      

    Name
      (Please Print)

     

    Social
      Security or other identifying Number: ___________

    

    Address:____________________________________

       City,
      State and Zip Code

    
 

     

    -10-REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
      is
      made as of December ___, 2007, among Surfect Holdings, Inc., a Delaware
      corporation (the “Company”),
      and
      the individuals and entities listed on Schedule
      A
      hereto
      (each, an “Investor”
and
      collectively, the “Investors”).

     

    R
      E C I T A L S

     

    WHEREAS,
      the Company and the Investors are parties to various Subscription Agreements
      (the “Subscription
      Agreements”);

     

    WHEREAS,
      the Investors’ obligations under the Subscription Agreements are conditioned
      upon certain registration rights under the Securities Act of 1933, as amended
      (the “Securities
      Act”),
      as
      described in the Subscription Agreements; and

     

    WHEREAS,
      the Investors and the Company desire to provide for the rights of registration
      under the Securities Act as are provided herein upon the execution and delivery
      of this Agreement by such Investors and the Company.

     

    NOW,
      THEREFORE, in consideration of the promises, covenants and conditions set forth
      herein, the parties hereto hereby agree as follows:

     

    1. Registration
      Rights.

     

    1.1 Definitions.
      As used
      in this Agreement, the following terms shall have the meanings set forth
      below:

     

    (a) “Commission”
means
      the United States Securities and Exchange Commission.

     

    (b) “Common
      Stock”
means
      the Company’s common stock, par value $0.0001 per share.

     

    (c) “Closing
      Date”
means
      the date on which the closing of the transactions contemplated by the
      Subscription Agreements occurs.

     

    (d) “Effectiveness
      Date”
means
      the 60th
      day
      following the Filing Date.

     

    (e) “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    (f) “Fair
      Market Value”
means
      the average of the high and low prices of publicly traded shares of Common
      Stock, rounded to the nearest cent, on the principal national securities
      exchange on which shares of Common Stock are listed (if the shares of Common
      Stock are so listed), or on The NASDAQ Capital Market (if the shares of Common
      Stock are regularly quoted on the Nasdaq Stock Market), or, if not so listed
      or
      regularly quoted, the mean between the closing bid and asked prices of publicly
      traded shares of Common Stock in the over-the-counter market, or, if such bid
      and asked prices shall not be available, as reported by any nationally
      recognized quotation service selected by the Company, or as determined by the
      Board of Directors of the Company in a manner consistent with the provisions
      of
      the Internal Revenue Code of 1986, as amended.

     

    
      
        
        

      

      
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    (g) “Filing
      Date”
means,
      with respect to the initial registration statement required to be filed
      hereunder, January 25, 2008.

     

    (h) “Investor”
means
      any person owning Registrable Securities.

     

    (i) The
      terms
“register,”
      “registered”
and
      “registration”
refer
      to a registration effected by preparing and filing a registration statement
      or
      similar document in compliance with the Securities Act, and the declaration
      or
      ordering of effectiveness of such registration statement or
      document.

     

    (j) “Registrable
      Securities”
means
      any of the Shares or any securities issued or issuable as (or any securities
      issued or issuable upon the conversion or exercise of any warrant, right or
      other security that is issued as) a dividend or other distribution with respect
      to, or in exchange for, or in replacement of, the Shares; provided,
      however,
      that
      Registrable Securities shall not include any securities of the Company that
      have
      previously been registered or which have been sold to the public either pursuant
      to a registration statement or Rule 144, or which have been sold in a private
      transaction in which the transferor’s rights under this Section 1 are not
      assigned, or which may be sold immediately without registration under the
      Securities Act and without volume restrictions pursuant to Rule
      144(k).

     

    (k) “Rule
      144”
means
      Rule 144 as promulgated by the Commission under the Securities Act, as such
      Rule
      may be amended from time to time, or any similar successor rule that may be
      promulgated by the Commission.

     

    (l) “Shares”
means
      the shares of the Common Stock issued pursuant to the Subscription Agreements
      and issuable upon exercise of the Warrants.

