Exhibit 10.5

 

[FORM OF ADDITIONAL WARRANT]

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE
STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.  NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

ARTEMIS INTERNATIONAL SOLUTIONS CORPORATION

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.: [           ]

Number of Shares:  (Calculated pursuant to §2(a) hereof)

Date of Issuance: June     , 2004 (“Issuance Date”)

 

Artemis International Solutions Corporation, a Delaware corporation (the
“Company”), hereby certifies that, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, [               ], the
registered holder hereof or its permitted assigns (the “Holder”), is entitled,
subject to the terms set forth below, including, but not limited to the
satisfaction of the condition set forth in Section 2(a) hereof, to purchase from
the Company, at the Exercise Price (as defined below) then in effect, upon
surrender of this Warrant to Purchase Common Stock (including all Warrants to
Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times on or after the date hereof, but not after
11:59 P.M., New York Time, on the Expiration Date (as defined below), fully paid
nonassessable shares, in such amount as calculated pursuant to §2(a) hereof, of
Common Stock (as defined below) (the “Warrant Shares”).  Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in Section 15.  This Warrant is one of the Warrants to Purchase Common
Stock (the “SPA Warrants”) issued pursuant to Section 1 of that certain
Securities Purchase Agreement, dated as of June    , 2004 (the “Subscription
Date”), among the Company and the buyers (the “Purchasers”) referred to therein
(the “Securities Purchase Agreement”).

 

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1.     EXERCISE OF WARRANT.

 

(A)           MECHANICS OF EXERCISE.  SUBJECT TO THE TERMS AND CONDITIONS
HEREOF, THIS WARRANT MAY BE EXERCISED BY THE HOLDER ON ANY DAY, IN WHOLE OR IN
PART, BY (I) DELIVERY OF A WRITTEN NOTICE, IN THE FORM ATTACHED HERETO AS
EXHIBIT A (THE “EXERCISE NOTICE”), OF THE HOLDER’S ELECTION TO EXERCISE THIS
WARRANT AND (II) (A) PAYMENT TO THE COMPANY OF AN AMOUNT EQUAL TO THE APPLICABLE
EXERCISE PRICE MULTIPLIED BY THE NUMBER OF WARRANT SHARES AS TO WHICH THIS
WARRANT IS BEING EXERCISED (THE “AGGREGATE EXERCISE PRICE”) IN CASH OR BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS OR (B) BY NOTIFYING THE COMPANY THAT
THIS WARRANT IS BEING EXERCISED PURSUANT TO A CASHLESS EXERCISE (AS DEFINED IN
SECTION 1(D)).  THE HOLDER SHALL NOT BE REQUIRED TO DELIVER THE ORIGINAL WARRANT
IN ORDER TO EFFECT AN EXERCISE HEREUNDER.  EXECUTION AND DELIVERY OF THE
EXERCISE NOTICE WITH RESPECT TO LESS THAN ALL OF THE WARRANT SHARES SHALL HAVE
THE SAME EFFECT AS CANCELLATION OF THE ORIGINAL WARRANT AND ISSUANCE OF A NEW
WARRANT EVIDENCING THE RIGHT TO PURCHASE THE REMAINING NUMBER OF WARRANT
SHARES.  ON OR BEFORE THE FIRST BUSINESS DAY FOLLOWING THE DATE ON WHICH THE
COMPANY HAS RECEIVED EACH OF THE EXERCISE NOTICE AND THE AGGREGATE EXERCISE
PRICE (OR NOTICE OF A CASHLESS EXERCISE) (THE “EXERCISE DELIVERY DOCUMENTS”),
THE COMPANY SHALL TRANSMIT BY FACSIMILE AN ACKNOWLEDGMENT OF CONFIRMATION OF
RECEIPT OF THE EXERCISE DELIVERY DOCUMENTS TO THE HOLDER AND THE COMPANY’S
TRANSFER AGENT (THE “TRANSFER AGENT”).  ON OR BEFORE THE THIRD BUSINESS DAY
FOLLOWING THE DATE ON WHICH THE COMPANY HAS RECEIVED ALL OF THE EXERCISE
DELIVERY DOCUMENTS (THE “SHARE DELIVERY DATE”), THE COMPANY SHALL (X) PROVIDED
THAT THE TRANSFER AGENT IS PARTICIPATING IN THE DEPOSITORY TRUST COMPANY (“DTC”)
FAST AUTOMATED SECURITIES TRANSFER PROGRAM AND THAT THE COMMON STOCK IS
ELIGIBLE, 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 AGENT COMMISSION SYSTEM, OR (Y) IF THE TRANSFER AGENT IS NOT
PARTICIPATING IN THE DTC FAST AUTOMATED SECURITIES TRANSFER PROGRAM, ISSUE AND
DISPATCH BY OVERNIGHT COURIER TO THE ADDRESS AS SPECIFIED IN THE EXERCISE
NOTICE, A CERTIFICATE, REGISTERED IN THE NAME OF THE HOLDER OR ITS DESIGNEE, FOR
THE NUMBER OF SHARES OF COMMON STOCK TO WHICH THE HOLDER IS ENTITLED PURSUANT TO
SUCH EXERCISE.  UPON DELIVERY OF THE EXERCISE NOTICE AND AGGREGATE EXERCISE
PRICE REFERRED TO IN CLAUSE (II)(A) ABOVE OR NOTIFICATION TO THE COMPANY OF A
CASHLESS EXERCISE REFERRED TO IN SECTION 1(D), THE HOLDER SHALL BE DEEMED FOR
ALL CORPORATE PURPOSES TO HAVE BECOME THE HOLDER OF RECORD OF THE WARRANT SHARES
WITH RESPECT TO WHICH THIS WARRANT HAS BEEN EXERCISED, IRRESPECTIVE OF THE DATE
OF DELIVERY OF THE CERTIFICATES EVIDENCING SUCH WARRANT SHARES.  IF THIS WARRANT
IS SUBMITTED IN CONNECTION WITH ANY EXERCISE PURSUANT TO THIS SECTION 1(A) AND
THE NUMBER OF WARRANT SHARES REPRESENTED BY THIS WARRANT SUBMITTED FOR EXERCISE
IS GREATER THAN THE NUMBER OF WARRANT SHARES BEING ACQUIRED UPON AN EXERCISE,
THEN THE COMPANY SHALL AS SOON AS PRACTICABLE AND IN NO EVENT LATER THAN THREE
BUSINESS DAYS AFTER ANY EXERCISE AND AT ITS OWN EXPENSE, ISSUE A NEW WARRANT (IN
ACCORDANCE WITH SECTION 7(D)) REPRESENTING THE RIGHT TO PURCHASE THE NUMBER OF
WARRANT SHARES PURCHASABLE IMMEDIATELY PRIOR TO SUCH EXERCISE UNDER THIS
WARRANT, LESS THE NUMBER OF WARRANT SHARES WITH RESPECT TO WHICH THIS WARRANT IS
EXERCISED.  NO FRACTIONAL SHARES OF COMMON STOCK ARE TO BE ISSUED UPON THE
EXERCISE OF THIS WARRANT, BUT RATHER THE NUMBER OF SHARES OF COMMON STOCK TO BE
ISSUED SHALL BE ROUNDED UP TO THE NEAREST WHOLE NUMBER (WITH ONE-HALF BEING
ROUNDED UPWARD).  THE COMPANY SHALL PAY ANY AND ALL TAXES, INCLUDING WITHOUT
LIMITATION, ALL DOCUMENTARY STAMP, TRANSFER OR SIMILAR TAXES, OR OTHER
INCIDENTAL EXPENSE THAT MAY BE PAYABLE WITH RESPECT TO THE ISSUANCE AND DELIVERY
OF WARRANT SHARES UPON EXERCISE OF THIS WARRANT.

