Exhibit 10.3
 
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
neonode inc.
 
investor warrant
 
Investor Warrant No. __
 
Date of Issuance: May __, 2014 (“Issuance Date”)
 
Neonode Inc., a Delaware corporation (the “Company”), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, 1,964,636, the registered holder hereof or its permitted assigns
(the “Holder”), is entitled, subject to the terms set forth below, to purchase
from the Company, at the Exercise Price (as defined below) then in effect, upon
exercise of this Investor Warrant to purchase Common Stock (including any
Investor Warrants to purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Investor Warrant”), at any time or times on or after
the date hereof (the “Initial Exercisability Date”), but not after 11:59 p.m.,
New York time, on the Termination Date (subject to adjustment as provided
herein) fully paid and non-assessable shares of Common Stock (as defined
below) (the “Investor Warrant Shares”).  Except as otherwise defined herein,
capitalized terms in this Investor Warrant shall have the meanings set forth in
Section 16.  This Investor Warrant is one of the Investor Warrants to purchase
Common Stock (the “Investor Warrants”) issued pursuant to the Securities
Purchase Agreement, dated as of May 9, 2014, by and among the Company and the
purchasers signatory thereto (the “Purchase Agreement”).
 
 
 

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1.           EXERCISE OF WARRANT.
 
(a)           Mechanics of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f) and
(g)), this Investor Warrant may be exercised by the Holder on any day on or
after the Initial Exercisability Date, in whole or in part, by delivery (whether
via facsimile or otherwise) of a written notice, in the form attached hereto as
Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this
Investor Warrant.  Within one (1) Trading Day following an exercise of this
Investor Warrant as aforesaid, the Holder shall deliver payment to the Company
of an amount equal to the Exercise Price in effect on the date of such exercise
multiplied by the number of Investor Warrant Shares as to which this Investor
Warrant was so exercised (the “Aggregate Exercise Price”) in cash or via wire
transfer of immediately available funds if the Holder did not notify the Company
in such Exercise Notice that such exercise was made pursuant to a Cashless
Exercise (as defined in Section 1(d)).  The Holder shall not be required to
deliver the original of this Investor Warrant in order to effect an exercise
hereunder.  Execution and delivery of an Exercise Notice with respect to less
than all of the Investor Warrant Shares shall have the same effect as
cancellation of the original of this Investor Warrant and issuance of a new
Investor Warrant evidencing the right to purchase the remaining number of
Investor Warrant Shares.  Execution and delivery of an Exercise Notice for all
of the then-remaining Investor Warrant Shares shall have the same effect as
cancellation of the original of this Investor Warrant after delivery of the
Investor Warrant Shares in accordance with the terms hereof.  On or before the
first (1st) Trading Day following the date on which the Company has received an
Exercise Notice, the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of such Exercise Notice, in the form attached hereto as
Exhibit B, to the Holder and the Company’s transfer agent (the “Transfer
Agent”). On or before the third (3rd) Trading Day following the date on which
the Company has received such Exercise Notice, the Company shall, (X) provided
that the Investor Warrant Shares are subject to an effective registration
statement (or this Investor Warrant is being exercised pursuant to the Cashless
Exercise provision and an exemption from registration is then available)
Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program, upon the request of the Holder, credit
such aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with
DTC through its Deposit/Withdrawal at Custodian system, or (Y) if a registration
statement is not then available for the resale of the Investor Warrants, the
Holder is not utilizing Cashless Exercise and the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the Holder or, at the Holder’s instruction pursuant to the Exercise
Notice, the Holder’s agent or designee, in each case, sent by reputable
overnight courier to the address as specified in the applicable Exercise Notice,
provide evidence that the Investor Warrant Shares have been registered in the
Company’s share register in the name of the Holder or its designee (as indicated
in the applicable Exercise Notice), for the number of shares of Common Stock to
which the Holder is entitled pursuant to such exercise.  Upon delivery of an
Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Investor Warrant Shares with respect to which
this Investor Warrant has been exercised, irrespective of the date such Investor
Warrant Shares are credited to the Holder’s DTC account or the date of delivery
of the evidence of such Investor Warrant Shares (as the case may be).  If this
Investor Warrant is submitted in connection with any exercise pursuant to this
Section 1(a) and the number of Investor Warrant Shares represented by this
Investor Warrant submitted for exercise is greater than the number of Investor
Warrant Shares being acquired upon an exercise, then, at the request of the
Holder, the Company shall as soon as practicable and in no event later than
three (3) Business Days after any exercise and at its own expense, issue and
deliver to the Holder (or its designee) a new Investor Warrant (in accordance
with Section 7(d)) representing the right to purchase the number of Investor
Warrant Shares purchasable immediately prior to such exercise under this
Investor Warrant, less the number of Investor Warrant Shares with respect to
which this Investor Warrant is exercised.  No fractional shares of Common Stock
are to be issued upon the exercise of this Investor Warrant, but rather the
number of shares of Common Stock to be issued shall be rounded up to the nearest
whole number.  The Company shall pay any and all fees which may be payable with
respect to the issuance and delivery of Investor Warrant Shares upon exercise of
this Investor Warrant.  Notwithstanding the foregoing, except in the case where
an exercise of this Investor Warrant is validly made pursuant to a Cashless
Exercise, the Company’s failure to deliver Investor Warrant Shares to the Holder
on or prior to the second (2nd) Trading Day after the Company’s receipt of the
Aggregate Exercise Price shall not be deemed to be a breach of this Investor
Warrant.
 
