AMENDMENT NO. 1 TO
INVESTMENT AGREEMENT

 

THIS AMENDMENT NO. 1 TO INVESTMENT AGREEMENT, dated as of May 8, 2014 (this
“Amendment”), is made between The Management Network Group, Inc., a Delaware
corporation (“Company”), and Elutions, Inc., a Delaware corporation
(“Purchaser”).

 

WITNESSETH

 

WHEREAS, on February 25, 2014, Company and Purchaser entered into an Investment
Agreement (the “Investment Agreement”); and

 

WHEREAS, Company and Purchaser now desire to amend the Investment Agreement
pursuant to Section 12.7 of the Investment Agreement, in the respects set forth
in this Amendment.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

 

 

1.           The definition of “Convertible Securities” is hereby amended in its
entirety as follows:

 

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock whether upon issuance or at a
later date or upon satisfaction of any conditions or contingencies, but
excluding Options.”

 

2.           The definition of “Excluded Issuances” is hereby amended in its
entirety as follows:

 

“Excluded Issuances” means any issuance or sale by Company after the Effective
Date of shares of Common Stock (including, without limitation, the granting of
stock appreciation rights, phantom stock rights or other rights with equity
features), Options or Convertible Securities: (a) pursuant to this Agreement or
any warrants, instruments or agreements entered into pursuant thereto; (b) to
directors, officers, employees, or consultants of Company and its Subsidiaries
in connection with their service as directors, employees or consultants of such
entities as approved by the Company Board; (c) pursuant to the conversion or
exercise of Options or Convertible Securities issued prior to the Effective
Date, provided that such securities are not amended after the date hereof to
increase the number of shares of Common Stock issuable thereunder or to lower
the exercise or conversion price thereof; (d) pursuant to the Amended and
Restated Rights Agreement, except to the extent that such agreement is triggered
upon any Person other than a member of the Elutions Group becoming an Acquiring
Person under the Amended and Restated Rights Agreement; (e) in connection with
acquisition transactions approved by the Company Board; (f) pursuant to a
strategic partner in a primarily non-financing transaction as approved by the
Company Board; (g) in a firm commitment underwritten public offering; or (h) in
connection with debt financings, equipment financings or similar transactions
approved by the Company Board.”

 

 

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3.           A new Section 6.2(c) of the Investment Agreement is hereby added to
read in its entirety as follows:

 

“During the period between the Effective Date and the earlier to occur of (i)
the exercise or conversion of all of the shares of Common Stock subject to the
Warrants (after all adjustments as set forth in the applicable Warrant) and (ii)
the six (6) year anniversary of the Closing Date, except as otherwise expressly
contemplated in this Agreement, the Company shall not (nor shall it permit any
of its Subsidiaries to), without the prior written consent of the Purchaser,
issue or sell any Options or Convertible Securities, other than with respect to
Excluded Issuances or pursuant to the Amended and Restated Rights Agreement.”

 

4.           Simultaneously with the execution and delivery of this Amendment,
Company and Purchaser shall amend and restate the outstanding Warrant
(Commercial Incentive) and the outstanding Warrant (Tracking), as follows: (a)
Purchaser shall surrender to the Company, for cancellation, the outstanding
Warrant (Commercial Incentive) and the outstanding Warrant (Tracking), and (b)
Purchaser and the Company shall execute and deliver an Amended and Restated
Common Stock Purchase Warrant (Commercial Incentive), in the form attached
hereto as Exhibit A, which shall upon the execution and delivery thereof be
deemed the Warrant (Commercial Incentive) for purposes of the Investment
Agreement and all other Transaction Documents, and Company and Purchaser shall
execute and deliver an Amended and Restated Common Stock Purchase Warrant
(Tracking), in the form attached hereto as Exhibit B, which shall upon the
execution and delivery thereof be deemed the Warrant (Tracking) for purposes of
the Investment Agreement and all other Transaction Documents. The Investment
Agreement as amended by this Amendment shall upon the execution and delivery of
this Amendment be deemed the Investment Agreement for purposes of all other
Transaction Documents.

 

5.           Unless expressly revised by this Amendment, the terms and
conditions of the Investment Agreement remain unchanged and in full force and
effect. The contents of this Amendment supersede any previous agreement between
the parties pertaining to the subject matter hereof. To the extent that there is
a conflict between the terms and provisions of the Investment Agreement and this
Amendment, the terms and provisions of this Amendment shall control. Capitalized
terms used herein but not defined herein shall have the respective meanings
assigned to them in the Investment Agreement.

 

6.           This Amendment and all claims or causes of action (whether in tort,
contract or otherwise) that may be based upon, arise out of or relate to this
Amendment or the negotiation, execution or performance of this Amendment
(including any claim or cause of action based upon, arising out of or related to
any representation or warranty made in or in connection with this Amendment)
shall be governed by and construed in accordance with the Laws (as defined in
the Investment Agreement) of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of New York. Notwithstanding the foregoing,
the fiduciary duties of the Company Board (as defined in the Investment
Agreement), the validity of any corporate action on the part of the Company, and
any other matters relating to the internal corporate affairs of the Company,
shall be interpreted, construed and governed by and in accordance with the laws
of the State of Delaware, without regard to the conflicts of laws rules thereof.

 

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7.           This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original,
and all such counterparts shall together constitute but one and the same
instrument. A signature to this Amendment transmitted electronically shall have
the same authority, effect, and enforceability as an original signature.

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.

 

COMPANY:               The Management Network Group, Inc.                      
          By: /s/ Donald E. Klumb       Name: Donald E. Klumb       Title: Chief
Executive Officer, President and Chief Financial Officer                        
PURCHASER:             Elutions, Inc.                                 By: /s/
Benjamin Kaiser       Name:

Benjamin Kaiser

      Title:

Chief Risk Officer

 

 

 

 

 

[Signature Page to Amendment No. 1 to Investment Agreement]

 

 

 

Exhibit A

 

Amended and Restated Common Stock Purchase Warrant

(Commercial Incentive)

 

 

 

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT AND THE SHARES ISSUABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS PROVIDED HEREIN,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
OR SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS PERMITTED UNDER RULE
144 OF THE ACT OR IS OTHERWISE EXEMPT FROM SUCH REGISTRATION.

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT IS SUBJECT TO THE TERMS
AND CONDITIONS OF AN INVESTMENT AGREEMENT DATED AS OF FEBRUARY 25, 2014, AS
AMENDED FROM TIME TO TIME.

 

AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

 

(COMMERCIAL INCENTIVE)

 

THE MANAGEMENT NETWORK GROUP, INC.

 

Warrant Shares: 3,400,000 Issue Date: May 8, 2014

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT (COMMERCIAL INCENTIVE)
(this “Warrant”) is issued in exchange, replacement and substitution for the
Common Stock Purchase Warrant (Commercial Incentive) (the “Original Warrant”)
originally issued by The Management Network Group, Inc., a Delaware corporation
(“Company”) to Elutions, Inc., a Delaware corporation, its successors and
permitted assigns (together, “Holder”), on March 18, 2014 (the “Original Issue
Date”). Company certifies that, for value received, Holder is entitled, at any
time on or after the Issue Date specified above (the “Issue Date”) and prior to
5:00 p.m., New York City time, on the sixth (6th) anniversary of the Original
Issue Date (the “Expiration Date”), to purchase from Company up to the number of
fully paid and non-assessable shares (the “Shares”) of Common Stock, par value
$0.005 per share, of Company (the “Common Stock”), specified as Warrant Shares
above (the “Warrant Shares”) at the applicable exercise price per Share set
forth in Section 1 of this Warrant (the “Warrant Exercise Price”), in each case
subject to the adjustments and provisions and upon the terms and conditions set
forth in this Warrant. The Warrant Exercise Price for Warrant Shares shall
become locked in with respect to the applicable Exercise Price (“Locked In”) as
provided in Section 1 and Appendix 1 attached hereto. The Warrant Shares shall
vest and become exercisable (“Vested”) as provided in Section 2 and Appendix 1
attached hereto.

 

This Warrant has been issued pursuant to an Investment Agreement, dated as of
February 25, 2014, between Company and Holder (as amended by Amendment No. 1 to
the Investment Agreement, dated as of May 8, 2014, and as it may be further
amended from time to time in accordance with its terms, the “Investment
Agreement”). Each capitalized term used herein and not otherwise defined has the
meaning given to such term in the Investment Agreement.

 

 

 

 

1.           EXERCISE PRICE

 

The Warrant Exercise Price for each of the Warrant Shares, on a per share basis,
shall be as follows, subject to the vesting provisions in Section 2 and Appendix
1 to this Warrant, the exercise requirements set forth in Section 3 of this
Warrant, the adjustments provided for in Section 4 of this Warrant, and all
other provisions of this Warrant:

 

(a)           for any Warrant Shares Locked In or Vested from and after the
Original Issue Date through the first anniversary of the Original Issue Date,
the Warrant Exercise Price shall be $3.85 per share;

 

(b)           for any Warrant Shares Locked In or Vested after the first
anniversary of the Original Issue Date through the second anniversary of the
Original Issue Date, the Warrant Exercise Price shall be $4.10 per share;

 

(c)           for any Warrant Shares Locked In or Vested after the second
anniversary of the Original Issue Date through the third anniversary of the
Original Issue Date, the Warrant Exercise Price shall be $4.35 per share;

 

(d)           for any Warrant Shares Locked In or Vested after the third
anniversary of the Original Issue Date through the fourth anniversary of the
Original Issue Date, the Warrant Exercise Price shall be $4.60 per share; and

 

(e)           for any Warrant Shares Locked In or Vested after the fourth
anniversary of the Original Issue Date through the fifth anniversary of the
Original Issue Date, the Warrant Exercise Price shall be $4.85 per share;
provided that for the avoidance of doubt this Warrant shall not be exercisable
with respect to Warrant Shares that are not Vested as of the fifth (5th)
anniversary of the Original Issue Date.

 

The applicable Warrant Exercise Price for any Warrant Shares shall be determined
based upon the date that such Warrant Shares become Locked-In or Vested, as
applicable.

 

2.           VESTING

 

(a)           Subject to the terms and conditions of this Warrant and the
Investment Agreement, and notwithstanding any status as Locked In, Warrant
Shares shall not become exercisable unless such Warrant Shares become Vested as
provided in Appendix 1.

 

(b)           Anything in this Warrant to the contrary notwithstanding, this
Warrant may not be exercised in whole or in part and no Purchase Rights may be
granted or exercised (i) unless and until the Company has received the Required
Approval with respect to the issuance of Warrant Shares and the other
transactions contemplated hereby or (ii) at any time from and after 5:00 p.m.,
New York City time, on the Expiration Date. If the Company fails to receive the
Required Approval with respect to the issuance of Warrant Shares and the other
transactions contemplated hereby, then this Warrant shall thereafter be void and
of no further force and effect.

 

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3.           EXERCISE

 

This Warrant shall be exercisable into shares of Common Stock, on the terms and
conditions set forth in this Section 3.