 

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(B)           EXERCISE PRICE.  FOR PURPOSES OF THIS WARRANT, “EXERCISE PRICE”
MEANS $.01, SUBJECT TO ADJUSTMENT AS PROVIDED HEREIN.

 

(C)           COMPANY’S FAILURE TO TIMELY DELIVER SECURITIES.  (I)  IN ADDITION
TO ANY OTHER RIGHTS AVAILABLE TO A HOLDER, IF THE COMPANY FAILS TO DELIVER OR
CAUSE TO BE DELIVERED TO THE HOLDER A CERTIFICATE REPRESENTING WARRANT SHARES BY
THE BUSINESS DAY AFTER THE DATE ON WHICH DELIVERY OF SUCH CERTIFICATE IS
REQUIRED BY THIS WARRANT, AND IF ON OR AFTER SUCH BUSINESS DAY 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 THE WARRANT SHARES THAT THE
HOLDER ANTICIPATED RECEIVING FROM THE COMPANY (A “BUY-IN”), THEN THE COMPANY
SHALL, WITHIN THREE 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, IF ANY) FOR THE SHARES OF
COMMON STOCK SO PURCHASED (THE “BUY-IN PRICE”), AT WHICH POINT THE COMPANY’S
OBLIGATION TO DELIVER SUCH CERTIFICATE (AND TO ISSUE SUCH COMMON STOCK) SHALL
TERMINATE, OR (II) PROMPTLY HONOR ITS OBLIGATION TO DELIVER TO THE HOLDER A
CERTIFICATE OR CERTIFICATES REPRESENTING SUCH COMMON STOCK 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, TIMES (B) THE CLOSING
PRICE ON THE EXERCISE DATE.

 

(II)           IF THE PROVISIONS OF CLAUSE (I) ABOVE SHALL NOT APPLY, IF THE
COMPANY SHALL FAIL FOR ANY REASON OR FOR NO REASON TO ISSUE TO THE HOLDER WITHIN
THREE BUSINESS DAYS OF THE EXERCISE DATE, A CERTIFICATE FOR THE NUMBER OF SHARES
OF COMMON STOCK TO WHICH THE HOLDER IS ENTITLED 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 WARRANT, THE COMPANY SHALL
PAY AS ADDITIONAL DAMAGES IN CASH TO SUCH HOLDER ON EACH DAY AFTER SUCH THIRD
BUSINESS DAY THAT THE ISSUANCE OF SUCH COMMON STOCK IS NOT TIMELY EFFECTED AN
AMOUNT EQUAL TO 1.0% OF THE PRODUCT OF (A) THE SUM OF THE 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 WHICH THE COMPANY COULD HAVE
ISSUED SUCH COMMON STOCK TO THE HOLDER WITHOUT VIOLATING SECTION 1(A).

 

(III)          IF WITHIN THREE (3) BUSINESS DAYS OF THE EXERCISE DATE, THE
COMPANY FAILS TO DELIVER A NEW WARRANT TO THE HOLDER FOR THE NUMBER OF SHARES OF
COMMON STOCK TO WHICH SUCH HOLDER IS ENTITLED, THE COMPANY SHALL PAY AS
ADDITIONAL DAMAGES IN CASH TO SUCH HOLDER ON THE DAY AFTER SUCH THIRD BUSINESS
DAY THAT SUCH DELIVERY OF SUCH NEW WARRANT IS NOT TIMELY EFFECTED AN AMOUNT
EQUAL TO 1.0% OF THE PRODUCT OF (A) THE NUMBER OF SHARES OF COMMON STOCK
REPRESENTED BY THE PORTION OF THIS WARRANT WHICH IS NOT BEING EXERCISED AND (B)
THE CLOSING SALE PRICE OF THE COMMON STOCK ON THE TRADING DAY IMMEDIATELY
PRECEDING THE LAST POSSIBLE DATE WHICH THE COMPANY COULD HAVE ISSUED SUCH
WARRANT TO THE HOLDER WITHOUT VIOLATING SECTION 1(A).