     

    (m) “Warrants”
means
      the warrants to purchase Common Stock issued pursuant to the Subscription
      Agreements.

     

    1.2 Company
      Registration.

     

    (a) On
      or
      prior to the Filing Date the Company shall prepare and file with the Commission
      a registration statement covering the Registrable Securities for an offering
      to
      be made on a continuous basis pursuant to Rule 415. The registration statement
      shall be on Form SB-2 or Form S-3 (except if the Company is not then eligible
      to
      register for resale the Registrable Securities on Form SB-2 or Form S-3, in
      which case such registration shall be on another appropriate form in accordance
      herewith). The Company shall cause the registration statement to become
      effective and remain effective as provided herein. The Company shall use its
      best efforts to cause the registration statement to be declared effective under
      the Securities Act as promptly as possible after the filing thereof, but in
      any
      event no later than the Effectiveness Date. The Company shall use its best
      efforts to keep the registration statement continuously effective under the
      Securities Act until the date which is the earliest to occur of: (i) the date
      that all securities are eligible to be resold pursuant to Rule 144(k), (ii)
      the
      date that is 18 months after the date hereof or (iii) the date of which all
      Registrable Securities have been sold (the “Effectiveness
      Period”).

     

    
      
        
        

      

      
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    (b) If:
      (i)
      the registration statement is not filed on or prior to the Filing Date; or
      (ii)
      the Company fails to cause the registration statement to be declared effective
      by the Effectiveness Date (any such failure or breach being referred to as
      an
“Event,”
and
      the date on which such Event occurs being referred to as the “Event
      Date”),
      then,
      until the applicable Event is cured, the Company shall pay to each Investor,
      in
      cash, or in Common Stock at Fair Market Value at the Company’s option, as
      liquidated damages and not as a penalty, an amount equal to 1.0% of the
      aggregate purchase price paid by such Investor pursuant to the Subscription
      Agreement executed by such Investor for each thirty (30) day period (prorated
      for partial periods), up to a maximum of 10%, during which such Event continues
      uncured. While such Event continues, such liquidated damages shall be paid
      not
      less often than every thirty (30) days. Any unpaid liquidated damages as of
      the
      date when an Event has been cured by the Company shall be paid within three
      (3)
      business days following the date on which such Event has been cured by the
      Company. Notwithstanding anything herein to the contrary, to the extent that
      the
      registration of any or all of the Registrable Securities by the Company on
      a
      registration statement is prohibited (the “Non-Registered
      Shares”)
      as a
      result of rules, regulations, positions or releases issued or actions taken
      by
      the SEC pursuant to its authority with respect to Rule 415 and the Company
      has
      registered at such time the maximum number of Registrable Securities permissible
      upon consultation with the SEC, then the liquidated damages described in this
      Section 1.2(b) shall not be applicable to such Non-Registered
      Shares.

     

    (c) The
      Company shall bear and pay all expenses incurred in connection with any
      registration, filing or qualification of Registrable Securities with respect
      to
      the registrations pursuant to this Section 1.2 for each Investor, including
      (without limitation) all registration, filing and qualification fees, printer’s
      fees, accounting fees and fees and disbursements of counsel for the Company,
      but
      excluding underwriting discounts and commissions relating to Registrable
      Securities and fees and disbursements of counsel for the Investors.

     

    1.3 Obligations
      of the Company.
      Whenever required under this Section 1 to effect the registration of any
      Registrable Securities, the Company shall, as expeditiously as reasonably
      possible:

     

    (a) Prepare
      and file with the Commission a registration statement with respect to such
      Registrable Securities and use its reasonable best efforts to cause such
      registration statement to become effective and to keep such registration
      statement effective during the Effectiveness Period;

     

    (b) Prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection with such
      registration statement as may be necessary to comply with the provisions of
      the
      Securities Act with respect to the disposition of all securities covered by
      such
      registration statement;

     

