Exhibit 10.1

 
SECOND AMENDMENT TO TERM CREDIT AGREEMENT

THIS SECOND AMENDMENT TO TERM CREDIT AGREEMENT ("Amendment") is made and entered
into as of October 1, 2004 (the "Effective Date) by and among ENTRADA NETWORKS,
INC., a Delaware corporation ("Borrower"), HONG KONG LEAGUE CENTRAL CREDIT
UNION, in its capacity as a lender under the Credit Agreement (as hereinafter
defined) ("Hong Kong League"), HIT CREDIT UNION, in its capacity as a lender
under the Credit Agreement ("HIT"), BRIGHTLINE BRIDGE PARTNERS I, LLC, in its
capacity as a lender under the Credit Agreement ("Brightline"), MATTHEW MCGOVERN
("McGovern"), in his capacity as a lender under the Credit Agreement, JON
BUTTLES ("Buttles"), in his capacity as a lender under the Credit Agreement and
SBI ADVISORS, LLC, a California limited liability company, in its capacity as
agent for Lenders ("Agent")), and is made with reference to the following:

A.    Agent, Hong Kong League, HIT, Shelly Singhal ("Singhal"), and Borrower
have entered into that certain Term Credit Agreement, dated as of January 30,
2004, as amended by the First Amendment to the Term Credit Agreement, dated May
14, 2004 (as the same may hereafter be amended, modified, extended and/or
restated from time to time, the "Credit Agreement"). Pursuant to the Credit
Agreement, as amended, Hong Kong League, HIT, Brightline, Buttles, McGovern and
Singhal have made certain Term Loans to Borrower, the repayment of which Term
Loans is secured by certain assets of Borrower pledged to Agent for the ratable
benefit of Hong Kong League, HIT, Brightline, Buttles and McGovern pursuant to
the Security Agreement.

B.    Borrower has requested that (i) Hong Kong League advance an additional
Seven Hundred and Fifty Thousand Dollars ($750,000) to Borrower, the repayment
of which is to be secured, on a pari passu basis, by the Collateral pledged
under the Security Agreement.

C.    Hong Kong League has agreed to provide the additional financing requested
by Borrower, provided that Borrower agrees to (x) amend certain provisions of
the Credit Agreement and deliver to Hong Kong League a promissory note in form
and substance acceptable to Hong Kong League, (y) pay to Hong Kong League
certain fees relating to the additional advances, and (z) issue to SBI Advisors
or its designees warrants to purchase common stock of the Borrower in form and
substance acceptable to SBI Advisors, all as more particularly set forth below
and in the promissory note to be entered into concurrently with the execution
and delivery of this Agreement.

NOW, THEREFORE, in consideration of the premises and the agreements, conditions
and covenants contained herein and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:

1.    Terms Defined in Credit Agreement. All capitalized terms used in this
Amendment and not otherwise defined herein shall have the meanings assigned to
them in the Credit Agreement.

2.    For purposes hereof, "Effective Date" means the date on which each of the
conditions set forth in Section 10 hereof is fully satisfied to the satisfaction
of Agent in its sole and absolute discretion.

       

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3.    Effective as of the Effective Date, the term "Security Agreement contained
in Section 1 of the Credit Agreement is hereby amended as follows:

"Security Agreement" means that Security Agreement by and between Borrower and
Agent, for the benefit of Hong Kong League, in the form of Exhibit B attached
hereto, as the same may be amended or modified from time to time.

Effective as of the Effective Date, the following terms are added to Section 1
of the Credit Agreement in their proper alphabetical sequence:

"Acquisition" means the acquisition by Borrower of 100% of the capital stock of
Microtek Systems, Inc.

"Effective Date" means the date on which each of the conditions set forth in
Section 9 of the Second Amendment is fully satisfied to the satisfaction of
Agent in its sole and absolute discretion.

"First Amendment" means that certain First Amendment to Term Credit Agreement
dated as of May 14, 2004 by and among Borrower, the Lenders named therein and
Agent.

"Funding Date" has the meaning assigned to such term in Section 13 of the Second
Amendment.

"Initial Advance" has the meaning assigned to such term in Section 2(a).

"Second Amendment" means that certain Second Amendment to the Term        
Credit Agreement dated as of October 1, 2004, by and among the Borrower, Hong
        Kong League and the Agent

"Second Supplemental Advance" has the meaning assigned to such term in Section
2(a).

"Second Funding Date" has the meaning assigned to such term in Section 13 of the
Second Amendment.

"Supplemental Advance" has the meaning assigned to such term in Section 2(a).

"Warrants" has the meaning assigned to such term in Section 4(f).

4.    Effective as of the Effective Date, Section 2(a) of the Credit Agreement
is hereby deleted in its entirety and the following is inserted in lieu thereof:

"Term Loan Advances. Subject to the terms and conditions of this Agreement, each
Lender hereby, severally and not jointly, agrees to make loans to Borrower
(collectively, the "Term Loans") (i) on the Closing Date in the amount of Five
Hundred Thousand Dollars ($500,000) (the "Initial Advance"), (ii) on May 14,
2004 in the amount of One Million Dollars ($1,000,000) (the "Supplemental
Advance"), and (iii) on the Effective Date in the amount of Seven Hundred and
Fifty Thousand Dollars ($750,000), which amounts may be repaid at any time prior
to the Maturity Date without premium or penalty, but may not be reborrowed once
repaid."

       

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5.    Effective as of the Effective Date, Section 2(c) of the Credit Agreement
is hereby deleted in its entirety, and the following is inserted in lieu
thereof:

"Interest Rate and Interest Payments. Borrower shall pay interest on the unpaid
principal amount of the Term Loans as follows: (i) with respect to the Term
Loans that comprise the Initial Advance, from the Closing Date until the
Maturity Date at a rate equal to twenty-four percent (24%) per annum, (ii) with
respect to the Term Loans that comprise the Supplemental Advance, from the
Funding Date until the Maturity Date at a rate equal to twenty-four percent
(24%) per annum, and with respect to the Term Loans that comprise the Second
Supplemental Advance, from the Second Funding Date until the Maturity Date at a
rate equal to twenty-four percent (24%) per annum (the "Interest Rate"). Subject
to Section 2(e) and 2(g) below, interest on the outstanding principal amount of
the Term Loans shall be due and payable to Agent, for the ratable benefit of
Hong Kong League, (x) with respect to the Term Loans that comprise the Initial
Advance, in advance (i) on the Closing Date, and (ii) thereafter, on the last
Business Day of each calendar month, commencing on the first of such dates
following the Closing Date until the Maturity Date, at which time all accrued
but unpaid interest shall be due and payable, and (y) with respect to the Term
Loans that comprise the Supplemental Advance, in advance (i) on the Funding
Date, and (ii) thereafter, on the last Business Day of each calendar month,
commencing on the first of such dates following the Funding Date until the
Maturity Date, at which time all accrued but unpaid interest shall be due and
payable."