 

(D)           CASHLESS EXERCISE.  NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO
THE CONTRARY, THE HOLDER MAY, IN ITS SOLE DISCRETION, EXERCISE THIS WARRANT IN
WHOLE OR IN PART AND, IN

 

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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)

B

 

For purposes of the foregoing formula:

 

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

 

B= the Closing Sale Price of the Common Stock (as reported by Bloomberg) on the
date immediately preceding the date of the Exercise Notice.

 

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

 

(E)           DISPUTES.  IN THE CASE OF A DISPUTE AS TO THE DETERMINATION OF THE
EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT SHARES, THE COMPANY
SHALL PROMPTLY ISSUE TO THE HOLDER THE NUMBER OF WARRANT SHARES THAT ARE NOT
DISPUTED AND RESOLVE SUCH DISPUTE IN ACCORDANCE WITH SECTION 12.

 

2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  THE EXERCISE
PRICE AND THE NUMBER OF WARRANT SHARES SHALL BE ADJUSTED FROM TIME TO TIME AS
FOLLOWS:

 

(a)           Calculation of Warrant Shares. If, and only in the event that, the
Six Month Price is below $2.20, then the Purchasers shall have the right to
exercise this Warrant to purchase a number of Warrant Shares equal to:

 

((Invested Dollars) - ((Preferred Shares Purchased) X (Six Month Price)))

((Six Month Price) - ($0.01))

 

For purposes of the foregoing formula:

 

Six Month Price = the greater of $1.75 or the lowest average closing price of
the Common Stock for any 15 consecutive day period during the six month period
immediately following the Closing Date.

 

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(B)           ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK.  IF
THE COMPANY AT ANY TIME AFTER THE SUBSCRIPTION DATE SUBDIVIDES (BY ANY STOCK
SPLIT, STOCK DIVIDEND, RECAPITALIZATION OR OTHERWISE) ONE OR MORE CLASSES OF ITS
OUTSTANDING SHARES OF COMMON STOCK INTO A GREATER NUMBER OF SHARES, THE EXERCISE
PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH SUBDIVISION WILL BE PROPORTIONATELY
REDUCED AND THE NUMBER OF WARRANT SHARES WILL BE PROPORTIONATELY INCREASED.  IF
THE COMPANY AT ANY TIME ON OR AFTER THE SUBSCRIPTION DATE COMBINES (BY
COMBINATION, REVERSE STOCK SPLIT OR OTHERWISE) ONE OR MORE CLASSES OF ITS
OUTSTANDING SHARES OF COMMON STOCK INTO A SMALLER NUMBER OF SHARES, THE EXERCISE
PRICE IN EFFECT IMMEDIATELY PRIOR TO SUCH COMBINATION WILL BE PROPORTIONATELY
INCREASED AND THE NUMBER OF WARRANT SHARES WILL BE PROPORTIONATELY DECREASED. 
ANY ADJUSTMENT UNDER THIS SECTION 2(B) SHALL BECOME EFFECTIVE AT THE CLOSE OF
BUSINESS ON THE DATE THE SUBDIVISION OR COMBINATION BECOMES EFFECTIVE.

 

3.     RIGHTS UPON DISTRIBUTION OF ASSETS.  IF THE COMPANY SHALL DECLARE OR MAKE
ANY DIVIDEND OR OTHER DISTRIBUTION OF ITS ASSETS (OR RIGHTS TO ACQUIRE ITS
ASSETS) TO HOLDERS 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 OR OTHER SIMILAR TRANSACTION) (A
“DISTRIBUTION”), AT ANY TIME AFTER THE ISSUANCE OF THIS WARRANT, THEN, IN EACH
SUCH CASE:

 

(A)           ANY EXERCISE PRICE IN EFFECT IMMEDIATELY PRIOR TO THE CLOSE OF
BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF HOLDERS OF COMMON
STOCK ENTITLED TO RECEIVE THE DISTRIBUTION SHALL BE REDUCED, EFFECTIVE AS OF THE
CLOSE OF BUSINESS ON SUCH RECORD DATE, TO A PRICE DETERMINED BY MULTIPLYING SUCH
EXERCISE PRICE BY A FRACTION OF WHICH (I) THE NUMERATOR SHALL BE THE CLOSING
SALE PRICE OF THE COMMON STOCK ON THE TRADING DAY IMMEDIATELY PRECEDING SUCH
RECORD DATE MINUS THE VALUE OF THE DISTRIBUTION (AS DETERMINED IN GOOD FAITH BY
THE COMPANY’S BOARD OF DIRECTORS) APPLICABLE TO ONE SHARE OF COMMON STOCK, AND
(II) THE DENOMINATOR SHALL BE THE CLOSING SALE PRICE OF THE COMMON STOCK ON THE
TRADING DAY IMMEDIATELY PRECEDING SUCH RECORD DATE; AND

 