 
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(b)           Exercise Price.  For purposes of this Investor Warrant, “Exercise
Price” means $5.09, subject to adjustment as provided herein.
 
(c)           Company’s Failure to Timely Deliver Securities.  If the Company
shall fail, for any reason or for no reason, to issue to the Holder within the
later of (i) three (3) Trading Days after receipt of the applicable Exercise
Notice and (ii) two (2) Trading Days after the Company’s receipt of the
Aggregate Exercise Price (or valid notice of Cashless Exercise) (such later
date, the “Share Delivery Deadline”), a certificate for the number of shares of
Common Stock to which the Holder is entitled and register such shares of Common
Stock on the Company’s share register or to credit the Holder’s balance account
with DTC for such number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of this Investor Warrant (as the case may
be) (a “Delivery Failure”), then, in addition to all other remedies available to
the Holder, the Company shall pay in cash to the Holder on each day after such
Share Delivery Deadline that the issuance of such shares of Common Stock is not
timely effected an amount equal to 1% of the product of (A) the aggregate number
of shares of Common Stock not issued to the Holder on a timely basis and to
which the Holder is entitled and (B) the Closing Sale Price of the Common Stock
on the Trading Day immediately preceding the last possible date on which the
Company could have issued such shares of Common Stock to the Holder without
violating Section 1(a).  In addition to the foregoing, if on or prior to the
Share Delivery Deadline, the Company shall fail to register such shares of
Common Stock on the Company’s share register or credit the Holder’s balance
account with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise hereunder (as the case may be), and if on or
after such Share Delivery Deadline the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of all or any portion of the number of shares of Common
Stock, or a sale of a number of shares of Common Stock equal to all or any
portion of the number of shares of Common Stock, issuable upon such exercise
that the Holder so anticipated receiving from the Company, then, in addition to
all other remedies available to the Holder, the Company shall, within three (3)
Business Days after the Holder’s request and in the Holder’s discretion, either
(i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any)
for the shares of Common Stock so purchased (including, without limitation, by
any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”),
at which point the Company’s obligation to so issue and deliver such certificate
or credit the Holder’s balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) (and to issue such shares of Common Stock) shall
terminate, or (ii) promptly honor its obligation to so issue and deliver to the
Holder a certificate or certificates representing such shares of Common Stock or
credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as
the case may be) and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock multiplied by (B) the lowest Closing Sale Price of the Common Stock on any
Trading Day during the period commencing on the date of the applicable Exercise
Notice and ending on the date of such issuance and payment under this clause
(ii).
 
 
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(d)           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary (other than Sections 1(f) and 1(g) below), if at any time after the
six-month anniversary of the Closing Date, there is no effective registration
statement registering, or no current prospectus available for, the resale of the
Investor Warrant Shares by the Holder, the Holder may, in its sole discretion,
exercise this Investor Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):
 
Net Number = (A x B) - (A x C)
                                                                                     
D
 
For purposes of the foregoing formula:

  A = 
 the total number of shares with respect to which this Investor Warrant is then
being exercised.

 
B = 
 the quotient of (x) the sum of the VWAP of the Common Stock of each of the ten
(10) Trading Days ending at the close of business on the Principal Market
immediately prior to the time of exercise as set forth in the applicable
Exercise Notice, divided by (y) ten (10).

 
C = 
 the Exercise Price then in effect for the applicable Investor Warrant Shares at
the time of such exercise.

 
D = 
 the VWAP of the Common Stock at the close of business on the Principal Market
on the date of the delivery of the applicable Exercise Notice.

 
(e)           Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Investor Warrant
Shares to be issued pursuant to the terms hereof, the Company shall promptly
issue to the Holder the number of Investor Warrant Shares that are not disputed
and resolve such dispute in accordance with Section 13.
 