 

3.1           Method of Exercise. Holder may, subject to the vesting provisions
in Section 2 of this Warrant, the adjustments provided for in Section 4 of this
Warrant, and all other provisions of this Warrant, exercise this Warrant in
whole or in part to purchase Warrant Shares that have become Vested for cash by
delivering to Company, in accordance with Section 9.2, (a) a duly executed
Notice of Exercise in substantially the form attached as Appendix 2 and (b) the
original of this Warrant. Unless Holder is exercising the conversion right
provided for in Section 3.2, Holder shall also deliver to Company a wire
transfer of immediately available funds (to an account designated by Company),
or, if Holder desires an alternative method of delivery of the funds, such other
form of payment acceptable to Company, in the amount of the aggregate Warrant
Exercise Price for the Warrant Shares being purchased. With respect to any
exercise or conversion of this Warrant, the Holder may not exercise or convert
this Warrant for fewer Warrant Shares than 1,000 Warrant Shares or if less, the
full number of Warrant Shares that may then be acquired upon exercise or
conversion of this Warrant.

 

3.2           Cashless Conversion Right. In lieu of exercising this Warrant to
purchase Warrant Shares for cash in accordance with Section 3.1, Holder may, at
its option, exercise this Warrant on a cashless basis for Warrant Shares that
become Vested in a fiscal year of the Company, provided that such cashless
exercise occurs not later than 60 days following the end of such fiscal year of
the Company in which such Warrant Shares have Vested, with net conversion based
on the Assumed Value per Share. Such cashless conversion shall be effected
without any obligation to pay the Warrant Exercise Price, into that number of
Warrant Shares determined by (x) multiplying the number of Warrant Shares being
exercised by (y) the quotient of (1)(A) the Assumed Value of one Share of Common
Stock minus (B) the Warrant Exercise Price of one Warrant Share divided by (2)
the Assumed Value of one Share of Common Stock. The Assumed Value of one Share
shall be determined pursuant to Section 3.3. Holder may exercise such conversion
right under this Warrant in whole or in part by delivering to Company, in
accordance with Section 9.2, (a) a duly executed Notice of Exercise in
substantially the form attached as Appendix 2 and (b) the original of this
Warrant. With respect to any Warrant Shares vesting in any fiscal year of the
Company, to the extent that the Holder fails to exercise such right under this
Warrant with respect to such Warrant Shares on a cashless basis within 60 days
following the end of such fiscal year of the Company as provided in this Section
3.2, Holder shall no longer have the right to exercise such right under this
Warrant with respect to such Warrant Shares on a cashless basis as provided in
this Section 3.2, but may otherwise exercise the Warrant thereafter with respect
to such Warrant Shares and pay the exercise price by wire transfer of
immediately available funds as provided in this Warrant. For the avoidance of
doubt, the number of Warrant Shares that are Locked In and Vested shall be
reduced by the number of such Warrant Shares being exercised, provided that the
maximum number of Shares that may be issued under this Warrant shall be reduced
only by the number of Warrant Shares that are actually issued. For example, if
the Assumed Value of one share of Common Stock is $8.20 and the Warrant Exercise
Price of one Warrant Share is $4.10, and the Warrant is being exercised with
respect to 500,000 Locked In and Vested Warrant Shares, resulting in the
issuance of 250,000 Warrant Shares, then the number of Warrant Shares that are
Locked In and Vested shall be reduced by 500,000 Warrant Shares and the maximum
number of Warrant Shares that may be issued under this Warrant shall be reduced
by 250,000 Warrant Shares.

 

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3.3           Assumed Value. For purposes of this Warrant, “Assumed Value” shall
mean, with respect to one Share of Common Stock for any date, the price
determined as follows: (a) the 30-day volume weighted average price of the
Common Stock (the dollar value of all Common Stock trading on the applicable
Principal Trading Market for the applicable 30-day period, divided by the total
trading volume or the applicable Principal Trading Market, for such 30-day
period) for the 30-day period ending on the last day of the respective fiscal
year (subject to proportionate adjustment for stock splits, subdivisions and
combinations of shares and similar events affecting the Common Stock), or (b) if
the Common Stock is not so listed or quoted, as reasonably determined by the
Company Board and Holder; provided, that if the Company Board and Holder cannot
determine the price of one Share of Common Stock, then such price shall be
determined in the same manner as determination of a Closing Price pursuant to
Section 6.11 of the Investment Agreement.

 

3.4           Delivery of Certificate and New Warrant. On or before 4:00 p.m.,
New York City time, on the third Business Day following the date of receipt or
transmittal of an Exercise Notice and, to the extent applicable, the aggregate
Warrant Exercise Price and receipt by Company of this Warrant, Company shall
issue and deliver to the address as specified in the Exercise Notice (if given
by Holder, otherwise to the address of Holder as set forth in Company’s
records), a certificate, registered in the name of Holder or its designee, for
the number of Shares to which Holder shall be entitled together with cash for
any fractional interest. Company shall, as soon as reasonably practicable and in
no event later than three Business Days after receipt of this Warrant and the
other items above and at its own expense, issue and deliver to Holder a new
Warrant, substantially identical hereto, representing the outstanding Warrant
Shares not exercised.

 

3.5           Reservation of Shares Issuable upon Exercise. Company shall
reserve and keep available out of its authorized but unissued Common Stock,
solely for the purpose of effecting the exercise of this Warrant, such number of
Shares as shall from time to time be sufficient to effect the exercise of all of
the Warrant Shares; and if at any time the number of Shares shall not be
sufficient to effect the exercise of all of the Warrant Shares, in addition to
such other remedies as shall be available to the Holder, Company shall take such
action as may be necessary to increase its authorized but unissued Common Stock
to such number of shares as shall be sufficient for such purposes.

 

4.           ADJUSTMENTS TO THE SHARES. The applicable Warrant Exercise Price
and the number of Warrant Shares obtainable upon exercise of this Warrant shall
each be subject to adjustment from time to time as provided in this Section 4.

 

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4.1           Stock Dividends, Splits, Etc. If, at any time while this Warrant
is outstanding, Company declares or pays a dividend or other distribution on the
outstanding shares of the Common Stock payable in additional shares of the
Common Stock or other securities (including rights to acquire securities), then
upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number of shares of Common Stock or the total
number and kind of other securities, as applicable, to which Holder would have
been entitled had Holder held such Shares as of the date on which a record is
taken for such dividend or other distribution. If Company subdivides the
outstanding shares of the Common Stock by reclassification or otherwise into a
greater number of shares, the number of Shares purchasable hereunder shall be
proportionately increased and the Warrant Exercise Price shall be
proportionately decreased as of the date on which a record is taken for such
subdivision. If the outstanding shares of the Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Exercise Price shall be proportionately increased and the number of
Shares purchasable hereunder shall be proportionately decreased as of the date
on which a record is taken for such combination or consolidation.

 

4.2           Reorganization, Reclassification, Exchange, Conversion or
Substitution. Upon any reorganization, reclassification (other than a
subdivision, combination or consolidation referred to in Section 4.1), exchange,
conversion, substitution, merger, sale of all or substantially all of the
Company’s assets followed by a liquidation of Company or similar event affecting
the outstanding shares of the Common Stock at any time while this Warrant is
outstanding (“Reorganization Event”), Holder shall be entitled to receive
(either directly or upon subsequent liquidation), upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised in full
immediately before such Reorganization Event, at an aggregate Warrant Exercise
Price not exceeding the aggregate Warrant Exercise Price in effect as of
immediately prior thereto. The provisions of this Section 4.2 shall similarly
apply to successive Reorganization Events. Notwithstanding anything to the
contrary contained herein, with respect to any Reorganization Event, the Holder
may elect prior to the record date or consummation date (if there is no record
date) of such Reorganization Event to exercise this Warrant in whole or in part
to the extent then exercisable instead of giving effect to the provisions
contained in this Section 4.2 with respect to this Warrant.

 

4.3           Distributions. If Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock evidences of its
indebtedness or other assets (excluding (a) evidences of indebtedness and other
assets referred to in Section 4.1 or Section 4.2 above or Section 4.8, and (b)
dividends or distributions paid in cash), then in each such case the Warrant
Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the Closing Price determined as of the record date
mentioned above and of which the numerator shall be the Closing Price on such
record date less the then per share fair market value at such record date of the
portion of such evidences of indebtedness or assets so distributed with respect
to one outstanding share of Common Stock. The net amount of any fair market
value of any consideration other than cash or marketable securities shall be
determined in good faith jointly by the Company Board and the Holder; provided,
however, that if such net amount of fair market value received cannot be
determined by the Company Board and Holder, then such net amount of fair market
value received shall be determined in the same manner as determination of a
Closing Price pursuant to Section 6.11 of the Investment Agreement.

 

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4.4           Fractional Shares. No fractional Share shall be issuable upon
exercise of this Warrant and the number of Shares to be issued shall be rounded
down to the nearest whole Share. If a fractional share interest arises upon any
exercise of this Warrant, Company shall eliminate such fractional share interest
by paying Holder cash in the amount computed by multiplying the fractional
interest by the Closing Price of a full Share on the date of exercise.

 

4.5           Certificate as to Adjustments. Upon each adjustment of the Warrant
Exercise Price, the Common Stock and/or number of Shares, or upon the occurrence
of any transaction or event described in this Section 4 (including, without
limitation, the grant of new securities or other property issuable upon exercise
or conversion of this Warrant as a result of a Reorganization Event), Company
shall promptly notify Holder thereof in writing, and, at Company’s expense,
promptly compute such adjustment, and furnish Holder with a certificate of its
Chief Financial Officer setting forth such adjustment and the facts upon which
such adjustment is based. In addition, Company shall promptly, following any
such adjustment, furnish Holder a certificate setting forth the Warrant Exercise
Price, Common Stock and number of Shares in effect upon the date thereof and the
series of adjustments leading to such Warrant Exercise Price, Common Stock and
number of Shares.

 

4.6           Additional Anti-Dilution Rights. In order to prevent dilution of
the purchase rights granted under this Warrant, the Warrant Exercise Price and
the number of Warrant Shares issuable upon exercise of this Warrant shall also
be subject to adjustment from time to time as provided in this Section 4.6.

 

(a)           Adjustment to Warrant Exercise Price Upon Issuance of Common
Stock. Except as provided in Section 4.6(d) and except in the case of an event
described in Section 4.1, Section 4.2, or Section 4.3, if the Company shall, at
any time or from time to time after the Original Issue Date, issue or sell any
shares of Common Stock (except as a result of the exercise or conversion of any
outstanding Options and/or Convertible Securities not prohibited from being
outstanding by the Investment Agreement) without consideration or for
consideration per share less than the Market Price in effect immediately prior
to such issuance or sale, then immediately upon such issuance or sale, the
Warrant Exercise Price in effect immediately prior to such issuance or sale
shall be reduced (and in no event increased) to a Warrant Exercise Price equal
to the product obtained by multiplying the Warrant Exercise Price by a fraction:

 

(i)           the numerator of which shall be the sum of (A) the number of
shares of Common Stock Deemed Outstanding immediately prior to such issuance or
sale plus (B) the aggregate number of shares of Common Stock which the aggregate
amount of consideration, if any, received by the Company upon such issuance or
sale would purchase at the Market Price; and

 

(ii)           the denominator of which shall be the number of shares of Common
Stock Deemed Outstanding immediately after such issuance or sale.

 

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For purposes of this Warrant, “Market Price” shall mean, with respect to one
Share of Common Stock for any date, the price determined as follows: (a) the
30-day volume weighted average price of the Common Stock (determined by dividing
the dollar value of all Common Stock trading on the applicable Principal Trading
Market for the applicable 30-day period, by the total trading volume on the
applicable Principal Trading Market, for such 30-day period) for the 30-day
period ending on the date of determination (subject to proportionate adjustment
for stock splits, subdivisions and combinations of shares and similar events
affecting the Common Stock), or (b) if the Common Stock is not so listed or
quoted, as reasonably determined by the Company Board and Holder; provided, that
if the Company Board and Holder cannot determine the Market Price of one Share
of Common Stock, then such Market Price shall be determined in the same manner
as determination of a Closing Price pursuant to Section 6.11 of the Investment
Agreement.

