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Exhibit 10.4
 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.

 

AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.  HOLDERS MUST
RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.  

 

Warrant to Purchase

_____________ shares

Warrant Number ____

 

Amended and Restated

Series A Warrant to Purchase Common Stock

of

ICP Solar Technologies, Inc.

 

THIS CERTIFIES that BRIDGEPOINTE MASTER FUND LTD., a Cayman Islands Exempted
Company or any subsequent holder hereof (“Holder”) has the right to purchase
from ICP Solar Technologies, Inc., a Nevada corporation (the “Company”), up to
______________________________ (_____________) fully paid and nonassessable
shares, of the Company's common stock, $0.00001 par value per share (“Common
Stock”), subject to adjustment as provided herein, at a price equal to the
Exercise Price as defined in Section 3 below, at any time during the Term (as
defined below). This Warrant amends and restates the Warrant originally dated as
of June 13, 2008.

 

Holder agrees with the Company that this Warrant to Purchase Common Stock of the
Company (this “Warrant” or this “Agreement”) is issued and all rights hereunder
shall be held subject to all of the conditions, limitations and provisions set
forth herein.

 

1.

Date of Issuance and Term.

 

This Warrant shall be deemed to be issued on June 13, 2008 (“Date of Issuance”).
 The term of this Warrant begins on the Date of Issuance and ends at 5:00 p.m.,
New York City time, on the date that is six (6) years after the Date of Issuance
(the “Term”).  This Warrant was issued in conjunction with the issuance of
Debentures of the Company (“the “Debentures”) to the Holder pursuant to the
terms of the Securities Purchase Agreement (“Securities Purchase Agreement”),
and the Registration Rights Agreement (“Registration Rights Agreement”) by and
between the Company and Holder dated on or about June 13, 2008.  

 

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Notwithstanding anything to the contrary herein, the applicable portion of this
Warrant shall not be exercisable during any time that, and only to the extent
that, the number of shares of Common Stock to be issued to Holder upon such
Exercise (as defined in Section 2(a)), when added to the number of shares of
Common Stock, if any, that the Holder otherwise beneficially owns (outside of
this Warrant, and not including any other warrants or securities of Holder’s
having a provision substantially similar to this paragraph) at the time of such
Exercise, would exceed 4.99% (the “Maximum Percentage”) of the number of shares
of Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon Exercise of this Warrant held by the
Holder, as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934 (the “Beneficial Ownership Limitation”).  The Beneficial
Ownership Limitation shall be conclusively satisfied if the applicable Notice of
Exercise includes a signed representation by the Holder that the issuance of the
shares in such Notice of Exercise will not violate the Limitation, and the
Company shall not be entitled to require additional documentation of such
satisfaction.

 

Notwithstanding the above, in the event that the Company receives any purchase,
tender or exchange offer or any offer to enter into a merger with another entity
whereby the Company shall not be the surviving entity (an “Offer”), then the
Maximum Percentage shall be increased (but not decreased) to 9.99%, and “4.99%”
shall be automatically revised immediately after such offer to read “9.99%” each
place it occurs in this Section 1.  The Beneficial Ownership Limitation
provisions of this Section 1 may be waived by such Holder, at the election of
such Holder, upon not less than 61 days’ prior notice to the Company, to change
the Beneficial Ownership Limitation to any amount not in excess of 9.99% of the
number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock upon Exercise of this Warrant held by
the Holder and the Beneficial Ownership Limitation shall continue to apply.
 Upon such a change by a Holder of the Beneficial Ownership Limitation from such
4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation
may not be further waived by such Holder, provided that, if an Event of Default
occurs, thereafter the Beneficial Ownership Limitation provisions of this
Section 1 may be waived by such Holder, at the election of such Holder, upon not
less than 61 days’ prior notice to the Company, to change the Maximum Percentage
to any other percentage (and not limited to 9.99%) of the number of shares of
the Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon Exercise of the Warrants held by the Holder and the
provisions of this Section 1 shall continue to apply.  The limitations on
Exercise set forth in this subsection are referred to as the “Beneficial
Ownership Limitations.”  The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 1 to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation.

 

Notwithstanding the above, Holder shall retain the option to either Exercise or
not Exercise its option(s) to acquire Common Stock pursuant to the terms hereof
after an Offer, and, in the event of a cash Exercise following a tender offer,
the Exercise Price per share that would otherwise be due shall instead be offset
against the tender price per share to be received by the Holder, provided,
however, that in the event a tender offer is not completed, Holder, at its
option may either (i) complete any Exercise that was initiated after the Offer
by promptly paying to the Company the Exercise Price that would have been due at
the time the Warrant was Exercised, or (ii) cancel such Exercise by providing
written notice to the Company, in which case such Exercise shall be deemed void
ad initio.

 

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           Maximum Exercise of Rights. In the event the Holder notifies the
Company that the Exercise of the rights described herein would result in the
issuance of an amount of Common Stock of the Company that would exceed the
maximum amount that may be issued to a Holder calculated in the manner described
above, then the issuance of such additional shares of Common Stock of the
Company to such Holder will be deferred in whole or in part until such time as
such Holder is able to beneficially own such Common Stock without exceeding the
maximum amount calculated in the manner described herein. The determination of
when such Common Stock may be issued shall be made by each Holder as to only
such Holder.

 

2.

Exercise.

 

(a) Manner of Exercise.  During the Term, this Warrant may be Exercised as to
all or any lesser number of full shares of Common Stock covered hereby (the
“Warrant Shares” or the “Shares”) upon surrender of this Warrant, with the
Notice of Exercise Form attached hereto as Exhibit A (the “Notice of Exercise”)
duly completed and executed, together with the full Exercise Price (as defined
below, which may be satisfied by either a Cash Exercise or a Cashless Exercise,
as each is defined below) for each share of Common Stock as to which this
Warrant is Exercised, at the office of the Company, Attn: Sass Peress,
President, CEO & Chairman; ICP Solar Technologies, Inc., 7075 Place
Robert-Joncas, Unit 131, Montreal   H4M272, Phone:   514-270-5770, Fax:  (514)
270-3677 or at such other location as the Company may then be located or such
other office or agency as the Company may designate in writing, by overnight
mail, by facsimile (such surrender and payment of the Exercise Price hereinafter
called the “Exercise” of this Warrant).   In the case of a Cashless Exercise,
the Exercise Price is deemed to have been delivered upon the Holder’s deliver of
a Notice of Exercise to the Company.

 

(b)  Date of Exercise.  The “Date of Exercise” of the Warrant shall be defined
as the date that a copy of the Notice of Exercise Form attached hereto as
Exhibit A, completed and executed, is sent by facsimile to the Company or its
transfer agent (“Transfer Agent”) (including but not limited to a scanned “PDF”
file which is delivered as an attachment to an e-mail to the Company), provided
that the original Warrant (if delivery of the original Warrant is required
pursuant to Section 2(l) hereof) and Notice of Exercise Form are received by the
Company and the Exercise Price is satisfied, each as soon as practicable
thereafter.  Alternatively, the Date of Exercise shall be defined as the date
the original Notice of Exercise Form is received by the Company, if Holder has
not sent advance notice by facsimile.  Upon delivery of the Notice of Exercise
Form to the Company by facsimile or otherwise, the Holder shall be deemed for
all corporate purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been exercised, irrespective of the date
such Warrant Shares are credited to the Holder's DTC account or the date of
delivery of the certificates evidencing such Warrant Shares as the case may be.
 The Company shall deliver any objection to any Notice of Exercise within 1
Business Day of receipt of such notice.  In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error.

 

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(c)  Delivery of Common Stock Upon Exercise.  Within 3 Trading Days from the
delivery to the Company of the Notice of Exercise, surrender of this Warrant (if
required) and payment of the aggregate Exercise Price (which, in the case of a
Cashless Exercise, shall be deemed to have been paid upon the submission by the
Holder of a Notice of Exercise)(the “Warrant Shares Delivery Deadline”), the
Company shall issue and deliver (or cause its transfer agent so to issue and
deliver) in accordance with the terms hereof to or upon the order of the Holder
that number of shares of Common Stock (“Exercise Shares”) for the portion of
this Warrant converted as shall be determined in accordance herewith.  Upon the
Exercise of this Warrant or any part thereof, the Company shall, at its own cost
and expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company's transfer agent shall issue stock
certificates in the name of Holder (or its nominee) or such other persons as
designated by Holder and in such denominations to be specified at Exercise
representing the number of shares of Common Stock issuable upon such Exercise.
The Company warrants that no instructions other than these instructions have
been or will be given to the transfer agent of the Company's Common Stock and
that, unless waived by the Holder, the Exercise Shares will be free-trading, and
freely transferable, and will not contain a legend restricting the resale or
transferability of the Exercise Shares if the Unrestricted Conditions (as
defined below) are met. If the Company fails for any reason to deliver to the
Holder certificates evidencing the Warrant Shares subject to a Notice of
Exercise by the Warrant Shares Delivery Deadline (a “Warrant Shares Delivery
Failure”), the Company shall pay to the Holder, in cash, as liquidated damages
and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise
(based on the VWAP (as defined below) of the Common Stock on the date of the
applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per
Trading Day on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after such Warrant Shares Delivery Deadline until
such certificates are delivered  (“Warrant Shares Delivery Failure Payments”).
  