(B)           THE NUMBER OF WARRANT SHARES SHALL BE INCREASED TO A NUMBER OF
SHARES EQUAL TO THE NUMBER OF SHARES OF COMMON STOCK OBTAINABLE IMMEDIATELY
PRIOR TO THE CLOSE OF BUSINESS ON THE RECORD DATE FIXED FOR THE DETERMINATION OF
HOLDERS OF COMMON STOCK ENTITLED TO RECEIVE THE DISTRIBUTION MULTIPLIED BY THE
RECIPROCAL OF THE FRACTION SET FORTH IN THE IMMEDIATELY PRECEDING PARAGRAPH (A);
PROVIDED THAT IN THE EVENT THAT THE DISTRIBUTION IS OF COMMON STOCK (“OTHER
COMMON STOCK”) OF A COMPANY WHOSE COMMON STOCK IS TRADED ON A NATIONAL
SECURITIES EXCHANGE OR A NATIONAL AUTOMATED QUOTATION SYSTEM, THEN THE HOLDER
MAY ELECT TO RECEIVE A WARRANT TO PURCHASE OTHER COMMON STOCK IN LIEU OF AN
INCREASE IN THE NUMBER OF WARRANT SHARES, THE TERMS OF WHICH SHALL BE IDENTICAL
TO THOSE OF THIS WARRANT, EXCEPT THAT SUCH WARRANT SHALL BE EXERCISABLE INTO THE
NUMBER OF SHARES OF OTHER COMMON STOCK THAT WOULD HAVE BEEN PAYABLE TO THE
HOLDER PURSUANT TO THE DISTRIBUTION HAD THE HOLDER EXERCISED THIS WARRANT
IMMEDIATELY PRIOR TO SUCH RECORD DATE AND WITH AN AGGREGATE EXERCISE PRICE EQUAL
TO THE PRODUCT OF THE AMOUNT BY WHICH THE EXERCISE PRICE OF THIS WARRANT WAS
DECREASED WITH RESPECT TO THE DISTRIBUTION PURSUANT TO THE TERMS OF THE
IMMEDIATELY PRECEDING PARAGRAPH (A) AND THE NUMBER OF WARRANT SHARES CALCULATED
IN ACCORDANCE WITH THE FIRST PART OF THIS PARAGRAPH (B).

 

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4.     PURCHASE RIGHTS; ORGANIC CHANGE.

 

(A)           PURCHASE RIGHTS.  IN ADDITION TO ANY ADJUSTMENTS PURSUANT TO
SECTION 2 OR 3 ABOVE, IF AT ANY TIME THE COMPANY GRANTS, ISSUES OR SELLS ANY
OPTIONS (OTHER THAN OPTIONS ISSUED PURSUANT TO AN APPROVED STOCK PLAN),
CONVERTIBLE SECURITIES OR RIGHTS TO PURCHASE STOCK, WARRANTS, SECURITIES OR
OTHER PROPERTY PRO RATA TO THE RECORD HOLDERS OF ANY CLASS 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 SUCH
HOLDER COULD HAVE ACQUIRED IF SUCH HOLDER HAD HELD THE NUMBER OF SHARES OF
COMMON STOCK ACQUIRABLE UPON COMPLETE EXERCISE OF THIS WARRANT (WITHOUT REGARD
TO ANY LIMITATIONS ON THE EXERCISE OF THIS WARRANT) 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 COMMON STOCK ARE TO BE DETERMINED FOR THE GRANT, ISSUE OR SALE OF SUCH
PURCHASE RIGHTS.

 

(B)           ORGANIC CHANGE.  ANY RECAPITALIZATION, REORGANIZATION,
RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OF ALL OR SUBSTANTIALLY ALL OF THE
COMPANY’S ASSETS TO ANOTHER PERSON OR OTHER TRANSACTION, IN EACH CASE WHICH IS
EFFECTED IN SUCH A WAY THAT HOLDERS OF COMMON STOCK ARE ENTITLED TO RECEIVE
SECURITIES OR ASSETS WITH RESPECT TO OR IN EXCHANGE FOR COMMON STOCK IS REFERRED
TO HEREIN AS AN “ORGANIC CHANGE.”  PRIOR TO THE CONSUMMATION OF ANY (I) SALE OF
ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS TO AN ACQUIRING PERSON OR (II)
OTHER ORGANIC CHANGE FOLLOWING WHICH THE COMPANY IS NOT A SURVIVING ENTITY, THE
COMPANY WILL SECURE FROM THE PERSON PURCHASING SUCH ASSETS OR THE PERSON ISSUING
THE SECURITIES OR PROVIDING THE ASSETS IN SUCH ORGANIC CHANGE (IN EACH CASE, THE
“ACQUIRING ENTITY”) A WRITTEN AGREEMENT (IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE HOLDERS OF SPA WARRANTS REPRESENTING AT LEAST A MAJORITY OF
THE SHARES OF COMMON STOCK OBTAINABLE UPON EXERCISE OF THE SPA WARRANTS THEN
OUTSTANDING) TO DELIVER TO THE HOLDER IN EXCHANGE FOR THIS WARRANT, A SECURITY
OF THE ACQUIRING ENTITY EVIDENCED BY A WRITTEN INSTRUMENT SUBSTANTIALLY SIMILAR
IN FORM AND SUBSTANCE TO THIS WARRANT AND REASONABLY SATISFACTORY TO THE HOLDER
(INCLUDING, AN ADJUSTED EXERCISE PRICE EQUAL TO THE VALUE FOR THE COMMON STOCK
REFLECTED BY THE TERMS OF SUCH CONSOLIDATION, MERGER OR SALE, AND EXERCISABLE
FOR A CORRESPONDING NUMBER OF SHARES OF COMMON STOCK ACQUIRABLE AND RECEIVABLE
UPON EXERCISE OF THIS WARRANT).  IN THE EVENT THAT AN ACQUIRING ENTITY IS
DIRECTLY OR INDIRECTLY CONTROLLED BY A COMPANY OR ENTITY WHOSE COMMON STOCK OR
SIMILAR EQUITY INTEREST IS LISTED, DESIGNATED OR QUOTED ON A SECURITIES EXCHANGE
OR TRADING MARKET, THE HOLDER MAY ELECT TO TREAT SUCH PERSON AS THE ACQUIRING
ENTITY FOR PURPOSES OF THIS SECTION 4(B).  PRIOR TO THE CONSUMMATION OF ANY
OTHER ORGANIC CHANGE, THE COMPANY SHALL BE REQUIRED TO MAKE APPROPRIATE
PROVISION (IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE HOLDERS OF SPA
WARRANTS REPRESENTING AT LEAST A MAJORITY OF THE SHARES OF COMMON STOCK
OBTAINABLE UPON EXERCISE OF THE SPA WARRANTS THEN OUTSTANDING) TO INSURE THAT
THE HOLDER THEREAFTER WILL HAVE THE RIGHT TO ACQUIRE AND RECEIVE IN LIEU OF OR
IN ADDITION TO (AS THE CASE MAY BE) THE SHARES OF COMMON STOCK IMMEDIATELY
THERETOFORE ACQUIRABLE AND RECEIVABLE UPON THE EXERCISE OF THIS WARRANT, SUCH
SHARES OF STOCK, SECURITIES OR ASSETS THAT WOULD HAVE BEEN ISSUED OR PAYABLE IN
SUCH ORGANIC CHANGE WITH RESPECT TO OR IN EXCHANGE FOR THE NUMBER OF SHARES OF
COMMON STOCK WHICH WOULD HAVE BEEN ACQUIRABLE AND RECEIVABLE UPON THE EXERCISE
OF THIS WARRANT AS OF THE DATE OF SUCH ORGANIC CHANGE.