 

For purposes of determining the adjusted Warrant Exercise Price under this
Section 4.6(a), if the Company shall, at any time or from time to time after the
Original Issue Date, issue or sell any shares of Common Stock: (A) for
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be the fair market value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the closing price
(as reflected on any securities exchange, quotation system or association or
similar pricing system covering such security) for such securities as of the end
of business on the date of receipt of such securities; (B) for no specifically
allocated consideration in connection with an issuance or sale of other
securities of the Company, together comprising one integrated transaction, the
amount of the consideration therefor shall be deemed to be the fair market value
of such portion of the aggregate consideration received by the Company in such
transaction as is attributable to such shares of Common Stock issued in such
transaction; or (C) to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair market value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock issued to such owners. The net
amount of any consideration and the fair market value of any consideration other
than cash or marketable securities shall be determined in good faith jointly by
the Company Board and the Holder; provided, however, that if such net amount of
cash consideration and/or fair market value received cannot be determined by the
Company Board and Holder, then such net amount of consideration and/or fair
market value received shall be determined in the same manner as determination of
a Closing Price pursuant to Section 6.11 of the Investment Agreement.

 

(b)           Adjustment to Number of Warrant Shares Upon Adjustment to Warrant
Exercise Price. Upon any and each adjustment of the Warrant Exercise Price as
provided in Section 4.6(a), the number of Warrant Shares issuable upon the
exercise of this Warrant immediately prior to any such adjustment shall be
increased to a number of Warrant Shares equal to the quotient obtained by
dividing:

 

(i)           the product of (A) the Warrant Exercise Price in effect
immediately prior to any such adjustment multiplied by (B) the number of Warrant
Shares issuable upon exercise of this Warrant immediately prior to any such
adjustment; by

 

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(ii)           the Warrant Exercise Price resulting from such adjustment.

 

(c)           Certain Events. If any event of the type contemplated by the
provisions of this Section 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features) occurs, then the
Company Board shall make an appropriate adjustment in the Warrant Exercise Price
and the number of Warrant Shares issuable upon exercise of this Warrant so as to
protect the rights of the Holder in a manner consistent with the provisions of
this Section 4; provided, that no such adjustment pursuant to this Section
4.6(c) shall increase the Warrant Exercise Price or decrease the number of
Warrant Shares issuable as otherwise determined pursuant to this Section 4. In
addition, the Company will not, by amendment of its Certificate of Incorporation
or Bylaws or through any 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, but will at all times in good faith assist in the carrying out of all
such terms and conditions and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment.

 

(d)           Exceptions To Adjustment Upon Issuance of Common Stock. Anything
herein to the contrary notwithstanding, there shall be no adjustment to the
Warrant Exercise Price or the number of Warrant Shares issuable upon exercise of
this Warrant with respect to any Excluded Issuance.

 

4.7           Notices. In the event:

 

(a)           that the Company shall take a record of the holders of its Common
Stock (or other capital stock or securities at the time issuable upon exercise
of the Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, to receive any right to subscribe for or
purchase any shares of capital stock of any class or any other securities, or to
receive any other security;

 

(b)           of any Reorganization Event;

 

(c)           of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or

 

(d)           that any other event occurs that would result in any adjustment to
the Warrant Exercise Price or the number of Warrant Shares issuable to Holder
pursuant to this Section 4;

 

then, and in each such case, the Company shall send or cause to be sent to the
Holder on the earlier of (i) at least 10 days prior to the applicable record
date or the applicable expected effective date, as the case may be, for such
event and (ii) the date upon which the Company sends such written notice to the
other holders of Common Stock (or other capital stock or securities at the time
issuable upon exercise of the Warrant) of such event, a written notice
specifying, as the case may be, (A) the record date for such dividend,
distribution, or other right or action, and a description of such dividend,
distribution or other right, along with copies of all relevant materials related
to such event (including, without limitation, any indentures related to
indebtedness distributed to stockholders), or (B) the effective date on which
such Reorganization Event, sale, dissolution, liquidation or winding-up is
proposed to take place, and the date, if any is to be fixed, as of which the
books of the Company shall close or a record shall be taken with respect to
which the holders of record of Common Stock (or such other Capital Stock or
securities at the time issuable upon exercise of the Warrant) shall be entitled
to exchange their shares of Common Stock (or such other Capital Stock or
securities) for securities or other property deliverable upon such
Reorganization Event, sale, dissolution, liquidation or winding-up, and the
amount per share and character of such exchange applicable to the Warrant and
the Warrant Shares (including, without limitation, the number, class and series
or other designation of such new securities or other property issuable upon
exercise or conversion of this Warrant as a result of such Reorganization
Event).

 

8

 

 

4.8           Purchase Rights. Without duplicating any purchase rights granted
under the Investment Agreement or any other warrant or other instrument, in
addition to any adjustments pursuant to this Section 4, if at any time the
Company grants or issues or sells any Options or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of Common
Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder would have acquired if the Holder had held the number of
Warrant Shares acquirable upon complete 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. Anything herein to the contrary notwithstanding, the
Holder shall not be entitled to the Purchase Rights granted herein with respect
to any Excluded Issuances.

 

5.           CERTAIN AGREEMENTS

 

Company hereby covenants and agrees as follows:

 

5.1           Shares to be Fully Paid. All Warrant Shares shall, upon issuance
in accordance with the terms of this Warrant, be duly and validly issued, fully
paid and non-assessable, free and clear of all Liens. Upon delivery to the
Holder of the Warrant Shares, good and valid title to the Warrant Shares shall
pass to the Holder free and clear of all Liens.

 

5.2           Reservation of Shares. Until the Expiration Date, Company shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for the purpose of effecting the full exercise of this Warrant,
such number of Shares as shall from time to time be sufficient to effect the
exercise with respect to all of the Warrant Shares that may be received pursuant
to this Warrant; and if at any time the number of Shares shall not be sufficient
to effect the full exercise of this Warrant, in addition to such other remedies
as shall be available to the Holder, Company shall take such action as may be
necessary to increase its authorized but unissued Common Stock to such number of
shares as shall be sufficient for such purposes.

 

5.3           Successors and Assigns. This Warrant shall be binding upon any
entity succeeding to Company by merger, consolidation, or acquisition of all or
substantially all Company’s assets or all or substantially all of Company’s
outstanding capital stock or otherwise.

 

5.4           No Rights as a Stockholder. Except as otherwise provided in this
Warrant, the Holder of this Warrant shall not be deemed the holder of Shares for
any purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, as such, any of the rights of a stockholder of Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
Company action (whether upon a merger, conveyance or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or otherwise
until this Warrant shall have been exercised or converted and the Shares
issuable upon the exercise or conversion hereof shall have been issued as
provided herein.

 

9

 

 

6.           TRANSFER AND REPLACEMENT OF WARRANT

 

6.1           Restriction on Transfer. Neither this Warrant nor the Warrant
Shares to be received upon exercise or conversion of this Warrant have been
registered under the Securities Act or under the securities Laws of any state
and Company shall have no obligation to register the resale of this Warrant or
the Warrant Shares under the Securities Act or under the securities Laws of any
state, except in the case of the Warrant Shares to the extent provided in the
Registration Rights Agreement. In addition to the restrictions set forth below,
this Warrant and the Warrant Shares may not be transferred (a) if such action
would constitute a violation of any federal or state securities Laws or a breach
of the conditions to any exemption from registration thereunder (including a
loss of the exemptions under the Securities Act, or applicable state securities
Laws) on which Company relied in connection with the issuance of this Warrant
and any Warrant Shares upon exercise or conversion thereof and (b) unless and
until one of the following has occurred: (i) registration of the resale of this
Warrant and/or Warrant Shares, as the case may be, under the Act, and such
registration or qualification as may be necessary under the securities laws of
any state, has become effective, or (ii) the Holder has delivered to Company an
opinion of counsel reasonably satisfactory to Company that such registration or
qualification is not required and such action will not constitute a breach of
the conditions to any exemption from registration thereunder (including a loss
of the exemptions under the Act, or applicable state securities laws) on which
Company relied in issuing this Warrant and any Warrant Shares upon exercise or
conversion thereof. In addition to the foregoing restrictions, this Warrant is
subject to the restrictions set forth in the Investment Agreement and neither
this Warrant nor any interest herein may be assigned, pledged, sold or otherwise
transferred without the prior written consent of Company in its sole discretion.
Any purported assignment prohibited by the Investment Agreement or this Warrant
shall be void.

 

6.2           Stock Legend. All Shares issued upon exercise or conversion in
whole or in part of this Warrant shall have stamped or imprinted thereron a
legend to the following effect:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AS PROVIDED HEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS PERMITTED UNDER RULE 144 OF THE ACT OR IS OTHERWISE EXEMPT FROM
SUCH REGISTRATION. THE SECURITIES ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS
OF AN INVESTMENT AGREEMENT DATED AS OF FEBRUARY 25, 2014, AS AMENDED FROM TIME
TO TIME.

 

10

 

 

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

 

6.4           Cancellation. Upon the surrender of this Warrant in connection
with any transfer, exchange or replacement, this Warrant shall be promptly
canceled by Company. The Original Warrant is hereby canceled.

 

6.5           Register. Company shall maintain, at its principal executive
offices (or such other office or agency of Company as it may designated by
notice to Holder), a register for this Warrant, in which Company shall record
the name and address of the Person in whose name this Warrant has been issued,
as well as the name and address of each transferee and each prior owner of this
Warrant.

 

7.           REGISTRATION RIGHTS

 

The shares of Common Stock issuable upon exercise or conversion of this Warrant
shall be “Registrable Common Shares” under that certain Registration Rights
Agreement, dated as of March 18, 2014, by and between Company and Holder.

 

8.           [Intentionally Omitted]

 

9.           MISCELLANEOUS

 

9.1           Term. This Warrant is exercisable or convertible in whole or in
part at any time and from time to time on or before the Expiration Date.

 

9.2           Notices. All notices, demands, requests, consents or other
communications to be given or delivered under or by reason of the provisions of
this Warrant shall be in writing and shall be deemed effectively given upon the
earlier of actual receipt or: (a) personal delivery to the party to be notified,
or (b) one (1) Business Day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written
verification of delivery. If any time period for giving notice or taking action
hereunder expires on a day that is not a Business Day, the time period shall
automatically be extended to the Business Day immediately following such day.
Such notices, demands, requests, consents and other communications shall be sent
to the following Persons at the following addresses.

 

11

 

 

if to Company, to:

 

The Management Network Group

7300 College Boulevard, Suite 302

Overland Park, KS 66210

Attention: CEO/President and General Counsel

 

if to Holder, to:

 

Elutions, Inc.

601 East Twiggs Street

Tampa, Florida 33602

Attention: Chairman/CEO and General Counsel

 

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

 

9.3           Waivers. The rights and remedies provided for herein are
cumulative and not exclusive of any right or remedy that may be available to
Holder whether at law, in equity, or otherwise. No delay, forbearance, or
neglect by Holder, whether in one or more instances, in the exercise of any
right, power, privilege, or remedy hereunder or in the enforcement of any term
or condition of this Warrant shall constitute or be construed as a waiver
thereof. No waiver of any provision hereof, or consent required hereunder, or
any consent or departure from this Warrant, shall be valid or binding unless
expressly and affirmatively made in writing and duly executed by Holder. No
waiver shall constitute or be construed as a continuing waiver or a waiver in
respect of any subsequent breach, either of similar or different nature, unless
expressly so stated in such writing.