 

(d)  Payment of Accrued Warrant Shares Delivery Failure Payments.  The Company
shall pay any payments incurred under this Section in cash or cash equivalent
upon demand or, if not demanded sooner, on or before the fifth (5th) day of each
month following a month in which they accrue.  Warrant Shares Delivery Failure
Payments are in addition to any Shares that the Holder is entitled to receive
upon Exercise of this Warrant.  Nothing herein shall limit the Holder's right to
pursue actual damages (to the extent in excess of the Warrant Shares Delivery
Failure Payments) for the Company's Warrant Shares Delivery Failure, and the
Holder shall have the right to pursue all remedies available at law or in equity
(including a decree of specific performance and/or injunctive relief).  

 

(e)  Maximum Interest Rate.  Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that the rate of
interest or dividends required to be paid or other charges hereunder exceed the
maximum permitted by such law, any payments in excess of such maximum shall be
credited against amounts owed by the Company to the Holder and thus refunded to
the Company.

 

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(f)  Revocation of Exercise Upon Delivery Failure.  In addition to any other
remedies which may be available to the Holder, in the event that the Company
fails for any reason to effect delivery of the Exercise Shares by the Warrant
Shares Delivery Deadline, the Holder will be entitled to revoke all or part of
the relevant Notice of Exercise by delivery of a notice to such effect to the
Company whereupon the Company and the Holder shall each be restored to their
respective positions immediately prior to the delivery of such notice, except
that the liquidated damages described above shall be payable through the date
notice of revocation or rescission is given to the Company.

 

(g)  Legends.  

 

(i) Restrictive Legend. The Holder understands that the Warrant and, until such
time as Exercise Shares have been registered under the 1933 Act as contemplated
by the Registration Rights Agreement or otherwise may be sold pursuant to Rule
144 or Rule 144(k) under the 1933 Act without any restriction as to the number
of securities as of a particular date that can then be immediately sold, the
Exercise Shares may bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of the
certificates for such securities):

 

         “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT, OR AN OPINION OF COUNSEL, IN FORM, SUBSTANCE AND SCOPE REASONABLY
SATISFACTORY TO COUNSEL TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.”

 

(ii) Removal of Restrictive Legends.  Certificates evidencing the Exercise
Shares shall not contain any legend restricting the transfer thereof (including
the legend set forth above in subsection 2(g)(i)): (i) while a registration
statement (including the Registration Statement, as defined in the Registration
Rights Agreement) covering the resale of such security is effective under the
Securities Act, or (ii) following any sale of such Exercise Shares pursuant to
Rule 144, or (iii) if such Exercise Shares are eligible for sale under Rule
144(k), or (iv) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission) (collectively, the “Unrestricted Conditions”).
The Company shall cause its counsel to issue a legal opinion to the Company’s
transfer agent promptly after the Effective Date (as defined below) of the
Registration Statement if required by the Company’s transfer agent to effect the
issuance of Exercise Shares without a restrictive legend or removal of the
legend hereunder. If the Unrestricted Conditions are met at the time of issuance
or resale of Exercise Shares, then such Exercise Shares shall be issued free of
all legends.  The Company agrees that following the Effective Date or at such
time as the Unrestricted Conditions are met or such legend is otherwise no
longer required under this Section 2(g), it will, no later than three (3)
Trading Days following the delivery (the “Unlegended Shares Delivery Deadline”)
by the Holder to the Company or the Company’s transfer agent of a certificate
representing Exercise Shares, as applicable, issued with a restrictive legend
(such third Trading Day, the “Legend Removal Date”), deliver, or cause the
Transfer Agent to deliver at the Company’s expense, to such Holder a certificate
(or electronic transfer) representing such shares that is free from all
restrictive and other legends.  For purposes hereof, “Effective Date” shall mean
the date that the Registration Statement that the Company is required to file
pursuant to the Registration Rights Agreement has been declared effective by the
Securities and Exchange Commission (the “Commission”).  

 

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(iii) Sale of Unlegended Shares.  Holder agrees that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 2(g)(i) above is predicated upon the Company’s reliance that the
Holder will sell any Exercise Shares pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein.  

 

(h) Cancellation of Warrant.  This Warrant shall be canceled upon the full
Exercise of this Warrant, and, as soon as practical after the Date of Exercise,
Holder shall be entitled to receive Common Stock for the number of shares
purchased upon such Exercise of this Warrant, and if this Warrant is not
Exercised in full, Holder shall be entitled to receive a new Warrant (containing
terms identical to this Warrant) representing any unexercised portion of this
Warrant in addition to such Common Stock.

 

(i)  Holder of Record.  Each person in whose name any Warrant for shares of
Common Stock is issued shall, for all purposes, be deemed to be the Holder of
record of such shares on the Date of Exercise of this Warrant, irrespective of
the date of delivery of the Common Stock purchased upon the Exercise of this
Warrant.  Nothing in this Warrant shall be construed as conferring upon Holder
any rights as a stockholder of the Company.

 

(j)  Delivery of Electronic Shares.   In lieu of delivering physical
certificates representing the unlegended shares of Common Stock issuable upon
Exercise (the “Unlegended Shares”), provided the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon written request of the Holder, so long as the
certificates therefor do not bear a legend, are not required to bear a legend,
and the Holder is not obligated to return such certificate for the placement of
a legend thereon, the Company shall cause its transfer agent to electronically
transmit the Unlegended Shares to the Holder by crediting the account of the
Holder's prime broker with DTC identified in the written request through its
Deposit Withdrawal Agent Commission (“DWAC”) system. Otherwise, delivery of the
Common Stock shall be by physical delivery to the address specified by the
Holder in the Notice of Exercise.  The time periods for delivery and liquidated
damages described herein shall apply to the electronic transmittals described
herein, or to physical delivery, whichever is applicable.  

 

(k)  Buy-In. In addition to any other rights available to the Holder, if the
Company fails to cause its transfer agent to transmit to the Holder a
certificate or certificates representing the Exercise Shares pursuant to an
Exercise on or before the Warrant Shares Delivery Deadline, and if after such
date the Holder is required by its broker to purchase (in an open market
transaction or otherwise) or the Holder’s brokerage firm otherwise purchases
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Exercise Shares which the Holder anticipated receiving upon such Exercise (a
“Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased exceeds (y) the amount obtained
by multiplying (A) the number of Exercise Shares that the Company was required
to deliver to the Holder in connection with the Exercise at issue times (B) the
price at which the sell order giving rise to such purchase obligation was
executed, and (2) at the option of the Holder, either reinstate the portion of
the Warrant and equivalent number of Exercise Shares for which such Exercise was
not honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its Exercise and
delivery obligations hereunder.  For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted Exercise of shares of Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause (1) of the
immediately preceding sentence the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In, together with applicable
confirmations and other evidence reasonably requested by the Company.  Nothing
herein shall limit a Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company’s
failure to timely deliver certificates representing shares of Common Stock upon
Exercise of the Warrant as required pursuant to the terms hereof.

 

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(l)  Surrender of Warrant Upon Exercise; Book-Entry.  Notwithstanding anything
to the contrary set forth herein, upon Exercise of this Warrant in accordance
with the terms hereof, the Holder shall not be required to physically surrender
the original Warrant Certificate to the Company unless all of this Warrant is
Exercised, in which case such Holder shall deliver the original Warrant being
Exercised to the Company promptly following the Date of Exercise at issue.
 Partial exercises of this Warrant resulting in purchases of a portion of the
total number of Warrant Shares available hereunder shall have the effect of
lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.  The Holder
and the Company shall maintain records showing the amount of this Warrant that
is so Exercised and the dates of such Exercises or shall use such other method,
reasonably satisfactory to the Holder and the Company, so as not to require
physical surrender of this original Warrant upon each such Exercise.  In the
event of any dispute or discrepancy, such records of the Holder shall be
controlling and determinative in the absence of manifest error.  The Holder and
any assignee, by acceptance of this Warrant, acknowledge and agree that, by
reason of the provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares available for
purchase hereunder at any given time may be less than the amount stated on the
face hereof.  