 

5.     NONCIRCUMVENTION.  THE COMPANY HEREBY COVENANTS AND AGREES THAT THE
COMPANY WILL NOT, BY AMENDMENT OF ITS CERTIFICATE OF INCORPORATION OR THROUGH
ANY

 

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REORGANIZATION, TRANSFER OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ISSUE OR
SALE OF SECURITIES, OR ANY OTHER VOLUNTARY ACTION, AVOID OR SEEK TO AVOID THE
OBSERVANCE OR PERFORMANCE OF ANY OF THE TERMS OF THIS WARRANT, AND WILL AT ALL
TIMES IN GOOD FAITH CARRY OUT ALL THE PROVISIONS OF THIS 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) WILL NOT INCREASE THE PAR VALUE
OF ANY SHARES OF COMMON STOCK RECEIVABLE UPON THE EXERCISE OF THIS WARRANT ABOVE
THE EXERCISE PRICE THEN IN EFFECT, (II) WILL TAKE ALL SUCH ACTIONS AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER THAT THE COMPANY MAY VALIDLY AND LEGALLY ISSUE
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK UPON THE EXERCISE OF THIS
WARRANT, AND (III) WILL, SO LONG AS ANY OF THE SPA WARRANTS ARE OUTSTANDING,
TAKE ALL ACTION NECESSARY TO RESERVE AND KEEP AVAILABLE OUT OF ITS AUTHORIZED
AND UNISSUED COMMON STOCK, SOLELY FOR THE PURPOSE OF EFFECTING THE EXERCISE OF
THE SPA WARRANTS, 125% OF THE NUMBER OF SHARES OF COMMON STOCK AS SHALL FROM
TIME TO TIME BE NECESSARY TO EFFECT THE EXERCISE OF THE SPA 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 SUCH PERSON’S CAPACITY AS A
HOLDER, OF THIS WARRANT SHALL NOT BE ENTITLED TO VOTE OR RECEIVE DIVIDENDS OR BE
DEEMED THE HOLDER OF SHARES OF THE COMPANY FOR ANY PURPOSE, NOR SHALL ANYTHING
CONTAINED IN THIS WARRANT BE CONSTRUED TO CONFER UPON THE HOLDER, SOLELY IN SUCH
PERSON’S CAPACITY AS A HOLDER OF THIS WARRANT, ANY OF THE RIGHTS OF A
SHAREHOLDER 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 WARRANT SHARES WHICH SUCH PERSON IS THEN ENTITLED
TO RECEIVE UPON THE DUE EXERCISE OF THIS WARRANT.  IN ADDITION, NOTHING
CONTAINED IN THIS WARRANT SHALL BE CONSTRUED AS IMPOSING ANY LIABILITIES ON SUCH
HOLDER TO PURCHASE ANY SECURITIES (UPON EXERCISE OF THIS 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 WILL 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.

 

7.             REISSUANCE OF WARRANTS.

 

(A)           TRANSFER OF WARRANT.  THE HOLDER MAY TRANSFER THIS WARRANT AND THE
RIGHTS HEREUNDER ONLY IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS.  IF THIS
WARRANT IS TO BE TRANSFERRED, THE HOLDER SHALL SURRENDER THIS WARRANT TO THE
COMPANY, WHEREUPON THE COMPANY WILL FORTHWITH ISSUE AND DELIVER UPON THE ORDER
OF THE HOLDER A NEW WARRANT (IN ACCORDANCE WITH SECTION 7(D)), REGISTERED AS THE
HOLDER MAY REQUEST, REPRESENTING THE RIGHT TO PURCHASE THE NUMBER OF WARRANT
SHARES BEING TRANSFERRED BY THE HOLDER AND, IF LESS THEN THE TOTAL NUMBER OF
WARRANT SHARES THEN UNDERLYING THIS WARRANT IS BEING TRANSFERRED, A NEW WARRANT
(IN ACCORDANCE WITH SECTION 7(D)) TO THE HOLDER REPRESENTING THE RIGHT TO
PURCHASE THE NUMBER OF WARRANT SHARES NOT BEING TRANSFERRED.

 

(B)           LOST, STOLEN OR MUTILATED WARRANT.  UPON RECEIPT BY THE COMPANY OF
EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY OF THE LOSS, THEFT, DESTRUCTION
OR MUTILATION OF

 

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THIS WARRANT, AND, IN THE CASE OF LOSS, THEFT OR DESTRUCTION, OF ANY
INDEMNIFICATION UNDERTAKING BY THE HOLDER TO THE COMPANY IN CUSTOMARY FORM, IN
THE CASE OF MUTILATION, UPON SURRENDER AND CANCELLATION OF THIS WARRANT, THE
COMPANY SHALL EXECUTE AND DELIVER TO THE HOLDER A NEW WARRANT (IN ACCORDANCE
WITH SECTION 7(D)) REPRESENTING THE RIGHT TO PURCHASE THE WARRANT SHARES THEN
UNDERLYING THIS WARRANT.