 

9.4           Specific Enforcement. The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Warrant are
not performed in accordance with their specific intent or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Warrant and to enforce specifically the terms and provisions hereof, in addition
to any other remedy to which they may be entitled by law or equity. The parties
hereto agree not to resist such application for relief on the basis that the
non-breaching party has an adequate remedy at law and agree to waive any
requirement for securing or posting of any bond in connection with such remedy.

 

9.5           Counterparts. This Warrant may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall constitute one
and the same Warrant. Counterparts may be delivered via facsimile, electronic
mail (including pdf) or other transmission method and any counterpart so
delivered shall be deemed to have been duly and validly delivered and be valid
and effective for all purposes.

 

12

 

 

9.6           Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Notwithstanding the foregoing,
the fiduciary duties of the Company Board, the validity of any corporate action
on the part of the Company, and any other matters relating to the internal
corporate affairs of the Company, shall be interpreted, construed and governed
by and in accordance with the laws of the State of Delaware, without regard to
the conflicts of laws rules thereof

 

9.7           Exclusive Jurisdiction; Venue. Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Warrant and the rights and obligations arising hereunder, or for recognition and
enforcement of any judgment in respect of this Warrant and the rights and
obligations arising hereunder brought by the other party hereto or its
successors or assigns, shall be brought and determined exclusively in the any
New York State court sitting in the County of New York, the State of New York or
the United States District Court for the Southern District of New York, and, in
each case, any appellate court therefrom. Each of the parties hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect of its property, generally and unconditionally, to the personal
jurisdiction of the aforesaid courts and agrees that it will not bring any
action relating to this Warrant or any of the transactions contemplated by this
Warrant in any court other than the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Warrant, (a) any
claim that it is not personally subject to the jurisdiction of the above named
courts for any reason other than the failure to serve in accordance with this
Section 9.7, (b) any claim that it or its property is exempt or immune from the
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by the applicable Law, any claim that
(i) the suit, action or proceeding in such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Warrant, or the subject matter hereof, may not be enforced in or by such
courts. Each of the parties hereto agrees that service of process upon such
party in any such action or proceeding shall be effective if such process is
given as a notice in accordance with Section 9.2. Each of the parties agrees
that the final judgment of any such court shall be enforceable in any court
having jurisdiction over the relevant party or any of its assets.

 

9.8           Waiver of Jury Trial. EACH OF THE PARTIES TO THIS WARRANT HEREBY
IRREVOCABLY WAIVES TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT
TO A TRIAL BY JURY IN ANY DIRECT OR INDIRECT ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY ( A ) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, ( B
) MAKES THIS WAIVER VOLUNTARILY, AND ( C ) ACKNOWLEDGES THAT EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS WARRANT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
CONTAINED IN THIS SECTION 9.8.

 

13

 

 

9.9           Successors and Assigns. Except as set forth in Section 6.1, this
Warrant and the rights and obligations hereunder shall not be assigned,
delegated, or otherwise transferred (whether by operation of law, by contract,
or otherwise) without the prior written consent of the other party hereto. Any
attempted assignment, delegation, or transfer in violation of this Section 9.9
shall be void and of no force or effect.

 

9.10           Amendment. This Warrant may be amended, modified, or supplemented
only pursuant to a written instrument making specific reference to this Warrant
and signed by Company and Holder.

 

9.11           Severability. Whenever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Warrant.

 

9.12           Descriptive Headings; No Strict Construction. The descriptive
headings of this Warrant are inserted for convenience only and do not constitute
a substantive part of this Warrant. The parties to this Warrant have
participated jointly in the negotiation and drafting of this Warrant. If an
ambiguity or question of intent or interpretation arises, this Warrant shall be
construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Warrant. The parties agree that
prior drafts of this Warrant shall be deemed not to provide any evidence as to
the meaning of any provision hereof or the intention of the parties hereto with
respect to this Warrant.

 

9.13           Blackout Periods. If, due to any “blackout period” or other
similar restriction on the purchase of Securities imposed by the Company, Holder
is prevented from exercising any of its rights hereunder (including, without
limitation, exercising the Warrant and purchasing Warrant Shares), then the
Expiration Date shall be extended such number of days equal to the time period
in which such “blackout period” or other similar restriction restricted Holder
from exercising such rights. If any additional rights are afforded to any
Persons subject to any such “blackout periods” or other similar restriction
(including, without limitation, any notice rights), then Holder shall be
afforded such additional rights.

 

9.14           Definitions.

 

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the
number of shares of Common Stock actually outstanding at such time, plus (b) the
number of shares of Common Stock issuable upon exercise of Options actually
outstanding at such time, plus (c) the number of shares of Common Stock issuable
upon conversion or exchange of Convertible Securities actually outstanding at
such time (treating as actually outstanding any Convertible Securities issuable
upon exercise of Options actually outstanding at such time), in each case,
regardless of whether the Options or Convertible Securities are actually
exercisable at such time; provided, that Common Stock Deemed Outstanding at any
given time shall not include shares owned or held by or for the account of the
Company or any of its wholly owned Subsidiaries.

 

14

 

 

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock whether upon issuance or at a
later date or upon satisfaction of any conditions or contingencies, but
excluding Options.

 

“Excluded Issuances” means any issuance or sale by Company after the Issue Date
of shares of Common Stock (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
Options or Convertible Securities: (a) pursuant to this Warrant or any warrants,
instruments or agreements entered into pursuant the Investment Agreement; (b) to
directors, officers, employees, or consultants of Company and its subsidiaries
in connection with their service as directors, employees or consultants of such
entities as approved by the Company Board; (c) pursuant to the conversion or
exercise of Options or Convertible Securities issued prior to the Issue Date,
provided that such securities are not amended after the date hereof to increase
the number of shares of Common Stock issuable thereunder or to lower the
exercise or conversion price thereof; (d) pursuant to the Amended and Restated
Rights Agreement, except to the extent that such agreement is triggered upon any
Person other than a member of the Elutions Group (as defined in the Amendment to
Rights Agreement) becoming an Acquiring Person under the Amended and Restated
Rights Agreement; (e) pursuant to a strategic partner in a primarily
non-financing transaction as approved by the Company Board; or (f) in connection
with debt financings, equipment financings or similar transactions approved by
the Company Board.

 

“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

[signature page follows]

 

15

 

 

IN WITNESS WHEREOF, the parties have duly executed and delivered this Warrant by
their duly authorized representatives as of the date first above written.

 

  COMPANY:             THE MANAGEMENT NETWORK GROUP, INC.                      
By:         Name: Donald E. Klumb       Title: Chief Executive Officer,
President and Chief Financial Officer                                   HOLDER:
            ELUTIONS, INC.                       By:         Name:

Benjamin Kaiser

      Title:

Chief Risk Officer

 

 

 

 

 

 

 

 

[Signature Page to Warrant (Commercial Incentive)]

 

 

 

APPENDIX 1

 

Vesting Provisions:

 

For purposes of this Warrant and this Appendix 1, the following terms shall have
the following meanings:

 

“Applicable Contract” means any Booked Order received from, and related Client
Statement of Work with, a third-party client (which shall include agreements
with a third-party financier) entered into by Company or an Affiliate of Company
with respect to such Booked Order and related Client Statement of Work.

 

“Applicable Contract Lock In Credit” means the Exercise Price for Warrant Shares
becomes Locked In based upon monies received or to be received by Company and/or
an Affiliate of Company over the term of Applicable Contracts. Applicable
Contract Lock In Credit shall be determined on the effective date of the
Applicable Contract.

 

“Applicable Contract Vesting Credit” means vesting credit for Warrant Shares
based upon either: (1) recognized revenues by Company and/or an Affiliate of
Company under GAAP in an Applicable Fiscal Quarter under Applicable Contracts
(“Revenue Vesting Credit”); or (2) monies received by Company and/or an
Affiliate of Company that is attributable to Substantially Completed
Installation/Deployment under prime contracts of Company in connection with
Applicable Contracts in an Applicable Fiscal Quarter and for which the Company
will recognize the revenues associated with such monies under GAAP in a future
fiscal quarter (“Cash Vesting Credit”). Cash Vesting Credit shall be granted
upon Substantial Completion of Installation/Deployment; provided, however, that,
if the installation/deployment involves multiple client sites, then Cash Vesting
Credit shall be granted on a pro rata basis upon Substantial Completion of
Installation/Deployment for each client site. Company and Holder shall agree in
writing as to the applicable Cash Vesting Credit to be granted with respect to
monies to be received pursuant to an Applicable Contract prior to their or their
Affiliates entering into such Applicable Contract. Cash Vesting Credit shall be
granted no later than the 365th day following receipt by Company and/or its
Affiliate(s) of any monies under an Applicable Contract for which the
recognition of such monies as revenue is not dependent on Substantially
Completed Installation/Deployment. For the avoidance of doubt, Applicable
Contract Vesting Credit shall be granted in accordance with the foregoing
notwithstanding that monies may have been received by Company or an Affiliate of
Company in the past with respect to related Applicable Contracts. Applicable
Contract Vesting Credit with respect to any Applicable Contracts shall be
awarded one time and without double-counting upon the earliest event to occur
that results in Revenue Vesting Credit or Cash Vesting Credit with respect to
such Applicable Contracts. For the avoidance of doubt, once Cash Vesting Credit
is awarded, associated revenue recognition relating to the same monies will not
result in duplicative Revenue Vesting Credit.

 

“Applicable Fiscal Quarter” means each fiscal quarter of the Company ending
after the Original Issue Date and before the Expiration Date (or partial fiscal
quarter for the fiscal quarter in which the Original Issue Date or the
Expiration Date occurs, where the first Applicable Fiscal Quarter determined
hereunder shall mean the first fiscal quarter or partial fiscal quarter of the
Company ending after the Effective Date of the Investment Agreement).

 

 

 

 

“Applicable Warrant Shares” means, for an Applicable Fiscal Quarter, the number
of Warrant Shares for which Applicable Contract Lock In Credit is granted, which
shall be determined by dividing the aggregate Applicable Contract Lock In Credit
earned in such Applicable Fiscal Quarter (i.e., monies received or to be
received by Company and/or an Affiliate of Company over the term of Applicable
Contracts that become effective in such Applicable Fiscal Quarter) by
$85,000,000, and then multiplying such resulting percentage by 3,400,000. For
example, if the aggregate Applicable Contract Lock In Credit earned in an
Applicable Fiscal Quarter is $10,000,000, then the Applicable Warrant Shares
resulting from such Applicable Contract Lock In Credit will be 400,000
Applicable Warrant Shares. Any computation of Applicable Warrant Shares shall
not increase the number of Warrant Shares as otherwise provided for in this
Warrant.

 

“Change in Control Vesting Credit” means vesting credit for Warrant Shares based
upon a Change in Control of the Company.

 

“Substantial Completion of Installation/Deployment” occurs when substantially
all of the equipment to be installed or deployed pursuant to a Client Statement
of Work is placed and mounted in client facilities (or other location, as
required by the Client Statement of Work) and data from such equipment is
populated in the Maestro database.