 

3.

Payment of Warrant Exercise Price.

 

The Exercise Price (“Exercise Price”) shall initially equal $0.50 per share (the
“Initial Exercise Price”), provided that as of December 31, 2008, the Exercise
Price shall be reduced, but not increased, to $0.25 per share, all subject to
adjustment pursuant to the terms hereof, including but not limited to Section 5
below.

 

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Payment of the Exercise Price may be made by either of the following, or a
combination thereof, at the election of Holder:

 

(i)

Cash Exercise: The Holder may exercise this Warrant in cash, bank or cashiers
check or wire transfer (a “Cash Exercise”); or

 

(ii)

Cashless Exercise:  The Holder, at its option, may exercise this Warrant in one
or more cashless exercise transactions anytime that there is not a current and
effective Registration Statement (as defined in the Registration Rights
Agreement) then in effect covering the resale of the Warrant Shares issuable
upon such exercise. In order to effect a Cashless Exercise, the Holder shall
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue Holder a
number of shares of Common Stock computed using the following formula (a
“Cashless Exercise”):

 

X = Y (A-B)/A

 

where:

X = the number of shares of Common Stock to be issued to Holder.

 

Y = the number of shares of Common Stock for which this Warrant is being
Exercised.

 

A = the Market Price of one (1) share of Common Stock (for purposes of this
Section 3(ii), where “Market Price,” as of any date, means the Volume Weighted
Average Price (as defined herein) of the Company’s Common Stock during the five
(5) consecutive trading day period immediately preceding the date of Exercise,
or other applicable date.

 

B = the Exercise Price.

 

As used herein, the “Volume Weighted Average Price” or “VWAP” for any security
as of any date means the volume weighted average sale price on the Over the
Counter Electronic Bulletin Board (the “OTC-BB”) as reported by, or based upon
data reported by, Bloomberg L.P. or an equivalent, reliable reporting service
mutually acceptable to and hereafter designated by holders of a majority in
interest of the Warrants and the Company (“Bloomberg”) or, if the OTC-BB is not
the principal trading market for such security, the volume weighted average sale
price of such security on the principal securities exchange or trading market
where such security is listed or traded as reported by Bloomberg, or, if no
volume weighted average sale price is reported for such security, then the last
closing trade price of such security as reported by Bloomberg, or, if no last
closing trade price is reported for such security by Bloomberg, the average of
the bid prices of any market makers for such security that are listed in the
“pink sheets” by the National Quotation Bureau, Inc. If the Volume Weighted
Average Price cannot be calculated for such security on such date in the manner
provided above, the volume weighted average price shall be the fair market value
as mutually determined by the Company and the holders of a majority in interest
of the Warrants being Exercised for which the calculation of the volume weighted
average price is required in order to determine the Exercise Price of such
Warrants. “Trading Day” shall mean any day on which the Common Sock is traded
for any period on the OTC-BB, or on the principal securities exchange or other
securities market on which the Common Stock is then being traded.  

 

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For purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon Exercise of this
Warrant in a cashless Exercise transaction shall be deemed to have been acquired
at the time this Warrant was originally issued.  Moreover, it is intended,
understood and acknowledged that the holding period for the Common Stock
issuable upon Exercise of this Warrant in a cashless Exercise transaction shall
be deemed to have commenced on the date this Warrant was issued.  

 

4.

Transfer and Registration.

 

(a)  Transfer Rights.  Subject to the provisions of Section 8 of this Warrant,
this Warrant may be transferred on the books of the Company, in whole or in
part, in person or by attorney, upon surrender of this Warrant properly
completed and endorsed.  This Warrant shall be canceled upon such surrender and,
as soon as practicable thereafter, the person to whom such transfer is made
shall be entitled to receive a new Warrant or Warrants as to the portion of this
Warrant transferred, and Holder shall be entitled to receive a new Warrant as to
the portion hereof retained.

 

(b)  Registrable Securities.  The Common Stock issuable upon the Exercise of
this Warrant has registration rights pursuant to that certain Registration
Rights Agreements between the Company and the Holder dated even herewith.

 

5.

Anti-Dilution Adjustments; Additional Adjustments; Purchase Rights.

 

(a)

[Omitted].  

 

(b)  Recapitalization or Reclassification.  If the Company shall at any time
effect a recapitalization, reclassification or other similar transaction of such
character that the shares of Common Stock shall be changed into or become
exchangeable for a larger or smaller number of shares, then upon the effective
date thereof, the number of shares of Common Stock which Holder shall be
entitled to purchase upon Exercise of this Warrant shall be increased or
decreased, as the case may be, in direct proportion to the increase or decrease
in the number of shares of Common Stock by reason of such recapitalization,
reclassification or similar transaction, and the Exercise Price shall be, in the
case of an increase in the number of shares, proportionally decreased and, in
the case of decrease in the number of shares, proportionally increased.  The
Company shall give Holder the same notice it provides to holders of Common Stock
of any transaction described in this Section 5(b).

 

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 (c)  Exercise Price Adjusted.  As used in this Warrant, the term “Exercise
Price” shall mean the purchase price per share specified in Section 3 of this
Warrant, until the occurrence of an event stated in this Section 5 or otherwise
set forth in this Warrant, and thereafter shall mean said price as adjusted from
time to time in accordance with the provisions of said subsection.  No such
adjustment under this Section 5 shall be made unless such adjustment would
change the Exercise Price at the time by $.01 or more; provided, however, that
all adjustments not so made shall be deferred and made when the aggregate
thereof would change the Exercise Price at the time by $.01 or more. No
adjustment made pursuant to any provision of this Section 5 shall have the net
effect of increasing the Exercise Price in relation to the split adjusted and
distribution adjusted price of the Common Stock.  

 

(d)  Adjustments: Additional Shares, Securities or Assets.  In the event that at
any time, as a result of an adjustment made pursuant to this Section 5 or
otherwise, Holder shall, upon Exercise of this Warrant, become entitled to
receive shares and/or other securities or assets (other than Common Stock) then,
wherever appropriate, all references herein to shares of Common Stock shall be
deemed to refer to and include such shares and/or other securities or assets;
and thereafter the number of such shares and/or other securities or assets shall
be subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.  

 

(e)  Adjustment Upon Issuance of Shares of Common Stock or Common Stock
Equivalents.  If the Company issues or sells, or in accordance with this Section
5(e) is deemed to have issued or sold, any shares of Common Stock (including the
issuance or sale of shares of Common Stock owned or held by or for the account
of the Company, but excluding shares of Common Stock deemed to have been issued
by the Company in connection with an Exempt Issuance (as defined in the
Securities Purchase Agreement) for a consideration per share (the "New Issuance
Price") less than a price (the "Applicable Price") equal to the Exercise Price
in effect immediately prior to such issue or sale or deemed issuance or sale
(the foregoing a "Dilutive Issuance"), then immediately after such Dilutive
Issuance, the Exercise Price then in effect shall be reduced to an amount equal
to the New Issuance Price.  Upon each such adjustment of the Exercise Price
hereunder, the number of Warrant Shares shall be adjusted in accordance with
Section 5(k) below. The adjustments required by this paragraph and by Sections
5(e)(i)-(iv) below are referred to in the singular, as a “Subsequent Issuance
Adjustment,“ and collectively as “Subsequent Issuance Adjustments.” For purposes
of determining the adjusted Exercise Price under this Section 5(e), the
following shall be applicable:

 

(i)

Issuance of Options.  If the Company in any manner grants any Options and the
lowest price per share for which one share of Common Stock is issuable upon the
exercise of any such Option or upon conversion, exercise or exchange of any
Convertible Securities issuable upon exercise of any such Option is less than
the Applicable Price, then such share of Common Stock shall be deemed to be
outstanding and to have been issued and sold by the Company at the time of the
granting or sale of such Option for such price per share.  For purposes of this
Section 5(e)(i), the "lowest price per share for which one share of Common Stock
is issuable upon exercise of such Options or upon conversion, exercise or
exchange of such Convertible Securities" shall be equal to the sum of the lowest
amounts of consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the granting or sale of the
Option, upon exercise of the Option and upon conversion, exercise or exchange of
any Convertible Security issuable upon exercise of such Option.  

 

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(ii)

Issuance of Convertible Securities.  If the Company in any manner issues or
sells any Convertible Securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such Convertible Securities for such price
per share.  For the purposes of this Section 5(e)(ii), the "lowest price per
share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the Convertible Security and
upon conversion, exercise or exchange of such Convertible Security.  In the case
of a Convertible Security which is accompanied Options (collectively, a “Unit”),
the "lowest price per share for which one share of Common Stock is issuable upon
the conversion, exercise or exchange of such Convertible Security” shall equal
(i) the consideration deemed received in exchange for the Convertible Security,
as determined in accordance with subsection 5(e)(iv) below, divided by (ii) the
total number of shares into which such Convertible Security is convertible or
exchangeable (without regard to any contractual limitation on the timing or
amount of conversions).  