 

(C)           WARRANT EXCHANGEABLE FOR MULTIPLE WARRANTS.  THIS WARRANT IS
EXCHANGEABLE, UPON THE SURRENDER HEREOF BY THE HOLDER AT THE PRINCIPAL OFFICE OF
THE COMPANY, FOR A NEW WARRANT OR WARRANTS (IN ACCORDANCE WITH SECTION 7(D))
REPRESENTING IN THE AGGREGATE THE RIGHT TO PURCHASE THE NUMBER OF WARRANT SHARES
THEN UNDERLYING THIS WARRANT, AND EACH SUCH NEW WARRANT WILL REPRESENT THE RIGHT
TO PURCHASE SUCH PORTION OF SUCH WARRANT SHARES AS IS DESIGNATED BY THE HOLDER
AT THE TIME OF SUCH SURRENDER; PROVIDED, HOWEVER, THAT NO WARRANTS FOR
FRACTIONAL SHARES OF COMMON STOCK SHALL BE GIVEN.

 

(D)           ISSUANCE OF NEW WARRANTS.  WHENEVER THE COMPANY IS REQUIRED TO
ISSUE A NEW WARRANT PURSUANT TO THE TERMS OF THIS WARRANT, SUCH NEW WARRANT (I)
SHALL BE OF LIKE TENOR WITH THIS WARRANT, (II) SHALL REPRESENT, AS INDICATED ON
THE FACE OF SUCH NEW WARRANT, THE RIGHT TO PURCHASE THE WARRANT SHARES THEN
UNDERLYING THIS WARRANT (OR IN THE CASE OF A NEW WARRANT BEING ISSUED PURSUANT
TO SECTION 7(A) OR SECTION 7(C), THE WARRANT SHARES DESIGNATED BY THE HOLDER
WHICH, WHEN ADDED TO THE NUMBER OF SHARES OF COMMON STOCK UNDERLYING THE OTHER
NEW WARRANTS ISSUED IN CONNECTION WITH SUCH ISSUANCE, DOES NOT EXCEED THE NUMBER
OF WARRANT SHARES THEN UNDERLYING THIS WARRANT), (III) SHALL HAVE AN ISSUANCE
DATE, AS INDICATED ON THE FACE OF SUCH NEW WARRANT WHICH IS THE SAME AS THE
ISSUANCE DATE, AND (IV) SHALL HAVE THE SAME RIGHTS AND CONDITIONS AS THIS
WARRANT.

 

8.     NOTICES.  WHENEVER NOTICE IS REQUIRED TO BE GIVEN UNDER THIS WARRANT,
UNLESS OTHERWISE PROVIDED HEREIN, SUCH NOTICE SHALL BE GIVEN IN ACCORDANCE WITH
SECTION 9(F) OF THE SECURITIES PURCHASE AGREEMENT.  THE COMPANY SHALL PROVIDE
THE HOLDER WITH PROMPT WRITTEN NOTICE OF ALL ACTIONS TAKEN PURSUANT TO THIS
WARRANT, INCLUDING IN REASONABLE DETAIL A DESCRIPTION OF SUCH ACTION AND THE
REASON THEREFORE.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE COMPANY
WILL GIVE WRITTEN NOTICE TO THE HOLDER (I) PROMPTLY UPON ANY ADJUSTMENT OF THE
EXERCISE PRICE OR NUMBER OF WARRANT SHARES OR NUMBER OR KIND OF SECURITIES
PURCHASABLE UPON EXERCISE OF THIS WARRANT, SETTING FORTH IN REASONABLE DETAIL,
AND CERTIFYING, THE FACTS REQUIRING SUCH ADJUSTMENT AND THE CALCULATION OF SUCH
ADJUSTMENT AND (II) AT LEAST FIFTEEN DAYS PRIOR TO THE DATE ON WHICH THE COMPANY
CLOSES ITS BOOKS OR TAKES A RECORD (A) WITH RESPECT TO ANY DIVIDEND OR
DISTRIBUTION UPON THE COMMON STOCK, (B) WITH RESPECT TO ANY GRANTS, ISSUES OR
SALES OF ANY OPTIONS, CONVERTIBLE SECURITIES OR RIGHTS TO PURCHASE STOCK,
WARRANTS, SECURITIES OR OTHER PROPERTY TO HOLDERS OF COMMON STOCK OR (C) FOR
DETERMINING RIGHTS TO VOTE WITH RESPECT TO ANY CHANGE OF CONTROL (AS DEFINED IN
THE CERTIFICATE OF DESIGNATIONS), DISSOLUTION OR LIQUIDATION, PROVIDED IN EACH
CASE THAT SUCH INFORMATION SHALL BE MADE KNOWN TO THE PUBLIC PRIOR TO OR IN
CONJUNCTION WITH SUCH NOTICE BEING PROVIDED TO THE HOLDER.

 

9.     AMENDMENT AND WAIVER.  EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
PROVISIONS OF THIS WARRANT 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 HOLDERS OF SPA
WARRANTS REPRESENTING AT LEAST A MAJORITY

 

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OF THE SHARES OF COMMON STOCK OBTAINABLE UPON EXERCISE OF THE SPA WARRANTS THEN
OUTSTANDING; PROVIDED THAT NO SUCH ACTION MAY INCREASE THE EXERCISE PRICE OF ANY
SPA WARRANT OR DECREASE THE NUMBER OF SHARES OR CLASS OF STOCK OBTAINABLE UPON
EXERCISE OF ANY SPA WARRANT WITHOUT THE WRITTEN CONSENT OF THE HOLDER.  NO SUCH
AMENDMENT SHALL BE EFFECTIVE TO THE EXTENT THAT IT APPLIES TO LESS THAN ALL OF
THE HOLDERS OF THE SPA WARRANTS THEN OUTSTANDING.

 

10.           GOVERNING LAW.  THIS WARRANT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY,
INTERPRETATION AND PERFORMANCE OF THIS 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.