 

“Vesting Formula” means the following formula:

 

(a)Applicable Contract Vesting Credit earned for an Applicable Fiscal Quarter,
multiplied by the

 

(b)Vesting Percentage.

 

“Vesting Percentage” means four percent (4%).

 

The Exercise Price for Applicable Warrant Shares shall be determined and Locked
In based upon Applicable Contract Lock In Credit for an Applicable Fiscal
Quarter.

 

Notwithstanding any status as Locked In, Warrant Shares shall only become Vested
pursuant to the application of the Vesting Formula and/or the creation of Change
in Control Vesting Credit on a first Locked In, first Vested basis, provided
further, however, that any Warrant Shares that have become Locked In but have
not yet become Vested prior to the fifth (5th) anniversary of the Original Issue
Date shall be deemed Vested as of the fifth (5th) anniversary of the Original
Issue Date. For example in regard to the first Locked In, first Vested basis, if
100 Warrant Shares are Locked In prior to the first anniversary of the Original
Issue Date pursuant to Applicable Contract “A” and 100 Warrant Shares are Locked
In between the first anniversary and the second anniversary of the Original
Issue Date pursuant to Applicable Contract “B”, then any Applicable Contract
Vesting Credit granted shall be applied (i) first to the first Warrant Shares
that have been Locked In (that is, the Warrant Shares Locked In pursuant to
Applicable Contract “A”), whether or not the Applicable Contract Vesting Credit
was first granted pursuant to Applicable Contract “A” or Applicable Contract
“B”, and (ii) then to the Warrant Shares Locked In next in time (that is, the
Warrant Shares Locked In pursuant to Applicable Contract “B”) and any remaining
Applicable Contract Vesting Credit not granted to any Locked In Warrant Shares
shall remain available to be applied to any future Locked In Warrant Shares.

 

 

 

 

Upon a Change in Control of the Company, all Applicable Contract Lock In Credit
that has not become Applicable Contract Vesting Credit shall then be deemed to
be Applicable Contract Vesting Credit. Change in Control Vesting Credit shall be
awarded one time and not cumulatively with respect to any Applicable Contract
Vesting Credit. For the avoidance of doubt, once Change in Control Vesting
Credit is awarded, any Warrant Shares that are Locked In and deemed Vested based
upon Change in Control Vesting Credit will not result in duplicative Applicable
Contract Vesting Credit.

 

The number of Warrant Shares that become Vested and exercisable for an
Applicable Fiscal Quarter shall be based upon Change in Control Vesting Credit
and the application of the Vesting Formula for such Applicable Fiscal Quarter,
subject in each case to the limit on the total number of Warrant Shares that may
be issued under this Warrant but without prejudice to Holder’s right to acquire
Warrant Shares to be applied to cashless conversion as set forth below. For
example, if the Applicable Contract Vesting Credit for an Applicable Fiscal
Quarter is $10,000,000, then the number of Warrant Shares that Vest for such
Applicable Fiscal Quarter shall equal (10,000,000 x .04) or 400,000 Warrant
Shares. For the avoidance of doubt, (i) each Applicable Contract Lock In Credit
shall be counted only once for purposes of determining the Exercise Price and
Locked In status of Warrant Shares and Applicable Contract Vesting Credit and
(ii) the Change in Control Vesting Credit shall be counted only once for
purposes of determining the Vested status of Warrant Shares.

 

Within ten (10) Business Days following the date of Company’s public disclosure
of its earnings for an Applicable Fiscal Quarter, but in no event later than
forty-five (45) days following the last day of an Applicable Fiscal Quarter,
Company shall deliver to Holder written notice of the Applicable Contract Lock
In Credit and Applicable Contract Vesting Credit for such Applicable Fiscal
Quarter, together with confirmation of the number of Warrant Shares that are
subject to a particular Exercise Price based upon Applicable Contract Lock In
Credit and the number of Warrant Shares that have Vested and become exercisable
as a result of Applicable Contract Vesting Credit (an “Incentive Warrant
Notice”). Any failure by Holder to object to Company’s calculations in the
Incentive Warrant Notice shall not be deemed a waiver by Holder of any of
Holder’s rights hereunder, including, without limitation, the right to object to
such calculation and demand an accounting thereof or exercise any rights
afforded to Holder hereunder, under the Investment Agreement or Transaction
Documents or enforce its rights at law or in equity. Applicable Contract Vesting
Credit included in the vesting computation for an Applicable Fiscal Quarter
shall not be included in the vesting computation for any subsequent Applicable
Fiscal Quarter.

 

 

 

 

After taking into account the adjustments set forth in Section 4 of this Warrant
and any additional Warrant Shares that may then be used to cashlessly exercise
this Warrant pursuant to Section 3.2 of the Warrant, in no event shall Warrant
Shares vest and become exercisable in an amount greater than that number of
Warrant Shares, when combined with the Purchased Shares and other shares of
Common Stock acquired by members of the Elutions Group and the shares of Common
Stock then currently issuable and/or issued under the Warrants (Tracking), that
would result in such Persons owning, or having the right to own, in excess of
38.5% of the issued and outstanding Common Stock (the “Ownership Cap”). For the
avoidance of doubt, Warrant Shares shall continue to be considered Locked In
and/or Vested in accordance with the terms hereof notwithstanding the Ownership
Cap; provided, however, that any such Warrant Shares which would enable Holder
if exercised to exceed the Ownership Cap shall be applied only to Holder’s
cashless exercise of this Warrant in accordance with Section 3.2 hereof.

 

Notwithstanding the foregoing, to the extent that the Company repurchases shares
of Common Stock (other than in connection with tax withholding under its equity
plans and equity award agreements) after the Effective Date in excess of
$2,000,000, the Ownership Cap shall be determined based on the issued and
outstanding Common Stock without giving effect to any such repurchases of Common
Stock by the Company in excess of $2,000,000.

 

 

 

 

APPENDIX 2

 

NOTICE OF EXERCISE

 

TO: THE MANAGEMENT NETWORK GROUP, INC.

 

1.           The undersigned hereby elects to purchase _____ Shares of the
Common Stock of The Management Network Group, Inc. pursuant to the terms of the
attached Amended and Restated Common Stock Purchase Warrant (the “Warrant”)
issued to the undersigned, and shall tender payment of the exercise price in
full in accordance with the terms of the Warrant.

 

2.           Payment shall take the form of (check applicable box):

 

[ ]           in lawful money of the United States; or

 

[ ]           the exercise of such number of Shares as is necessary, in
accordance with the formula set forth in Section 3.2 of the Warrant, to exercise
the Warrant with respect to the number of Shares to be purchased as set forth in
item 1 above pursuant to the cashless exercise procedure set forth in Section
3.2 of the Warrant.

 

3.           Please issue a certificate or certificates representing said Shares
in the name of the undersigned.

 

  ELUTIONS, INC.         By:         Name:     Title:

 

 

 

 

Date:________________

 

 

 

 

 

 

Exhibit B

 

Amended and Restated Common Stock Purchase Warrant

(Tracking)

 

 

 

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT AND THE SHARES ISSUABLE
HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS PROVIDED HEREIN,
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
OR SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION IS PERMITTED UNDER RULE
144 OF THE ACT OR IS OTHERWISE EXEMPT FROM SUCH REGISTRATION.

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT IS SUBJECT TO THE TERMS
AND CONDITIONS OF AN INVESTMENT AGREEMENT DATED AS OF FEBRUARY 25, 2014, AS
AMENDED FROM TIME TO TIME.

 

AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT

 

(TRACKING)

 

THE MANAGEMENT NETWORK GROUP, INC.

 

Warrant Shares: 996,544 Issue Date: May 8, 2014

 

THIS AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT (TRACKING) (this
“Warrant”) is issued in exchange, replacement and substitution for the Common
Stock Purchase Warrant (Tracking) (the “Original Warrant”) originally issued by
The Management Network Group, Inc., a Delaware corporation (“Company”) to
Elutions, Inc., a Delaware corporation, its successors and permitted assigns
(together, “Holder”), on March 18, 2014 (the “Original Issue Date”). Company
certifies that, for value received, Holder is entitled, at any time on or after
the Issue Date specified above (the “Issue Date”) and prior to 5:00 p.m., New
York City time, on the sixth (6th) anniversary of the Original Issue Date (the
“Expiration Date”), to purchase from Company up to the number of fully paid and
non-assessable shares (the “Shares”) of Common Stock, par value $0.005 per
share, of Company (the “Common Stock”) specified as Warrant Shares above (the
“Warrant Shares”) at the applicable exercise price per Share set forth in
Section 1 of this Warrant (the “Warrant Exercise Price”) or to exercise this
Warrant into Shares, in each case subject to the adjustments and provisions and
upon the terms and conditions set forth in this Warrant. This Warrant has been
issued pursuant to an Investment Agreement, dated as of February 25, 2014,
between Company and Holder (as amended by Amendment No. 1 to the Investment
Agreement, dated as of May 8, 2014, and as it may be further amended from time
to time in accordance with its terms, the “Investment Agreement”). Initially
capitalized terms not defined herein shall have the respective meanings assigned
to them in the Investment Agreement.

 

1.EXERCISE

 

This Warrant shall be exercisable into shares of Common Stock, on the terms and
conditions set forth in this Section 1.

 

 

 

 

1.1.        Exercise Rights.

 

(a)        On or after the date hereof but prior to the Expiration Date, Holder
shall be entitled to exercise (on one or more separate occasions) any portion of
the outstanding and unexercised Total Exercise Amount (as hereinafter defined)
into Shares in accordance with Section 1.3, at the Exercise Rate (as hereinafter
defined), provided that with respect to any exercise the Holder may not exercise
less than the lesser of (i) an Exercise Amount equal to $250,000 or (ii) the
full Total Exercise Amount then outstanding.

 

(b)        On or after the date that is 30 months following the Original Issue
Date, provided that, at the time the Company causes exercise, (1) Company (on a
consolidated basis) has cash and cash equivalents (net of any amounts required
to cover checks and similar instruments issued by the Company which have not
cleared and determined in conformity with GAAP applied consistently with the
application thereof in the preparation of the balance sheet included in the most
recent financial statements included in the Company’s SEC filings) (the “Company
Cash”) of not less than $9,500,000 and (2) the result of (i) the current assets
of the Company (on a consolidated basis) determined in conformity with GAAP
applied consistently with the application thereof in the preparation of the
balance sheet included in the most recent financial statements included in the
Company’s SEC filings minus (ii) the current liabilities of the Company (on a
consolidated basis) determined in conformity with GAAP applied consistently with
the application thereof in the preparation of the balance sheet included in the
most recent financial statements included in the Company’s SEC Documents (the
“Net Working Capital”) is not less than $13,000,000, the Company shall be
entitled to cause Holder to exercise all or any portion of the outstanding and
unpaid Total Exercise Amount (as hereinafter defined) into Shares in accordance
with Section 1.3, at the Exercise Rate (as hereinafter defined).

 

(c)        On or after the date as of which the volume weighted average price of
the Common Stock on each Trading Day during any consecutive 90-day period after
the eighteen (18) month anniversary of the Original Issue Date of this Warrant
has exceeded $5.50 per share (subject to proportionate adjustment for stock
splits, subdivisions and combinations of shares and similar events affecting the
Common Stock) (the “Threshold Common Stock Price”), provided that (i) at such
time the Company causes exercise the Threshold Common Stock Price is then
exceeded, (ii) the Company Cash is not less than $9,500,000 and (iii) the Net
Working Capital is not less than $13,000,000, the Company shall be entitled to
cause Holder to exercise all or any portion of the outstanding and unpaid Total
Exercise Amount into Shares in accordance with Section 1.3, at the Exercise
Rate.

