Exhibit 10.4

 

 

 

 

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS
WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO TRUEYOU.COM INC. THAT SUCH REGISTRATION IS
NOT REQUIRED.

 

Right to Purchase up to 29,276,583,452 Shares of Common Stock of
TrueYou.Com Inc.
(subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT

 

 

No. D

Issue Date: May 4, 2007

          TrueYou.com Inc., a corporation organized under the laws of the State
of Delaware (the “Company”), hereby certifies that, for value received, LAURUS
MASTER FUND, LTD. (the “Purchaser”), or permitted assigns (together with the
Purchaser, the “Holder”), is entitled, subject to the terms set forth below and
the provisions of the Purchase Agreement and Warrant Side Letter (as such terms
are defined below)), to purchase from the Company (as defined herein) from and
after the Issue Date of this Warrant, up to 29,276,583,452 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $0.001 par value
per share, at the applicable Exercise Price per share (as defined below). The
number and character of such shares of Common Stock and the applicable Exercise
Price per share are subject to adjustment as provided in this warrant (as
amended, modified, restated and/or supplemented from time to time, this
“Warrant”).

          As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:

 

 

 

          (a) The term “Company” shall include TrueYou.com Inc. and any person
or entity which shall succeed, or assume the obligations of, TrueYou.com Inc.
hereunder.

 

 

 

          (b) The term “Common Stock” includes (i) the Company’s Common Stock,
par value $0.001 per share; and (ii) any other securities into which or for
which any of the securities described in the preceding clause (i) may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.

--------------------------------------------------------------------------------

 

 

 

          (c) The term “Other Securities” refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.

 

 

 

          (d) The “Exercise Price” applicable under this Warrant shall be $0.001
per share.

 

 

 

          (e) Capitalized terms used herein without definition shall have the
meanings ascribed to such terms in that certain Amended and Restated Securities
Purchase Agreement dated as of May 4, 2007 by and between the Company and the
Purchaser (as amended, modified, restated and/or supplemented from time to time,
the “Purchase Agreement”) or in any Related Agreement (as defined in the
Purchase Agreement).

 

 

           1.      Exercise of Warrant.

                    1.1 Number of Shares Issuable upon Exercise. From and after
the date hereof through and including the Expiration Date, the Holder shall be
entitled to receive, upon exercise of this Warrant in whole or in part, by
delivery of an original or fax copy of an exercise notice in the form attached
hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of the
Company, subject to adjustment pursuant to Section 4.

                    1.2 Fair Market Value. For purposes hereof, the “Fair Market
Value” of a share of Common Stock as of a particular date (the “Determination
Date”) shall mean:

 

 

 

          (a) If the Company’s Common Stock is traded on the American Stock
Exchange or another national exchange or is quoted on the National or Capital
Market of The Nasdaq Stock Market, Inc. (“Nasdaq”), then the closing or last
sale price, respectively, reported for the last business day immediately
preceding the Determination Date.

 

 

 

          (b) If the Company’s Common Stock is not traded on the American Stock
Exchange or another national exchange or on the Nasdaq but is traded on the NASD
Over The Counter Bulletin Board, then the mean of the average of the closing bid
and asked prices reported for the last business day immediately preceding the
Determination Date.

 

 

 

          (c) Except as provided in clause (d) below, if the Company’s Common
Stock is not publicly traded, then as the Holder and the Company agree or in the
absence of agreement by arbitration in accordance with the rules then in effect
of the American Arbitration Association, before a single arbitrator to be chosen
from a panel of persons qualified by education and training to pass on the
matter to be decided.

 

 

 

          (d) If the Determination Date is the date of a liquidation,
dissolution or winding up, or any event deemed to be a liquidation, dissolution
or winding up pursuant to the Company’s charter, then all amounts to be payable
per share to holders of the

2

--------------------------------------------------------------------------------

 

 

 

Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination Date.

                    1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder hereof acknowledge
in writing its continuing obligation to afford to such holder any rights to
which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.

                    1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the holders of this
Warrant pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent (as hereinafter described) and shall
accept, in its own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the Company or such
successor, as the case may be, on exercise of this Warrant pursuant to this
Section 1.