6.    Effective as of the Effective Date, Section 2(d) of the Credit Agreement
is hereby deleted in its entirety, and the following is inserted in lieu
thereof:

"Promissory Notes. The Term Loan shall be evidenced by promissory notes
(collectively, the "Notes") in the forms of Exhibit "A-1", Exhibit "A-2", and
Exhibit "A-3" attached to this Agreement, Exhibit "A-1" and Exhibit "A-2"
attached to the First Amendment and Exhibit "A-1" attached to the Second
Amendment, each duly executed by Borrower."

7.    Effective as of the Effective Date, a new Section 4(f) shall be added to
the Credit Agreement to read as follows:

"(f)    -Second Supplement Advance Lender Fees. (i) Borrower shall pay to Agent
on the Second Funding Date, for the benefit of Hong Kong League, $75,000 in
consideration of Hong Kong League agreeing to enter into the transactions set
forth herein, which amount shall be non-refundable and deemed fully-earned upon
Agent’s receipt thereof; and (ii) Borrower shall, on the Second Funding Date,
deliver to the designees provided by SBI Advisors, warrants (the "Warrants") in
the form of Exhibit B-1 hereto, to purchase a total of 15,000,000 shares of the
common stock of Borrower at an exercise price of $0.10 per share, which warrants
shall not expire prior to the third anniversary of the Second Funding Date and
shall contain piggyback registration rights, in form and substance acceptable to
SBI Advisors.

8.    Reaffirmation of Security Agreement. Borrower hereby reaffirms on the date
hereof each of the covenants and agreements made by it in the Security Agreement
and agrees that each of such covenants and agreements shall remain unmodified
and in full force and effect notwithstanding the execution and delivery of this
Amendment.

9.    Conditions Precedent. The satisfaction of the following shall be
conditions precedent to the effectiveness of this Amendment:

9.1    Amendment. Agent shall have received this Amendment, duly executed by
Borrower.

9.2    Promissory Notes and Warrants. Agent shall have received (i) the Term
Note in the form of Exhibit A-1 attached hereto, dated of even date herewith in
the original principal amount of Seven Hundred and Fifty Thousand Dollars
($750,000) in favor of and for the benefit of Hong Kong League, and (ii) the
Warrant to purchase up to 15,000,000 shares of the Borrower’s common stock in
the form of Exhibit B-1 attached hereto.

9.3    Representations and Warranties. Each representation and warranty made by
Borrower in Section 3 of the Credit Agreement shall be true and correct on and
as of the Effective Date as though made as of the Effective Date, except to the
extent such representations and warranties relate solely to an earlier date.

10.    General Amendment. Effective as of the Effective Date, the Credit
Agreement, the Security Agreement, and each document delivered to Lender in
connection therewith (collectively, the "Loan Documents") are hereby amended to
the further extent required to give effect to the terms and conditions of the
amendments to the Credit Agreement effected hereunder.

11.    Full Force and Effect. Effective as of the Effective Date, each of the
Loan Documents is hereby amended such that all references to the Credit
Agreement contained in any such documents shall be deemed to be references to
the Credit Agreement, as amended by this Amendment. Except as amended hereby,
the Credit Agreement and the other Loan Documents shall remain unaltered and in
full force and effect.

12.    Counterparts. This Amendment may be executed in multiple counterparts,
each of which shall constitute an original and all of which, taken together,
shall constitute but one and the same instrument.

13.    Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of California.

[Remainder of this page intentionally left blank, signatures follow]

       

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their
respective duly authorized officers as of the date first above written.

"BORROWER"

ENTRADA NETWORKS, INC., a Delaware corporation

                    By: /s/ Kanwar J. S. Chadha
                    Name: Kanwar J. S. Chadha, Ph. D.
                    Its:CEO

"AGENT"

SBI ADVISORS, LLC, solely in its capacity as Agent hereunder

                  By: /s/ Shelly Singhal
                  Name: Shelly Singhal
                  Its: Manager

"HONG KONG LEAGUE"

HONG KONG LEAGUE CENTRAL CREDIT UNION

                 By: /s/ Shelly Singhal
                 Name:Shelly Singhal
                 Its: Advisor
 
HIT CREDIT UNION

                 By: /s/ Shelly Singhal
                 Name:  Shelly Singhal
                 Its: Advisor

BRIGHTLINE BRIDGE PARTNERS I, LLC

                 By:/s/ Shelly Singhal
                 Name:  Shelly Singhal
                 Its: Manager

                                                  /s/ Matthew McGovern

MATTHEW MCGOVERN
 

 
/s/ Jon Buttles                

JON BUTTLES
 
 
 

       

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Exhibit A-1

to the Second Amendment to Term Credit Agreement

FORM OF TERM NOTE

THE OBLIGATIONS EVIDENCED BY THIS TERM NOTE HAVE BEEN EXPRESSLY SUBORDINATED TO
CERTAIN OTHER OBLIGATIONS OF BORROWER PURSUANT TO THE TERMS OF THAT CERTAIN
SUBORDINATION AGREEMENT (DEBT AND SECURITY INTEREST) BY AND AMONG ENTRADA
NETWORKS, INC., BRIGHTLINE BRIDGE PARTNERS I, LLC, AND SILICON VALLEY BANK, AS
AMENDED.

TERM NOTE
Los Angeles, California
U.S.  $750,000                                      October 1, 2004
 
FOR VALUE RECEIVED, the undersigned, ENTRADA NETWORKS, INC., a Delaware
corporation (the "Borrower"), HEREBY UNCONDITIONALLY PROMISES TO PAY to the
order of HONG KONG LEAGUE CENTRAL CREDIT UNION (the "Lender"), without offset or
counterclaim, the principal sum of Seven Hundred and Fifty Thousand U.S. Dollars
(U.S.$750,000) on or before March 31, 2005. The Borrower further promises to pay
interest on the Term Loan outstanding hereunder from time to time at the
interest rates, and payable on the dates, set forth in the Credit Agreement
referred to below. This Term Note may be prepaid at any time prior to the
Maturity Date without premium or penalty.
 