 

(d)        No fractional shares shall be issued upon exercise of this Warrant,
and any portion of the Exercise Amount that otherwise would be exercisable into
a fractional share shall be paid in cash in an amount based on the Warrant
Exercise Price.

 

1.2.        Exercise Rate. The number of Shares issuable upon exercise of any
Exercise Amount pursuant to Section 1.1 (the “Exercise Rate”) shall be
determined by dividing (x) the Exercise Amount by (y) the Warrant Exercise
Price.

 

2

 

 

(a)        “Exercise Amount” means the value of the Warrant Shares being
exercised pursuant to a respective exercise determined by multiplying the
Warrant Exercise Price by the number of Warrant Shares being exercised.

 

(b)        “Total Exercise Amount” means the aggregate sum of $3,268,664.32, as
reduced by the Exercise Amount of each exercise hereunder.

 

(c)        “Warrant Exercise Price” means $3.28 per Share, subject to adjustment
as provided herein.

 

1.3.        Procedure for Exercise. To exercise all or any portion of the Total
Exercise Amount into Shares on any date (an “Exercise Date”), the party electing
to cause such exercise shall (a) transmit by facsimile or otherwise in
accordance with Section 7.2, for receipt on or prior to 4:00 p.m., New York City
time, on such date, a copy of an executed notice of exercise in the form
attached hereto as Appendix I (the “Exercise Notice”) to the other party (in the
case of notice from Company, with appropriate changes to the form for exercise
caused by Company rather than Holder), and (b) in the case of Holder, pay to
Company in immediately available funds an amount equal to the applicable
Exercise Amount (the “Cash Payment”), and also cause this Warrant to be
delivered to Company as soon as reasonably practicable on or following such date
(but no later than within five (5) Business Days following the date on which the
Exercise Notice is given by the Company or Holder); provided, however, that if
the Note is still outstanding, then (i) the Exercise Amount shall be offset and
decreased by an equal amount of accrued, but unpaid, interest plus principal
outstanding under the Note (the “Set-Off Amount”), and (ii) such amount of
principal and accrued, but unpaid, interest outstanding under the Note shall be
reduced by the Set-Off Amount. If the exercising party is Company and if the
amount outstanding under the Note is less than the Exercise Amount, Holder shall
make a Cash Payment to the Company in an amount equal to the unpaid portion of
the Exercise Amount within fifty (50) days following the date on which the
Exercise Notice is given and if such Cash Payment is not made within such fifty
(50) day period and Holder does not make such Cash Payment within ten (10) days
after delivery of written notice from Company that such Cash Payment has not
been made, then this Warrant shall no longer be exercisable and shall be of no
further force or effect with respect to the Warrant Shares subject to such
portion of the Exercise Amount. On or before 4:00 p.m., New York City time, on
the first Business Day following the date of receipt of an Exercise Notice, the
receiving party shall transmit by electronic mail to the Chief Executive Officer
and General Counsel of the other party a confirmation of receipt of such
Exercise Notice to the transmitting party (at the electronic mail address
provided in the Exercise Notice) and Company’s transfer agent, if any. On or
before 4:00 p.m., New York City time, on the third Business Day following the
date of receipt or transmittal of an Exercise Notice and receipt by Company of
the Exercise Amount (by payment in cash or Set-Off Amount) and this Warrant,
Company shall issue and deliver to the address as specified in the Exercise
Notice (if given by Holder, otherwise to the address of Holder as set forth in
Company’s records), a certificate, registered in the name of Holder or its
designee, for the number of Shares to which Holder shall be entitled together
with cash for any fractional interest. Company shall, as soon as reasonably
practicable and in no event later than three Business Days after receipt of this
Warrant and the other items above and at its own expense, issue and deliver to
Holder a new Warrant, substantially identical hereto, representing the
outstanding Warrant Shares not exercised. With respect to exercises caused by
Company, Company shall keep proper written records of the amount of this Warrant
exercised as of each Exercise Date until this Warrant is delivered to Company.
Except with respect to any failure to pay the Exercise Amount, the Person(s)
entitled to receive the Shares issuable upon an exercise of this Warrant shall
be treated for all purposes as the record holder or holders of such Shares on
the Exercise Date, notwithstanding when items other than the Exercise Notice are
transmitted or delivered.

 

3

 

 

1.4.        Reservation of Shares Issuable upon Exercise. Company shall reserve
and keep available out of its authorized but unissued Common Stock, solely for
the purpose of effecting the exercise of this Warrant, such number of Shares as
shall from time to time be sufficient to effect the exercise of all of the Total
Exercise Amount; and if at any time the number of Shares shall not be sufficient
to effect the exercise of all of the Total Exercise Amount, in addition to such
other remedies as shall be available to the Holder, Company shall take such
action as may be necessary to increase its authorized but unissued Common Stock
to such number of shares as shall be sufficient for such purposes.

 

2.        ADJUSTMENTS TO THE SHARES. The Warrant Exercise Price and the number
of Warrant Shares obtainable upon exercise of this Warrant shall each be subject
to adjustment from time to time as provided in this Section 2.

 

2.1.        Stock Dividends, Splits, Etc. If, at any time while this Warrant is
outstanding, Company declares or pays a dividend or other distribution on the
outstanding shares of the Common Stock payable in additional shares of the
Common Stock or other securities (including rights to acquire securities), then
upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number of shares of Common Stock or the total
number and kind of other securities, as applicable, to which Holder would have
been entitled had Holder held such Shares as of the date on which a record is
taken for such dividend or other distribution. If Company subdivides the
outstanding shares of the Common Stock by reclassification or otherwise into a
greater number of shares, the number of Shares purchasable hereunder shall be
proportionately increased and the Warrant Exercise Price shall be
proportionately decreased as of the date on which a record is taken for such
subdivision. If the outstanding shares of the Common Stock are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant Exercise Price shall be proportionately increased and the number of
Shares purchasable hereunder shall be proportionately decreased as of the date
on which a record is taken for such combination or consolidation.

 

2.2.        Reorganization, Reclassification, Exchange, Conversion or
Substitution. Upon any reorganization, reclassification (other than a
subdivision, combination or consolidation referred to in Section 2.1), exchange,
conversion, substitution, merger, sale of all or substantially all of the
Company’s assets followed by a liquidation of Company or similar event affecting
the outstanding shares of the Common Stock at any time while this Warrant is
outstanding (“Reorganization Event”), Holder shall be entitled to receive
(either directly or upon subsequent liquidation), upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised in full
immediately before such Reorganization Event, at an aggregate Warrant Exercise
Price not exceeding the aggregate Warrant Exercise Price in effect as of
immediately prior thereto. The provisions of this Section 2.2 shall similarly
apply to successive Reorganization Events. Notwithstanding anything to the
contrary contained herein, with respect to any Reorganization Event, the Holder
may elect prior to the record date or consummation date (if there is no record
date) of such Reorganization Event to exercise this Warrant in whole or in part
to the extent then exercisable instead of giving effect to the provisions
contained in this Section 2.2 with respect to this Warrant.

 

4

 

 

2.3.        Distributions. If Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock evidences of its
indebtedness or other assets (excluding (a) evidences of indebtedness and other
assets referred to in Section 2.1 or Section 2.2 above or Section 2.8, and (b)
dividends or distributions paid in cash), then in each such case the Warrant
Exercise Price shall be adjusted by multiplying the Warrant Exercise Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the Closing Price determined as of the record date
mentioned above and of which the numerator shall be the Closing Price on such
record date less the then per share fair market value at such record date of the
portion of such evidences of indebtedness or assets so distributed with respect
to one outstanding share of Common Stock. The net amount of any fair market
value of any consideration other than cash or marketable securities shall be
determined in good faith jointly by the Company Board and the Holder; provided,
however, that if such net amount of fair market value received cannot be
determined by the Company Board and Holder, then such net amount of fair market
value received shall be determined in the same manner as determination of a
Closing Price pursuant to Section 6.11 of the Investment Agreement.

 

2.4.        Fractional Shares. No fractional Share shall be issuable upon
exercise or exercise of this Warrant and the number of Shares to be issued shall
be rounded down to the nearest whole Share. If a fractional share interest
arises upon any exercise or exercise of this Warrant, Company shall eliminate
such fractional share interest by paying Holder cash in the amount computed by
multiplying the fractional interest by the Closing Price of a full Share on the
date of exercise.

 

2.5.        Certificate as to Adjustments. Upon each adjustment of the Warrant
Exercise Price, the Common Stock and/or number of Shares, or upon the occurrence
of any transaction or event described in this Section 2 (including, without
limitation, the grant of new securities or other property issuable upon exercise
or conversion of this Warrant as a result of a Reorganization Event), Company
shall promptly notify Holder thereof in writing, and, at Company’s expense,
promptly compute such adjustment, and furnish Holder with a certificate of its
Chief Financial Officer setting forth such adjustment and the facts upon which
such adjustment is based. In addition, Company shall promptly, following any
such adjustment, furnish Holder a certificate setting forth the Warrant Exercise
Price, Common Stock and number of Shares in effect upon the date thereof and the
series of adjustments leading to such Warrant Exercise Price, Common Stock and
number of Shares.

 

2.6.        Additional Anti-Dilution Rights. In order to prevent dilution of the
purchase rights granted under this Warrant, the Warrant Exercise Price and the
number of Warrant Shares issuable upon exercise of this Warrant shall also be
subject to adjustment from time to time as provided in this Section 2.6.

 

5

 

 

(a)        Adjustment to Warrant Exercise Price Upon Issuance of Common Stock.
Except as provided in Section 2.6(d) and except in the case of an event
described in Section 2.1, Section 2.2, or Section 2.3, if the Company shall, at
any time or from time to time after the Original Issue Date, issue or sell any
shares of Common Stock (except as a result of the exercise or conversion of any
outstanding Options and/or Convertible Securities not prohibited from being
outstanding by the Investment Agreement) without consideration or for
consideration per share less than the Market Price immediately prior to such
issuance or sale, then immediately upon such issuance or sale, the Warrant
Exercise Price in effect immediately prior to such issuance or sale shall be
reduced (and in no event increased) to a Warrant Exercise Price equal to the
quotient obtained by multiplying the Warrant Exercise Price by a fraction:

 

(i)        the numerator of which shall be the sum of (A) the number of shares
of Common Stock Deemed Outstanding immediately prior to such issuance or sale
plus (B) the aggregate number of shares of Common Stock which the aggregate
amount of consideration, if any, received by the Company upon such issuance or
sale would purchase at the Market Price; and

 

(ii)        the denominator of which shall be the number of shares of Common
Stock Deemed Outstanding immediately after such issuance or sale.

 

For purposes of this Warrant, “Market Price” shall mean, with respect to one
Share of Common Stock for any date, the price determined as follows: (a) the
30-day volume weighted average price of the Common Stock (determined by dividing
the dollar value of all Common Stock trading on the applicable Principal Trading
Market for the applicable 30-day period, by the total trading volume on the
applicable Principal Trading Market, for such 30-day period) for the 30-day
period ending on the date of determination (subject to proportionate adjustment
for stock splits, subdivisions and combinations of shares and similar events
affecting the Common Stock), or (b) if the Common Stock is not so listed or
quoted, as reasonably determined by the Company Board and Holder; provided, that
if the Company Board and Holder cannot determine the Market Price of one Share
of Common Stock, then such Market Price shall be determined in the same manner
as determination of a Closing Price pursuant to Section 6.11 of the Investment
Agreement.