          2.           Procedure for Exercise.

                    2.1 Delivery of Stock Certificates, Etc., on Exercise. The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder as the record owner of such
shares as of the close of business on the date on which this Warrant shall have
been surrendered and payment made for such shares in accordance herewith. As
soon as practicable after the exercise of this Warrant in full or in part, and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will cause
to be issued in the name of and delivered to the Holder, or as such Holder (upon
payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such Holder
is entitled upon such exercise pursuant to Section 1 or otherwise.

                    2.2 Exercise.

 

 

 

          (a) Payment may be made either (i) in cash of immediately available
funds or by certified or official bank check payable to the order of the Company
equal to the applicable aggregate Exercise Price, (ii) by delivery of this
Warrant, or shares of Common Stock and/or Common Stock receivable upon exercise
of this Warrant in accordance with the formula set forth in subsection (b)
below, or (iii) by a combination of any of the foregoing methods, for the number
of Common Shares specified in such Exercise Notice (as such exercise number
shall be adjusted to reflect any adjustment in

3

--------------------------------------------------------------------------------

 

 

 

the total number of shares of Common Stock issuable to the Holder per the terms
of this Warrant) and the Holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully-paid and non-assessable shares
of Common Stock (or Other Securities) determined as provided herein.

 

 

 

          (b) Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of Common Stock is greater than the Exercise Price (at
the date of calculation as set forth below), in lieu of exercising this Warrant
for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Warrant (or the portion thereof being exercised) by
surrender of this Warrant at the principal office of the Company together with
the properly endorsed Exercise Notice in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the following
formula:

 

 

 

 

 

X=

Y(A-B)

 

      A

 

 

 

 

Where X =

the number of shares of Common Stock to be issued to the Holder

 

 

 

 

Y =

the number of shares of Common Stock purchasable under this Warrant or, if only
a portion of this Warrant is being exercised, the portion of this Warrant being
exercised (at the date of such calculation)

 

 

 

 

A =

the Fair Market Value of one share of the Company’s Common Stock (at the date of
such calculation)

 

 

 

 

B =

the Exercise Price per share (as adjusted to the date of such calculation)

 

 

 

 

3.   Effect of Reorganization, Etc.; Adjustment of Exercise Price.

                    3.1 Reorganization, Consolidation, Merger, Etc. In case at
any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all or
substantially all of its properties or assets to any other person under any plan
or arrangement contemplating the dissolution of the Company, then, in each such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder, on the
exercise hereof as provided in Section 1 at any time after the consummation of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock (or
Other Securities) issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property (including cash) to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.

                    3.2 Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, concurrently with any distributions made to holders of its
Common Stock, shall at its expense deliver or cause to be

4

--------------------------------------------------------------------------------

delivered to the Holder the stock and other securities and property (including
cash, where applicable) receivable by the Holder pursuant to Section 3.1, or, if
the Holder shall so instruct the Company, to a bank or trust company specified
by the Holder and having its principal office in New York, NY as trustee for the
Holder.

                    3.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of stock and other
securities and property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or the effective
date of dissolution following any such transfer, as the case may be, and shall
be binding upon the issuer of any such stock or other securities, including, in
the case of any such transfer, the person acquiring all or substantially all of
the properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In the
event this Warrant does not continue in full force and effect after the
consummation of the transactions described in this Section 3, then the Company’s
securities and property (including cash, where applicable) receivable by the
Holder will be delivered to the Holder or the Trustee as contemplated by Section
3.2.

          4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock or any preferred stock issued by
the Company, (b) subdivide its outstanding shares of Common Stock, (c) combine
its outstanding shares of the Common Stock into a smaller number of shares of
the Common Stock, then, in each such event, the Exercise Price shall,
simultaneously with the happening of such event, be adjusted by multiplying the
then Exercise Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock
that the holder shall thereafter, on the exercise hereof as provided in Section
1, be entitled to receive shall be adjusted to a number determined by
multiplying the number of shares of Common Stock that would otherwise (but for
the provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Exercise Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Exercise Price in effect on the date of such exercise (taking into account the
provisions of this Section 4). Notwithstanding the foregoing, in no event shall
the Exercise Price be less than the par value of the Common Stock.

          5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of this Warrant, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of this Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a)

5

--------------------------------------------------------------------------------

the consideration received or receivable by the Company for any additional
shares of Common Stock (or Other Securities) issued or sold or deemed to have
been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the holder and any warrant agent of the
Company (appointed pursuant to Section 11 hereof).