1.    Payment. Both principal and interest are payable in lawful money of the
United States of America and in immediately available funds to the Lender at c/o
SBI Advisors, LLC, 610 Newport Center, Suite 1205, Newport Beach, CA 92660, or
such other place as the Lender may designate in writing to the Borrower from
time to time.
 
2.    Record Keeping. The Lender shall record the amount of principal and
interest due and payable from time to time hereunder, each payment thereof and
the resulting unpaid principal balance hereof, in the Lender’s internal records,
and any such recordation shall be rebuttable presumptive evidence of the
accuracy of the information so recorded; provided, however, that the Lender’s
failure so to record shall not limit or otherwise affect the obligations of the
Borrower hereunder and under the Credit Agreement to repay the principal of and
interest on the Term Loan.
 
3.    Credit Agreement. This Term Note is one of the Notes referred to in, and
is subject to and entitled to the benefits of, that certain Term Credit
Agreement, dated as of January 30, 2004 (as amended by the First Amendment,
dated May 14, 2004 and the Second Amendment, dated October 1 ,2004, and as may
be further amended, modified, renewed or extended from time to time, the "Credit
Agreement") between the Borrower, the Lender, and certain other parties thereto.
Unless otherwise defined herein, capitalized terms used herein shall have the
respective meanings assigned to them in the Credit Agreement. The Credit
Agreement provides, among other things, for acceleration (which in certain cases
shall be automatic) of the maturity hereof upon the occurrence of certain stated
events, in each case without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived. This Term Note is secured by
certain Collateral more specifically described in the Security Agreement.

       

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4.    Limitation on Interest Rate. In no contingency or event whatsoever shall
the aggregate of all amounts deemed interest hereunder or under the Credit
Agreement and charged or collected by the Lender or any holder of this Term Note
exceed the highest rate permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that the Lender has charged or received
interest hereunder or under the Credit Agreement in excess of the highest
applicable rate, the rate in effect hereunder and under the Credit Agreement
shall automatically be reduced to the maximum rate permitted by applicable law
and the Lender shall apply all interest paid in excess of the maximum lawful
rate to reduce the principal balance of the amounts outstanding hereunder and
under the Credit Agreement. It is the intent of the parties hereto that the
Borrower not pay or contract to pay, and that the Lender not receive or contract
to receive, directly or indirectly in any manner whatsoever, interest in excess
of the maximum rate of interest that may be paid by the Borrower to the Lender
under applicable law.

5.    Governing Law. THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA, EXCLUSIVE OF ITS CONFLICTS
OF LAWS AND CHOICE OF LAWS RULES THAT WOULD OR MAY CAUSE THE APPICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.

ENTRADA NETWORKS, INC.

By: /s/ Kanwar J. S. Chadha           
Name: Kanwar J. S. Chadha, Ph. D.
Its: CEO          

 

       

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Exhibit B-1
 
Warrant
 

THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(III) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

ENTRADA NETWORKS, INC.

WARRANT CERTIFICATE
Common Stock, par value $.001 per share

Date of Issue:               ,
2004                                                                                                                                                        
Warrant to Purchase
                                                                                                                                                                                                          
15,000,000 Shares

THIS CERTIFIES THAT, for value received,                     or its registered
assigns, is entitled, subject to the provisions of this Warrant Certificate
(this "Warrant"), to purchase an aggregate of 15,000,000 shares of common stock,
par value $.001 per share ("Common Stock"), of Entrada Networks, Inc. (the
"Company").

The number of shares of the Common Stock to be received upon the exercise of
this Warrant and the payment of the Underlying Share Purchase Price (as
hereinafter defined) therefor are subject to adjustment from time-to-time as
hereinafter set forth.

SECTION 1.   

Definitions.    The following terms as used in this Warrant shall have the
meanings set forth below:

(a)        "Assignment Form" means the form attached hereto as Exhibit A.

(b)        "Business Day" means any day other than a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of
California.

       

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(c)        "Change of Control" shall have the meaning set forth in Section
4(b)(i) hereof.

(d)        "Common Stock" shall have the meaning set forth in the introductory
paragraph.

(e)        "Company" shall have the meaning set forth in the introductory
paragraph, or any successor thereof.

(f)    "Exercise Date" shall mean any date on which the Company shall have
received (i) this Warrant, together with a Subscription Form duly executed by
the Warrant Holder, or his, her or its attorney-in-fact duly authorized in
writing, and (ii) payment in cash, or by official bank or certified check made
payable to the Company, of an amount in lawful money of the United States of
America equal to the Underlying Share Purchase Price, plus transfer taxes, if
any.

(g)        "Issuance Date" means             , 2004.

(h)        "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.

(i)        "Person" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, joint venture, government
or agency, political subdivision thereof, or any other entity of any kind.

(j)    "Registrable Securities" means (i) the Underlying Shares, and (ii) any
securities issued or issuable with respect to Common Stock by the way of stock
dividend or stock split or in connection with a combination or reorganization or
otherwise.

(k)    "Registration Statement" shall have the meaning set forth in Section 6(a)
hereof.

(l)    "Requested Information" shall have the meaning set forth in Section
6(c)(i) hereof.

(m)    "Rule 144" shall have the meaning set forth in Section 6(g) hereof.

(n)        "SEC" means the Securities and Exchange Commission.

(o)    "Securities Act" means the Securities Act of 1933, as amended.

(p)    "Subscription Form" means the form attached hereto as Exhibit B.

(q)    "Transfer Agent" means the Company or any firm engaged to act as the
transfer agent of the Company.

(r)    "Expiration Date" means the last date on which this Warrant may be
exercised, which shall be 5:00 p.m., New York City time, on the day before the
date which is three (3) years from the Issuance Date, or if such expiration date
is not a Business Day, at or before 5:00 p.m. New York City time on the next
following Business Day.

       

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(s)    "Underlying Share Purchase Price" shall mean the purchase price to be
paid upon the exercise of this Warrant with respect to the Underlying Shares in
accordance with the terms hereof, which price shall be $0.10 per Underlying
Share, subject to adjustment from time to time pursuant to the provisions of
Section 4 hereof.