 

For purposes of determining the adjusted Warrant Exercise Price under this
Section 2.6(a), if the Company shall, at any time or from time to time after the
Original Issue Date, issue or sell any shares of Common Stock: (A) for
consideration other than cash, the amount of the consideration other than cash
received by the Company shall be the fair market value of such consideration,
except where such consideration consists of marketable securities, in which case
the amount of consideration received by the Company shall be the closing price
(as reflected on any securities exchange, quotation system or association or
similar pricing system covering such security) for such securities as of the end
of business on the date of receipt of such securities; (B) for no specifically
allocated consideration in connection with an issuance or sale of other
securities of the Company, together comprising one integrated transaction, the
amount of the consideration therefor shall be deemed to be the fair market value
of such portion of the aggregate consideration received by the Company in such
transaction as is attributable to such shares of Common Stock issued in such
transaction; or (C) to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair market value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock issued to such owners. The net
amount of any consideration and the fair market value of any consideration other
than cash or marketable securities shall be determined in good faith jointly by
the Company Board and the Holder; provided, however, that if such net amount of
cash consideration and/or fair market value received cannot be determined by the
Company Board and Holder, then such net amount of consideration and/or fair
market value received shall be determined in the same manner as determination of
a Closing Price pursuant to Section 6.11 of the Investment Agreement.

 

6

 

 

(b)        Adjustment to Number of Warrant Shares Upon Adjustment to Warrant
Exercise Price. Upon any and each adjustment of the Warrant Exercise Price as
provided in Section 2.6(a), the number of Warrant Shares issuable upon the
exercise of this Warrant immediately prior to any such adjustment shall be
increased to a number of Warrant Shares equal to the quotient obtained by
dividing:

 

(i)        the product of (A) the Warrant Exercise Price in effect immediately
prior to any such adjustment multiplied by (B) the number of Warrant Shares
issuable upon exercise of this Warrant immediately prior to any such adjustment;
by

 

(ii)        the Warrant Exercise Price resulting from such adjustment.

 

(c)        Certain Events. If any event of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features) occurs, then the
Company Board shall make an appropriate adjustment in the Warrant Exercise Price
and the number of Warrant Shares issuable upon exercise of this Warrant so as to
protect the rights of the Holder in a manner consistent with the provisions of
this Section 2; provided, that no such adjustment pursuant to this Section
2.6(c) shall increase the Warrant Exercise Price or decrease the number of
Warrant Shares issuable as otherwise determined pursuant to this Section 2. In
addition, the Company will not, by amendment of its Certificate of Incorporation
or Bylaws or through any 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, but will at all times in good faith assist in the carrying out of all
such terms and conditions and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Holder against
impairment.

 

(d)        Exceptions To Adjustment Upon Issuance of Common Stock. Anything
herein to the contrary notwithstanding, there shall be no adjustment to the
Warrant Exercise Price or the number of Warrant Shares issuable upon exercise of
this Warrant with respect to any Excluded Issuances.

 

7

 

 

2.7.        Notices. In the event:

 

(a)        that the Company shall take a record of the holders of its Common
Stock (or other capital stock or securities at the time issuable upon exercise
of the Warrant) for the purpose of entitling or enabling them to receive any
dividend or other distribution, to receive any right to subscribe for or
purchase any shares of capital stock of any class or any other securities, or to
receive any other security;

 

(b)        of any Reorganization Event;

 

(c)        of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or

 

(d)        that any other event occurs that would result in any adjustment to
the Warrant Exercise Price or the number of Warrant Shares issuable to Holder
pursuant to this Section 2;

 

then, and in each such case, the Company shall send or cause to be sent to the
Holder on the earlier of (i) at least 10 days prior to the applicable record
date or the applicable expected effective date, as the case may be, for such
event and (ii) the date upon which the Company sends such written notice to the
other holders of Common Stock (or other capital stock or securities at the time
issuable upon exercise of the Warrant) of such event, a written notice
specifying, as the case may be, (A) the record date for such dividend,
distribution, or other right or action, and a description of such dividend,
distribution or other right along with copies of all relevant materials related
to such event (including, without limitation, any indentures related to
indebtedness distributed to stockholders), or (B) the effective date on which
such Reorganization Event, sale, dissolution, liquidation or winding-up is
proposed to take place, and the date, if any is to be fixed, as of which the
books of the Company shall close or a record shall be taken with respect to
which the holders of record of Common Stock (or such other Capital Stock or
securities at the time issuable upon exercise of the Warrant) shall be entitled
to exchange their shares of Common Stock (or such other Capital Stock or
securities) for securities or other property deliverable upon such
Reorganization Event, sale, dissolution, liquidation or winding-up, and the
amount per share and character of such exchange applicable to the Warrant and
the Warrant Shares (including, without limitation, the number, class and series
or other designation of such new securities or other property issuable upon
exercise or conversion of this Warrant as a result of such Reorganization
Event).

 

2.8.        Purchase Rights. Without duplicating any purchase rights granted
under the Investment Agreement or any other warrant or instrument, in addition
to any adjustments pursuant to this Section 2, if at any time the Company grants
or issues or sells Options or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of Common Stock (the “Purchase
Rights”), then the Holder shall be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder would have acquired if the Holder had held the number of Warrant Shares
acquirable upon complete 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. Anything herein to the contrary notwithstanding, the Holder shall not be
entitled to the Purchase Rights granted herein with respect to any Excluded
Issuance.

 

8

 

 

2.9.        Limitation on Additional Anti-Dilution Rights and Purchase Rights.
Notwithstanding anything herein to the contrary, the number of Warrant Shares
issuable upon exercise of this Warrant at any given time or pursuant to the
Purchase Rights, when combined with the aggregate number of Warrant Shares
previously issued upon conversion of this Warrant and any other Warrant issued
by the Company pursuant to the Investment Agreement and any Shares sold pursuant
to the Investment Agreement, shall not, in the absence of receipt of the
Required Approval (i) exceed 19.9% of the number of shares of Common Stock
issued and outstanding immediately prior to the Effective Date or (ii) result in
a “change of control” of Company within the meaning of the applicable NASDAQ
rules, and the number of Warrant Shares that may be issued or sold shall be
adjusted accordingly to prevent a violation of NASDAQ rules; provided, however,
that any Warrant Shares not so issued or sold shall remain Warrant Shares
issuable upon a future exercise of this Warrant in the event that the Company
decides to seek and obtains the required stockholder approval at a later time.
The Company shall promptly, and in any event within five (5) Business Days
following the receipt of Required Approval, if obtained, deliver to the Holder a
certificate, in form reasonably satisfactory to the Holder, certifying that the
limitation contained in this Section 2.9 has been duly removed by the Company
and is no longer applicable to this Warrant (except to the extent a separate
stockholder vote is required under NASDAQ rules for any future offering pursuant
to the Purchase Rights).

 

3.CERTAIN AGREEMENTS

 

Company hereby covenants and agrees as follows:

 

3.1.        Shares to be Fully Paid. All Warrant Shares shall, upon issuance in
accordance with the terms of this Warrant, be duly and validly issued, fully
paid and non-assessable, free and clear of all Liens. Upon delivery to the
Holder of the Warrant Shares, good and valid title to the Warrant Shares shall
pass to the Holder free and clear of all Liens.

 

3.2.        Reservation of Shares. Until the Expiration Date, Company shall at
all times reserve and keep available out of its authorized but unissued Common
Stock, solely for the purpose of effecting the full exercise of this Warrant,
such number of Shares as shall from time to time be sufficient to effect the
exercise with respect to all of the Warrant Shares that may be received pursuant
to this Warrant; and if at any time the number of Shares shall not be sufficient
to effect the full exercise of this Warrant, in addition to such other remedies
as shall be available to the Holder, Company shall take such action as may be
necessary to increase its authorized but unissued Common Stock to such number of
shares as shall be sufficient for such purposes.

 

3.3.        Successors and Assigns. This Warrant shall be binding upon any
entity succeeding to Company by merger, consolidation, or acquisition of all or
substantially all Company’s assets or all or substantially all of Company’s
outstanding capital stock or otherwise.

 

9

 

 

3.4.        No Rights as a Stockholder. Except as otherwise provided in this
Warrant, the Holder of this Warrant shall not, by virtue of its status as the
Holder of this Warrant, be deemed the holder of Shares for any purpose, nor
shall anything contained in this Warrant be construed to confer upon the Holder,
as such, any of the rights of a stockholder of Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any Company action (whether
upon a merger, conveyance or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until this Warrant shall
have been exercised or converted and the Shares issuable upon the exercise or
conversion hereof shall have been issued as provided herein.

 

4.TRANSFER AND REPLACEMENT OF WARRANT

 

4.1.        Restriction on Transfer. Neither this Warrant nor the Warrant Shares
to be received upon exercise or conversion of this Warrant have been registered
under the Securities Act or under the securities Laws of any state and Company
shall have no obligation to register the resale of this Warrant or the Warrant
Shares under the Securities Act or under the securities Laws of any state,
except in the case of the Warrant Shares to the extent provided in the
Registration Rights Agreement. In addition to the restrictions set forth below,
this Warrant and the Warrant Shares may not be transferred (a) if such action
would constitute a violation of any federal or state securities Laws or a breach
of the conditions to any exemption from registration thereunder (including a
loss of the exemptions under the Securities Act, or applicable state securities
Laws) on which Company relied in connection with the issuance of this Warrant
and any Warrant Shares upon exercise or conversion thereof and (b) unless and
until one of the following has occurred: (A) registration of the resale of this
Warrant and/or Warrant Shares, as the case may be, under the Act, and such
registration or qualification as may be necessary under the securities laws of
any state, has become effective, or (B) the Holder has delivered to Company an
opinion of counsel reasonably satisfactory to Company that such registration or
qualification is not required and such action will not constitute a breach of
the conditions to any exemption from registration thereunder (including a loss
of the exemptions under the Act, or applicable state securities laws) on which
Company relied in issuing this Warrant and any Warrant Shares upon exercise or
conversion thereof. In addition to the foregoing restrictions, this Warrant is
subject to the restrictions set forth in the Investment Agreement and neither
this Warrant nor any interest herein may be assigned, pledged, sold or otherwise
transferred without the prior written consent of Company in its sole discretion.
Any purported assignment prohibited by the Investment Agreement or this Warrant
shall be void.

 

4.2.        Stock Legend. All Shares issued upon exercise or conversion in whole
or in part of this Warrant shall have stamped or imprinted thereron a legend to
the following effect:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF
ANY STATE AND, EXCEPT AS PROVIDED HEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFER, SALE, TRANSFER, PLEDGE OR
HYPOTHECATION IS PERMITTED UNDER RULE 144 OF THE ACT OR IS OTHERWISE EXEMPT FROM
SUCH REGISTRATION. THE SECURITIES ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS
OF AN INVESTMENT AGREEMENT DATED AS OF FEBRUARY 25, 2014, AS AMENDED FROM TIME
TO TIME.

 

10

 

 

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

 

4.4.        Cancellation. Upon the surrender of this Warrant in connection with
any transfer, exchange or replacement, this Warrant shall be promptly canceled
by Company. The Original Warrant is hereby canceled.