          6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. From
and after the date that the Certificate of Incroporation for the Company is
amended to increase the authorized Common Stock of the Company, the Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, shares of Common Stock (or Other Securities) from time
to time issuable on the exercise of this Warrant.

          7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a “Transferor”) in whole or in
part. On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the form of Exhibit B attached hereto (the “Transferor
Endorsement Form”) and together with evidence reasonably satisfactory to the
Company demonstrating compliance with applicable securities laws, which shall
include, without limitation, a legal opinion from the Transferor’s counsel (at
the Company’s expense) that such transfer is exempt from the registration
requirements of applicable securities laws, the Company at its expense (but with
payment by the Transferor of any applicable transfer taxes) will issue and
deliver to or on the order of the Transferor thereof a new Warrant of like
tenor, in the name of the Transferor and/or the transferee(s) specified in such
Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face or faces of the Warrant so surrendered by the Transferor.

          8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.

          9. Registration Rights. The Holder has been granted certain
registration rights by the Company. These registration rights are set forth in a
Registration Rights Agreement entered into by the Company and Holder dated as of
the date hereof, as the same may be amended, modified and/or supplemented from
time to time.

          10. Maximum Exercise. Notwithstanding anything herein to the contrary,
in no event shall the Holder be entitled to exercise any portion of this Warrant
in excess of that portion of this Warrant upon exercise of which the sum of (1)
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates (other than shares of Common Stock which may be deemed beneficially
owned through the ownership of the unexercised portion of the

6

--------------------------------------------------------------------------------

Warrant or the unexercised or unconverted portion of any other security of the
Holder subject to a limitation on conversion analogous to the limitations
contained herein) and (2) the number of shares of Common Stock issuable upon the
exercise of the portion of this Warrant with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the
Holder and its Affiliates of any amount greater than 9.99% of the then
outstanding shares of Common Stock (whether or not, at the time of such
exercise, the Holder and its Affiliates beneficially own more than 9.99% of the
then outstanding shares of Common Stock). As used herein, the term “Affiliate”
means any person or entity that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
person or entity, as such terms are used in and construed under Rule 144 under
the Securities Act. For purposes of the proviso to the second preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso. The
limitations set forth herein (x) may be waived by the Holder upon provision of
no less than sixty-one (61) days prior notice to the Company and (y) shall
automatically become null and void following notice to the Company upon the
occurrence and during the continuance of an Event of Default (as defined in the
Purchase Agreement).

          11. Warrant Agent. The Company may, by written notice to the each
Holder of the Warrant, appoint an agent for the purpose of issuing Common Stock
(or Other Securities) on the exercise of this Warrant pursuant to Section 1,
exchanging this Warrant pursuant to Section 7, and replacing this Warrant
pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.

          12. Transfer on the Company’s Books. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder hereof
as the absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.

          13. Notices, Etc. All notices and other communications from the
Company to the Holder shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company an
address, then to, and at the address of, the last Holder who has so furnished an
address to the Company.

          14. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS. ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS
WARRANT SHALL BE BROUGHT ONLY IN STATE COURTS OF NEW YORK OR IN THE FEDERAL
COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY
CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW
YORK. The individuals executing this Warrant on behalf of the Company agree to
submit to the jurisdiction of such courts and waive trial by jury. The
prevailing party shall be entitled to recover from the

7

--------------------------------------------------------------------------------

other party its reasonable attorneys’ fees and costs. In the event that any
provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision hereof.
The Company acknowledges that legal counsel participated in the preparation of
this Warrant and, therefore, stipulates that the rule of construction that
ambiguities are to be resolved against the drafting party shall not be applied
in the interpretation of this Warrant to favor any party against the other
party.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]

8

--------------------------------------------------------------------------------

          IN WITNESS WHEREOF, the Company has executed this Warrant as of the
date first written above.

 

 

 

 

TRUEYOU.COM INC.

 

 

WITNESS:

 

 

 

 

 

 

By:

 

 

 

--------------------------------------------------------------------------------

 

Name:

 

 

--------------------------------------------------------------------------------

 

Title:

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

9

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)

 

 

 

TO:

TrueYou.com Inc.