 
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(f)           Limitations on Exercises.  Notwithstanding anything to the
contrary contained in this Investor Warrant, this Investor Warrant shall not be
exercisable by the Holder hereof to the extent (but only to the extent) that
after giving effect to such exercise the Holder (together with any of its
affiliates) would beneficially own in excess of  4.99% (the “Maximum
Percentage”) of the Common Stock.  To the extent the above limitation applies,
the determination of whether this Investor Warrant shall be exercisable
(vis-à-vis other convertible, exercisable or exchangeable securities owned by
the Holder or any of its affiliates) and of which such securities shall be
convertible, exercisable or exchangeable (as the case may be, as among all such
securities owned by the Holder) shall, subject to such Maximum Percentage
limitation, be determined on the basis of the first submission to the Company
for conversion, exercise or exchange (as the case may be).  No prior inability
to exercise this Investor Warrant pursuant to this paragraph shall have any
effect on the applicability of the provisions of this paragraph with respect to
any subsequent determination of exercisability.  For the purposes of this
paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage
ownership) shall be determined in accordance with Section 13(d) of the 1934 Act
(as defined in the Purchase Agreement) and the rules and regulations promulgated
thereunder.  The provisions of this paragraph shall be implemented in a manner
otherwise than in strict conformity with the terms of this paragraph to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Maximum Percentage limitation.  The limitations contained in
this paragraph shall apply to a successor Holder of this Investor Warrant.  The
holders of Common Stock shall be third party beneficiaries of this paragraph and
the Company may not waive this paragraph without the consent of holders of a
majority of its Common Stock.  For any reason at any time, upon the written or
oral request of the Holder, the Company shall within one (1) Business Day
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding, including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including, without
limitation, pursuant to this Investor Warrant or securities issued pursuant to
the Purchase Agreement.  At any time the Holder may increase or decrease the
Maximum Percentage to any other percentage not in excess of 9.99% as specified
in a written notice by the Holder to the Company (subject to the Company’s
consent to any such increase, not to be unreasonably withheld); provided that
(i) any such increase will not be effective until the 61st day after such notice
is delivered to the Company, and (ii) any such increase or decrease will apply
only to the Holder sending such notice and not to any other holder of the
Investor Warrants.
 
 
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(g)           Insufficient Authorized Shares.  The Company shall at all times
keep reserved for issuance under this Investor Warrant a number of shares of
Common Stock at least equal to 125% of the maximum number of shares of Common
Stock as shall be necessary to satisfy the Company’s obligation to issue shares
of Common Stock hereunder (without regard to any limitation otherwise contained
herein with respect to the number of shares of Common Stock that may be
acquirable upon exercise of this Investor Warrant).  If, notwithstanding the
foregoing, and not in limitation thereof, at any time while any of the Investor
Warrants remain outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its obligation to
reserve for issuance upon exercise of the Investor Warrants at least a number of
shares of Common Stock (the “Required Reserve Amount”) equal to the number of
shares of Common Stock as shall from time to time be necessary to effect the
exercise of all of the Investor Warrants then outstanding (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for all the Investor
Warrants then outstanding.  Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than sixty (60) days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock.  In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its reasonable
best efforts to solicit its stockholders’ approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.  In the event
that the Company is prohibited from issuing shares of Common Stock upon an
exercise of this Investor Warrant due to the failure by the Company to have
sufficient shares of Common Stock available out of the authorized but unissued
shares of Common Stock (such unavailable number of shares of Common Stock, the
“Authorization Failure Shares”), in lieu of delivering such Authorization
Failure Shares to the Holder, the Company shall pay cash in exchange for the
cancellation of such portion of this Investor Warrant exercisable into such
Authorized Failure Shares at a price equal to the sum of (i) the product of (x)
such number of Authorization Failure Shares and (y) the greatest Closing Sale
Price of the Common Stock on any Trading Day during the period commencing on the
date the Holder delivers the applicable Exercise Notice with respect to such
Authorization Failure Shares to the Company and ending on the date of such
issuance and payment under this Section 1(g), and (ii) to the extent the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of Authorization Failure Shares,
any brokerage commissions and other out-of-pocket expenses, if any, of the
Holder incurred in connection therewith.
 
2.           ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF INVESTOR WARRANT
SHARES.  The Exercise Price and number of Investor Warrant Shares issuable upon
exercise of this Investor Warrant are subject to adjustment from time to time as
set forth in this Section 2.
 
(a)           Stock Dividends and Splits.  Without limiting any provision of
Section 4, if the Company, at any time on or after the date of the Purchase
Agreement, (i) pays a stock dividend on one or more classes of its then
outstanding shares of Common Stock or otherwise makes a distribution on any
class of capital stock that is payable in shares of Common Stock, (ii)
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its then outstanding shares of Common Stock into a larger
number of shares or (iii) combines (by combination, reverse stock split or
otherwise) one or more classes of its then outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event.  Any adjustment made pursuant to clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.  If any event requiring an adjustment under this paragraph occurs
during the period that an Exercise Price is calculated hereunder, then the
calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.
 