 

(iii)

Change in Option Price or Rate of Conversion.  If the purchase price provided
for in any Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Convertible Securities, or the
rate at which any Convertible Securities are convertible into or exercisable or
exchangeable for shares of Common Stock increases or decreases at any time, the
Exercise Price and the number of Warrant Shares in effect at the time of such
increase or decrease shall be adjusted to the Exercise Price and the number of
Warrant Shares which would have been in effect at such time had such Options or
Convertible Securities provided for such increased or decreased purchase price,
additional consideration or increased or decreased conversion rate, as the case
may be, at the time initially granted, issued or sold.  For purposes of this
Section 5(e)(iii), if the terms of any Option or Convertible Security that was
outstanding as of the date of issuance of this Note are increased or decreased
in the manner described in the immediately preceding sentence, then such Option
or Convertible Security and the shares of Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have been issued as
of the date of such increase or decrease.  No adjustment pursuant to this
Section 5(e)(iii) shall be made if such adjustment would result in an increase
of the Exercise Price then in effect or a decrease in the number of Warrant
Shares.

 

(iv)   Calculation of Consideration Received.  In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction, the Options will be deemed to have been
issued for their Black Scholes value, and the other securities issued or sold in
such integrated transaction will be deemed to have been issued or sold for the
balance of the consideration received by the Company.  If any shares of Common
Stock, Options or Convertible Securities are issued or sold or deemed to have
been issued or sold for cash, the consideration received therefor will be deemed
to be the net amount received by the Company therefor.  If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company will
be the fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration received by
the Company will be the Weighted Average Price of such security on the date of
receipt.  If any shares of Common Stock, Options or Convertible Securities are
issued to the owners of the non-surviving entity in connection with any merger
in which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such shares of
Common Stock, Options or Convertible Securities, as the case may be.  The fair
value of any consideration other than cash or securities will be determined
jointly by the Company and the Required Warrant Holders.  If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the "Valuation Event"), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
day following the Valuation Event by an independent, reputable appraiser jointly
selected by the Company and the Required Warrant Holders.  The determination of
such appraiser shall be final and binding upon all parties absent manifest error
and the fees and expenses of such appraiser shall be borne by the Company.

 

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(v)

Record Date.  If the Company takes a record of the holders of shares of Common
Stock for the purpose of entitling them (i) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible
Securities or (ii) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

 

For purposes hereof:

 

“Common Stock Equivalents,” “Exempt Issuance” and “Variable Equity Securities”
shall each have the meanings ascribed to them in the Securities Purchase
Agreement.  

 

“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
Common Stock.

 

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

 

(f)  Subsequent Rights Offerings.  If the Company, at anytime prior to the date
that all of the Warrants have been Exercised, redeemed or otherwise satisfied in
accordance with their terms, shall issue rights, options or warrants to all
holders of Common Stock (and not to Holders) entitling them to subscribe for or
purchase shares of Common Stock at a price per share (the “Base Rights Offering
Price”) that is lower than the Exercise Price then in effect, then the Exercise
Price then in effect shall be reduced (but not increased) to the Base Rights
Offering Price (a “Subsequent Rights Offering Adjustment”).  Such adjustment
shall be made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights, options or warrants.  No
adjustment shall be made hereunder if such adjustment would result in an
increase of the Exercise Price then in effect.

 

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(g)

 Milestone Adjustments.  If the Company shall have failed (each a “Milestone
Failure”) to meet or exceed any of the milestone goals (“Milestone Goals”) that
are set forth on Schedule 5(g) annexed hereto for the following period (the
“Milestone Period”): the twelve (12) month period ending April 30, 2009 (the
“Milestone Date”), as reported in the Company’s Form 10-Q (or Form 10-K, if
applicable) for such fiscal period, then the Exercise Price shall be reduced
(but not increased) (a “Milestone Adjustment”) to equal the lesser of (a) the
Exercise Price then in effect, (b) the Market Price as determined on the
applicable Milestone Date, or (c) the Market Price as determined on the date
(each, a “Milestone Adjustment Date”) that is five (5) Trading Days after the
date that Company files its next Form 10-Q (or Form 10-K, if applicable) with
the Commission following the end of the applicable Milestone Period (the
“Milestone Adjustment Price”).  

 

Each such adjustment shall be effective as of the first day following each
Milestone Date (by way of example, if the Milestone Goal is not met for the
Milestone Period ending October 31, 2008, the reduction is effective immediately
on November 1, 2008).  As to any Exercises by the Holder that occurred following
the end of a Milestone Period but prior to the date the Company’s periodic
report was filed (“Interim Period”), the Company shall retroactively send the
Holder additional Warrant Shares (“Interim Warrant Shares”) within 3 Trading
Days of the date of the applicable filing if an adjustment is required hereunder
(provided that to the extent any such shares would cause the Beneficial
Ownership Limitation to be exceeded, such excess shares shall not be issued and
delivered until such time as such shares may be so issued without exceeding the
Beneficial Ownership Limitation).  The number of additional Warrant Shares
issued shall be equal to the number of Warrant Shares receivable from such
Exercises based on the adjusted Exercise Price less any Warrant Shares
previously received on account of such Exercises.  Any subsequent restatements
of the Company’s financials shall require similar retroactive issuances if the
aforementioned events are subsequently deemed to have occurred.  The Company
shall provide written notice to the Holder no later than 1 Business Day
following the Company’s filing of the applicable periodic report with the
Commission, indicating therein the new Exercise Price, the increased number of
shares represented by the Warrant, and the revenue and EBITDA for the applicable
Milestone Period.  In the event that there is an adjustment to the Exercise
Price pursuant to any other provision under this Warrant during the Interim
Period, the Exercise Price shall be the lower of (i) the Exercise Price as
adjusted pursuant to the other provisions of this Warrant and (ii) the new
Exercise Price as determined hereunder.  Notwithstanding anything herein to the
contrary, (i) the provision shall only have the effect of reducing the Exercise
Price and (ii) each adjustment shall be permanent notwithstanding future Revenue
or the achievement of any other milestones and cumulative with any other
adjustments hereunder.  

 

(h)

Adjustments to Exercise Price During Major Announcements.  Notwithstanding
anything contained in this Debenture to the contrary, in the event the Company
makes any public announcement (the date of such announcement is hereinafter
referred to as the “Announcement Date”) anytime during the period beginning five
(5) Business Days before any Milestone Adjustment Date and ending five (5)
Business Days after such Milestone Adjustment Date (the “Protected Period”),
then the “Milestone Adjustment Price” for such Milestone Adjustment shall equal
the lesser of (X) the Milestone Adjustment Price as determined pursuant to
Section 5(h) above, (Y) the Market Price as determined on the Trading Day
immediately preceding the Announcement Date and (Z) the Market Price as
determined on the date that is ten (10) Trading Days after the Announcement
Date.  

 

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(i)  

Subdivision or Combination of Common Stock.  If the Company at any time
subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a greater number of shares, then, after the date of
record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced and the number of
shares represented by this Warrant shall proportionally increase.  If the
Company at any time combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) the shares of Common Stock
acquirable hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately
prior to such combination will be proportionately increased and the number of
shares represented by this Warrant shall proportionally decrease.

 

(j)  Voluntary Adjustment By Company. The Company may at any time during the
term of this Warrant reduce the then current Exercise Price to any amount and
for any period of time deemed appropriate by the Board of Directors of the
Company (a “Voluntary Adjustment”).   

 

(k)  Adjustment to Number of Shares.  In the event of any adjustment to the
Exercise Price pursuant to the terms of this Warrant, including but not limited
to any Subsequent Issuance Adjustment any Subsequent Rights Offering Adjustment,
or any Voluntary Adjustment, the number of Warrant Shares issuable upon Exercise
of this Warrant shall be increased such that the aggregate Exercise Price
payable in a full Cash Exercise hereunder, after taking into account the
decrease in the Exercise Price, shall be equal to the aggregate Exercise Price
payable in a full Cash Exercise prior to such adjustment, and the number of
Warrant Shares issuable in a Cashless Exercise shall be increased accordingly.  