(t)    "Underlying Shares" means the 15,000,000 shares of Common Stock that are
the subject of this Warrant, subject to adjustment from time to time as provided
herein.

(u)    "Warrant" shall have the meaning set forth in the introductory paragraph.

(v)    "Warrant Holder" means a person or entity in whose name this Warrant
shall be either initially or subsequently registered upon the books to be
maintained by the Company for such purpose, and "Warrant Holders" means,
collectively, the Warrant Holder and all other persons or entities in whose name
the Warrants shall be either initially or subsequently registered upon the books
to be maintained by the Company for such purpose.

SECTION 2.   

Duration, Vesting and Exercise.

(a)    Duration. This Warrant may be exercised from time to time, upon the terms
and subject to the conditions set forth herein, at any time on or before the
Expiration Date. If this Warrant is not exercised in accordance with the terms
hereof on or before the Expiration Date, the Warrant Holder shall no longer be
entitled to purchase the Underlying Shares and all rights hereunder to purchase
such Underlying Shares shall thereupon cease.

(b)    Vesting. All shares underlying this Warrant are immediately vested.

(c)    Exercise.

(i)    A Warrant Holder may exercise this Warrant, in whole or in part, to
purchase the vested Underlying Shares in such amounts as may be elected upon
surrender of this Warrant, together with a duly executed Subscription Form, to
the Company at its corporate office, together with the full Underlying Share
Purchase Price for each Underlying Share to be purchased, in lawful money of the
United States, or by certified check or bank draft payable in United States
dollars to the order of the Company and upon compliance with and subject to the
conditions set forth herein.

(ii)    Upon receipt of this Warrant, together with a duly executed Subscription
Form, and accompanied by payment of the Underlying Share Purchase Price for the
number of vested Underlying Shares for which this Warrant is then being
exercised, the Company shall, subject to Section 7(b) hereof, cause to be issued
and delivered promptly, but in no event later than the third Business Day after
the date on which the Company receives this Warrant, the Subscription Form and
the Underlying Share Purchase Price, to the Warrant Holder certificates for such
shares of Common Stock in such denominations as are requested by the Warrant
Holder in the Subscription Form.

       

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(iii)    In case a Warrant Holder shall exercise this Warrant with respect to
less than all of the Underlying Shares, the Company will execute a new Warrant,
which shall be exercisable for the balance of the Underlying Shares that may be
purchased upon exercise of the unexercised portion of this Warrant and shall
deliver such new Warrant to the Warrant Holder.

(iv)    This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the Exercise Date, and the Person entitled to receive
the vested Underlying Shares and any new Warrant representing the unexercised
portion of this Warrant deliverable upon such exercise shall be treated for all
purposes as the holder of such Underlying Shares and new Warrant, respectively,
upon such exercise as of the close of business on the Exercise Date.

SECTION 3.    Covenants.

(a)    Issuance and Sale of Underlying Shares. The Company covenants that it
will at all times reserve and keep available, free from preemptive rights, out
of its authorized Common Stock, solely for the purpose of issuance upon exercise
of this Warrant, such number of shares of Common Stock as shall equal the
aggregate number of the Underlying Shares. The Company covenants that all shares
of Common Stock that shall be issuable upon exercise of this Warrant shall, at
the time of delivery, and, subject to Section 2(c) hereof, upon receipt by the
Company of the Underlying Share Purchase Price, be duly and validly issued,
fully paid, nonassessable and free from all taxes, liens and charges with
respect to the issue thereof (other than those which the Company shall promptly
pay or discharge).

The Transfer Agent for the Common Stock will be irrevocably authorized and
directed at all times to reserve such number of authorized shares of Common
Stock as shall be required for such purpose. The Company will keep a copy of
this Warrant on file with the Transfer Agent, if such agent is other than the
Company. The Company will supply such Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 6(b) hereof. The Company will
furnish such Transfer Agent with a copy of all notices of adjustments and
certificates related thereto transmitted to the Warrant Holder pursuant to
Section 4(f) hereof.

(b)    Restrictive Legend. Each certificate evidencing shares of Common Stock
issued to the Warrant Holder following the exercise of this Warrant shall bear
the following restrictive legend until such time as the transfer of such
security is not restricted under the federal securities laws:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES
LAWS, AND MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (I) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (III) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY
TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.

       

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SECTION 4.    Adjustment of Underlying Share Purchase Price and Number of
Underlying Shares. The number of Underlying Shares purchasable upon the exercise
of this Warrant and the payment of the Underlying Share Purchase Price shall be
subject to adjustment from time to time as follows:

(a)    Adjustment for Stock Splits and Combinations. If the Company at any time
or from time to time after the date of this Warrant shall effect a subdivision
of the outstanding Common Stock or combines the outstanding shares of Common
Stock, then, in each such case, the Underlying Share Purchase Price in effect
immediately prior to such event shall be adjusted so that the Holder of this
Warrant shall have the right to purchase the number of shares of Common Stock
which he, she or it would have had the right to purchase after the event had
such shares of Common Stock been purchased immediately prior to the occurrence
of such event. Any adjustment under this Section 4(a) shall become effective as
of the date and time such subdivision or combination becomes effective.

(b)    Reorganization, Reclassification, Consolidation, Merger or Sale.

(i) Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company’s assets to another
Person and any transaction which is effected in such a way that holders of more
than fifty percent (50%) of the shares of Common Stock then outstanding are
entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets of another Person with respect to or in exchange for Common
Stock is referred to herein as a "Change of Control."

(ii)    Prior to the consummation of any Change of Control, the Company shall
make appropriate provisions, in form and substance reasonably satisfactory to
the Warrant Holder, to insure that the Warrant Holder shall thereafter have the
right to acquire and receive in lieu of or in addition to (as the case may be)
the shares of Common Stock immediately theretofore acquirable and receivable
upon the exercise of such Warrant Holder’s rights under this Warrant to purchase
such shares of Common Stock or other securities as may be issuable or payable
with respect to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon the exercise of such
Warrant Holder’s rights, had such Change of Control not taken place. In any such
case, the Company shall make appropriate provisions, in form and substance
reasonably satisfactory to at the Warrant Holder, with respect to such Warrant
Holder’s rights and interests to insure that the provisions hereof shall
thereafter be applicable to this Warrant (including, in the case of any such
consolidation, merger or sale in which the successor entity or purchasing entity
is other than the Company, an immediate adjustment of the Underlying Share
Purchase Price to reflect the value for the Common Stock reflected by the terms
of such consolidation, merger or sale, if the value so reflected is less than
the Underlying Share Purchase Price in effect immediately prior to such
consolidation, merger or sale).