 
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(b)           Number of Investor Warrant Shares.  Simultaneously with any
adjustment to the Exercise Price pursuant to paragraph (a) of this Section 2,
the number of Investor Warrant Shares that may be purchased upon exercise of
this Investor Warrant shall be increased or decreased proportionately, so that
after such adjustment the aggregate Exercise Price payable hereunder for the
adjusted number of Investor Warrant Shares shall be the same as the aggregate
Exercise Price in effect immediately prior to such adjustment (without regard to
any limitations on exercise contained herein).
 
(c)           Stock Combination Event Adjustment. If at any time and from time
to time on or after the Issuance Date the Company combines (by combination,
reverse stock split or otherwise) one or more classes of its then outstanding
shares of Common Stock into a smaller number of shares (each, a “Stock
Combination Event”) and the product of (i) the quotient determined by dividing
(x) the Exercise Price in effect immediately prior to the Stock Combination
Event by (y) the quotient determined by dividing (A) the sum of the VWAP of the
Common Stock on each day of the fifteen (15) Trading Day period immediately
prior to the Stock Combination Event, divided by (B) fifteen (15); and (ii) the
quotient determined by dividing (x) the sum of the VWAP of the Common Stock on
each day of the fifteen (15) Trading Day period immediately following the date
of such Stock Combination Event, divided by (y) fifteen (15) (each, an “Event
Market Price”) is less than the Exercise Price then in effect (after giving
effect to the adjustment in clause (b) above), then on the sixteenth (16th)
Trading Day immediately following such Stock Combination Event, the Exercise
Price then in effect on such sixteenth (16th) Trading Day (after giving effect
to the adjustment in clause (b) above) shall be reduced (but in no event
increased) to the Event Market Price.  For the avoidance of doubt, if the
adjustment in the immediately preceding sentence would otherwise result in an
increase in the Exercise Price hereunder, no adjustment shall be made.
 
(d)           Calculations.  All calculations under this Section 2 shall be made
by rounding to the nearest cent or the nearest 1/100th of a share, as
applicable; provided that any individual adjustments  below one cent or 1/100th
of a share that arise from one or more related transactions shall be aggregated
for purposes of determining the appropriate adjustment hereunder.  The number of
shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
 
3.           RIGHTS UPON DISTRIBUTION OF ASSETS.  In addition to any adjustments
pursuant to Section 2 above, if the Company shall declare or make any dividend
or other distribution of its assets (or rights to acquire its assets) to holders
of shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
“Distribution”), at any time after the issuance of this Investor Warrant, then,
in each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have participated therein
if the Holder had held the number of shares of Common Stock acquirable upon
complete exercise of this Investor Warrant (without regard to any limitations on
exercise hereof, including without limitation, the Maximum Percentage)
immediately before the date on which a record is taken for such Distribution,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the Holder’s right to
participate in any such Distributions would result in the Holder exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (or the beneficial ownership of any such shares of
Common Stock as a result of such Distribution to such extent) and such
Distribution to such extent shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage).
 
 
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4.           PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.
 
(a)           Purchase Rights.  In addition to any adjustments pursuant to
Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Investor Warrant
(without regard to any limitations on exercise hereof, including without
limitation, the Maximum Percentage) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of shares of
Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate
in any such Purchase Right would result in the Holder exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common
Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Maximum
Percentage).
 