 

11.   CONSTRUCTION; HEADINGS.  THIS WARRANT SHALL BE DEEMED TO BE JOINTLY
DRAFTED BY THE COMPANY AND ALL THE PURCHASERS AND SHALL NOT BE CONSTRUED AGAINST
ANY PERSON AS THE DRAFTER HEREOF.  THE HEADINGS OF THIS WARRANT ARE FOR
CONVENIENCE OF REFERENCE AND SHALL NOT FORM PART OF, OR AFFECT THE
INTERPRETATION OF, THIS WARRANT.

 

12.   DISPUTE RESOLUTION.  (A)   IN THE CASE OF A DISPUTE AS TO THE ARITHMETIC
CALCULATION OF THE EXERCISE PRICE OR THE ARITHMETIC CALCULATION OF THE WARRANT
SHARES, THE COMPANY SHALL SUBMIT THE DISPUTED ARITHMETIC CALCULATIONS VIA
FACSIMILE WITHIN TWO BUSINESS DAYS OF RECEIPT OF THE EXERCISE NOTICE GIVING RISE
TO SUCH DISPUTE, AS THE CASE MAY BE, TO THE HOLDER.  THE HOLDER AND THE COMPANY
SHALL DETERMINE THE CORRECT ARITHMETIC CALCULATION WITHIN THREE BUSINESS DAYS OF
SUCH DISPUTED ARITHMETIC CALCULATION BEING TRANSMITTED TO SUCH HOLDER.  IF THE
HOLDER AND THE COMPANY ARE UNABLE TO AGREE UPON CORRECT ARITHMETIC CALCULATION
OF THE EXERCISE PRICE OR THE WARRANT SHARES WITHIN SUCH TIME, THEN THE COMPANY
SHALL, WITHIN TWO BUSINESS DAYS, SUBMIT VIA FACSIMILE THE DISPUTED CALCULATION
TO AN INDEPENDENT, REPUTABLE NATIONALLY RECOGNIZED ACCOUNTING FIRM SELECTED
JOINTLY BY THE COMPANY AND THE HOLDER.  THE COMPANY SHALL CAUSE THE ACCOUNTING
FIRM TO PERFORM THE CALCULATION AND NOTIFY THE COMPANY AND THE HOLDER OF THE
RESULTS NO LATER THAN TEN BUSINESS DAYS FROM THE TIME IT RECEIVES THE DISPUTED
DETERMINATIONS OR CALCULATIONS.  SUCH ACCOUNTING FIRM’S DETERMINATION SHALL BE
BINDING UPON ALL PARTIES ABSENT MANIFEST ERROR.

 

(B)           IN THE CASE OF A DISPUTE AS TO THE DETERMINATION OF FAIR MARKET
VALUE OF A SECURITY TO DETERMINE THE EXERCISE PRICE, THE COMPANY SHALL SUBMIT
THE DISPUTED DETERMINATION VIA FACSIMILE WITHIN TWO BUSINESS DAYS OF RECEIPT OF
THE EXERCISE NOTICE GIVING RISE TO SUCH DISPUTE, AS THE CASE MAY BE, TO THE
HOLDER.  IF THE HOLDER AND THE COMPANY ARE UNABLE TO AGREE UPON SUCH
DETERMINATION OR CALCULATION OF THE EXERCISE PRICE OR THE WARRANT SHARES WITHIN
THREE BUSINESS DAYS OF SUCH DISPUTED DETERMINATION BEING SUBMITTED TO THE
HOLDER, THEN THE COMPANY SHALL, WITHIN TWO BUSINESS DAYS, SUBMIT VIA FACSIMILE
THE DISPUTED DETERMINATION OF THE EXERCISE PRICE TO AN INDEPENDENT, REPUTABLE
INVESTMENT BANK OR ACCOUNTANT SELECTED JOINTLY BY THE COMPANY AND THE HOLDER. 
THE COMPANY SHALL CAUSE THE INVESTMENT BANK OR THE ACCOUNTANT, AS THE CASE MAY
BE, TO PERFORM THE DETERMINATIONS AND NOTIFY THE COMPANY AND THE HOLDER OF THE
RESULTS NO LATER THAN TEN BUSINESS DAYS FROM THE TIME IT RECEIVES THE DISPUTED
DETERMINATIONS OR CALCULATIONS.  SUCH INVESTMENT BANK’S DETERMINATION SHALL BE
BINDING UPON ALL PARTIES ABSENT DEMONSTRABLE ERROR.

 

9

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(C)           THE FEES AND EXPENSES ASSOCIATED WITH THE DETERMINATIONS MADE BY
SUCH INVESTMENT BANK OR ACCOUNTANT SHALL BE BOURNE BY THE PARTIES HERETO IN
INVERSE PROPORTION TO THE RESOLUTION OF THE DISCREPANCY THAT IS THE SUBJECT OF
THE DISPUTE.

 

13.   REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  THE REMEDIES
PROVIDED IN THIS WARRANT SHALL BE CUMULATIVE AND IN ADDITION TO ALL OTHER
REMEDIES AVAILABLE UNDER THIS WARRANT OR ANY OTHER TRANSACTION DOCUMENT (AS
DEFINED IN THE SECURITIES PURCHASE AGREEMENT), 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 RIGHT TO PURSUE ACTUAL DAMAGES FOR
ANY FAILURE BY THE COMPANY TO COMPLY WITH THE TERMS OF THIS WARRANT. 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 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.

 

14.   TRANSFER.  THIS WARRANT MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED WITHOUT THE CONSENT OF THE COMPANY, SUBJECT TO APPLICABLE SECURITIES
LAWS.

 

15.   CERTAIN DEFINITIONS.  FOR PURPOSES OF THIS WARRANT, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:

 

(A)           “APPROVED STOCK PLAN” MEANS ANY EMPLOYEE BENEFIT PLAN WHICH HAS
BEEN APPROVED BY THE BOARD OF DIRECTORS OF THE COMPANY, PURSUANT TO WHICH THE
COMPANY’S SECURITIES MAY BE ISSUED TO EMPLOYEES, OFFICERS OR INDEPENDENT
DIRECTORS FOR SERVICES PROVIDED TO THE COMPANY.

