NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
SAID ACT.

PREMIER ALLIANCE GROUP, INC.

COMMON STOCK PURCHASE WARRANT

Warrant No. 2012-[_______]
 
Issuance Date: _____________, 2012

1. Issuance; Certain Definitions.  In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by PREMIER ALLIANCE
GROUP, INC., a Delaware corporation (the “Company”), _______________ or its
registered assigns (the “Holder”) is hereby granted the right to purchase at any
time until 5:00 P.M., New York City time, November [*], 2017 (the “Expiration
Date”), _________________ fully paid and non-assessable shares of the Company’s
Common Stock, $0.001 par value per share (the “Common Stock”), at an initial
exercise price per share of $1.125 per share, subject to further adjustment as
set forth herein (the “Exercise Price”).  The shares of Common Stock issued upon
exercise of this Warrant are referred to as “Warrant Shares.”  The period from
the date of this Warrant through the Expiration Date is referred to as the
“Exercise Period.”

2. Exercise of Warrants.

a. This Warrant is exercisable in whole or in part at any time and from time to
time in accordance with this Section 2(a).  Exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 9) a completed and duly executed Notice of
Exercise (substantially in the form attached to this Warrant as Exhibit A).  The
date such Notice of Exercise is faxed or sent via e-mail to the Company shall be
the “Exercise Date,” provided that, if this Warrant has been fully exercised,
the Holder of this Warrant tenders this Warrant to the Company within five (5)
business days thereafter.  The Notice of Exercise shall be executed by the
Holder of this Warrant and shall indicate the number of shares then being
purchased pursuant to such exercise.  Upon surrender of this Warrant
Certificate, if relevant, together with appropriate payment of the Exercise
Price for the shares of Common Stock purchased, the Holder shall be entitled to
receive a certificate or certificates representing the shares of Common Stock so
purchased.  The Exercise Price per share of Common Stock for the shares then
being exercised shall be payable in cash or by certified or official bank check
or wire transfer.  The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2 on the
Exercise Date.

 
 

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

 

3. Adjustment of Exercise Price and Number of Warrant Shares.

a. Stock Dividends and Splits.   If the Company, at any time while this Warrant
is outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant but shall exclude paid-in-kind dividends or interest),
(ii) subdivides outstanding shares of Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock split) outstanding
shares of Common Stock into a smaller number of shares, or (iv) issues by
reclassification of shares of the Common Stock any shares of capital stock of
the Company, then in each such case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such
event.  Any adjustment made pursuant to clause (i) of this paragraph shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution, and any
adjustment pursuant to clause (ii), (iii) or (iv) of this paragraph shall become
effective immediately after the effective date of such subdivision, combination
or reclassification.

b. Reorganization, Reclassification, Consolidation, Merger or Sale.  If any
recapitalization, reclassification or reorganization of the share capital of the
Company, or the sale of all or substantially all of its shares and/or assets or
other transaction (including, without limitation, a sale of substantially all of
its assets followed by a liquidation) shall be effected in such a way that
holders of Common Stock shall be entitled to receive shares, securities or other
assets or property (a “Change”), then, as a condition of such Change, lawful and
adequate provisions shall be made by the Company whereby the Holder hereof shall
thereafter have the right to purchase and receive (in lieu of the Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares, securities or other
assets or property as may be issued or payable with respect to or in exchange
for the number of outstanding shares of Common Stock which such Holder would
have been entitled to receive had such Holder exercised this Warrant immediately
prior to the consummation of such Change. The Company or its successor shall
promptly issue to Holder a new Warrant for such new securities or other
property. The new Warrant shall provide for adjustments which shall be as nearly
equivalent as may be practicable to give effect to the adjustments provided for
in this Section 3, including, without limitation, adjustments to the Exercise
Price and to the number of securities or property issuable upon exercise of the
new Warrant.  The provisions of this Section 3(b) shall similarly apply to
successive Changes.

4. Covenants of the Company.

a. Covenants as to Warrant Shares.  The Company covenants and agrees that all
Warrant Shares that may be issued upon the exercise of this Warrant will, upon
issuance, be validly issued and outstanding, fully paid and nonassessable, and
free from all taxes, liens and charges with respect to the issuance
thereof.  The Company further covenants and agrees that the Company will at all
times during the Exercise Period, have authorized and reserved, free from
preemptive rights, a sufficient number of shares of its Common Stock to provide
for the exercise

 
 

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

 

of this Warrant.  If at any time during the Exercise Period the number of
authorized but unissued shares of Common Stock shall not be sufficient to permit
exercise of this Warrant, the Company will take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purposes.

b. No Impairment. Except and to the extent as waived or consented to by the
Holder, the Company will not, by amendment of its articles of incorporation 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 to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the exercise rights of the Holder against impairment.

c. Notice to Holder.

i. Notices of Record Date.   In the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, the Company shall mail to the Holder, at least twenty (20) days
prior to the date specified herein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend or distribution.