 
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(b)           Fundamental Transactions.  The Company shall not enter into or be
party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of the Company under this Investor Warrant and
the other Transaction Documents (as defined in the Purchase Agreement) in
accordance with the provisions of this Section 4(b), including agreements to
deliver to the Holder in exchange for this Investor Warrant a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Investor Warrant, including, without limitation, which is
exercisable for a corresponding number of shares of capital stock equivalent to
the shares of Common Stock acquirable and receivable upon exercise of this
Investor Warrant (without regard to any limitations on the exercise of this
Investor Warrant) prior to such Fundamental Transaction, and with an exercise
price which applies the exercise price hereunder to such shares of capital stock
(but taking into account the relative value of the shares of Common Stock
pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Investor Warrant immediately prior to the consummation of such Fundamental
Transaction.  Upon the consummation of each Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and
after the date of the applicable Fundamental Transaction, the provisions of this
Investor Warrant and the other Transaction Documents referring to the “Company”
shall refer instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the Company
under this Investor Warrant and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein.  Upon
consummation of each Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon exercise of this
Investor Warrant at any time after the consummation of the applicable
Fundamental Transaction, in lieu of the shares of Common Stock (or other
securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable
thereafter)) issuable upon the exercise of this Investor Warrant prior to the
applicable Fundamental Transaction, such shares of publicly traded common stock
(or its equivalent) of the Successor Entity (including its Parent Entity) which
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Investor Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Investor Warrant), as adjusted in
accordance with the provisions of this Investor Warrant.  Notwithstanding the
foregoing, and without limiting Section 1(f) hereof, the Holder may elect, at
its sole option, by delivery of written notice to the Company to waive this
Section 4(b) to permit the Fundamental Transaction without the assumption of
this Investor Warrant.  In addition to and not in substitution for any other
rights hereunder, prior to the consummation of each Fundamental Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon an
exercise of this Investor Warrant at any time after the consummation of the
applicable Fundamental Transaction but prior to the Expiration Date, in lieu of
the shares of the Common Stock (or other securities, cash, assets or other
property (except such items still issuable under Sections 3 and 4(a) above,
which shall continue to be receivable thereafter)) issuable upon the exercise of
the Investor Warrant prior to such Fundamental Transaction, such shares of
stock, securities, cash, assets or any other property whatsoever (including
warrants or other purchase or subscription rights) which the Holder would have
been entitled to receive upon the happening of the applicable Fundamental
Transaction had this Investor Warrant been exercised immediately prior to the
applicable Fundamental Transaction (without regard to any limitations on the
exercise of this Investor Warrant).  Provision made pursuant to the preceding
sentence shall be in a form and substance reasonably satisfactory to the Holder.
 
(c)           Black Scholes Redemption. Notwithstanding the foregoing and the
provisions of Section 4(b) above, at the request of the Holder delivered at any
time commencing on the earliest to occur of (x) the public disclosure of any
Fundamental Transaction, (y) the consummation of any Fundamental Transaction and
(z) the Holder first becoming aware of any Fundamental Transaction through the
date that is ninety (90) days after the public disclosure of the consummation of
such Fundamental Transaction by the Company pursuant to a Current Report on Form
8-K filed with the SEC, the Company or the Successor Entity (as the case may be)
shall purchase this Investor Warrant from the Holder on the date of such request
by paying to the Holder cash in an amount equal to the Black Scholes Value.
 
 
9

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(d)           Application.  The provisions of this Section 4 shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied as if this Investor Warrant (and any such subsequent
warrants) were fully exercisable and without regard to any limitations on the
exercise of this Investor Warrant (provided that the Holder shall continue to be
entitled to the benefit of the Maximum Percentage, applied however with respect
to shares of capital stock registered under the 1934 Act and thereafter
receivable upon exercise of this Investor Warrant (or any such other warrant)).
 
5.           NONCIRCUMVENTION.  The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation (as defined
in the Purchase Agreement), Bylaws (as defined in the Purchase Agreement) or
through any reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, 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
of this Investor Warrant, and will at all times in good faith carry out all the
provisions of this Investor Warrant and take all action as may be required to
protect the rights of the Holder.  Without limiting the generality of the
foregoing, the Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Investor Warrant above the
Exercise Price then in effect, (ii) shall take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock upon the exercise of this
Investor Warrant, and (iii) shall, in accordance with Section 1(g) above, so
long as any of the Investor Warrants are outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the exercise of the Investor
Warrants, the maximum number of shares of Common Stock as shall from time to
time be necessary to effect the exercise of the Investor Warrants then
outstanding (without regard to any limitations on exercise).
 
6.           WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise
specifically provided herein, the Holder, solely in its capacity as a holder of
this Investor Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Investor Warrant be construed to confer upon the
Holder, solely in its capacity as the Holder of this Investor Warrant, any of
the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Investor
Warrant Shares which it is then entitled to receive upon the due exercise of
this Investor Warrant.  In addition, nothing contained in this Investor Warrant
shall be construed as imposing any liabilities on the Holder to purchase any
securities (upon exercise of this Investor Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the Company
or by creditors of the Company.  Notwithstanding this Section 6, the Company
shall provide the Holder with copies of the same notices and other information
given to the stockholders of the Company generally, contemporaneously with the
giving thereof to the stockholders.
 
 
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7.           REISSUANCE OF WARRANTS.
 
(a)           Transfer of Investor Warrant.  If this Investor Warrant is to be
transferred, the Holder shall surrender this Investor Warrant to the Company,
whereupon the Company will forthwith issue and deliver upon the order of the
Holder a new Investor Warrant (in accordance with Section 7(d)), registered as
the Holder may request, representing the right to purchase the number of
Investor Warrant Shares being transferred by the Holder and, if less than the
total number of Investor Warrant Shares then underlying this Investor Warrant is
being transferred, a new Investor Warrant (in accordance with Section 7(d)) to
the Holder representing the right to purchase the number of Investor Warrant
Shares not being transferred.
 