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

 

          Attention:     Chief Financial Officer

          The undersigned, pursuant to the provisions set forth in the attached
Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

 

 

________

________ shares of the common stock covered by such warrant; or

 

 

________

the maximum number of shares of common stock covered by such warrant pursuant to
the cashless exercise procedure set forth in Section 2.

          The undersigned herewith makes payment of the full Exercise Price for
such shares at the price per share provided for in such Warrant, which is
$___________. Such payment takes the form of (check applicable box or boxes):

 

 

________

$__________ in lawful money of the United States; and/or

 

 

________

the cancellation of such portion of the attached Warrant as is exercisable for a
total of _______ shares of Common Stock (using a Fair Market Value of $_______
per share for purposes of this calculation); and/or

 

 

________

the cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2.2, to exercise this Warrant
with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in Section 2.

          The undersigned requests that the certificates for such shares be
issued in the name of, and delivered to
______________________________________________ whose address is
___________________________________________________________________________.

          The undersigned represents and warrants that all offers and sales by
the undersigned of the securities issuable upon exercise of the within Warrant
shall be made pursuant to registration of the Common Stock under the Securities
Act of 1933, as amended (the “Securities Act”) or pursuant to an exemption from
registration under the Securities Act.

 

 

 

 

Dated: 

 

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

(Signature must conform to name of holder as
specified on the face of the Warrant)

 

 

Address:  

 

 

 

--------------------------------------------------------------------------------

 

 

 

--------------------------------------------------------------------------------

10

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)

          For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading “Transferees” the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of TrueYou.com Inc. into which the within Warrant relates
specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of TrueYou.com
Inc. with full power of substitution in the premises.

 

 

 

 

  Transferees

   Address

Percentage
Transferred

Number
Transferred

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

Dated:  

 

 

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

(Signature must conform to name of holder as
specified on the face of the Warrant)

 

 

Address:   

 

 

 

--------------------------------------------------------------------------------

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

SIGNED IN THE PRESENCE OF:

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

(Name)

 

 

ACCEPTED AND AGREED:

 

[TRANSFEREE]

 

 

 

--------------------------------------------------------------------------------

 

(Name)

 

11

--------------------------------------------------------------------------------

IRREVOCABLE PROXY

                    For good and valuable consideration, receipt of which is
hereby acknowledged, Laurus Master Fund, Ltd. (“Laurus”), hereby appoints
___________________ (the “Proxy Holder” or the “Company”), with a mailing
address at ___________________________, with full power of substitution, as
proxy, to vote all shares of Common Stock of the Company, now or in the future
owned by Laurus to the extent such shares are issued to Laurus upon its exercise
of (a) the Common Stock Purchase Warrant (the “Warrant”), issued by the Company
to Laurus as of the date hereof and (b) all other warrants and/or options issued
by the Company in favor of Laurus with an exercise price equal to or less than
the greater of $0.01 and the par value of the Company’s common stock (the “Other
Options and Warrants”) (collectively, the “Shares”).

                    This proxy is irrevocable and coupled with an interest. Upon
the sale or other transfer of the Shares, in whole or in part, or the assignment
of the Warrant or any of the Other Options and Warrants, this proxy shall
automatically terminate (x) with respect to such sold or transferred Shares at
the time of such sale and/or transfer, and (y) in the case of an assignment of
the Warrant and/or Other Options and Warrants, at the time of such assignment in
respect of the Shares issuable upon exercise of such assigned Warrant and/or
Other Options and Warrants, in each case, without any further action required by
any person.

                    Laurus shall use its best efforts to forward to Proxy Holder
within two (2) business days following Laurus’ receipt thereof, at the address
for Proxy Holder set forth above, copies of all materials received by Laurus
relating, in each case, to the solicitation of the vote of shareholders of the
Company.

                    This proxy shall remain in effect with respect to the Shares
of the Company during the period commencing on the date hereof and continuing
until the payment in full of all obligations and liabilities owing by the
Company to Laurus (as the same may be amended, restated, extended or modified
from time to time).

                    IN WITNESS WHEREOF, the undersigned has executed this
irrevocable proxy as of the __ day of April 2007.

 

 

 

 

LAURUS MASTER FUND, LTD.

 

 

 

 

By:

 

 

 

--------------------------------------------------------------------------------

 

      Name:

 

      Title:

12

--------------------------------------------------------------------------------