 

4.5.        Register. Company shall maintain, at its principal executive offices
(or such other office or agency of Company as it may designated by notice to
Holder), a register for this Warrant, in which Company shall record the name and
address of the Person in whose name this Warrant has been issued, as well as the
name and address of each transferee and each prior owner of this Warrant.

 

5.REGISTRATION RIGHTS

 

The shares of Common Stock issuable upon exercise or conversion of this Warrant
shall be “Registrable Common Shares” under that certain Registration Rights
Agreement, dated as of March 18, 2014, by and between Company and Holder.

 

6.[Intentionally Omitted]

 

7.MISCELLANEOUS

 

7.1.        Term. This Warrant is exercisable or convertible in whole or in part
at any time and from time to time on or before the Expiration Date, provided,
however, that notwithstanding the stated Expiration Date or any other provision
hereof to the contrary, the Holder shall have no right to exercise this Warrant
or any portion hereof with respect to any Warrant Shares at any time following
the date that the Holder, or the Purchaser or any of its Affiliates, causes
Company to redeem the Note pursuant to Section 2.4(a) of the Note, but only to
the extent of the Warrant Shares corresponding to such redeemed amount.
Notwithstanding the foregoing, nothing in this Section 7.1 shall prevent the
Holder from exercising this Warrant or any portion hereof in connection with any
such redemption of the Note.

 

7.2.        Notices. All notices, demands, requests, consents or other
communications to be given or delivered under or by reason of the provisions of
this Warrant shall be in writing and shall be deemed effectively given upon the
earlier of actual receipt or: (a) personal delivery to the party to be notified,
or (b) one (1) Business Day after deposit with a nationally recognized overnight
courier, freight prepaid, specifying next business day delivery, with written
verification of delivery. If any time period for giving notice or taking action
hereunder expires on a day that is not a Business Day, the time period shall
automatically be extended to the Business Day immediately following such day.
Such notices, demands, requests, consents and other communications shall be sent
to the following Persons at the following addresses.

 

11

 

 

if to Company, to:

 

The Management Network Group

7300 College Boulevard, Suite 302

Overland Park, KS 66210

Attention: CEO/President and General Counsel

 

if to Holder, to:

 

Elutions, Inc.

601 East Twiggs Street

Tampa, Florida 33602

Attention: Chairman/CEO and General Counsel

 

or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.

 

7.3.        Waivers. The rights and remedies provided for herein are cumulative
and not exclusive of any right or remedy that may be available to Holder whether
at law, in equity, or otherwise. No delay, forbearance, or neglect by Holder,
whether in one or more instances, in the exercise of any right, power,
privilege, or remedy hereunder or in the enforcement of any term or condition of
this Warrant shall constitute or be construed as a waiver thereof. No waiver of
any provision hereof, or consent required hereunder, or any consent or departure
from this Warrant, shall be valid or binding unless expressly and affirmatively
made in writing and duly executed by Holder. No waiver shall constitute or be
construed as a continuing waiver or a waiver in respect of any subsequent
breach, either of similar or different nature, unless expressly so stated in
such writing.

 

7.4.        Specific Enforcement. The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Warrant are
not performed in accordance with their specific intent or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Warrant and to enforce specifically the terms and provisions hereof, in addition
to any other remedy to which they may be entitled by law or equity. The parties
hereto agree not to resist such application for relief on the basis that the
non-breaching party has an adequate remedy at law and agree to waive any
requirement for securing or posting of any bond in connection with such remedy.

 

7.5.        Counterparts. This Warrant may be executed simultaneously in two or
more counterparts, any one of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Warrant. Counterparts may be delivered via facsimile, electronic mail
(including pdf) or other transmission method and any counterpart so delivered
shall be deemed to have been duly and validly delivered and be valid and
effective for all purposes.

 

12

 

 

7.6.        Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York. Notwithstanding the foregoing,
the fiduciary duties of the Board of Directors of the Company, the validity of
any corporate action on the part of the Company, and any other matters relating
to the internal corporate affairs of the Company, shall be interpreted,
construed and governed by and in accordance with the laws of the State of
Delaware, without regard to the conflicts of laws rules thereof.

 

7.7.        Exclusive Jurisdiction; Venue. Each of the parties hereto
irrevocably agrees that any legal action or proceeding with respect to this
Warrant and the rights and obligations arising hereunder, or for recognition and
enforcement of any judgment in respect of this Warrant and the rights and
obligations arising hereunder brought by the other party hereto or its
successors or assigns, shall be brought and determined exclusively in any New
York State court sitting in the County of New York, the State of New York or the
United States District Court for the Southern District of New York, and, in each
case, any appellate court therefrom. Each of the parties hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect of its property, generally and unconditionally, to the personal
jurisdiction of the aforesaid courts and agrees that it will not bring any
action relating to this Warrant or any of the transactions contemplated by this
Warrant in any court other than the aforesaid courts. Each of the parties hereto
hereby irrevocably waives, and agrees not to assert as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Warrant, (a) any
claim that it is not personally subject to the jurisdiction of the above named
courts for any reason other than the failure to serve in accordance with this
Section 7.7, (b) any claim that it or its property is exempt or immune from the
jurisdiction of any such court or from any legal process commenced in such
courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or otherwise)
and (c) to the fullest extent permitted by the applicable Law, any claim that
(i) the suit, action or proceeding in such court is brought in an inconvenient
forum, (ii) the venue of such suit, action or proceeding is improper or (iii)
this Warrant, or the subject matter hereof, may not be enforced in or by such
courts. Each of the parties hereto agrees that service of process upon such
party in any such action or proceeding shall be effective if such process is
given as a notice in accordance with Section 7.2. Each of the parties agrees
that the final judgment of any such court shall be enforceable in any court
having jurisdiction over the relevant party or any of its assets.

 

7.8.        Waiver of Jury Trial. EACH OF THE PARTIES TO THIS WARRANT HEREBY
IRREVOCABLY WAIVES TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT
TO A TRIAL BY JURY IN ANY DIRECT OR INDIRECT ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY ( A ) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, ( B
) MAKES THIS WAIVER VOLUNTARILY, AND ( C ) ACKNOWLEDGES THAT EACH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS WARRANT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
CONTAINED IN THIS SECTION 7.8.

 

13

 

 

7.9.        Successors and Assigns. Except as set forth in Section 3.3, this
Warrant and the rights and obligations hereunder shall not be assigned,
delegated, or otherwise transferred (whether by operation of law, by contract,
or otherwise) without the prior written consent of the other party hereto. Any
attempted assignment, delegation, or transfer in violation of this Section 7.9
shall be void and of no force or effect.

 

7.10.        Amendment. This Warrant may be amended, modified, or supplemented
only pursuant to a written instrument making specific reference to this Warrant
and signed by Company and Holder.

 

7.11.        Severability. Whenever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Warrant.

 

7.12.        Descriptive Headings; No Strict Construction. The descriptive
headings of this Warrant are inserted for convenience only and do not constitute
a substantive part of this Warrant. The parties to this Warrant have
participated jointly in the negotiation and drafting of this Warrant. If an
ambiguity or question of intent or interpretation arises, this Warrant shall be
construed as if drafted jointly by the parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Warrant. The parties agree that
prior drafts of this Warrant shall be deemed not to provide any evidence as to
the meaning of any provision hereof or the intention of the parties hereto with
respect to this Warrant.

 

7.13.        Blackout Periods. If, due to any “blackout period” or other similar
restriction on the purchase of Securities imposed by the Company, Holder is
prevented from exercising any of its rights hereunder (including, without
limitation, exercising the Warrant and purchasing Warrant Shares), then the
Expiration Date shall be extended such number of days equal to the time period
in which such “blackout period” or other similar restriction restricted Holder
from exercising such rights. If any additional rights are afforded to any
Persons subject to any such “blackout periods” or other similar restriction
(including, without limitation, any notice rights), then Holder shall be
afforded such additional rights.

 

7.14.        Definitions.

 

“Common Stock Deemed Outstanding” means, at any given time, the sum of (a) the
number of shares of Common Stock actually outstanding at such time, plus (b) the
number of shares of Common Stock issuable upon exercise of Options actually
outstanding at such time, plus (c) the number of shares of Common Stock issuable
upon conversion or exchange of Convertible Securities actually outstanding at
such time (treating as actually outstanding any Convertible Securities issuable
upon exercise of Options actually outstanding at such time), in each case,
regardless of whether the Options or Convertible Securities are actually
exercisable at such time; provided, that Common Stock Deemed Outstanding at any
given time shall not include shares owned or held by or for the account of the
Company or any of its wholly owned Subsidiaries.

 

14

 

 

“Convertible Securities” means any securities (directly or indirectly)
convertible into or exchangeable for Common Stock whether upon issuance or at a
later date or upon satisfaction of any conditions or contingencies, but
excluding Options.

 

“Excluded Issuances” means any issuance or sale by Company after the Issue Date
of shares of Common Stock (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
Options or Convertible Securities: (a) pursuant to this Warrant or any warrants,
instruments or agreements entered into pursuant the Investment Agreement; (b) to
directors, officers, employees, or consultants of Company and its Subsidiaries
in connection with their service as directors, employees or consultants of such
entities as approved by the Company Board; (c) pursuant to the conversion or
exercise of Options or Convertible Securities issued prior to the Issue Date,
provided that such securities are not amended after the date hereof to increase
the number of shares of Common Stock issuable thereunder or to lower the
exercise or conversion price thereof; (d) pursuant to the Amended and Restated
Rights Agreement, except to the extent that such agreement is triggered upon any
Person other than a member of the Elutions Group (as defined in the Amendment to
Rights Agreement) becoming an Acquiring Person under the Amended and Restated
Rights Agreement; (e) pursuant to a strategic partner in a primarily
non-financing transaction as approved by the Company Board; or (f) in connection
with debt financings, equipment financings or similar transactions approved by
the Company Board.

 

“Options” means any warrants or other rights or options to subscribe for or
purchase Common Stock or Convertible Securities.

 

[signature page follows]

 

15

 

 

IN WITNESS WHEREOF, the parties have duly executed and delivered this Warrant by
their duly authorized representatives as of the date first above written.

 

  COMPANY:               THE MANAGEMENT NETWORK GROUP, INC.                    
  By:              Name: Donald E. Klumb       Title: Chief Executive Officer,
President and Chief Financial Officer                                   HOLDER:
              ELUTIONS, INC.                     By:             Name:

Benjamin Kaiser

      Title:

Chief Risk Officer

 

 

 

 

 

 

 

 

 

 

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

TO: THE MANAGEMENT NETWORK GROUP, INC.

 

1.           The undersigned hereby elects to purchase _____ Shares of the
Common Stock of The Management Network Group, Inc. pursuant to the terms of the
attached Amended and Restated Common Stock Purchase Warrant (Tracking) (the
“Warrant”) issued to the undersigned, and shall tender payment of the exercise
price in full in accordance with the terms of the Warrant.

 

2.           Payment shall take the form of (check applicable box):

 

[ ]        in lawful money of the United States; and/or

 

[ ]        Application of the Set-Off Amount in an amount equal to
$_______________ pursuant to Section 1.3 of the Warrant.

 

3.           Please issue a certificate or certificates representing said Shares
in the name of the undersigned.

 

  ELUTIONS, INC.             By:         Name:     Title:

 

Electronic Mail Address of Chief Executive Officer:

 

Electronic Mail Address of General Counsel:

 

 

 

Date:_________________