 

(l)  Notice of Adjustments; Notice Failure Adjustment.  The Company shall notify
the Holder in writing, no later than one (1) Business Day following any Dilutive
Issuance, indicating therein the applicable issuance price, or applicable reset
price, exchange price, conversion price, exercise price and other pricing terms
(such notice, the “Dilutive Issuance Notice”).   In the event that the Company
fails to provide the Holder with an Exercise Price Adjustment Notice within five
(5) Business Days of any Dilutive Issuance (the “Dilutive Issuance Notice
Deadline”), the Exercise Price shall be permanently reduced (but not increased)
on the Dilutive Issuance Notice Deadline, and on the same day of each calendar
month thereafter until such notice is given (each, a “Notice Failure Adjustment
Date”), or in each case if not a business day, then on the next business day
(each, a “Notice Failure Adjustment”) to a price equal to the lesser of (a) the
Exercise Price then in effect or (b) 100% of the VWAP for five (5) trading day
period immediately preceding the applicable Notice Failure Adjustment Date
(collectively, the “Notice Failure Adjustment Price”).

 

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Whenever the Exercise Price is required to be adjusted pursuant to the terms of
this Warrant, the Company shall within Five (5) Business Days mail to the Holder
a notice (a “Exercise Price Adjustment Notice”) setting forth the new Exercise
Price and specifying the new number of shares into which the Warrant is
convertible after such adjustment and setting forth a statement of the facts
requiring such adjustment. The Company shall, upon the written request at any
time of the Holder, furnish to such Holder a like Warrant setting forth (i) such
adjustment or readjustment, (ii) the Exercise Price at the time in effect and
(iii) the number of shares of Common Stock and the amount, if any, of other
securities or property which at the time would be received upon Exercise of the
Warrant, following delivery of the original Warrant to the Company for exchange.
 If the Company issues Variable Equity Securities (as defined in the Securities
Purchase Agreement), despite the prohibition thereon in the Securities Purchase
Agreement, the Company shall be deemed to have issued Common Stock or Common
Stock Equivalents at the lowest possible conversion or exercise price at which
such securities may be converted or exercised. For purposes of clarification,
whether or not the Corporation provides an Exercise Price Adjustment Notice
pursuant to this Section 5(l), upon the occurrence of any event that leads to an
adjustment of the Exercise Price, the Holders are entitled to receive an
Exercise Price and a number of Exercise Shares based upon the new Exercise
Price, as adjusted, for exercises occurring on or after the date of such
adjustment, regardless of whether a Holder accurately refers to the adjusted
Exercise Price in the Notice of Exercise.  

 

(m)  Notice to Allow Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) 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, of 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 as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) 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
(y) 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; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice.  The Holder is
entitled to exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such notice.

 

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(n)  Purchase Rights.  In addition to any other adjustments described herein, if
at any time the Company grants, issues or sells any Options, Convertible
Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the
“Purchase Rights”), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the proportionate number of
shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) immediately
before the date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as of which the
record holders of shares of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.

 

6.

Fractional Interests.

 

No fractional shares or scrip representing fractional shares shall be issuable
upon the Exercise of this Warrant, but on Exercise of this Warrant, Holder may
purchase only a whole number of shares of Common Stock.  If, on Exercise of this
Warrant, Holder would be entitled to a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional share shall
be disregarded and the number of shares of Common Stock issuable upon Exercise
shall be the next closest number of whole shares.

 

7.

Reservation of Shares.

 

From and after the date hereof, the Company shall at all times reserve for
issuance such number of authorized and unissued shares of Common Stock (or other
securities substituted therefor as herein above provided) equal to 125% (the
“Minimum Warrant Share Reservation Amount”) of such number as shall be
sufficient for the Exercise of this Warrant and payment of the Exercise Price in
full without regard to any Beneficial Ownership Limitation. If at any time the
number of shares of Common Stock authorized and reserved for issuance is below
125% of the number of shares sufficient for the Exercise of this Warrant (a
“Share Authorization Failure”)(based on the Exercise Price in effect from time
to time), the Company will promptly take all corporate action necessary to
authorize and reserve a sufficient number of shares, including, without
limitation, calling a special meeting of stockholders to authorize additional
shares to meet the Company's obligations under this Section 7, in the case of an
insufficient number of authorized shares, and using its best efforts to obtain
stockholder approval of an increase in such authorized number of shares such
that the number of shares authorized and reserved for the Exercise of this
Warrant shall exceed the Minimum Warrant Share Reservation Amount. The Company
covenants and agrees that upon the Exercise of this Warrant, all shares of
Common Stock issuable upon such Exercise shall be duly and validly issued, fully
paid, nonassessable and not subject to liens, claims, preemptive rights, rights
of first refusal or similar rights of any person or entity.

 

8.

Restrictions on Transfer.

 

(a) Registration or Exemption Required.  This Warrant has been issued in a
transaction exempt from the registration requirements of the Act by virtue of
Regulation D and exempt from state registration under applicable state laws. The
Warrant and the Common Stock issuable upon the Exercise of this Warrant may not
be transferred, sold or assigned except pursuant to an effective registration
statement or an exemption to the registration requirements of the Act and
applicable state laws.

 

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(b) Assignment.  If Holder can provide the Company with reasonably satisfactory
evidence that the conditions of (a) above regarding registration or exemption
have been satisfied, Holder may sell, transfer, assign, pledge or otherwise
dispose of this Warrant, in whole or in part. Holder shall deliver a written
notice to Company, substantially in the form of the Assignment attached hereto
as Exhibit B, indicating the person or persons to whom the Warrant shall be
assigned and the respective number of warrants to be assigned to each assignee.
The Company shall effect the assignment within ten (10) days of receipt of such
notice, and shall deliver to the assignee(s) designated by Holder a Warrant or
Warrants of like tenor and terms for the appropriate number of shares.

 

9.

Noncircumvention.  The Company hereby covenants and agrees that the Company will
not, by amendment of its Certificate of Incorporation, Bylaws or through any
reorganization, transfer of assets, consolidation, merger, scheme of
arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder.  Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, and (ii) shall take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

 

10.

Rights Upon Major Transaction or Change of Entity Transaction.

 

 

(a) Definitions. For purposes hereof,

 

“Change of Entity Transaction” means (i) a consolidation, merger, exchange of
shares, recapitalization, reorganization, business combination or other similar
event,  (A) following which the holders of Common Stock immediately preceding
such consolidation, merger, combination or event either (1) no longer hold a
majority of the shares of Common Stock of the Company or (2) no longer have the
ability to elect the board of directors of the Company or (B) as a result of
which shares of Common Stock shall be changed into (or the shares of Common
Stock become entitled to receive) the same or a different number of shares of
the same or another class or classes of stock or securities of the Company or
another entity.

 

“Sufficient Trading Characteristics” shall mean that the average daily dollar
trading volume of the common stock of such entity on its primary exchange or
market is equal to or in excess of $100,000 for the 90th through the 31st day
prior to the public announcement of such transaction.

 

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“Permissible Change of Entity Transaction” shall mean a Change of Entity
Transaction where the Successor Entity (as defined below) (A) is a publicly
traded Company whose common stock is quoted on or listed for trading on an
Eligible Market, (B) has Sufficient Trading Characteristics (as defined above)
and (C) meets the Assumption Requirements (as required in Section 10(b) below).

 

“Eligible Market” means the over the counter Bulletin Board (“OTC-BB”), the New
York Stock Exchange, Inc., the NASDAQ Capital Market, the NASDAQ Global Market,
the NASDAQ Global Select Market or the American Stock Exchange.

 

 

“Impermissible Change of Entity Transaction” shall mean a Change of Entity
Transaction which does not qualify as a Permissible Change of Entity
Transaction.

 

“ Major Transaction” means

 

(i)

an Impermissible Change of Entity Transaction; and

 

(ii)

the sale or transfer of more than 40%, in the aggregate, of the properties or
assets of the Company to another Person or Persons in one or a series of related
transactions in any rolling 12 month period (an “Asset Sale”);  and

 

(iii)

a purchase, tender or exchange offer made to and accepted by the holders of more
than the 50% of the outstanding shares of Common Stock.