       

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(iii)    The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from such consolidation or merger or the corporation or
other entity purchasing such assets assumes by written instrument (which may be
the agreement of consolidation, merger or sale), in form and substance
reasonably satisfactory to the Warrant Holder, the obligation to deliver to the
Warrant Holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the Warrant Holder may be entitled to acquire.

 
(c)    No Impairment. The Company will not, through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company.

(d)    Record Date. If the Company takes a record of the holders of Common Stock
for the purpose of entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities, or
(ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

(e)    Certificate of Adjustment. In any case of an adjustment of the number of
shares of Common Stock to be purchased under this Warrant, an officer of the
Company designated by a majority of the Independent Directors shall compute such
adjustment in accordance with the provisions hereof and prepare and sign a
certificate showing such adjustment and shall mail such certificate, by first
class mail, postage prepaid, to the Warrant Holder at the address of the Warrant
Holder set forth or as provided herein. The certificate shall set forth such
adjustment showing in detail the facts upon which such adjustment, including a
statement of the number of shares of Common Stock and the type and amount, if
any, of other property which at the time would be received upon the purchase of
the Underlying Shares.

(f)    Notices of Record Date. In the event of (i) any taking by the Company of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, (ii) to offer for subscription any additional shares of
capital stock of any class or series, (iii) to effect any reclassification or
recapitalization of Common Stock outstanding, or (iv) any Change of Control or
voluntary or involuntary dissolution, liquidation or winding up of the Company,
the Company shall mail to the Warrant Holder, not less than ten (10) days and
not more than sixty (60) days prior to the date on which the books of the
Company shall close, the record date specified therein or the effective date
thereof as the case may be, a notice specifying (A) the material terms and
conditions of the proposed action, (B) the date on which any such record is to
be taken for the purpose of such dividend or distribution and a description of
such dividend or distribution, (C) the date on which any such Change in Control,
dissolution, liquidation or winding up is expected to become effective, and (D)
the time, if any, that is to be fixed, as to when the holders of record of
Common Stock (or other securities) shall be entitled to exchange their shares of
Common Stock (or other securities) for securities or other property deliverable
upon such Change of Control, dissolution, liquidation or winding up.

       

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(g)    Notices. Any notice required by the provisions of this Section 4 shall be
in writing and shall be deemed given upon delivery, if delivered personally, or
by a recognized commercial courier with receipt acknowledged, or upon the
expiration of seventy-two (72) hours after the same has been deposited in the
United States mail, by certified or registered mail, return receipt requested,
postage prepaid, and addressed to the Warrant Holder at his, her or its address
set forth or as provided herein.

(h)    Closing of Books. The Company will at no time close its transfer books
against the transfer of any shares of Common Stock issued or issuable upon the
purchase of any shares of Common Stock under this Warrant in any manner which
interferes with the timely purchase of such shares of Common Stock.

SECTION 5.    Dividends. In the event the Company shall, at any time prior to
the earlier to occur of (i) the complete exercise of this Warrant, and (ii) the
Expiration Date, declare or pay to the holders of Common Stock a dividend
payable in any kind of shares of capital stock of the Company or make any
distribution of its assets to holders of its Common Stock as a liquidation or
partial liquidation dividend or by way of a return or capital, then, upon the
subsequent exercise of this Warrant, the Warrant Holder shall receive, in
addition to shares of Common Stock to which it would otherwise be entitled upon
such exercise, such additional shares of stock or assets of the Company, which
he, she or it would have been entitled to receive, had he, she or it exercised
this Warrant into the shares of Common Stock prior to the happening of such
dividend or distribution.

SECTION 6.    Registration Rights.

(a)    Incidental Registration. If at any time after the issuance of this
Warrant, the Company proposes to register any of its Common Stock under the
Securities Act by registration on any form other than Form S-4 or S-8, whether
or not for sale for its own account, it shall each such time give prompt written
notice to the Warrant Holder of its intention to do so and of the Warrant
Holder’s registration rights under this Section 6(a). Upon the written request
of the Warrant Holder, made as promptly as practicable and in any event within
ten (10) Business Days after the receipt of notice from the Company (which
request shall specify the Registrable Securities intended to be disposed of by
the Warrant Holder and the intended method of disposition), the Company shall
use its reasonable best efforts to effect, in such registration statement (the
"Registration Statement"), the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Warrant Holder to the extent required to permit the disposition of such
Registrable Securities in accordance with the intended methods thereof described
as aforesaid; provided, however, immediately upon notification to the Company
from the managing underwriter of the price at which such securities are to be
sold, if such price is below the price which the Warrant Holder shall have
indicated to be acceptable to him, her or it, the Company shall so advise the
Warrant Holder of such price, and the Warrant Holder shall then have the right
to withdraw his, her or its request to have his, her or its Registrable
Securities included in such Registration Statement; provided, further, that if,
at any time after giving written notice of his, her or its intention to register
any securities and prior to the effective date of the Registration Statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, (a) give written notice of such determination not to
register, and thereby be relieved of its obligation to register any Registrable
Securities in connection with such registration (but not from any obligation of
the Company to pay the registration expenses in connection therewith), and (b)
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities.

       

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If the managing underwriter of any underwritten offering under this Section 6(a)
shall inform the Company by letter that, in its opinion, the number or type of
Registrable Securities requested to be included in such registration would
adversely affect such offering, and the Company has so advised the Warrant
Holder in writing, then the Company will include in such registration, to the
extent of the number and type that the Company is so advised can be sold in (or
during the time of) such offering, first, all securities proposed by the Company
to be sold for its own account, and second, such Registrable Securities
requested to be included in such registration pursuant to this Warrant and all
other securities proposed to be registered, pro rata based on the number of
securities proposed to be registered.