(b)           Lost, Stolen or Mutilated Investor Warrant.  Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Investor Warrant (as to which a written
certification and the indemnification contemplated below shall suffice as such
evidence), and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary and
reasonable form and, in the case of mutilation, upon surrender and cancellation
of this Investor Warrant, the Company shall execute and deliver to the Holder a
new Investor Warrant (in accordance with Section 7(d)) representing the right to
purchase the Investor Warrant Shares then underlying this Investor Warrant.
 
(c)           Exchangeable for Multiple Investor Warrants.  This Investor
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Company, for a new Investor Warrant or Investor Warrants
(in accordance with Section 7(d)) representing in the aggregate the right to
purchase the number of Investor Warrant Shares then underlying this Investor
Warrant, and each such new Investor Warrant will represent the right to purchase
such portion of such Investor Warrant Shares as is designated by the Holder at
the time of such surrender; provided, however, no warrants for fractional shares
of Common Stock shall be given.
 
(d)           Issuance of New Investor Warrants.  Whenever the Company is
required to issue a new Investor Warrant pursuant to the terms of this Investor
Warrant, such new Investor Warrant (i) shall be of like tenor with this Investor
Warrant, (ii) shall represent, as indicated on the face of such new Investor
Warrant, the right to purchase the Investor Warrant Shares then underlying this
Investor Warrant (or in the case of a new Investor Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Investor Warrant Shares designated by the
Holder which, when added to the number of shares of Common Stock underlying the
other new Investor Warrants issued in connection with such issuance, does not
exceed the number of Investor Warrant Shares then underlying this Investor
Warrant), (iii) shall have an issuance date, as indicated on the face of such
new Investor Warrant which is the same as the Issuance Date, and (iv) shall have
the same rights and conditions as this Investor Warrant.
 
8.           NOTICES.  Whenever notice is required to be given under this
Investor Warrant, unless otherwise provided herein, such notice shall be given
in accordance with Section 9(f) of the Purchase Agreement.  The Company shall
provide the Holder with prompt written notice of all actions taken pursuant to
this Investor Warrant, including in reasonable detail a description of such
action and the reason therefor.  Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Investor Warrant
Shares, setting forth in reasonable detail, and certifying, the calculation of
such adjustment(s) and (ii) at least fifteen (15) days prior to the date on
which the Company takes action with respect to Section 2, 3, or 4, provided that
such information shall be made known to the public prior to or in conjunction
with such notice being provided to the Holder.  To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of its Subsidiaries, the Company shall
simultaneously file such notice with the SEC (as defined in the Purchase
Agreement) pursuant to a Current Report on Form 8-K.  It is expressly understood
and agreed that the time of execution specified by the Holder in each Exercise
Notice shall be definitive and may not be disputed or challenged by the Company.
 
 
11

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9.           AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Investor Warrant (other than Section 1(f)) may be amended and
the Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, only if the Company has obtained the
written consent of the Holder.  No waiver shall be effective unless it is in
writing and signed by an authorized representative of the waiving party.
 
10.           SEVERABILITY.  If any provision of this Investor Warrant is
prohibited by law or otherwise determined to be invalid or unenforceable by a
court of competent jurisdiction, the provision that would otherwise be
prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or
unenforceability of such provision shall not affect the validity of the
remaining provisions of this Investor Warrant so long as this Investor Warrant
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties.  The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).
 
11.           GOVERNING LAW.  This Investor Warrant shall be governed by and
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Investor Warrant
shall be governed by, the internal laws of the State of New York, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York.  The Company
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law.  Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company’s obligations to the
Holder or to enforce a judgment or other court ruling in favor of the
Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
 
 
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12.           CONSTRUCTION; HEADINGS.  This Investor Warrant shall be deemed to
be jointly drafted by the Company and the Holder and shall not be construed
against any Person as the drafter hereof.  The headings of this Investor Warrant
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Investor Warrant.  Terms used in this Investor Warrant
but defined in the other Transaction Documents shall have the meanings ascribed
to such terms on the Closing Date (as defined in the Purchase Agreement) in such
other Transaction Documents unless otherwise consented to in writing by the
Holder.
 