 

(b)  Assumption Upon Change of Entity Transaction.  The Company shall not, so
long as any portion of this Warrant remains outstanding, enter into or be party
to a Change of Entity Transaction unless any Person purchasing the Company’s
assets or Common Stock, or any successor entity resulting from such Change of
Entity Transaction (in each case, an “Successor Entity”), assumes (an
“Assumption”) in writing all of the obligations of the Company under this
Warrant in accordance with the provisions of this Section 10(b) pursuant to
written agreements in form and substance satisfactory to the Required Warrant
Holders (as defined below) and approved by the Required Warrant Holders prior to
such Change of Entity Transaction, including agreements to deliver to each
holder of Warrants in exchange for such Warrants a security of the Successor
Entity evidenced by a written instrument substantially similar in form and
substance to this Warrant, including, without limitation, having an exercise
price equal to the Exercise Price of this Warrant, having similar exercise
rights as this Warrant (including but not limited to similar exercise price
adjustment provisions), and reasonably satisfactory to the Required Warrant
Holders.  Upon the occurrence of any Change of Entity Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date
of such Change of Entity Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor Entity), and may exercise
every right and power of the Company and shall assume all of the obligations of
the Company under the Warrant with the same effect as if such Successor Entity
had been named as the Company herein.  Upon consummation of a Change of Entity
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise or redemption of the Warrant at any time
after the consummation of the Change of Entity Transaction, in lieu of the
shares of Common Stock (or other securities, cash, assets or other property)
issuable upon the exercise of this Warrant prior to such Change of Entity
Transaction, such shares of common stock (or their equivalent) of the Successor
Entity, as adjusted in accordance with the provisions of this Warrant.  The
provisions of this Section shall apply similarly and equally to successive
Change of Entity Transactions and shall be applied without regard to any
limitations on the exercise of the Warrant.  The requirements of this Section
10(b) are referred to herein as the “Assumption Requirements.”

 

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For purposes hereof, “Required Warrant Holders” shall mean the Holders of
greater than seventy five percent (75%) of the then outstanding Warrants
(determined by the number of unexercised underlying shares).

 

(c) Notice of Major Transaction; Redemption Right Upon Major Transaction.  At
least thirty (30) days prior to the consummation of a Major Transaction, but not
prior to the public announcement of such transaction, the Company shall deliver
written notice thereof to the Holder (a “Major Transaction Notice”), which
notice shall specify the nature and terms of the proposed transaction and nature
of the Successor Entity (if any).   

 

(d)  Redemption Right Upon Major Transaction.  At any time during the period
beginning after the Holder's receipt of a Major Transaction Notice and ending on
the Trading Day immediately prior to the consummation of such Major Transaction,
the Holder may require the Company to redeem all or any portion of the Holder’s
Warrant by delivering written notice thereof (“Major Transaction Redemption
Notice”) to the Company, which Major Transaction Redemption Notice shall
indicate the number of Warrant Shares  of its Warrant (the “Redemption Warrant
Amount”)  that the Holder is electing to be redeemed.  

 

The portion of this Warrant subject to redemption pursuant to this Section 10(d)
shall be redeemed by the Company in cash at a price equal to 100% of the greater
of (i) the Black Scholes value (as defined below) of the remaining outstanding
portion of the Warrant to be redeemed on the date the Major Transaction is
consummated calculated using the Black Scholes Option Pricing Model and (ii) the
Black-Scholes value of the remaining unexercised portion of this Warrant to be
redeemed on the Trading Day immediately preceding the date that the Major
Transaction Redemption Price (as defined below) is paid to the Holder (the
greater of which is referred to as the “Major Transaction Redemption Price”).
 For purposes hereof, the “Black-Scholes” value of a Warrant shall be determined
by use of the Black Scholes Option Pricing Model reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of such date of request and (B) an expected
volatility equal to the greater of 100% and the 100 day volatility obtained from
the HVT function on Bloomberg.  

 

(e) Escrow; Payment of Major Transaction Redemption Price.  The Company shall
not effect a Major Transaction unless it shall first place, or shall cause the
Successor Entity to place, into an escrow account with an independent escrow
agent, prior to or concurrently with the closing date of the Major Transaction
(the “Major Transaction Escrow Deadline”), an amount equal to the Major
Transaction Redemption Price.  Concurrently upon closing of any Major
Transaction, the Company shall pay or shall instruct the escrow agent to pay the
Major Transaction Redemption Price to the Holder, which payment shall constitute
a Redemption Upon Major Transaction of the Warrants.  

 

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(f) Injunction.  In the event that the Company attempts to consummate a Major
Transaction without placing the Major Transaction Redemption Price in escrow in
accordance with subsection (e) above or without payment of the Major Transaction
Redemption Price to the Holder upon consummation of such Major Transaction, the
Buyer shall have the right to apply for an injunction in any state or federal
courts sitting in the City of New York, borough of Manhattan to prevent the
closing of such Major Transaction until the Major Transaction Redemption Price
is paid to the Holder, in full.

 

(g) Mechanics of Redemptions Upon Major Transactions.  

 

Redemptions required by this Section 10 shall be made in accordance with the
provisions of Section 12.  Notwithstanding anything to the contrary in this
Section 10, until the Major Transaction Redemption Price is paid in full, the
portion of the Warrant submitted for redemption under this Section may be
converted, in whole or in part, by the Holder into shares of Common Stock, or in
the event the Exercise Date is after the consummation of a Major Transaction,
into shares of common stock (or their equivalent) of the Successor Entity
pursuant to Section 10(b). Unless otherwise indicated by the Holder in the
applicable Notice of Exercise, any amount of this Warrant exercised during the
period from the date of the Major Transaction Redemption Notice until the date
the Major Transaction Redemption Price is paid in full shall be considered to be
an exercise (instead of a Redemption) of a portion of the Warrant that would
have been subject to such Redemption, and any amounts of this Warrant exercised
from time to time during such period shall exercised in full into Common Stock
at the Exercise Price then in effect, and the number of shares of this Warrant
so exercised into Common Stock shall be deducted from the number of Warrants
that are subject to redemption hereunder. The parties hereto agree that in the
event of the Company's redemption of any portion of the Warrant under this
Section 10(d), the Holder's damages would be uncertain and difficult to estimate
because of the parties' inability to predict future interest rates and the
uncertainty of the availability of a suitable substitute investment opportunity
for the Holder.  Accordingly, any redemption premium due under this Section 10
is intended by the parties to be, and shall be deemed, a reasonable estimate of
the Holder's actual loss of its investment opportunity and not as a penalty.

 

11.

Default and Redemption.   

 

(a) Events of Default.  Each of the following events which occur while any
Warrants are outstanding shall be considered to be an “Event of Default”:  

 

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(i)  Failure To File and Pursue Registration.  An Event of Default occurs under
Section 10(c) of the Debentures, with respect to any Warrant Shares (a
“Registration Default”);

 

(ii)  Failure To Authorize and Reserve Common Stock.  A Share Authorization
Failure occurs under Section 7 hereof, and such Share Authorization Failure
remains uncured for a period of more than twenty (20) days. (a “Share
Reservation Default”);

 

(iii)  Failure To Deliver Common Stock. A Warrant Shares Delivery Failure (as
defined above) occurs and remains uncured for a period of more than twenty (20)
days.  

 

(iv)  Legend Removal Failure.   A Legend Removal Failure occurs and remains
uncured for a period of twenty (20) days, where a “Legend Removal Failure” shall
be deemed to have occurred if the Company fails to issue Exercise Shares without
a restrictive legend, when and as required under Section 2(g)(ii) hereof or
under Section 6 of the Securities Purchase Agreement.

 

(v)  Corporate Existence; Major Transaction.  The Company has effected a Major
Transaction without paying the Major Transaction Redemption Price to the Holder
pursuant to Section 10(d) or, if the Holder did not elect a Redemption Upon
Major Transaction, the Company has failed to meet the Assumption Requirements of
Section 10(b) prior to effecting a Major Transaction.

 

(vi) Failure to Adjust Exercise Price; Failure to Comply With Dispute Resolution
Procedures.  The Company shall have failed to comply in good faith with the
Dispute Resolution Procedures (as defined herein) or shall have failed to adjust
the Exercise Price as required under Section 5(e) following a Dilutive Issuance,
or otherwise (after any applicable Dispute Resolution Procedure required
herein), and such failure continues for ten (10) Business Days after the Holder
provides written notice to the Company that such performance by the Company is
past due.

 

 (b) Mandatory Redemption; Certain Adjustments on Default.   

 

(i) Mandatory Redemption Amount.  If any Events of Default shall occur and any
such Event of Default continues for an additional ten (10) Business Days after
the Holder provides written notice to the Company that an Event of Default has
occurred and specifying the factual basis therefor, then thereafter, unless
waived by the Holder, upon the occurrence and during the continuation of any
Event of Default, at the option of the Holder, such option exercisable through
the delivery of written notice to the Company by such Holder (the “Default
Notice”), the outstanding amount of this Warrant shall be immediately redeemed
by the Company and the Company shall pay to the Holder (a “Mandatory
Redemption”) an amount (the “Mandatory Redemption Amount” or the “Default
Amount”) equal to 100% of the greater of (i) the Black-Scholes value of the
remaining unexercised portion of this Warrant on the date of such Default Notice
 and (2) the Black-Scholes value of the remaining unexercised portion of this
Warrant on the Trading Day immediately preceding the date that the Mandatory
Redemption Amount is paid to the Holder.  

 

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The Mandatory Redemption Amount shall be payable, in cash or cash equivalent,
within five (5) business days of the Date of the applicable Default Notice (the
“Default Amount Due Date”).  If the Company fails to pay the Mandatory
Redemption Amount within thirty (30) days of the Default Amount Due Date, then
(A) the Exercise Price shall be permanently decreased (but not increased) on the
first Trading Day of each calendar month thereafter (each a “Default Adjustment
Date”) until the Default Amount is paid in full, to a price equal to the lesser
of (i) the Exercise Price then in effect, or (ii) the lowest Market Price that
has occurred on any Default Adjustment Date since the date that the Event of
Default began.  Notwithstanding the occurrence of an Event of Default, Failure
Payments and any other Required Cash Payments (as defined in the Securities
Purchase Agreement) shall continue to accrue.  On the date that is five (5)
Business Days after the Company’s receipt of the Holder’s Default Notice, the
Default Amount, together with all other amounts payable hereunder, shall
immediately become due and payable, all without demand, presentment or notice,
all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder shall
be entitled to exercise all other rights and remedies available at law or in
equity, and (B) .

 

If the Company fails to pay the Default Amount within the (10)Business Days of
written notice that such amount is due and payable (the “Default Amount Due
Date”), then interest shall accrue thereon at a rate of eighteen percent (18%)
per annum, compounded monthly (or the maximum amount allowed by applicable law,
whichever is less), and the Holder shall have the right at any time, so long as
the Company remains in default (and so long and to the extent that there are
sufficient authorized shares), to require the Company, upon written notice
(“Default Exercise Notice”) (which may be given one or more times, from time to
time anytime after the Default Amount Due Date), to immediately issue (a
“Default Exercise”), in lieu of all or any specified portion (the “Specified
Portion”) of the unpaid portion (the “Unpaid Portion”) of the Default Amount, a
number (the “Default Share Amount”) of shares (the “Default Shares”) of Common
Stock, subject to the Beneficial Ownership Limitation, equal to the Specified
Portion of the Default Amount divided by the Exercise Price in effect on the
date such shares are issued to the Holder, PROVIDED THAT, the Holder may require
that such payment of shares be made in one or more installments at such time and
in such amounts as Holder chooses.   The Default shares are due within five (5)
Business Days of the date that the Holder delivers a Default Exercise Notice to
the Company (the “Default Share Delivery Deadline”).   

 

Upon a Default Exercise, the Company shall be required to deliver a number of
Common Shares to the Holder equal to the applicable Default Share Amount (as
described above).

 

If the Company is unable to redeem all of the Warrants submitted for redemption,
the Company shall redeem a pro rata amount from each Holder based on the number
of Warrants submitted for redemption by such Holder relative to the total number
of Warrants submitted for redemption by all Holders.

 

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The Holder shall not be entitled to receive Default Shares on a given date if
and to the extent that such issuance would cause the Beneficial Ownership
Limitation then in effect to be exceeded.  If and to the extent that the
issuance of Default Shares with respect to a given Specified Portion would
result in the a violation of the Beneficial Ownership Limitation, then that
particular Specified Portion shall be automatically reduced to a value that
would cause the number of Default Shares to be issued to equal the Maximum
Percentage, and the amount of such reduction shall be added back to the Unpaid
Portion of the Default Amount.

 

 (ii) Liquidated Damages.  The parties hereto acknowledge and agree that the
sums payable as liquidated damages or pursuant to a Mandatory Redemption shall
give rise to liquidated damages and not penalties.  The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred by the
Holder is incapable or is difficult to precisely estimate, (ii) the amounts
specified bear a reasonable proportion and are not plainly or grossly
disproportionate to the probable loss likely to be incurred by the Investor, and
(iii) the parties are sophisticated business parties and have been represented
by sophisticated and able legal and financial counsel and negotiated this
Agreement at arm’s length.

 

The Default Amount, together with all other amounts payable hereunder, shall
immediately become due and payable, all without demand, presentment or notice,
all of which hereby are expressly waived, together with all costs, including,
without limitation, legal fees and expenses, of collection, and the Holder shall
be entitled to Exercise all other rights and remedies available at law or in
equity.

 

(c)  Redemption by Other Holders.  Upon the Company's receipt of notice from any
of the holders for redemption or repayment of other Warrants that were issued
pursuant to the Securities Purchase Agreement (the “Other Warrants”) as a result
of an event or occurrence of an Event of Default or a Major Transaction (each,
an “Other Redemption Notice”), the Company shall immediately, but no later than
one (1) Business Day of its receipt thereof, forward to the Holder by facsimile
a copy of such notice.  If the Company receives a Redemption Notice and one or
more Other Redemption Notices, during the seven (7) Business Day period
beginning on and including the date which is three (3) Business Days prior to
the Company's receipt of the Holder's Redemption Notice and ending on and
including the date which is three (3) Business Days after the Company's receipt
of the Holder's Redemption Notice and the Company is unable to redeem all
amounts designated in such Redemption Notice and such Other Redemption Notices
received during such seven (7) Business Day period, then the Company shall
redeem a pro rata amount from each holder of the Warrants (including the Holder)
based on the number of Warrants submitted for redemption pursuant to such
Redemption Notice and such Other Redemption Notices received by the Company
during such seven (7) Business Day period.

 

(d)  Posting of Bond.  In the event that any Event of Default occurs hereunder
or any Event of Default occurs under any of the Transaction Documents, the
Company may not raise as a legal defense (in any Lawsuit, as defined below, or
otherwise) or justification to such Event of Default any claim that such Holder
or any one associated or affiliated with such Holder has been engaged in any
violation of law, unless the Company has posted a surety bond (a “Surety Bond”)
for the benefit of such Holder in the amount of 130% of the aggregate Surety
Bond Value (as defined below) of all of the Holder’s Debentures and Warrants
(the “Bond Amount”), which Surety Bond shall remain in effect until the
completion of litigation of the dispute and the proceeds of which shall be
payable to such Holder to the extent Holder obtains judgment.

 

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For purposes hereof, a “Lawsuit” shall mean any lawsuit, arbitration or other
dispute resolution filed by either party herein pertaining to any of the
Transaction Documents.

 

“Surety Bond Value,” for the Warrants shall mean 130% of the of the
Black-Scholes value of the remaining unexercised portion of this Warrant on the
Trading Day immediately preceding the date that such bond goes into effect) and
“Surety Bond Value” for the Debentures shall have the meaning ascribed to it in
the Debenture.  

 

(e)  Injunction and Posting of Bond.  In the event that the Event of Default
referred to in subsection (d) above pertains to the Company’s failure to deliver
unlegended shares of Common Stock to the Holder pursuant to a Warrant Exercise,
legend removal request, or otherwise, the Company may not refuse such unlegended
share delivery based on any claim that such Holder or any one associated or
affiliated with such Holder has been engaged in any violation of law, unless an
injunction from a court, on prior notice to Holder, restraining and or enjoining
Exercise of all or part of said Warrant shall have been sought and obtained by
the Company and the Company has posted a Surety Bond for the benefit of such
Holder in the amount of the Bond Amount (as described above), which Surety Bond
shall remain in effect until the completion of litigation of the dispute and the
proceeds of which shall be payable to such Holder to the extent Holder obtains
judgment.  

 

(f)   Remedies, Other Obligations, Breaches and Injunctive Relief.  The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant and the other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder to
pursue actual damages for any failure by the Company to comply with the terms of
this Warrant.  The Company acknowledges that a breach by it of its obligations
hereunder could cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate.  The Company therefore agrees that, in
the event of any such breach or threatened breach, the holder of this Warrant
could seek, in addition to all other available remedies, an injunction
restraining any breach.  

 

12.

Holder’s Redemptions.  

 

(a)  Mechanics of Holder’s Redemptions.  In the event that the Holder has sent a
Major Transaction Redemption Notice to the Company pursuant to Section 10(d) or
a Default Notice pursuant to Section 11(b)(i), respectively (each, a “Redemption
Notice”), the Holder shall promptly submit this Warrant to the Company (if
delivery of the original Warrant is required pursuant to Section 2(l). In the
event of a redemption of less than all of the outstanding portion of this
Warrant, the Company shall promptly cause to be issued and delivered to the
Holder a new Warrant representing the outstanding number of underlying Warrant
Shares which have not been redeemed.  In the event that the Company does not pay
the applicable Redemption Price to the Holder within the time period required,
at any time thereafter and until the Company pays such unpaid Redemption Price
in full, the Holder shall have the option, in lieu of redemption, to require the
Company to promptly return to the Holder all or any portion of this Warrant that
was submitted for redemption and for which the applicable Major Transaction
Redemption Price (together with any late charges thereon) has not been paid.
 Upon the Company's receipt of such notice, (x) the applicable Redemption Notice
shall be null and void with respect to such Redemption Share Amount, (y) the
Company shall immediately return this Warrant, or issue a new Warrant to the
Holder representing the portion of this Warrant that was submitted for
redemption.  The Holder's delivery of a notice voiding a Redemption Notice and
exercise of its rights following such notice shall not affect the Company's
obligations to make any payments of Failure Payments which have accrued prior to
the date of such notice with respect to the Warrant subject to such notice.

 

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(b) Warrants Detachable.  The Warrants constitute a separate, detachable
security from the Debentures.   In the event of any redemption of the
Debentures, in whole or in part, by the Company, the Holder shall retain its
outstanding Warrants.

 

13.  Remedies, Other Obligations, Breaches and Injunctive Relief.  The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant and the other Transaction Documents, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the Holder right
to pursue actual damages for any failure by the Company to comply with the terms
of this Warrant.  The Company acknowledges that a breach by it of its
obligations hereunder could cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of
this Warrant could seek, in addition to all other available remedies, an
injunction restraining any breach.

 

14.

Dispute Resolution. In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Warrant Shares
issuable upon any exercise of this Warrant, the Company shall promptly issue to
the Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with this subsection.  In the case of a dispute as to the
determination of the closing price or the Volume Weighted Average Price of the
Company’s Common Stock or the arithmetic calculation of the Exercise Price,
Market Price or any Redemption Price, or the determination of whether or not a
Dilutive Issuance or a Milestone Failure has occurred, the Company shall submit
the disputed determinations or arithmetic calculations via facsimile within two
(2) Business Days of receipt, or deemed receipt, of the Notice of Exercise or
Redemption Notice or other event giving rise to such dispute, as the case may
be, to the Holder. If the Holder and the Company are unable to agree upon such
determination or calculation within two (2) Business Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within two (2) Business Days submit via facsimile (i) the
disputed determination of the closing price or the Volume Weighted Average Price
of the Company’s Common Stock to an independent, reputable investment bank
selected by the Company and approved by the Holder, which approval shall not be
unreasonably withheld, (ii) the disputed arithmetic calculation of the Exercise
Price, Market Price or any Redemption Price to the Company’s independent,
outside accountant or (iii) the disputed facts regarding the occurrence of a
Dilutive Issuance or Milestone Failure (or any other matter referred to above
that is not expressly designated to the independent investment bank or the
independent outside accountant pursuant to (i) or (ii) immediately above) to an
expert attorney from a nationally recognized outside law firm (having at least
50 attorneys and having with no prior relationship with the Company) selected by
the Company and approved by the Holder. The Company, at the Company’s expense,
shall cause the investment bank or the accountant, law firm, or other expert, as
the case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five (5) Business Days from
the time it receives the disputed determinations or calculations. Such
investment bank’s or accountant’s determination or calculation, as the case may
be, shall be binding upon all parties absent demonstrable error (collectively,
the “Dispute Resolution Procedures”).

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15.

Benefits of this Warrant.

 

Nothing in this Warrant shall be construed to confer upon any person other than
the Company and Holder any legal or equitable right, remedy or claim under this
Warrant and this Warrant shall be for the sole and exclusive benefit of the
Company and Holder.

 

16.

Governing Law.   

 

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.  Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed to limit
in any way any right to serve process in any other manner permitted by law.  The
parties hereby waive all rights to a trial by jury.  If either party shall
commence an action or proceeding to enforce any provisions of this Agreement,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such action or
proceeding.

 

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17.

Loss of Warrant.

 

Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity or security reasonably satisfactory to the Company, and upon surrender
and cancellation of this Warrant, if mutilated, the Company shall execute and
deliver a new Warrant of like tenor and date.

 

18.

Notice or Demands.

 

Notices or demands pursuant to this Warrant to be given or made by Holder to or
on the Company shall be sufficiently given or made if sent by certified or
registered mail, return receipt requested, postage prepaid, and addressed, until
another address is designated in writing by the Company, to the address set
forth in Section 2(a) above. Notices or demands pursuant to this Warrant to be
given or made by the Company to or on Holder shall be sufficiently given or made
if sent by certified or registered mail, return receipt requested, postage
prepaid, and addressed, to the address of Holder set forth in the Company’s
records, until another address is designated in writing by Holder.

 

19.

Amendment.  This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Required Warrant Holders.

 

 

IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated
Warrant as of the 31st day of December, 2008, and the original Date of Issuance
remains the 13th day of June, 2008.

 

 

ICP Solar Technologies, Inc.

 

By:  ________________________

Print Name: __________________

Title: ________________________

 

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EXHIBIT A

 

NOTICE OF EXERCISE FORM FOR WARRANT

 

TO:  ICP SOLAR TECHNOLOGIES, INC.

 

The undersigned hereby irrevocably Exercises the right to purchase ____________
of the shares of Common Stock (the “Common Stock”) of ICP SOLAR TECHNOLOGIES,
INC., a Nevada corporation (the “Company”), evidenced by the attached warrant
(the “Warrant”), and herewith makes payment of the Exercise price with respect
to such shares in full, all in accordance with the conditions and provisions of
said Warrant.

 

1. The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any of the Common Stock obtained on Exercise of the Warrant, except in
accordance with the provisions of Section 8(a) of the Warrant.

 

2.  The undersigned requests that stock certificates for such shares be issued
free of any restrictive legend, if appropriate, and a warrant representing any
unexercised portion hereof be issued, pursuant to the Warrant in the name of the
undersigned and delivered to the undersigned at the address set forth below:

 

Dated:________

 

________________________________________________________________________

Signature

 

 

_______________________________________________________________________

Print Name

 

 

________________________________________________________________________

Address

 

 

_______________________________________________________________________

NOTICE

 

The signature to the foregoing Notice of Exercise Form must correspond to the
name as written upon the face of the attached Warrant in every particular,
without alteration or enlargement or any change whatsoever.

________________________________________________________________________

 

 

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EXHIBIT B

 

ASSIGNMENT

 

(To be executed by the registered holder

desiring to transfer the Warrant)

 

FOR VALUE RECEIVED, the undersigned holder of the attached warrant (the
“Warrant”) hereby sells, assigns and transfers unto the person or persons below
named the right to purchase _______ shares of the Common Stock of ICP SOLAR
TECHNOLOGIES, INC., a Nevada corporation, evidenced by the attached Warrant and
does hereby irrevocably constitute and appoint _______________________ attorney
to transfer the said Warrant on the books of the Company, with full power of
substitution in the premises.

 

Dated:

_________

______________________________

Signature

 

 

Fill in for new registration of Warrant:

 

 ___________________________________

Name

 

___________________________________

Address

 

___________________________________

Please print name and address of assignee

(including zip code number)

 

_______________________________________________________________________

 

NOTICE

 

The signature to the foregoing Assignment must correspond to the name as written
upon the face of the attached Warrant in every particular, without alteration or
enlargement or any change whatsoever.

________________________________________________________________________

 

 

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SCHEDULE 5(g)

 

MILESTONE GOALS

 

Milestone Date

Milestone Goals

 

April 30, 2009

 

- 4 Quarter Trailing Revenues as reported in the Company’s public filings equal
or exceed $13,000,000

 

- 4 Quarter Trailing Consolidated EBITDA as reported in the Company’s public
filings equal or exceed $1,100,000

 

For purposes of the above, the following definitions shall apply:

 

“Consolidated EBITDA” means, with respect to any Person for any period, the
Consolidated Net Income of such Person and its Subsidiaries for such period,
plus, without duplication, the sum of the following amounts of such Person and
its Subsidiaries for such period and to the extent deducted in determining
Consolidated Net Income of such Person for such period:  (A) Consolidated Net
Interest Expense, (B) income tax expense, (C) depreciation expense, (D)
amortization expense, and (E) any additional non-cash charges including but not
limited to compensation expense and accretion.

 

“Consolidated Net Income” means, with respect to any Person for any period, the
net income (loss) of such Person and its Subsidiaries for such period,
determined on a consolidated basis and in accordance with GAAP, but excluding
from the determination of Consolidated Net Income (without duplication) (a) any
extraordinary or non recurring gains or losses or gains or losses from
Dispositions, (b) restructuring charges, (c) any tax refunds, net operating
losses or other net tax benefits and (d) effects of discontinued operations.

 

“Consolidated Net Interest Expense” means, with respect to any Person, for any
period, gross interest expense of such Person and its Subsidiaries for such
period determined on a consolidated basis and in accordance with GAAP (excluding
the interest component of any Capitalized Lease Obligations), less interest
income determined on a consolidated basis and in accordance with GAAP.

 

 

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