(b)    Obligations of the Company. In connection with the registration of the
Registrable Securities as contemplated by Section 6(a), the Company shall:

(i)    prepare the Registration Statement and file it with the SEC, and
thereafter use its reasonable best efforts to cause the Registration Statement
to become effective, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;

(ii)    prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the prospectus
used in connection with the Registration Statement as may be necessary to keep
the Registration Statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in the Registration
Statement;

(iii)    furnish to the Warrant Holder such number of copies of a prospectus,
including a preliminary prospectus and all amendments and supplements thereto,
and such other documents, as the Warrant Holder may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by the Warrant
Holder;

              (iv)              use reasonable efforts to (A) register and
qualify the Registrable Securities covered by the Registration Statement under
such securities or Blue Sky laws of the jurisdictions reasonably requested by
the Warrant Holder, (B) prepare and file in those jurisdictions all required
amendments (including post-effective amendments) and supplements, (C) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times the Registration Statement is in effect,
and (D) take all other actions necessary or advisable to enable the disposition
of such securities in all such jurisdictions; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 6(b);

(v)    (A) in the case of an underwritten offering, enter into and perform its
obligations under an underwriting agreement with the managing underwriter of
such offering, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, and (B) in the case of
any non-underwritten offering, provide to broker-dealers participating in any
distribution of Registrable Securities reasonable indemnification substantially
similar to that provided by Section 6(e) hereof.

(vi)    promptly notify the Warrant Holder of the happening of any event of
which the Company has knowledge, as a result of which the prospectus included in
the 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, in light of the circumstances then
existing, not misleading, and use its best efforts to prepare promptly a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to the Warrant Holder as he, she or it may reasonably request;

(vii)    promptly notify the Warrant Holder (or, in the event of an underwritten
offering, the managing underwriters) of the issuance by the SEC of any stop
order or other suspension of effectiveness of the Registration Statement, and
make every reasonable effort to obtain the withdrawal of any order suspending
the effectiveness of the Registration Statement at the earliest possible time;

(viii)    permit counsel to the Warrant Holder to review the Registration
Statement and all amendments and supplements thereto for a reasonable period of
time prior to their filing with the SEC, and shall not file any document in a
form to which such counsel reasonably objects;

               (ix)               make generally available to its security
holders as soon as practical, but not later than ninety (90) days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities Act) covering a twelve
month period beginning not later than the first day of the Company’s fiscal
quarter next following the effective date of the Registration Statement;

       

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(x)    at the request of the Warrant Holder, furnish on the date that
Registrable Securities are delivered to an underwriter for sale in connection
with the Registration Statement (A) a letter, dated such date, from the
Company’s independent certified public accountants, in form and substance as is
customarily given by independent certified public accountants to underwriters in
an underwritten public offering, addressed to the underwriters, and (B) an
opinion, dated such date, from counsel representing the Company for purposes of
such Registration Statement, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters;

(xi)    make available for inspection by the Warrant Holder, any underwriter
participating in any disposition pursuant to the Registration Statement, and any
attorney, accountant, or other agent retained by the Warrant Holder or
underwriter (collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of the Company, as shall
be reasonably necessary to enable each Inspector to exercise its due diligence
responsibility in connection with the preparation of the Registration Statement,
and cause the Company’s officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with the
Registration Statement;

(xii)    use its best efforts either to (A) cause all the Registrable
Securities, except for this Warrant, covered by the Registration Statement to be
listed on a national securities exchange and on each additional national
securities exchange on which similar securities issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or (B) secure designation of all the
Registrable Securities, except this Warrant, covered by the Registration
Statement as a NASDAQ "National Market Security" or "SmallCap Security", or on
the "Bulletin Board" as may then be the case, and the quotation of the
Registrable Securities on the NASDAQ National Market or NASDAQ SmallCap Market
or on the Bulletin Board;

(xiii)    provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;

(xiv)    cooperate with the Warrant Holder and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be sold pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, and
registered in such names as the managing underwriter or underwriters, if any, or
the Warrant Holder may reasonably request; and

(xv)    take all other reasonable actions necessary to expedite and facilitate
disposition of Registrable Securities by the Warrant Holder pursuant to the
Registration Statement.

(c)    Obligations of the Warrant Holder.

(i)    It shall be a condition precedent to the obligations of the Company to
take any action pursuant to this Warrant with respect to the Warrant Holder that
the Warrant Holder shall furnish to the Company such information regarding the
Warrant Holder, the Registrable Securities held by the Warrant Holder and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents and agreements in connection with such registration as
the Company may reasonably request. At least fifteen (15) Business Days prior to
the first anticipated filing date of the Registration Statement, the Company
shall notify the Warrant Holder of the information the Company requires from he,
she or it (the "Requested Information") if he, she or it elects to have any of
its Registrable Securities included in the Registration Statement. If within
three (3) Business Days of the filing date the Company has not received the
Requested Information from the Warrant Holder, then the Company may file the
Registration Statement without including Registrable Securities of the Warrant
Holder.

(ii)    The Warrant Holder, by its, his or her acceptance of the Registrable
Securities, agrees to cooperate with the Company in connection with the
preparation and filing of any Registration Statement hereunder.

(iii)    In the event of an underwritten offering, the Warrant Holder agrees to
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including without limitation customary indemnification and
contribution obligations, with the managing underwriter of such offering and to
take such other actions as are reasonably required in order to expedite or
facilitate the disposition of the Registrable Securities, unless the Warrant
Holder has decided not to participate.

       

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(iv)    The Warrant Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 6(b)(vi),
the Warrant Holder will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until its, his or her receipt of the copies of the supplemented or
amended prospectus contemplated by Section 6(b)(vi) and, if so directed by the
Company, the Warrant Holder shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of such
destruction) all copies, other than permanent file copies then in its, his or
her possession, of the prospectus covering such Registrable Securities current
at the time of receipt of such notice.

(d)    Expenses of Registration. In connection with any and all registrations
pursuant to Section 6, all expenses other than underwriting discounts and
commissions incurred in connection with registration, filings or qualifications,
including, without limitation, all registration, listing, filing and
qualification fees, printing and accounting fees and costs, the fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements for one firm of counsel for the Warrant Holder shall be borne by
the Company.