ii. Adjustment to Exercise Price.  Whenever the Exercise Price is adjusted
pursuant to Section 3, the Company shall promptly mail to each Holder a notice
setting forth the Exercise Price after such adjustment and provide a brief
statement of the facts requiring such adjustment.

iii. Notice to Allow Exercise by Holder.   If (A) the Company shall declare a
dividend (or any other distribution) on the Common Stock; (B) the Company shall
declare a special nonrecurring cash dividend on or a redemption of the Common
Stock; (C) the Company shall authorize the granting to all holders of the Common
Stock rights or warrants to subscribe for or purchase any shares of capital
stock of any class or of any rights; (D) the approval of any stockholders of the
Company shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the Holder
at its last address at least twenty (20) days prior to the applicable record or
effective date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(ii) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,

 
 

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

 

 sale, transfer or share exchange.  For the avoidance of doubt, the Holder is
entitled to exercise this Warrant during the twenty (20) day period commencing
the date of such notice.

5. Mutilation or Loss of Warrant.  Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) receipt of reasonably
satisfactory indemnification, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver a new Warrant
of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant
shall thereupon become void.

6. Rights of the Holder.  The Holder shall not, by virtue hereof, be entitled to
any rights of a stockholder in the Company, either at law or equity, and the
rights of the Holder are limited to those expressed in this Warrant.

7. Registration Rights. If after the Issuance Date but prior to the Expiration
Date, there is not an effective registration statement covering all of the
Warrant Shares, and the Company shall determine to prepare and file with the
Securities and Exchange Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of 1933, as amended (the “Act”) of any of its equity securities, other than on
Form S-4 or Form S-8 (each as promulgated under the Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Holder a written notice of such determination
and, if within fifteen (15) days after the date of the delivery of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement all or any part of such Warrant Shares such Holder
requests to be registered; provided, however, that the Company shall not be
required to register any Registrable Securities pursuant to this Section 7  that
are eligible for resale pursuant to Rule 144 promulgated by the Securities and
Exchange Commission pursuant to the Act or that are the subject of a then
effective registration statement.

8. Transfer to Comply with the Securities Act.   This Warrant has not been
registered under the Act and has been issued to the Holder for investment and
not with a view to the distribution of either the Warrant or the Warrant Shares.
Neither this Warrant nor any of the Warrant Shares or any other security issued
or issuable upon exercise of this Warrant may be sold, transferred, pledged or
hypothecated in the absence of an effective registration statement under the Act
relating to such security or an opinion of counsel satisfactory to the Company
that registration is not required under the Act.  Each certificate for the
Warrant, the Warrant Shares and any other security issued or issuable upon
exercise of this Warrant shall contain a legend on the face thereof, in form and
substance satisfactory to counsel for the Company, setting forth the
restrictions on transfer contained in this Section 8.

9. Notices.   Any notice or other communication required or permitted hereunder
shall be in writing and shall be delivered personally, sent by facsimile
transmission or e-mail or sent by certified, registered or express mail, postage
pre-paid.  Any such notice shall only be duly given and effective upon receipt
(or refusal of receipt).  Any party may by notice given in accordance with
this Section 9 to the other parties designate another address or person for
receipt of notices hereunder.

 
 

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

 

10. Supplements and Amendments; Whole Agreement.  This Warrant may be amended or
supplemented only by an instrument in writing signed by the Company and the
Holder.  This Warrant contains the full understanding of the Company and the
Holder with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.

11. Governing Law.  This Warrant shall be governed by, and interpreted and
enforced in accordance with, the laws of the State of New York for contracts to
be wholly performed in such state and without giving effect to the principles of
conflict of laws of such state which would result in the application of the laws
of any other jurisdiction.  Each of the Company and the Holder consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Warrant and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.

12. Descriptive Headings.  The headings of this Warrant are for convenience of
reference only and shall not form part of, or affect or alter the meaning or
interpretation of any provisions hereof.

[Signature page follows]

 
 

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

 

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

 
PREMIER ALLIANCE GROUP, INC.
         
By:
     
Name:
Mark S. Elliott
   
Title:
Chief Executive Officer

 
 

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

 

EXHIBIT A

EXERCISE NOTICE

PREMIER ALLIANCE GROUP, INC.

The undersigned holder hereby exercises the right to purchase _________________
of the shares of Common Stock (“Warrant Shares”) of Premier Alliance Group,
Inc., a Delaware corporation (the “Company”), evidenced by Warrant to Purchase
Common Stock No. _______ (the “Warrant”). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
 
1.           Amount of Warrant Shares.  The Holder intends that payment of the
Exercise Price shall be made as a “Cash Exercise” with respect to
_________________ Warrant Shares.
 
2.           Payment of Exercise Price. The Holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in accordance
with the terms of the Warrant.
 
3.           Delivery of Warrant Shares.  The Company shall deliver to Holder,
or its designee or agent as specified below, __________ Warrant Shares in
accordance with the terms of the Warrant.  Delivery shall be made to Holder, or
for its benefit, to the following address:
 
_______________________
_______________________
_______________________
_______________________

Date:
               
[Registered Holder]
                 
By:
           
Name:
           
Title:
 

 
 

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