13.           DISPUTE RESOLUTION.  In the case of a dispute as to the
determination of the Exercise Price, the Closing Sale Price, the Bid Price or
fair market value or the arithmetic calculation of the number of Investor
Warrant Shares (as the case may be), the Company or the Holder (as the case may
be) shall submit the disputed determinations or arithmetic calculations (as the
case may be) via facsimile (i) within two (2) Business Days after receipt of the
applicable notice giving rise to such dispute to the Company or the Holder (as
the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder learned of the circumstances giving rise to such dispute.  If
the Holder and the Company are unable to agree upon such determination or
calculation (as the case may be) of the Exercise Price, the Closing Sale Price,
the Bid Price or fair market value or the number of Investor Warrant Shares (as
the case may be) within three (3) Business Days of such disputed determination
or arithmetic calculation being submitted to the Company or the Holder (as the
case may be), then the Company shall, within two (2) Business Days submit via
facsimile (a) the disputed determination of the Exercise Price, the Closing Sale
Price, the Bid Price or fair market value (as the case may be) to an
independent, reputable investment bank selected by the Holder that is reasonably
acceptable to the Company or (b) the disputed arithmetic calculation of the
number of Investor Warrant Shares to an independent, outside accountant selected
by the Holder that is reasonably acceptable to the Company.  The Company shall
cause at its expense the investment bank or the accountant (as the case may be)
to perform the determinations or calculations (as the case may be) and notify
the Company and the Holder of the results no later than ten (10) Business Days
from the time it receives such disputed determinations or calculations (as the
case may be).  Such investment bank’s or accountant’s determination or
calculation (as the case may be) shall be binding upon all parties absent
demonstrable error.
 
14.           REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The remedies provided in this Investor Warrant shall be
cumulative and in addition to all other remedies available under this Investor
Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Investor
Warrant.  The Company covenants to the Holder that there shall be no
characterization concerning this instrument other than as expressly provided
herein.  Amounts set forth or provided for herein with respect to payments,
exercises and the like (and the computation thereof) shall be the amounts to be
received by the Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance
thereof).  The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate.  The Company therefore agrees that, in
the event of any such breach or threatened breach, the holder of this Investor
Warrant shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.  The Company shall
provide all information and documentation to the Holder that is requested by the
Holder to enable the Holder to confirm the Company’s compliance with the terms
and conditions of this Investor Warrant (including, without limitation,
compliance with Section 2 hereof).  The issuance of shares and certificates for
shares as contemplated hereby upon the exercise of this Investor Warrant shall
be made without charge to the Holder or such shares for any issuance tax or
other costs in respect thereof, provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than the Holder or its
agent on its behalf.
 
 
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15.           TRANSFER.  This Investor Warrant may be offered for sale, sold,
transferred or assigned without the consent of the Company, except as may
otherwise be required by Section 4.1(a) of the Purchase Agreement.
 
16.           CERTAIN DEFINITIONS.  For purposes of this Investor Warrant, the
following terms shall have the following meanings:
 
(a)            “Bid Price” means, for any security as of the particular time of
determination, the bid price for such security on the Principal Market as
reported by Bloomberg as of such time of determination, or, if the Principal
Market is not the principal securities exchange or trading market for such
security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
as of such time of determination, or if the foregoing does not apply, the bid
price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg as of such time of
determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC) as of such time of determination.  If the Bid
Price cannot be calculated for a security as of the particular time of
determination on any of the foregoing bases, the Bid Price of such security as
of such time of determination shall be the fair market value as mutually
determined by the Company and the Holder.  If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved in accordance with the procedures in Section 13.  All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during such period.
 
(b)            “Black Scholes Value” means the value of the unexercised portion
of this Investor Right remaining on the date of the Holder’s request pursuant to
Section 4(c), which value is calculated using the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg utilizing (i) an underlying
price per share equal to the greater of (1) the highest Closing Sale Price of
the Common Stock during the period beginning on the Trading Day immediately
preceding the announcement of the applicable Fundamental Transaction (or the
consummation of the applicable Fundamental Transaction, if earlier) and ending
on the Trading Day of the Holder’s request pursuant to Section 4(c) and (2) the
sum of the price per share being offered in cash in the applicable Fundamental
Transaction (if any) plus the value of the non-cash consideration being offered
in the applicable Fundamental Transaction (if any), (ii) a strike price equal to
the Exercise Price in effect on the date of the Holder’s request pursuant to
Section 4(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury
rate for a period equal to the greater of (1) the remaining term of this
Investor Right as of the date of the Holder’s request pursuant to Section 4(c)
and (2) the remaining term of this Investor Right as of the date of consummation
of the applicable Fundamental Transaction or as of the date of the Holder’s
request pursuant to Section 4(c) if such request is prior to the date of the
consummation of the applicable Fundamental Transaction, (iv) a zero cost of
borrow and (v) an expected volatility equal to the greater of 100% and the 30
day volatility obtained from the HVT function on Bloomberg (determined utilizing
a 365 day annualization factor) as of the Trading Day immediately following the
earliest to occur of (x) the public disclosure of the applicable Fundamental
Transaction, (y) the consummation of the applicable Fundamental Transaction and
(z) the date on which the Holder first became aware of the applicable
Fundamental Transaction.
 