(e)    Indemnification. In the event any Registrable Securities are included in
a Registration Statement under this Warrant:

(i)    To the extent permitted by law, the Company will indemnify and hold
harmless the Warrant Holder (in such capacity) and, if applicable, its members,
managers, directors, officers and/or agents, any underwriter (as defined in the
Securities Act) for the Warrant Holder, and each person, if any, who controls
any such underwriter within the meaning of Section 15 of the Securities Act
(collectively, an "Indemnified Party"), against any losses, claims, damages,
expenses, liabilities (joint or several) (collectively, "Claims") to which any
of them may become subject under the Securities Act, the Exchange Act or
otherwise, insofar as such Claims (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"); (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(B) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus if used prior to the effective date of
such Registration Statement, or contained in the final prospectus (as amended or
supplemented if the Company files any amendment thereof or supplement thereto
with the SEC), or the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Subject to the restrictions set forth in Section 6(e)(iv) with
respect to the number of legal counsel, the Company shall promptly reimburse the
Warrant Holder, and each such other person entitled to indemnification under
this Section 6(e)(i), as such expenses are incurred and are due and payable, for
any legal fees or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim, whether or not such Claim,
investigation or proceeding is brought or initiated by the Company or a third
party. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(e)(i) shall not (A) apply
to a Claim arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the Company by
the Warrant Holder expressly for use in connection with the preparation of the
Registration Statement, any prospectus or any such amendment thereof or
supplement thereto or any failure of the Warrant Holder to deliver a prospectus
as required by the Securities Act; or (B) apply to amounts paid in settlement of
any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Warrant Holder and shall survive the transfer of the
Registrable Securities by the Warrant Holder as provided herein.

(ii)    In connection with any Registration Statement in which the Warrant
Holder is participating in such capacity, the Warrant Holder agrees to indemnify
and hold harmless, to the same extent and in the same manner set forth in
Section 6(e)(i), the Company, each of its directors, each of its officers who
sign the Registration Statement, each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter (collectively, also an "Indemnified Party"), against any Claim to
which any of them may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such Claim arises out of or is 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 to the Company by the Warrant Holder expressly for use in connection
with such Registration Statement; and the Warrant Holder shall promptly
reimburse an Indemnified Party, as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by the
Indemnified Party in connection with investigating or defending any such Claim,
whether or not such claim, investigation or proceeding is brought or initiated
by the Indemnified Party or a third party; provided, however, that the indemnity
agreement contained in this Section 6(e)(ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Warrant Holder, which consent shall not be unreasonably withheld;
provided, further, that the Warrant Holder shall be liable under this Section
6(e)(ii) for only that amount of a Claim as does not exceed the net proceeds to
it as a result of the sale of Registrable Securities pursuant to such
Registration Statement.

(iii)    The Company shall be entitled to receive indemnification from
underwriters, selling brokers, dealer managers, and similar securities industry
professionals participating in the distribution to the same extent as provided
above, with respect to information about such persons so furnished in writing by
such persons expressly for inclusion in the Registration Statement.

(iv)    Promptly after receipt by an Indemnified Party under this Section 6(e)
of notice of the commencement of any action (including any governmental action),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6(e), deliver to an
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 given notice, to assume control of the defense thereof with counsel
satisfactory to the Indemnified Party; provided, however, that an Indemnified
Party shall have the right to retain its, his or her own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel for such party, representation of such party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
differing interests between such party and any other party represented by such
counsel in such proceeding. The Company shall pay for only one legal counsel for
the Warrant Holder and any Indemnified Party related thereto; such legal counsel
shall be selected by the Warrant Holder or such other Indemnified Party subject
to the Company’s approval which shall not be unreasonably withheld. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action shall not relieve such indemnifying party of
any liability to another under this Section 6(e), except to the extent that such
failure to notify results in the forfeiture by the indemnifying party of
substantive rights or defenses. The indemnification required by this Section
6(e) shall be made by periodic payments of the amount thereof during the course
of the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.

       

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(f)    Contribution. To the extent any indemnification by an indemnifying party
is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which, he, she or it would
otherwise be liable under Section 6(c) to the fullest extent permitted by law;
provided, however, that (i) no contribution shall be made under circumstances
where the maker would not have been liable for indemnification under Section
6(c), (ii) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning used in the Securities Act) shall be
entitled to contribution from any seller of Registrable Securities who was not
guilty of such fraudulent misrepresentation, and (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of such Registrable Securities.

(g)    Reports Under Exchange Act. With a view to making available to the
Warrant Holder the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
security holders to sell securities of the Company to the public without
registration ("Rule 144"), the Company shall at all times:

(i)    make and keep public information available, as those terms are understood
and defined in Rule 144;

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

(iii)    furnish to the Warrant Holder while a holder hereof, promptly upon
request, (A) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act, (B)
a copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed with the SEC by the Company, and (C) such
other information as may be reasonably requested to permit the Warrant Holder to
sell such securities without registration.

SECTION 7.   

Other Provisions Relating to Rights of the Warrant Holder.

(a)    Warrant Holder not a Shareholder. The Warrant Holder, as such, shall not
be entitled to vote or receive dividends or be deemed holders of Common Stock
for any purpose whatsoever, nor shall anything contained in this Warrant be
construed to confer upon the Warrant Holder, as such, any of the rights of a
stockholder of the Company, including, but not limited to, the right to vote for
the election of directors or on any other matter, give or withhold consent to
any action by the Company (whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings or other action affecting stockholders (except for
notices provided for in this Warrant), receive dividends or subscription rights,
or otherwise until this Warrant shall have been exercised to purchase Underlying
Shares, at which time the person or persons in whose name or names the
certificate or certificates for the shares of Common Stock are registered shall
be deemed the holder or holders of record of such shares of Common Stock for all
purposes.

(b)    Fractional Shares. Anything contained herein to the contrary
notwithstanding, the Company shall not be required to issue any fractional
shares of Common Stock in connection with the exercise of this Warrant. In any
case where the Warrant Holder would, except for the provisions of this
Section 7(b), be entitled under the terms of this Warrant to receive a fraction
of a share of Common Stock upon the exercise of this Warrant, the Company shall,
upon the exercise of this Warrant and receipt of the Underlying Share Purchase
Price, issue the largest number of whole shares of Common Stock purchasable upon
exercise of this Warrant. The Warrant Holder expressly waives his, her or its
right to receive a certificate of any fraction of a share of Common Stock upon
the exercise hereof. However, with respect to any fraction of a share of Common
Stock called for upon any exercise hereof, the Company shall pay to the Warrant
Holder an amount in cash equal to such fraction multiplied by the Market Price
per share of Common Stock.