    (c) Furnish
      to the Investors such numbers of copies of a prospectus, including a preliminary
      prospectus, in conformity with the requirements of the Securities Act, and
      such
      other documents as they may reasonably request in order to facilitate the
      disposition of Registrable Securities owned by them (provided that the Company
      would not be required to print such prospectuses if readily available to
      Investors from any electronic service, such as on the EDGAR filing database
      maintained at www.sec.gov);

     

    
      
        
        

      

      
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    (d) Use
      its
      reasonable best efforts to register and qualify the securities covered by such
      registration statement under such other securities’ or blue sky laws of such
      jurisdictions as shall be reasonably requested by the Investors; provided that
      the Company shall not be required in connection therewith or as a condition
      thereto to qualify to do business or to file a general consent to service of
      process in any such states or jurisdictions;

     

    (e) In
      the
      event of any underwritten public offering, enter into and perform its
      obligations under an underwriting agreement, in usual and customary form, with
      the managing underwriter(s) of such offering (each Investor participating in
      such underwriting shall also enter into and perform its obligations under such
      an agreement);

     

    (f) Notify
      each Investor of Registrable Securities covered by such registration statement,
      at any time when a prospectus relating thereto is required to be delivered
      under
      the Securities Act, of the happening of any event as a result of which the
      prospectus included in such registration statement, as then in effect, includes
      an untrue statement of a material fact or omits to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading in the light of the circumstances then existing;

     

    (g) Cause
      all
      such Registrable Securities registered pursuant hereto to be listed on each
      securities exchange or nationally recognized quotation system on which similar
      securities issued by the Company are then listed; and

     

    (h) Provide
      a
      transfer agent and registrar for all Registrable Securities registered pursuant
      hereunder and a CUSIP number for all such Registrable Securities, in each case
      not later than the effective date of such registration.

     

    1.4 Furnish
      Information.
      It
      shall be a condition precedent to the Company’s obligations to take any action
      pursuant to this Section 1 with respect to the Registrable Securities of any
      selling Investor that such Investor shall furnish to the Company such
      information regarding such Investor, the Registrable Securities held by such
      Investor, and the intended method of disposition of such securities as shall
      be
      required by the Company or the managing underwriters, if any, to effect the
      registration of such Investor’s Registrable Securities.

     

    1.5 Delay
      of Registration.
      No
      Investor shall have any right to obtain or seek an injunction restraining or
      otherwise delaying any such registration as the result of any controversy that
      might arise with respect to the interpretation or implementation of this Section
      1.

     

    1.6 Indemnification.

     

    (a) To
      the
      extent permitted by law, the Company will indemnify and hold harmless each
      Investor, any underwriter (as defined in the Securities Act) for such Investor
      and each person, if any, who controls such Investor or underwriter within the
      meaning of the Securities Act or the Exchange Act, against any losses, claims,
      damages or liabilities (joint or several) to which any of the foregoing persons
      may become subject under the Securities Act, the Exchange Act or other federal
      or state securities law, insofar as such losses, claims, damages or liabilities
      (or actions in respect thereof) arise out of or are based upon any of the
      following statements, omissions or violations (collectively, a “Violation”):
      (i)
      any untrue statement or alleged untrue statement of a material fact contained
      in
      a registration statement, including any preliminary prospectus or final
      prospectus contained therein or any amendments or supplements thereto
      (collectively, the “Filings”),
      (ii)
      the omission or alleged omission to state in the Filings a material fact
      required to be stated therein, or necessary to make the statements therein
      not
      misleading, or (iii) any violation or alleged violation by the Company of the
      Securities Act, the Exchange Act, any state securities law or any rule or
      regulation promulgated under the Securities Act, the Exchange Act or any state
      securities law; and the Company will pay any legal or other expenses reasonably
      incurred by any person to be indemnified pursuant to this Section 1.6(a) in
      connection with investigating or defending any such loss, claim, damage,
      liability or action; provided,
      however,
      that
      the indemnity agreement contained in this Section 1.6(a) shall not apply to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Company (which consent
      shall not be unreasonably withheld), nor shall the Company be liable in any
      such
      case for any such loss, claim, damage, liability or action to the extent that
      it
      arises out of or is based upon a Violation that occurs in reliance upon and
      in
      conformity with written information furnished expressly for use in connection
      with such registration by any such Investor, underwriter or controlling
      person.

     

    
      
        
        

      

      
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    (b) To
      the
      extent permitted by law, each Investor will indemnify and hold harmless the
      Company, each of its directors, each of its officers who has signed the
      registration statement, each person, if any, who controls the Company within
      the
      meaning of the Securities Act or the Exchange Act, any underwriter, any other
      Investor selling securities in such registration statement and any controlling
      person of any such underwriter or other Investor, against any losses, claims,
      damages or liabilities (joint or several) to which any of the foregoing persons
      may become subject under the Securities Act, the Exchange Act or other federal
      or state securities law, insofar as such losses, claims, damages or liabilities
      (or actions in respect thereto) arise out of or are based upon any Violation,
      in
      each case to the extent (and only to the extent) that such Violation occurs
      in
      reliance upon and in conformity with written information furnished by such
      Investor expressly for use in connection with such registration; and each such
      Investor will pay any legal or other expenses reasonably incurred by any person
      to be indemnified pursuant to this Section 1.6(b) in connection with
      investigating or defending any such loss, claim, damage, liability or action;
      provided,
      however,
      that
      the indemnity agreement contained in this Section 1.6(b) shall not apply to
      amounts paid in settlement of any such loss, claim, damage, liability or action
      if such settlement is effected without the consent of the Investor (which
      consent shall not be unreasonably withheld); provided,
      however,
      in no
      event shall any indemnity under this subsection 1.6(b) exceed the gross proceeds
      from the offering received by such Investor.

     

    (c) Promptly
      after receipt by an indemnified party under this Section 1.6 of notice of the
      commencement of any action (including any governmental action), such indemnified
      party will, if a claim in respect thereof is to be made against any indemnifying
      party under this Section 1.6, deliver to the indemnifying party a written notice
      of the commencement thereof and the indemnifying party shall have the right
      to
      participate in, and, to the extent the indemnifying party so desires, jointly
      with any other indemnifying party similarly noticed, to assume the defense
      thereof with counsel mutually satisfactory to the parties; provided,
      however,
      that an
      indemnified party (together with all other indemnified parties that may be
      represented without conflict by one counsel) shall have the right to retain
      one
      separate counsel, with the fees and expenses to be paid by the indemnifying
      party, if representation of such indemnified party by the counsel retained
      by
      the indemnifying party would be inappropriate due to actual or potential
      differing interests between such indemnified party and any other party
      represented by such counsel in such proceeding. The failure to deliver written
      notice to the indemnifying party within a reasonable time of the commencement
      of
      any such action, if materially prejudicial to its ability to defend such action,
      shall relieve such indemnifying party of any liability to the indemnified party
      under this Section 1.6, but the omission so to deliver written notice to the
      indemnifying party will not relieve it of any liability that it may have to
      any
      indemnified party otherwise than under this Section 1.6.

     

    
      
        
        

      

      
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    (d) If
      the
      indemnification provided for in Sections 1.6(a) and (b) is held by a court
      of
      competent jurisdiction to be unavailable to an indemnified party with respect
      to
      any loss, claim, damage or expense referred to herein, then the indemnifying
      party, in lieu of indemnifying such indemnified party hereunder, shall
      contribute to the amount paid or payable by such indemnified party as a result
      of such loss, claim, damage or expense in such proportion as is appropriate
      to
      reflect the relative fault of the indemnifying party on the one hand and of
      the
      indemnified party on the other in connection with the statements or omissions
      or
      alleged statements or omissions that resulted in such loss, liability, claim
      or
      expense as well as any other relevant equitable considerations. The relative
      fault of the indemnifying party and of the indemnified party shall be determined
      by reference to, among other things, whether the untrue or alleged untrue
      statement of a material fact relates to information supplied by the indemnifying
      party or by the indemnified party and the parties’ relative intent, knowledge,
      access to information and opportunity to correct or prevent such statement
      or
      omission. In no event shall any Investor be required to contribute an amount
      in
      excess of the gross proceeds from the offering received by such
      Investor.