 

(B)           “BLOOMBERG” MEANS BLOOMBERG FINANCIAL MARKETS.

 

(C)           “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.

 

(D)           “CLOSING BID PRICE” AND “CLOSING SALE PRICE” MEAN, FOR ANY
SECURITY AS OF ANY DATE, THE LAST CLOSING BID PRICE AND LAST CLOSING TRADE
PRICE, RESPECTIVELY, FOR SUCH SECURITY ON THE PRINCIPAL MARKET (AS DEFINED IN
THE SECURITIES PURCHASE AGREEMENT), AS REPORTED BY BLOOMBERG, OR, IF THE
PRINCIPAL MARKET BEGINS TO OPERATE ON AN EXTENDED HOURS BASIS AND DOES NOT
DESIGNATE THE CLOSING BID PRICE OR THE CLOSING TRADE PRICE, AS THE CASE MAY BE,
THEN THE LAST BID PRICE OR LAST TRADE PRICE, RESPECTIVELY, OF SUCH SECURITY
PRIOR TO 4:00 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 CLOSING BID PRICE OR LAST TRADE PRICE, RESPECTIVELY, 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 DO
NOT APPLY, THE LAST CLOSING BID PRICE OR LAST TRADE PRICE, RESPECTIVELY, OF SUCH
SECURITY IN THE OVER-THE-COUNTER MARKET ON THE ELECTRONIC BULLETIN BOARD FOR
SUCH SECURITY AS REPORTED BY BLOOMBERG, OR, IF NO CLOSING BID PRICE OR LAST
TRADE

 

10

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PRICE, RESPECTIVELY, IS REPORTED FOR SUCH SECURITY BY BLOOMBERG, THE AVERAGE OF
THE BID PRICES, OR THE ASK PRICES, RESPECTIVELY, OF ANY MARKET MAKERS FOR SUCH
SECURITY AS REPORTED IN THE “PINK SHEETS” BY PINK SHEETS LLC (FORMERLY THE
NATIONAL QUOTATION BUREAU, INC.).  IF THE CLOSING BID PRICE OR THE CLOSING SALE
PRICE CANNOT BE CALCULATED FOR A SECURITY ON A PARTICULAR DATE ON ANY OF THE
FOREGOING BASES, THE CLOSING BID PRICE OR THE CLOSING SALE PRICE, AS THE CASE
MAY BE, 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 PURSUANT TO SECTION 12.  ALL SUCH DETERMINATIONS TO BE
APPROPRIATELY ADJUSTED FOR ANY STOCK DIVIDEND, STOCK SPLIT, STOCK COMBINATION OR
OTHER SIMILAR TRANSACTION DURING THE APPLICABLE CALCULATION PERIOD.

 

(E)           “COMMON STOCK” MEANS (I) THE COMPANY’S COMMON STOCK, PAR VALUE
$.001 PER SHARE, AND (II) ANY CAPITAL STOCK INTO WHICH SUCH COMMON STOCK SHALL
HAVE BEEN CHANGED OR ANY CAPITAL STOCK RESULTING FROM A RECLASSIFICATION OF SUCH
COMMON STOCK.

 

(F)            “CONVERTIBLE SECURITIES” MEANS ANY STOCK OR SECURITIES (OTHER
THAN OPTIONS) DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR EXERCISABLE OR
EXCHANGEABLE FOR COMMON STOCK.

 

(G)           “EXPIRATION DATE” MEANS THE DATE TWO HUNDRED AND TEN DAYS AFTER
THE CLOSING DATE (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT) 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.

 

(H)           “OPTIONS” MEANS ANY RIGHTS, WARRANTS OR OPTIONS TO SUBSCRIBE FOR
OR PURCHASE COMMON STOCK OR CONVERTIBLE SECURITIES.

 

(I)            “PERSON” MEANS AN INDIVIDUAL, A LIMITED LIABILITY COMPANY, A
PARTNERSHIP, A JOINT VENTURE, A CORPORATION, A TRUST, AN UNINCORPORATED
ORGANIZATION, ANY OTHER ENTITY AND A GOVERNMENT OR ANY DEPARTMENT OR AGENCY
THEREOF.

 

(J)            “REGISTRATION RIGHTS AGREEMENT” MEANS THAT CERTAIN REGISTRATION
RIGHTS AGREEMENT BY AND AMONG THE COMPANY AND THE PURCHASERS.

 

(K)           “SPA SECURITIES” MEANS THE SERIES A CONVERTIBLE PREFERRED STOCK OF
THE COMPANY ISSUED PURSUANT TO THE SECURITIES PURCHASE AGREEMENT.

 

[Signature Page Follows]

 

11

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

ARTEMIS INTERNATIONAL
SOLUTIONS CORPORATION

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

12

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EXHIBIT A

 

EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

ARTEMIS INTERNATIONAL SOLUTIONS CORPORATION

 

The undersigned holder hereby exercises the right to purchase              of
the shares of Common Stock (“Warrant Shares”) of Artemis International Solutions
Corporation, a Delaware corporation (the “Company”), evidenced by the attached
Warrant to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Warrant.

 

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as:

 

a “Cash Exercise” with respect to                                    Warrant
Shares; and/or

 

a “Cashless Exercise” with respect to                                Warrant
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 Warrant 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 Warrant.

 

3.  Delivery of Warrant Shares.  The Company shall deliver to the holder
                     Warrant Shares in accordance with the terms of the Warrant.

 

Date:                     ,       

 

 

 

 

Name of Registered Holder

 

 

 

 

 

By:

 

 

 

Name:

 

Title:

 

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ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust Co. to issue the above indicated number of shares of
Common Stock in accordance with the Transfer Agent Instructions dated June     ,
2004 from the Company and acknowledged and agreed to by American Stock Transfer
& Trust Co.

 

 

ARTEMIS INTERNATIONAL
SOLUTIONS CORPORATION

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

14

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