(c)    Absolute Owner. Prior to due presentment for registration of transfer of
the Warrant Certificates, the Company may deem and treat the Warrant Holder as
the absolute owner of this Warrant for the purpose of any exercise thereof and
for all other purposes and the Company shall not be affected by any notice to
the contrary.

       

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SECTION 8.

Division, Split-Up, Combination, Exchange and Transfer of Warrants

(a)    Request. This Warrant may be divided, split up, combined or exchanged for
other Warrants of like tenor to purchase a like aggregate number of Underlying
Shares. If the Warrant Holder desires to divide, split up, combine or exchange
this Warrant, he, she or it shall make such request in writing delivered to the
Company at its corporate offices in Irvine, California, or as otherwise directed
by the Company in writing, and shall surrender the Warrant to be so divided,
split up, combined or exchanged at said office; provided, however, that if this
Warrant is divided or split up and any resulting warrant is to be issued in the
name of a person other than the Warrant Holder, the Warrant Holder must comply
with the provisions of Section 8(b) hereof. Upon any such surrender for a
division, split-up, combination or exchange, the Company shall execute and
deliver to the Warrant Holder the new Warrants as so requested. The Company may
require the Warrant Holder to pay a sum sufficient to cover any tax,
governmental or other charge that may be imposed in connection with any
division, split-up, combination or exchange of this Warrant.

(b)    Assignment; Replacement of Warrant Certificates. This Warrant may be
sold, transferred, assigned or hypothecated by the Warrant Holder at any time,
in whole or in part, subject to compliance with federal and state securities
laws; provided, however, the Warrant Holder shall provide an opinion of counsel,
which opinion shall be reasonably satisfactory to counsel to the Company, that
the transfer, assignment or hypothecation qualifies for an exemption from
registration under the Securities Act. Any division or assignment permitted of
this Warrant shall be made by surrender by the Warrant Holder of this Warrant to
the Company at its principal office with the Assignment Form attached as
Exhibit A hereto duly executed, together with funds sufficient to pay any
transfer tax. In such event, the Company shall, without charge, execute and
deliver one or more new Warrants in the name of the assignees named in such
instrument of assignment and the surrendered Warrant shall promptly be canceled;
provided however, if less than all of the Underlying Shares are assigned, the
remainder of this Warrant will be evidenced by a new Warrant. Upon receipt by
the Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen or destroyed
Warrant shall thereupon become void.

SECTION 9.

Other Matters.

(a)    Notices. Except as otherwise provided herein, notice or demand pursuant
to this Agreement to be given or made by the Warrant Holder to or on the Company
or by the Company to or on the Warrant Holder, shall be sufficiently given or
made if delivered personally or by overnight courier, or sent by registered or
certified mail, postage prepaid, return receipt requested, or by facsimile
transmission, electronically confirmed and addressed, until another address is
designated in writing by either the Company or the Warrant Holders, as the case
may be, as follows:
                  If to the Company:

                 Entrada Networks, Inc.
                 5755 Oberlin Dr, Suite 204
                 San Diego, California 92121
                 Attention: Kanwar J.S. Chadha, Ph.D.
                 President and CEO
                 Telephone No.: (858) 597-1102
                 Facsimile No.: (858) 597-1107
 
If to the Warrant Holder:
                  
 
 
 
 
 
 

Except as otherwise provided herein, notices delivered in accordance with the
foregoing provisions of this Section 9(a) shall be effective (i) when delivered,
if delivered personally or by facsimile transmission electronically confirmed,
(ii) one Business Day after being delivered (properly addressed and all fees
paid) for overnight delivery to a courier (such as Federal Express) which
regularly provides such service and regularly obtains executed receipts
evidencing delivery, or (iii) five (5) days after being sent by registered or
certified mail, postage prepaid, return receipt requested.

       

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(b)    Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the laws of the State of Delaware, without giving
effect to the conflicts of laws principles thereof.

(c)    Exclusive Benefit. Nothing in this Warrant expressed or nothing that may
be implied from any of the provisions hereof is intended, or shall be construed,
to confer upon, or give to, any person or corporation other than the Company and
the Warrant Holder any right, remedy or claim hereunder, and all covenants,
conditions, stipulations, promises and agreements contained in this Warrant
shall be for the sole and exclusive benefit of such persons and their
successors, survivors and permitted assigns hereunder. This Warrant is for the
benefit of and is enforceable by any subsequent Warrant Holder.

(d)        Headings. The article headings herein are for convenience only and
are not part of this Warrant and shall not affect the interpretation hereof.

IN WITNESS WHEREOF, Entrada Networks, Inc. has caused this Warrant to be duly
executed and delivered as of the date first above written.

ENTRADA NETWORKS, INC.

By:                                                       
Name:
Title:

       

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EXHIBIT A

ASSIGNMENT FORM

For value received, the undersigned hereby sells, assigns and transfers unto
____________, whose address is _________________ and whose social security or
other identifying number is _______________, this Warrant to purchase
__________________ Underlying Shares, and hereby irrevocably constitutes and
appoints the Secretary of Entrada Networks, Inc. (the "Company") as his, her or
its attorney-in-fact to transfer the same on the books of the Company with full
power of substitution and re-substitution. If said number of Underlying Shares
is less than all of the Underlying Shares purchasable under this Warrant so
assigned, the undersigned requests that a new Warrant representing the remaining
Underlying Shares be registered in the name of ______________________________,
whose address is __________________________________, whose social security or
other identifying number is __________________________________, and that such
new Warrant be delivered to _____________________, whose address is
_______________________________________.
 
 
Date:           
(Signature)
   
(Print Name)

     

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EXHIBIT B

SUBSCRIPTION FORM

The undersigned hereby irrevocably elects to exercise this Warrant, to purchase
__________ Underlying Shares and tenders payment herewith in the amount of
$_____. The undersigned requests that a certificate for such Underlying Shares
be registered in the name of __________, whose address is __________ and whose
social security or other identifying number is __________, and that such
Underlying Shares be delivered to __________, whose address is __________. If
said number of Underlying Shares is less than all of the Underlying Shares
purchasable under this Warrant, the undersigned requests that a new Warrant
representing the remaining Underlying Shares be registered in the name of
__________, whose address is __________ and whose social security or other
identifying number is __________, and that such new Warrant be delivered to
__________, whose address is __________.

                 Date:           
                   (Signature)

                   ________________________
                   (Print Name)

 

 
 

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