     

    (e) The
      obligations of the Company and Investors under this Section 1.6 shall survive
      the completion of any offering of Registrable Securities in a registration
      statement under this Section 1, and otherwise.

     

    1.7 Reports
      Under Securities Exchange Act.
      With a
      view to making available the benefits of certain rules and regulations of the
      Commission, including Rule 144, that may at any time permit an Investor to
      sell
      securities of the Company to the public without registration or pursuant to
      a
      registration on Form SB-2, the Company agrees to:

     

    (a) make
      and
      keep public information available, as those terms are understood and defined
      in
      Rule 144, at all times after ninety (90) days after the effective date of the
      registration statement;

     

    (b) take
      such
      action, including the voluntary registration of its Common Stock under Section
      12 of the Exchange Act, as is necessary to enable the Investors to utilize
      Form
      SB-2 for the sale of their Registrable Securities, such action to be taken
      as
      soon as practicable after the end of the fiscal year in which the registration
      statement is declared effective;

     

    
      
        
        

      

      
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    (c) file
      with
      the Commission in a timely manner all reports and other documents required
      of
      the Company under the Securities Act and the Exchange Act; and

     

    (d) furnish
      to any Investor, so long as the Investor owns any Registrable Securities,
      forthwith upon request (i) a written statement by the Company that it has
      complied with the reporting requirements of Rule 144 (at any time after ninety
      (90) calendar days after the effective date of the registration statement),
      the
      Securities Act and the Exchange Act (at any time after it has become subject
      to
      such reporting requirements), or that it qualifies as a registrant whose
      securities may be resold pursuant to Form SB-2 (at any time after it so
      qualifies), (ii) a copy of the most recent annual or quarterly report of the
      Company and such other reports and documents so filed by the Company, and (iii)
      such other information as may be reasonably requested in availing any Investor
      of any rule or regulation of the Commission that permits the selling of any
      such
      securities without registration or pursuant to such form.

     

    1.8 Transfer
      or Assignment of Registration Rights.
      The
      rights to cause the Company to register Registrable Securities pursuant to
      this
      Section 1 may be transferred or assigned, but only with all related obligations,
      by an Investor to a transferee or assignee who (a) acquires both at least
      250,000 Shares and Warrants to acquire at least 250,00 Shares (all subject
      to
      appropriate adjustment for stock splits, stock dividends and combinations)
      from
      such transferring Investor or (b) holds Registrable Securities immediately
      prior
      to such transfer or assignment; provided,
      that in
      the case of (a), (i) prior to such transfer or assignment, the Company is
      furnished with written notice stating the name and address of such transferee
      or
      assignee and identifying the securities with respect to which such registration
      rights are being transferred or assigned, (ii) such transferee or assignee
      agrees in writing to be bound by and subject to the terms and conditions of
      this
      Agreement including, without limitation, the provisions of Section 1.9 hereof
      and (iii) such transfer or assignment shall be effective only if immediately
      following such transfer or assignment the further disposition of such securities
      by the transferee or assignee is restricted under the Securities
      Act.

     

    2. Covenants
      of the Company to the Investors.

     

    2.1 Information
      Rights.
      The
      Company shall deliver to each Investor who holds (and continues to hold) at
      least 250,000 Shares (subject to appropriate adjustment for stock splits, stock
      dividends and combinations), upon the request of such Investor (which may be
      satisfied by filing of Company quarterly and annual reports under the Exchange
      Act):

     

    (a) as
      soon
      as practicable, but in any event within one hundred twenty (120) calendar days
      after the end of each fiscal year of the Company, consolidated balance sheets
      of
      the Company and its subsidiaries, if any, as of the end of such fiscal year,
      and
      consolidated statements of income and consolidated statements of cash flows
      of
      the Company and its subsidiaries, if any, for such year, prepared in accordance
      with generally accepted accounting principles (“GAAP”),
      all
      in reasonable detail; and

     

    (b) as
      soon
      as practicable, but in any event within forty-five (45) calendar days after
      the
      end of each of the first three (3) quarters of each fiscal year of the Company,
      consolidated balance sheets of the Company and its subsidiaries, if any, as
      of
      the end of such quarter, and consolidated statements of income and consolidated
      statements of cash flows of the Company and its subsidiaries, if any, for such
      quarter prepared in accordance with GAAP, all in reasonable detail.

     

    
      
        
        

      

      
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    2.2 Confidentiality.
      Each
      Investor receiving any non-public information of the Company hereby agrees
      to
      hold in confidence and trust and to act in a fiduciary manner with respect
      to
      all information so provided; provided,
      however,
      that
      notwithstanding the foregoing, an Investor may include summary financial
      information concerning the Company and general statements concerning the nature
      and progress of the Company’s business in an Investor’s reports to its
      affiliates.

     

    3. Legend.

     

    (a) Each
      certificate representing Shares of Common Stock held by the Investors shall
      be
      endorsed with the following legend:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE
      SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER THE SECURITIES ACT, (B) AN OPINION OF COUNSEL, REASONABLY
      ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (C) REASONABLE ASSURANCE HAVING BEEN PROVIDED TO THE COMPANY THAT SUCH OFFER,
      SALE, ASSIGNMENT OR TRANSFER IS BEING MADE PURSUANT TO RULE 144 OR RULE 144A
      UNDER SAID ACT.

     

    (b) The
      legend set forth above shall be removed, and the Company shall issue a
      certificate without such legend to the transferee of the Shares represented
      thereby, if, unless otherwise required by state securities laws, (i) such Shares
      have been sold under an effective registration statement under the Securities
      Act, (ii) in connection with a sale, assignment or other transfer, such holder
      provides the Company with an opinion of counsel, reasonably acceptable to the
      Company, to the effect that such sale, assignment or transfer is being made
      pursuant to an exemption from the registration requirements of the Securities
      Act, or (iii) such holder provides the Company with reasonable assurance that
      the Shares are being sold, assigned or transferred pursuant to Rule 144 or
      Rule
      144A under the Securities Act.

     

    4. Miscellaneous.

     

    4.1 Governing
      Law.
      The
      parties hereby agree that any dispute which may arise between them arising
      out
      of or in connection with this Agreement shall be adjudicated only before a
      Federal court located in the State of Delaware and they hereby submit to the
      exclusive jurisdiction of the federal and state courts of the State of Delaware
      with respect to any action or legal proceeding commenced by any party, and
      irrevocably waive any objection they now or hereafter may have respecting the
      venue of any such action or proceeding brought in such a court or respecting
      the
      fact that such court is an inconvenient forum, relating to or arising out of
      this Agreement or any acts or omissions relating to the registration of the
      securities hereunder, and consent to the service of process in any such action
      or legal proceeding by means of registered or certified mail, return receipt
      requested, in care of the address set forth below or such other address as
      the
      undersigned shall furnish in writing to the other. The parties further agree
      that in the event of any dispute, action, suit or other proceeding arising
      out
      of or in connection with this Agreement brought by a Subscriber (or transferee),
      the Company (and each other defendant) shall recover all of such party’s
      attorneys’ fees and costs incurred in each and every action, suit or other
      proceeding, including any and all appeals or petitions therefrom. As used
      herein, attorney’s fees shall be deemed to mean the full and actual costs of any
      investigation and of legal services actually performed in connection with the
      matters involved, calculated on the basis of the usual fee charged by the
      attorneys performing such services.

     

    
      
        
        

      

      
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    4.2 Waivers
      and Amendments.
      This
      Agreement may be terminated and any term of this Agreement may be amended or
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively) with the written consent of the Company and Investors holding
      at
      least a majority of the Registrable Securities then outstanding (the
“Majority
      Investors”).
      Notwithstanding the foregoing, additional parties may be added as Investors
      under this Agreement with the written consent of the Company and the Majority
      Investors. No such amendment or waiver shall reduce the aforesaid percentage
      of
      the Registrable Securities, the holders of which are required to consent to
      any
      termination, amendment or waiver without the consent of the record holders
      of
      all of the Registrable Securities. Any termination, amendment or waiver effected
      in accordance with this Section 4.2 shall be binding upon each holder of
      Registrable Securities then outstanding, each future holder of all such
      Registrable Securities and the Company.

     

    4.3 Successors
      and Assigns.
      Except
      as otherwise expressly provided herein, the provisions of this Agreement shall
      inure to the benefit of, and be binding upon, the successors, assigns, heirs,
      executors and administrators of the parties hereto.

     

    4.4 Entire
      Agreement.
      This
      Agreement constitutes the full and entire understanding and agreement among
      the
      parties with regard to the subject matter hereof, and no party shall be liable
      or bound to any other party in any manner by any warranties, representations
      or
      covenants except as specifically set forth herein.

     

    4.5 Notices.
      All
      notices and other communications required or permitted under this Agreement
      shall be in writing and shall be delivered personally by hand or by overnight
      courier, mailed by United States first-class mail, postage prepaid, sent by
      facsimile or sent by electronic mail directed (a) if to an Investor, at such
      Investor’s address, facsimile number or electronic mail address set forth in the
      Company’s records, or at such other address, facsimile number or electronic mail
      address as such Investor may designate by ten (10) days’ advance written notice
      to the other parties hereto or (b) if to the Company, to its address, facsimile
      number or electronic mail address set forth on its signature page to this
      Agreement and directed to the attention of the Chief Executive Officer, or
      at
      such other address, facsimile number or electronic mail address as the Company
      may designate by ten (10) days’ advance written notice to the other parties
      hereto. All such notices and other communications shall be effective or deemed
      given upon delivery, on the date of mailing, upon confirmation of facsimile
      transfer or upon confirmation of electronic mail delivery.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    4.6 Interpretation.
      The
      words “include,” “includes” and “including” when used herein shall be deemed in
      each case to be followed by the words “without limitation.” The titles and
      subtitles used in this Agreement are used for convenience only and are not
      considered in construing or interpreting this Agreement.

     

    4.7 Severability.
      If one
      or more provisions of this Agreement are held to be unenforceable under
      applicable law, such provision shall be excluded from this Agreement, and the
      balance of the Agreement shall be interpreted as if such provision were so
      excluded, and shall be enforceable in accordance with its terms.

     

    4.8 Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall constitute one
      instrument.

     

    4.9 Telecopy
      Execution and Delivery.
      A
      facsimile, telecopy or other reproduction of this Agreement may be executed
      by
      one or more parties hereto, and an executed copy of this Agreement may be
      delivered by one or more parties hereto by facsimile or similar electronic
      transmission device pursuant to which the signature of or on behalf of such
      party can be seen, and such execution and delivery shall be considered valid,
      binding and effective for all purposes. At the request of any party hereto,
      all
      parties hereto agree to execute an original of this Agreement as well as any
      facsimile, telecopy or other reproduction hereof.

     

    [SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the day, month
      and
      year first set forth above.

     

    “Company”

     

    SURFECT
      HOLDINGS, INC.

     

    By:________________________________

    Name:
      

    Title:
      

     

    Address
      for notice:

    

    Surfect
      Holdings, Inc.

    1800
      W
      Broadway Road

    Tempe,
      Arizona 85282

    Facsimile:
      ( ) - 

    
 

    [COMPANY
      SIGNATURE PAGE TO REGISTATION RIGHTS AGREEMENT]

    

    
      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

    

    

    

    IN
      WITNESS WHEREOF, the parties have executed this Agreement on the day, month
      and
      year first set forth above.

     

    “Investor”

     

    ___________________________________

     

    By:________________________________

    Name

    Title:

     

    Address:

     

    ___________________________________

    ___________________________________

    ___________________________________

    Telephone:__________________________

    Facsimile:___________________________

    Email:______________________________

     

    [INVESTOR
      SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

     

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    

    Schedule
      A

     

    Investors

     

     

     

     

     

     

     

     

    -13-

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