 
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(c)           “Bloomberg” means Bloomberg, L.P.
 
(d)           “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.
 
(e)           “Closing Sale Price” means, for any security as of any date, the
last closing trade price for such security on the Principal Market, as reported
by Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing trade price, then the last trade price
of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last trade price of such security on the principal
securities exchange or trading market where such security is listed or traded as
reported by Bloomberg, or if the foregoing does not apply, the last trade price
of such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no last trade price is
reported for such security by Bloomberg, the average of the ask prices of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC).  If the Closing Sale Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Closing Sale Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder.  If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved in accordance with the procedures in
Section 13.  All such determinations shall be appropriately adjusted for any
stock dividend, stock split, stock combination or other similar transaction
during such period.
 
(f)           “Common Stock” means (i) the Company’s shares of common stock,
$0.0001 par value per share, and (ii) any capital stock into which such common
stock shall have been changed or any share capital resulting from a
reclassification of such common stock.
 
(g)           “Convertible Securities” means any stock or other security (other
than Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.
 
 
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(h)           “Eligible Market” means The New York Stock Exchange, the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Select Market, the Nasdaq Global
Market or the Principal Market.
 
(i)           “Expiration Date” means the date that is the eighteen (18) month
anniversary of the Initial Exercisability Date or, if such date falls on a day
other than a Business Day or on which trading does not take place on the
Principal Market (a “Holiday”), the next date that is not a Holiday.
 
(j)           “Fundamental Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1) consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Voting Stock of the
Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4)
consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other Person whereby such other Person acquires
more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (ii) any “person” or “group” (as these terms are used
for purposes of Sections 13(d) and 14(d) of the 1934 Act and the rules and
regulations promulgated thereunder) is or shall become the “beneficial owner”
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of
the aggregate ordinary voting power represented by issued and outstanding Voting
Stock of the Company.
 
(k)           “Options” means any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.
 
(l)           “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.
 
(m)           “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.
 
(n)           “Principal Market” means the Nasdaq Capital Market.
 
(o)           “Successor Entity” means the Person (or, if so elected by the
Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.
 
 
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(p)           “Trading Day” means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.
 
(q)           “Voting Stock” of a Person means capital stock of such Person of
the class or classes pursuant to which the holders thereof have the general
voting power to elect, or the general power to appoint, at least a majority of
the board of directors, managers or trustees of such Person (irrespective of
whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
 
(r)           “VWAP” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market (or, if
the Principal Market is not the principal trading market for such security, then
on the principal securities exchange or securities market on which such security
is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its
“Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by OTC Markets Group
Inc. (formerly Pink Sheets LLC).  If VWAP cannot be calculated for such security
on such date on any of the foregoing bases, the VWAP of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder.  If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved in accordance
with the procedures in Section 13.  All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during such period.
 
 [signature page follows]
 
 
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IN WITNESS WHEREOF, the Company has caused this Investor Warrant to Purchase
Common Stock to be duly executed as of the Issuance Date set out above.
 

 

 
NEONODE INC.
         
 
By:
        Name:       Title:          

 
 
 
 

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EXHIBIT A
 
EXERCISE NOTICE
 
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT TO PURCHASE COMMON STOCK
 
NEONODE INC.
 
The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Investor Right Shares”) of Neonode Inc., a
Delaware corporation (the “Company”), evidenced by Investor Right to Purchase
Common Stock No. _______ (the “Investor Right”).  Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Investor Right.
 
1.           Form of Exercise Price.  The Holder intends that payment of the
Exercise Price shall be made as:
 
 
____________
a “Cash Exercise” with respect to _________________ Investor Right Shares;
and/or

 
 
____________
a “Cashless Exercise” with respect to _______________ Investor Right Shares.

 
2.           Payment of Exercise Price.  In the event that the Holder has
elected a Cash Exercise with respect to some or all of the Investor Right Shares
to be issued pursuant hereto, the Holder shall pay the Aggregate Exercise Price
in the sum of $___________________ to the Company in accordance with the terms
of the Investor Right.
 
3.           Delivery of Investor Right Shares.  The Company shall deliver to
Holder, or its designee or agent as specified below, __________ Investor Right
Shares in accordance with the terms of the Investor Right.  Delivery shall be
made to Holder, or for its benefit, to the following address:
 

 

Date: _____________ __,                                               
 
Name of Registered Holder
By:
Name:
Title:
 

 
 
 

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EXHIBIT B
 
ACKNOWLEDGMENT
 
The Company hereby acknowledges this Exercise Notice and hereby directs
______________ to issue the above indicated number of shares of Common Stock in
accordance with the Transfer Agent Instructions dated _________, 201_, from the
Company and acknowledged and agreed to by _______________.
 
 

             
 
By:
        Name:       Title: